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OfficeMax Operations Generate Weak Q1 Results

For the first quarter ended March 30, OfficeMax posted net income of $56.3 million, or 64 cents per diluted share, versus $4.9 million, or six cents per diluted share, in the 2012 period. However, the company noted, adjusted net income, excluding the effect of changes in foreign exchange rates, the impact of stores closed and opened, and the difference in the number of business days in the quarter this year versus last, was $10.1 million, or 11 cents per diluted share, versus $19 million, or 22 cents per diluted share, in the 2012 first quarter.

OfficeMax missed a Zacks Consensus Estimate of 23 cents per diluted share.

Total sales were $1.77 billion in the first quarter as compared to $1.87 billion in the 2012 period, while operating income was $101.9 million versus $17.8 million in the year-prior time frame. First quarter adjusted sales decreased 4.3% to $1.76 billion from the 2012 period, while adjusted operating income slipped to $22.4 million, or 1.3% of sales, versus $41 million, or 2.2% of sales, in the year-earlier quarter.

Retail sales in the United States suffered a comparable store sales decrease of 5.7% while those in Mexico decreased 2.1% on a local currency basis. Overall, comps slipped 5.4% on a local currency basis due to decreased traffic and lower technology product category sales, Office Max reported. Total retail sales decreased 7.3% to $845.4 million compared with the previous-year quarter, the company related.

“We experienced a challenging first quarter with a sales decline that reflected weak macroeconomic conditions and continued industry declines in technology sales,” said Ravi Saligram, OfficeMax president and CEO.  “We will continue to drive gross margin improvement and have put in place a significant cost reduction plan that should improve results in the second half of the year.”