Naperville, Ill. - One-time charges contributed to a 76 percent decline in fourth-quarter profits for OfficeMax.
The No. 3 office-supply chain said net income for the three months, ended Dec. 31, was $2.9 million on a 3.9 percent gain in net sales, to $1.8 billion.
Results reflect one additional week of operation in the U.S., plus $17.8 million in pretax charges for severance pay and impairment of certain U.S. stores.
The chain closed 22 U.S. locations last year.
Within its retail segment, comprised of 896 U.S. and 82 Mexican stores, sales rose 5.7 percent to $901 million and comp-store sales edged up 0.2 percent, reflecting a slight decline in U.S. comps.
Inventory markdowns, higher fuel costs and increased promotional activity to drive holiday traffic led to a 3.2 percent decline in gross profit margin, to 26.9 percent, and retail segment income fell 30 percent to $13.2 million, or 1.4 percent of sales, compared with 2.2 percent of sales during the year-ago quarter.
"Sales trends improved in the fourth quarter but remain soft," noted Bruce Besanko, executive VP and chief financial and administrative officer. "Consequently we will continue to streamline our cost structure, enabling us to make strategic investments in initiatives that will jump-start growth."
For the full year, profits fell 52 percent to $32.8 million, and net sales slipped 0.4 percent to $7.1 billion.
Looking ahead, the company is projecting flat first-quarter net sales, and is planning capital expenditures of upward of $100 million in 2012 for IT, e-commerce and infrastructure upgrades.
OfficeMax announced in November that it would begin tests of
that are staffed and operated by RadioShack. A pilot program was scheduled to begin last month in about 15 to 20 stores within the San Francisco market.