Office Depot Reports Q2 Sales Decline

Office Depot reported declining sales and income for 2013’s second quarter, ended June 29. Sales for Q2 were $2.4 billion, down 4% compared to the second quarter of 2012. In addition, the company showed a net loss, after preferred stock dividends, of $64 million or $0.23 per share for Q2, which mirrored a net loss, after preferred stock dividends, of $64 million or $0.23 per share in the second quarter of 2012, according to the retailer.

“Our second quarter results came in largely as expected, as we remain focused on executing against our multi-year strategic plan,” said Neil Austrian, chairman and CEO of Office Depot. “Sales continue to be impacted by a sluggish technology category, particularly laptops, as well as ongoing budgetary pressure on our federal accounts.

“Despite these headwinds, however, we were pleased with our cost reduction actions and progress on our key initiatives. In addition, we remain actively engaged in integration planning related to the proposed merger with OfficeMax, which we continue to expect to close by the end of the year. Shareholders of both companies overwhelmingly supported the merger at concurrent special meetings that were held in early July, and we look forward to closing the transaction and creating an even stronger office solutions provider in an increasingly competitive environment.”

In February, OfficeMax Inc. and Office Depot revealed that they had signed a definitive merger agreement that allows them to combine in an all-stock transaction. Earlier this month, OfficeMax stockholders voted to approve the merger between the two companies and adopt the agreement and plan of merger with Office Depot. Office Depot stockholders voted to approve the issuance of shares of Office Depot common stock to OfficeMax stockholders pursuant to the agreement and plan of merger as well.

Second quarter 2013 results included $30 million of pre-tax charges, comprised primarily of merger and certain shareholder-related expenses, restructuring activities, and $4 million related to non-cash store asset impairment charges in the North American Retail Division. Excluding these charges, the net loss, after preferred stock dividends for 2013 Q2 would have been $28 million, or $0.10 per share.

Total company gross profit margin decreased slightly in the second quarter of 2013 compared to the prior year period, with improvements in North American Retail and North American Business Solutions more than offset by a decrease in International.

Total company operating expenses decreased by $39 million in the second quarter of 2013 compared to the prior year period. When adjusted for merger and certain shareholder-related expenses and impairment and restructuring charges, total company operating expenses decreased by $38 million versus the prior year period.


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