Office Depot Q2 Retail Sales Rise 5%

By Jeff Malester On Jul 26 2004 - 6:00am

Office Depot said second quarter sales in its North American retail segment increased 5 percent, hitting $1.34 billion, up from $1.28 billion in the year-ago period, despite a drop in momentum in the retail division in June and July.

Segment comp store sales in the United States and Canada rose 3 percent, primarily due to increased sales of technology products and as a direct result of merchandising initiatives launched in the fourth quarter of 2003.

Operating profit in the North American retail segment jumped 54 percent in the second three months, ended June 26, reaching $71.3 million, up from $46.4 million in the same quarter a year ago.

By reducing shrink and occupancy costs, Office Depot increased gross margin as a percentage of sales in its North American retail division, to 25.4 percent, compared with a year-over-year 24.7 percent. There was some offset from increased sales of lower margin technology products, said the company.

Gross margin in core office supplies and furniture categories increased on a year-over-year basis.

Office Depot, which anticipates continued positive comps in its North American retail segment throughout the remainder of 2004, said future retail growth will be driven by the rollout of its new Millennium 2 (M2) store format, both for remodels and new stores.

North American retail sales are expected to grow in the high single digit to low teens range in the second half.