Office Depot Inc. (ODP) posted a surprise third-quarter profit,
as the office-supplies retailer had indicated on Monday, owing to
cost cuts and large tax and interest-expense benefits.
The sector has been hurt by the soft economy, especially high
unemployment among white-collar workers. Meanwhile consumer
spending has strengthened a bit, but shoppers remain cautious.
Office Depot's chief executive, Steven Odland, also on Monday
agreed to step down after a controversial five-year tenure that was
marred by a series of investigations into accounting and other
issues.
The company reported a profit of $63.5 million, or 18 cents a
share, compared with a prior-year loss of $398 million, or $1.51 a
share. The latest period included a net benefit of 15 cents of
gains related to tax and interest-expense benefits while last year
had a net $1.43 a share in restructuring-related expenses.
The company on Monday projected earnings, excluding items, of 3
cents, not the loss analysts had been expecting.
Revenue decreased 4.3% to $3 billion after a prior-year drop of
17%. Analysts polled by Thomson Reuters most recently forecast
$2.94 billion.
Gross margin edged up to 28.6% from 28.4%.
Office Depot's North-American retail business reported earnings
dropped 15% as sales fell 1% and same-store sales were flat as
customer transactions increased but the average order value
declined.
Its international business saw profit decline 12% and revenue
drop 10%, or 3% excluding currency fluctuations, amid lower
volume.
Smaller rival OfficeMax Inc. (OMX), which itself earlier this
month named a replacement for its long-time leader, will report its
most recent results on Thursday. The company has been gaining on
Office Depot despite weak demand in the sector.
Office Depot shares closed Tuesday at $4.77 and were inactive
premarket. The stock is down 26% this year as sales were weaker
than expected earlier this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com