Office Depot Posts Q1 Net Loss

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Boca Raton, Fla. - Office Depot reported a net loss and slightly lower sales in its fiscal first quarter, ended March 26.

The net loss, after preferred stock dividends, was $15 million compared with net earnings of $20 million in last year's first quarter.

Sales in the first quarter were $3 billion, a decrease of 3 percent compared to the first quarter of 2010. Excluding sales related to asset dispositions and deconsolidation in the fourth quarter of 2010 and an acquisition in the first quarter of 2011, total Office Depot sales decreased 2 percent vs. prior year.

First quarter 2011 results included charges primarily related to restructuring and integration activity costs, and actions to improve future operating performance. Excluding these charges, which totaled $8 million before tax, net earnings, after preferred stock dividends, were marginally profitable.

"Our first quarter operating results were lower than the prior year due to the impact of lower sales," said Neil Austrian, Office Depot's interim chairman/CEO. "However, we are encouraged by the progress we're making throughout the enterprise to improve the future operating performance of the Company."

First quarter 2011 sales in the North American retail division were $1.3 billion, a decrease of 2 percent compared with the same period last year.

Same-store sales in the 1,115 stores in the U.S. and Canada that have been open for more than one year decreased 1 percent in the first quarter compared with the prior year period.

The division reported an operating profit of $58 million for the first quarter of 2011, compared with $73 million reported in the same period of the prior year. The operating profit decline was driven primarily by the negative flow-through impact from lower sales, rolling over a shrink benefit reported one year ago, incremental advertising expense to drive brand awareness and additional investment in key initiatives. These factors were somewhat offset by lower property costs.

During the first quarter, Office Depot closed seven stores, opened one and relocated two stores, bringing the total store count for North America to 1,141 as of March 26.

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