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OfficeMax Posts Lower Sales, Higher Profits

Naperville, Ill. — OfficeMax reported lower sales but higher operating and net income for its fiscal first quarter, ended March 30.

The chain, which agreed to be acquired by Office Depot in a $1.17 billion deal set to be completed by the end of the year, said total sales were $1.76 billion in the first quarter of 2013, compared with $1.87 billion in the first quarter of 2012.

Operating income was $101.9 million, compared with $17.8 million last year, and net income was $56.3 million, compared with net income of $4.9 million last year.

Excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and the difference in the number of business days in the quarter compared with the same quarter last year, adjusted sales for the first quarter of 2013 decreased 4.3 percent from the first quarter of 2012.

“We experienced a challenging first quarter, with a sales decline that reflected weak macroeconomic conditions and continued industry declines in technology sales,” said Ravi Saligram, president and CEO of OfficeMax. “We will continue to drive gross-margin improvement and have put in place a significant cost-reduction plan that should improve results in the second half of the year.”

Retail segment sales in the first quarter of 2013 decreased 7.3 percent to $845.4 million compared with the first quarter of 2012, reflecting a same-store sales decrease on a local currency basis of 5.4 percent primarily due to decreased traffic and lower technology product category sales. The decrease reflected a U.S. retail operations same-store sales decrease of 5.7 percent, and a Mexico retail operations same-store sales decrease of 2.1 percent on a local currency basis.

Retail segment income was $16.2 million during the quarter, compared with $22.8 million in the prior year’s first quarter.

In the first quarter, OfficeMax announced its new OfficeMax Business Solutions Center. The new store format is a first of its kind for OfficeMax in the U.S., offering 5,000 square feet of specially tailored business services, solutions and products delivered by expert associates to help local entrepreneurs grow their businesses, the retailer said.

OfficeMax ended the first quarter of 2013 with a total of 936 retail stores, consisting of 846 retail stores in the U.S. and 90 retail stores in Mexico. During the first three months of 2013, OfficeMax closed five stores in the U.S., and opened one store and closed one store in Mexico.