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Profits Up, Sales Down At Office Depot

Boca Raton, Fla.
– Strong international performance helped Office Depot post first-quarter
earnings of $20 million, compared with a year-ago loss of $55 million.

 However, net sales for the three months, ended
March 27, decreased 5 percent to $3.1 billion on weakness in its North American
retail unit. Sales there fell 6 percent to $1.3 billion — due largely to the closure
of 120 stores last year — and comp-store sales slipped 1 percent. Operating
profit declined nearly 10 percent to $73 million due to the negative impact of
lower sales and increased advertising expenses to drive brand awareness. Average
ticket was up during the quarter, but the number of transactions was down, the
company reported.

During the period the chain closed
seven stores and opened four, bringing the total store count for North America to 1,149 as of March 27.

More recently, Kevin Peters, Office
Depot’s former supply chain and IT executive VP, succeeded Carl Rubin as
president of the North American retail division, reporting to chairman/CEO
Steve Odland.

In a statement, chief financial
officer Mike Newman noted, “Our first quarter operating results exceeded our
expectations due primarily to a stronger than anticipated performance for the
second consecutive quarter by our international division. We’re pleased that
these results include year-over-year gross profit margin improvement, marking
the third consecutive quarter of such improvement.”

Total company operating expenses
decreased approximately 12 percent year over year, primarily reflecting a
first-quarter charge in 2009 and lower distribution costs in the first quarter
of 2010.