OfficeMax Inc. (OMX: Quote) said Tuesday charges stemming from the closure of 23 of its stores in the U.S. resulted in its first-quarter profit drop significantly from last year. Excluding the charges, earnings were higher and came in above the Street estimates. The office products distributor maintained its full-year forecast, but cautioned that second-quarter sales could be down.
In the first quarter, OfficeMax's net income available to common shareholders plummeted to $4.86 million or $0.06 per share from $11.37 million or $0.13 per share last year. The results included charges of $15.4 million or $0.18 per share related to the store closures.
Excluding this, net income available to shareholders would have been $20.3 million or $0.23 per share. On average, 12 analysts polled by Thomson Reuters expected earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total sales edged up 0.5 percent from last year to $1.87 billion and came in line with ten Wall Street analysts' consensus estimate.
Peer Office Depot, Inc. (ODP: Quote) last week said it returned to profitability in the first quarter, despite a worrisome drop in North American sales. While total sales declined 3 percent, margins improved.
Similar to its peer, OfficeMax's gross profit margin improved to 25.8 percent from prior year's 25.5 percent and adjusted operating margin grew to 2.3 percent from 1.5 percent a year ago.
In the company's retail segment, same-store sales decreased 2.1 percent due to reduced store transactions. However, the segment's margin improved due to reduced occupancy and inventory shrinkage expense.
Looking ahead to the second quarter, OfficeMax anticipates total company sales to be flat to slightly lower from last year, including the impact of favorable foreign currency translation. Adjusted operating income margin is expected be about in line with last year's 1.1 percent.
For the year as a whole, the company continues to project sales to be flat to slightly higher than last year, including favorable currency impact and excluding the additional week in 2011. Also, it sees adjusted operating income margin to be approximately in line with, to slightly higher than, the 1.7 percent recorded in the prior year.
For the year, the company plans to close 35 stores and open 1-2 stores in the U.S. In Mexico, it plans to open 8-10 stores and close 1-2 stores.
In pre-market activity, OfficeMax shares are currently trading at $4.10, down $0.30 or 6.82 percent.
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by RTT Staff Writer
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