OfficeMax Plans To Propel Profits As Sales Skid

For the fiscal first quarter ended March 30, OfficeMax, Inc. posted net income available to common shareholders of $56.3 million, or 64 cents per diluted share, compared to net income of $4.9 million, or six cents per diluted share, in the prior-year period. Adjusted net income was $10.1 million, or 11 cents per diluted share, versus $19 million, or 22 cents per diluted share, in the 2012 first quarter.

Retail segment income was $16.2 million, or 1.9% of sales, in the 2013 first quarter, versus $22.8 million, or 2.5% of sales, in the year-earlier period, the retailer stated.

Retail segment comparable store sales slipped 5.4% on a local currency basis, according to OfficeMax. The decline occurred because of decreased traffic and lower technology sales primarily, the company maintained. Retail operations in the United States suffered a 5.7% comp decline while those in Mexico slipped 2.1% on a local currency basis.

However, first quarter retail segment gross profit margin increased to 29.6% from 29.3% driven primarily by a sales mix shift from the relatively lower-profit technology category as well as less promotional activity and lower product costs from profitability initiatives, the retailer pointed out. Partially offsetting the positive factors were deleveraging of occupancy costs due to lower sales and an expiration of favorable purchase accounting for leases.

Retail segment sales decreased 7.3% in the first quarter to $845.4 million year over year, OfficeMax stated.

For the company, first quarter total sales were $1.77 billion versus $1.87 billion in the 2012 period. Operating income was $101.9 million compared to $17.8 million in the 2012 period, the retailer related.

Excluding the impact of changes in foreign exchange rates, the impact of stores closed and opened, and the difference in the number of business days in the periods year over year, adjusted 2013 first quarter sales decreased 4.3% from the 2012 frame, it said. Adjusted operating income was $22.4 million, or 1.3% of sales, versus $41 million, or 2.2% of sales, in the 2013 first quarter.

“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.”


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