OfficeMax Suffers Q2 Net Loss - Twice

OfficeMax Suffers Q2 Net Loss

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Cleveland - OfficeMax suffered a $33.4 million loss for its second quarter, even as sales increased 4.8 percent to $1 billion, compared to the same period last year.

The OfficeMax Domestic Business segment reported sales of $972.7 million for the second quarter, ended July 27, up from $949.6 million in the second quarter last year. Net loss was $33.3 million, compared with $24 million the previous year.

The office superstore chain enjoyed a 3.4 percent comparable-store sales increase in during the period. This figure excludes sales from 29 stores that were closed on the first day of the fiscal year. Including the sales from those closed stores for the second quarter last year, revenue increased by 3.1 percent year over year. The recent quarter's results do not reflect a tax provision or benefit. Assuming the tax benefit, the loss would have been reduced to $20.2 million, a 16 percent improvement over last year's second quarter.

Gross margin dropped slightly in the first quarter, due mainly to the growing popularity of digital photography and related items, which represents an expanded category for OfficeMax, but one that carries a lower initial merchandise mark-up than the retailer's average product mark-up.

For the first half, overall sales increased 2.5 percent, to $2.19 billion, up from $2.17 billion the previous year, excluding sales from the 29 stores. Including these, revenue increased less than 1 percent year over year.

Overall net income for the six months was $30.2 million, up from a loss of $40.6 million in the same period in 2001. This year's results exclude a tax provision and include a previously reported $57.5 million benefit from a cash tax refund. Excluding the benefit, the loss for the most recent six months would have been $16.5 million.

Based primarily on continued sales and margin expansion, OfficeMax expects to beat its previously announced profit range for the full year, looking to a one-year, pre-tax improvement of over $150 million, compared with last year's comparable pre-tax loss of $139 million, excluding charges.

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