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Ceo Buys $3.65M Home After His Company Reports a $144 million Loss
Office Depot posts surprise loss, shares plungeBy Maria Ajit Thomas
Feb 25 (Reuters) – Office Depot Inc reported a surprise quarterly loss and said it expected sales to continue to fall in 2014, sending its shares down 14 percent in early trading.
Office supply retailers such as Office Depot have been struggling as more shoppers buy paper and gadgets from online retailers such as Amazon.com Inc as well as drugstores and mass merchants such as Wal-Mart Stores Inc.
Shares of market leader Staples Inc fell more than 5 percent.
"Revenue declined in 2013 versus the prior year and we expect that trend to continue in 2014," Office Depot Chief Executive Roland Smith said on a post-earnings call on Tuesday.
Office Depot, which bought OfficeMax Inc in November to help it better compete with Staples, said it expected 2014 sales to be less than the $16.83 billion the companies would have generated had they operated as a single entity in all of 2013.
Analysts on average were expecting sales of $16.40 billion for the year, according to Thomson Reuters I/B/E/S.
Office Depot reported a 4 percent fall in North America retail same-store sales in the fourth quarter ended Dec. 28.
Sales of office supplies and furniture declined by low-single-digit percentages, while technology sales dropped by a mid-single-digit percentage, Chief Financial Officer Stephen Hare said on the call.
"A sharp decline in tablet revenues was a significant driver of the technology category decline," Hare said.
Office Depot said its net loss widened to $144 million, or 34 cents per share, in the quarter from $17 million, or 6 cents per share, a year earlier.
The results include acquisition-related charges of more than $100 million.
On an adjusted basis, Office Depot reported a loss of 3 cents per share. Analysts expected a profit of 3 cents per share.
Sales rose 33 percent to $3.49 billion but fell short of the average analyst estimate of $4.03 billion. Sales included $939 million from OfficeMax. Excluding OfficeMax's contribution, sales fell 2.9 percent in the quarter.
Office Depot's $976 million acquisition of OfficeMax was announced last February and closed on Nov. 5.
About 40 percent of Office Depot's sales came from its North American retail business. The North America business solutions division, which caters to corporate customers and institutions, contributed about 34 percent of revenue.
Office Depot also has an international division.
A drop in store traffic resulted in fewer transactions in the North America retail business, the company said. The average order value also fell.
The company, which appointed turnaround expert Roland Smith as chief executive in November, said it expects $400 million of integration expenses between 2014 and 2016. About $300 million would be incurred in 2014.
The company said it expected synergies of more than $600 million from the merger, up from its earlier forecast of $400 million-$600 million.
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