DOW JONES NEWSWIRES
OfficeMax Inc. (OMX) swung to a surprise second-quarter profit
as the office-supplies retailer reported stronger margins and
continued sales stabilization.
But the company expects third-quarter sales will be slightly
lower than the prior year's $1.83 billion and reduced its 2010
sales view. OfficeMax now expects annual sales will be flat to
slightly lower than 2009 sales of $7.21 billion, compared with its
prior view for a slight increase. Analysts' average estimate was
for third-quarter sales of $1.86 billion.
The No. 3 office products supplier by sales behind Staples Inc.
(SPLS) and Office Depot Inc. (ODP) aims to at least grow larger
than Office Depot. OfficeMax is redesigning its marketing to
include catalogs with brighter color and more attractive
presentations to appeal to women, who the retailer says make 70% of
office-supplies purchase decisions--part of a five-year plan to
raise sales without adding stores. OfficeMax also is adding
nontraditional outlets such as grocery and convenience stores.
The sector has been struggling owing to high unemployment rates,
especially among white-collar workers. Office Depot last week
posted a narrower second-quarter loss than expected, as cost
cutting more than made up for weaker-than-expected sales.
OfficeMax reported a profit of $12.4 million, or 14 cents a
share, compared with a prior-year loss of $16.9 million, or 23
cents. The latest quarter had 2 cents a share of gains. Analysts
polled by Thomson Reuters most recently forecast break-even
results.
Sales edged down 0.3% to $1.65 billion. The company in April
projected a slight gain.
Gross margin rose to 25.9% from 23.8%.
OfficeMax's contract segment--its business-to-business
office-products distributor--saw sales edge down 0.1% compared with
a 21% drop a year earlier.
Retail business sales eased by 0.5%, reflecting a same-store
sales decline of 0.3% and fewer stores. However, the sales decline
was an improvement over the prior-year drop of 12%.
The businesses' sizes are nearly the same by sales.
Shares closed Monday at $14.85 and were up 0.8% to $14.97 in
premarket trading. The stock is up 49% in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com