Office supplies and services provider Office Depot, Inc. (ODP), which has agreed to merge with OfficeMax Inc. (OMX), Tuesday reported a loss for the first quarter, weighed down by charges and lower sales due to a shift in holidays.
Neil Austrian, CEO, said, ''Although our first quarter results were heavily impacted by the holiday timing, we saw a modest improvement in trends late in the period, which gives us confidence going into the second quarter and, ultimately, in achieving our full-year targets."
Net loss attributable to common stockholders was $16.82 million or $0.06 per share, compared to net earnings of $41.29 million or $0.14 per share last year.
The latest results included $25 million of pre-tax charges related mainly to merger-related costs and restructuring activities, as well as $5 million related to non-cash store asset impairment charges in the North American Retail Division. The prior year results also included items.
Excluding charges, net earnings would have been approximately $1 million or $0.00 per share compared to $30 million or $0.11 per share in the year-ago period. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.
Sales declined to $2.72 billion from $2.87 billion. Analysts had a consensus revenue estimate of $2.77 billion for the quarter.
Office Depot noted that sales were hurt by $58 million or 200 basis points due to a shift in the timing of the New Year and Easter holidays.
The North American Retail Division reported sales of $1.1 billion, down 6 percent from last year. The timing of holidays had a negative impact of 130 basis points on the segment's sales. Comparable store sales decreased 5 percent, driven by technology peripherals and by the consumer demand shift to tablets from laptops. Tablets have a lower average selling price and lower basket attachment.
Sales at its North American Business Solutions Division to $816 million slid 1 percent. Adjusting for the estimated holiday impact, sales would have been up 1 percent. International Division sales dropped 8 percent to $759 million.
The company is facing shareholder anger over its performance. Last week, Starboard Value LP, together with its affiliates, which owns about 14.8 percent of the outstanding common shares of Office Depot, said it is uncomfortable with the execution and experience of the current Board and seeks to add a number of individuals to the board.
The combination with OfficeMax is expected to help both companies to tide over weak economic conditions, falling sales and rising online competition. The $1.2 billion all stock-deal is expected to close by the end of 2013.
ODP settled at $3.70 on Monday.
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