Office Depot Posts Lower Q1 Sales, Loss

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Boca Raton, Fla. — Office Depot reported lower sales and a net loss of $17 million in the first quarter, ended March 30.

Sales were $2.7 billion, down 5 percent compared with the first quarter of 2012 in both U.S. dollars and in constant currency. Sales in the quarter were negatively impacted by approximately $58 million compared with the prior year due to a shift in the timing of the New Year and Easter holidays.

Office Depot had a net loss of $17 million compared with net earnings, after preferred stock dividends, of $41 million in the first quarter of 2012.

First quarter of 2013 results included approximately $25 million of pretax charges, comprised primarily of merger-related costs, restructuring activities, and approximately $5 million related to non-cash store asset impairment charges in the North American retail division

Excluding these charges, net earnings, after preferred stock dividends, would have been approximately $1 million.

 “Although our first-quarter results were heavily impacted by the holiday timing, we saw a modest improvement in trends late in the period, which gives us confidence going into the second quarter and, ultimately, in achieving our full-year targets,” said Neil Austrian, chairman and CEO of Office Depot. “I’m also very pleased with the progress we have made on the merger over the past two months, especially the selection of Mike Newman, chief financial officer of Office Depot, and Bruce Besanko, chief financial officer of OfficeMax, to lead the integration efforts for the two companies.”

The North American retail division reported first quarter 2013 sales of approximately $1.1 billion, a decrease of 6 percent compared with the prior year. The timing of holidays in the quarter had a negative impact on sales.

Comp-store sales in the 1,078 stores that have been open for more than one year decreased 5 percent for the first quarter of 2013. The decline was mainly driven by technology peripherals and by the consumer demand shift out of laptops and into tablets, which have a lower average selling price and lower basket attachment.

The North American retail division reported operating income of $15 million in the first quarter of 2013, compared with $18 million in the same period last year.

At the end of the first quarter of 2013, Office Depot operated 1,111 stores in the U.S. and Puerto Rico. The North American retail division opened no new stores and closed one during the first quarter of 2013.

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