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Office Depot Q4 Falls Well Short Of Estimates

Tuesday February 25th, 2014 - 12:42PM


For the year ended December 28, Office Depot, Inc. posted sales of $11.2 billion an increase of 5% compared to the prior year including sales from the combined OfficeMax operation from the completion date of the merger, November 5, 2013. For the full fiscal year, Office Depot reported an operating loss of $205 million versus an operating loss of $31 million in fiscal 2012, and a net loss attributable to common stockholders of $93 million, or 29 cents per share, compared to a net loss of $110 million, or 39 cents per share, in the year earlier.

Total sales for the 2013 fourth quarter gained 33% to $3.5 billion versus the prior-year quarter, Office Depot declared. The company reported an operating loss of $118 million compared to operating income of $5 million in the 2012 fourth quarter, and a net loss attributable to common stockholders of $144 million, or 34 cents per share, compared to a net loss of $17 million, or six cents per diluted share, in the year-earlier period.

Reported results include merger-related expenses, asset impairment and other charges, Office Depot pointed out.

The fourth quarter of 2013 included operating income charges totaling $123 million comprised of $108 million in merger-related expenses, $12 million in non-cash store impairment charges and $3 million in restructuring costs and severance. The tax effect of these pretax charges was $15 million. Also, the quarter included $22 million in expenses related to preferred stock redemption. Excluding those items, fourth quarter adjusted operating income was $5 million compared to adjusted operating income of $26 million in the prior-year period, and the adjusted net loss attributable to common stockholders was $14 million, or three cents per share, compared to adjusted net income of $1 million, or zero cents per share, in the 2012 fourth quarter, according to Office Depot.

Fourth quarter sales missed a Thomson Reuters average analyst estimate, as did adjusted earnings per share, in that case by six cents.

North American Retail Division fourth quarter sales increased 31% to $1.4 billion versus the 2012 period, primarily reflecting $384 million of sales from the OfficeMax post-merger period. Comparable store sales decreased 4% primarily due to lower average order values and lower transaction counts resulting from decreased store traffic, the company stated. North American Retail Division operating loss was $8 million flat with the year-earlier period. Fourth quarter 2013 results reflected the negative flow-through impact of lower sales and an unfavorable inventory adjustment, offset by a decrease in selling, general and administrative expenses including payroll and legal, and the positive impact of the OfficeMax post-merger period, Office Depot maintained.