Naperville, Ill. - Costs for closing 23 U.S. stores during the first quarter dragged OfficeMax's profits down 57 percent for the period.
Net income was $4.9 million for the three months, ended March 31. Excluding the charges, earnings were $20.3 million, a 78 percent gain.
The No. 3 office-supply chain said it may close another dozen U.S. stores this year and open one or two new locations. It currently operates 874 stores domestically.
Net sales edged up 0.5 percent to $1.9 billion during the first quarter, and same-store sales slipped 2.1 percent due to reduced store transactions, the company said.
Retail sales decreased 2.7 percent to $912.3 million, reflecting the same-store sales decline, and income for the company's retail segment was $22.8 million, or 2.5 percent of sales, compared with $25.6 million, or 2.7 percent of sales during the year-ago quarter.
Retail segment gross profit margin increased to 29.3 percent, from 28.7 percent last year, due to lower occupancy costs, reduced inventory shrinkage and unfavorable import duties during the year-ago period. These were partially offset by increased delivery expense due to higher fuel costs and discounting of products at stores that were closed during the quarter.
Operating, selling, general and administrative expenses (OSG&A) as a percentage of sales were 26.8 percent for the retail segment, up from 26 percent last year due primarily to slightly higher store bonus expense and higher spending associated with the chain's growth and profitability initiatives.
"We are off to a good start in 2012, and the team delivered solid first-quarter results," said OfficeMax president/CEO Ravi Saligram. "We are making steady progress in executing the early stages of our strategic plan."