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Office Depot Struggles In Q4 As Staples Acquisition Looms

For the 2015 fourth quarter, Office Depot posted company net income of $15 million, or three cents per share, versus a company net loss of $84 million, or 15 cents per share, in the year-previous period. Company adjusted net income was $39 million, or seven cents per share, compared to $40 million, or seven cents per share, in the 2014 fourth quarter.

Office Depot missed a fourth quarter Zacks Investment Research analyst average estimate by four cents.

Operating income was $27 million versus an operating loss of $61 million for the fourth quarter in the year prior as adjusted operating income, which excludes the after tax impact of special charges and credits related to the Office Depot/OfficeMax merger and pending acquisition by Staples as well as international restructuring and non-cash store impairment charges, came in at $88 million versus $78 million in the 2014 period.

Total sales slid 9% to $3.48 billion in the quarter year over year, Office Depot reported.

In the North American retail division, comparable store sales were flat in the quarter, while net sales were $1.41 billion versus $1.54 billion, and operating income was $63 million compared with $16 million in the year prior-period, according to Office Depot. Comps also were flat for the full fiscal year, as net sales were $6 billion versus $6.53 billion and operating income was to $310 million compared with $126 million in the year previous.

Overall, for the full fiscal year, Office Depot posted company net income of $8 million, or one cent per share, versus a net loss of $354 million, or 66 cents per share, in fiscal 2014. Company adjusted net income was $229 million, or 41 cents per share, versus $117 million, or 22 cents per share, in the year prior.

Operating income for fiscal 2015 was $115 million versus an operating loss of $275 million in the year before, and adjusted operating income was $460 million versus $289 million in the year earlier.

Total sales slipped 10% to $14.49 billion, the company reported.

“We were pleased to deliver another year of strong operating results in 2015, despite experiencing substantial business disruption related to the pending acquisition by Staples,” said Roland Smith, chairman and CEO of Office Depot. “We made significant progress executing our 2015 critical priorities, realized our targeted incremental synergies from the integration of OfficeMax and exceeded our operating income plan for the year. In 2016, our focus remains on driving synergies, stabilizing our top line and positioning the company for long-term growth.”

The FTC is contesting the Office Depot/Staples acquisition, with the parties having taken the dispute to federal court.

Smith commented, “Regarding the pending acquisition by Staples, we look forward to presenting our case in U.S. federal district court and expect resolution by May 10. We continue to believe that this transaction provides substantial benefits to our customers and shareholders.”

Office Depot ended 2015 with a total of 1,564 retail stores in the North American retail division. During the quarter, the company closed 56 stores.