Strong first quarter sales of technology products at Office Depot helped the office supply chain register its first positive retail comp-store quarter in the last four years, with North American retail sales increasing 5 percent and comps 3 percent.
The chain’s comp-store climb was primarily attributable to the technology products sales increase, and a direct result of several technology-merchandising initiatives started in the fourth quarter of last year. The lower margin technology products, however, adversely affected gross profit as a percentage of sales during the first quarter, ended March 27. Gross margin percentages in core office supply categories increased on a year-over-year basis.
During the fourth quarter, Office Depot opened three stores, relocated three and closed three more, all in North America. With the acquisition of Kids ‘R’ Us sites, the retailer expects to open 80 to 100 new stores in 2004. The chain operated 900 office product superstores at the end of the first quarter.
Total company sales jumped 18 percent in the first three months, reaching $3.6 billion, up from $3.1 billion year-on-year.
Operating profit climbed 9 percent in the first quarter, hitting $175.5 million, compared with $161.3 million in the same three months in 2003.
Net earnings in the first quarter came in at $115.6 million, up from $79.2 million in the same period a year earlier. Included in first quarter 2004 results was a $4 million charge to settle outstanding litigation.
Office Depot, in calculating the overall performance of the first quarter and early trends in the second, issued reinforced optimism for the remainder of 2004, where it anticipates accelerating North American retail comps over the 12 months.