Profits Up, Sales Down At Office Depot

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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.


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