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More targeted promotional activity, focused primarily on small business customers, at office products retailer OfficeMax, reduced first-quarter sales for the company's retail segment, but increased year-on-year profit and gross margin.
OfficeMax retail segment sales dropped 2 percent in the first three months, down to $1.20 billion from a year-ago $1.22 billion, while comp-store sales were off 1 percent in the period.
Operating income in the retail business division jumped 36 percent, hitting $22.9 million, up from $16.9 million in the same period in 2004. Operating margin was 1.9 percent in the first quarter of 2005, ending March 26, compared with 1.4 percent in the first three months of last year. The operating income rise was due primarily to increased gross margin, partially offset by a modest decrease in operating expenses.
Consolidated first-quarter sales hit $2.3 billion in the first quarter, a drop from $3.5 billion year-over-year, primarily because the company's Boise Building Solutions and Boise Paper Solutions segment sales were included in the first quarter of 2004, but not in the same three months this year. Sale of assets of these segments was completed last October.
Consolidated net income for the first quarter declined to $2.6 million from a year-earlier $59.1 million. Financial results last year included the company's paper, forest products and timberland results, which since have been sold.
During the first quarter of this year, OfficeMax incurred special items, including a loss from discontinued operations and certain expenses, which are not expected to be ongoing. Excluding these special items, OfficeMax first-quarter net income reached $19.7 million, compared with first quarter 2004 net income, before special items, of $28.1 million.
Net income in the first quarter of 2005, excluding special items, improved by $38.4 million, from a net loss, before special items, of $18.7 million in the fourth quarter of last year.
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