Office Depot Earnings Surprise But Sales Slip

Excluding one-time charges, Office Depot posted a net profit in the fourth quarter, beating analyst expectations of a modest loss, but the office superstore operator’s sales slipped.
Total company sales for the 2010 fourth quarter were $3 billion, down 3% versus the 2009 period.
The retailer reported a net loss in the quarter, after preferred stock dividends, of $58 million, or 21 cents per share, versus a loss of $77 million, or 28 cents per share, in the year-earlier period. Excluding one–time charges, which total $87 million, net earnings, after preferred stock dividends, were $24 million, or nine cents per share, in this year’s period. Tax benefits totaling almost $29 million positively impacted earnings in the 2010 fourth quarter while the 2009 period results included restructuring charges of 22 cents per share.
Sales for Office Depot’s North American Retail Division were $1.2 billion in the fourth quarter, a decrease of 2% compared to the same period last year. Comparable store sales for the 1,124 Office Depot stores operating across the United States and Canada slipped 1% in the period. The division posted a profit of $16 million for the quarter versus $2 million in the prior-year period.
For the full 2010 fiscal year, sales were $11.6 billion, down 4% from the prior year. The reported net loss, after preferred stock dividends, was $2 million, or one cent per diluted share, versus a loss of $627 million, or $2.30 per diluted share, in 2009. Adjusted for charges and tax benefits, and after preferred stock dividends, 2010 net earnings were $30 million, or 11 cents per diluted share, versus a loss of $71 million, or 26 per diluted share, for 2009.