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OfficeMax Beats In Q3 But Retail Comps Lag

For its fiscal third quarter ended September 29, OfficeMax Inc. has announced that adjusted operating income was $44.9 million, an increase from $41.3 million in the 2011 period. Adjusted net income available to OfficeMax common shareholders was $23.6 million, or 27 cents per diluted share, versus $21.5 million, or 25 cents per diluted share, in last year’s third quarter.

OfficeMax earnings beat a the Zacks Consensus Estimate of financial analysts by a penny.

OfficeMax reported operating income of $33.5 million in the most recently completed period versus $41.3 million in the 2011 third quarter, the company stated.

Unadjusted net income was $433 million, or $4.92 per diluted share, compared to $21.5 million, or 25 cents per diluted share, in the 2011 quarter. Results for the 2012 third quarter include a non-cash gain of $670.8 million related to the extinguishment of non-recourse debt guaranteed by Lehman Brothers Holdings, Inc., which increased net income by $416.4 million, or $4.73 per diluted share. The 2012 quarter also included $11.4 million of expenses to impair fixed assets associated with certain stores and to record a change in the estimated lease obligation of a previously closed location in the United States, which reduced net income by $7 million, or eight cents per diluted share.

Total sales in the 2012 third quarter were $1.74 billion, a decrease of 1.7% from the prior-year period. Excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and a shift in fiscal calendar weeks, adjusted total sales in the 2012 third quarter decreased 1.2% from the 2011 period, the company stated.

OfficeMax retail segment sales decreased 3.1% to $863.7 million in the third quarter, the company said. Comparable store sales decrease 2.1% on a local currency basis, the retailer related, primarily due to lower technology product category sales. The decrease reflected a U.S. retail operations comp decrease of 2.6%, partially offset by a Mexico retail operations same store sales gain of 2.2% on a local currency basis.

“Our team’s focus on strengthening the core business resulted in stronger operating margins for the quarter, driven primarily by our U.S. and international contract businesses.  While we continued to drive sales growth in our U.S. contract business including digital initiatives, retail sales were challenged by weaker demand for technology products, especially personal computers,” said Ravi Saligram, OfficeMax president and CEO, in announcing company results.