OfficeMax Retail Sales Rise 6.8%

By Jeff Malester On Feb 27 2006 - 8:00am

Retail segment sales at office products company OfficeMax increased 6.8 percent in the fourth quarter, hitting $1.23 billion, up from a year-ago $1.16 billion, including an additional week for selling this past year. Same-store sales decreased 1 percent.

Excluding a charge of $17.9 million in the fourth quarter, ended Dec. 31, for closing 110 domestic retail stores by the end of the first quarter of 2006, retail segment operating income hit $22.4 million, compared with a loss of $16.9 million year-on-year. Including the charge, income for the quarter was $4.5 million.

Improvement of retail business operating profit during the fourth quarter was due to sales growth, improved gross margin and expense control, said OfficeMax. Retail segment gross margin “increased significantly” in the fourth quarter, compared with the same period the previous year, with increased gross margin in nearly all product categories, it reported. The retailer cited a more effective promotional strategy, partially offset by significantly higher fuel and utility prices for the margin climb.

Retail segment sales for the 12 months edged upward 1.1 percent, hitting $4.53 billion, compared with a year-ago $4.48 billion. Comp-store sales also dropped 1 percent for the year.

Operating income for the year climbed to $45.8 million in the retail segment, excluding the $17.9 million charge, compared with $22.7 million the previous 12 months. Including the charge, 12-month retail income was $27.9 million.

Consolidated OfficeMax sales in the fourth quarter dropped to $2.5 billion from a year-ago $2.7 billion. In 2004, sales included about $500 million from the results of the company's Boise paper products business, which was sold in October of 2004.

The retailer suffered a net loss of $43.1 million in the fourth quarter, compared with income of $695,000 in the same period a year earlier. Excluding special items, the company reported net income of $6 million, compared with a net loss of $18.7 million the prior year.

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