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Office Depot misses estimates, shares fall
Same store sales decline 3% based on slower PC market, office furniture sales.
NEW
YORK — Office Depot Inc. reported first-quarter sales that missed Wall
Street estimates, sending the retailer’s shares down nearly 4 percent,
while earnings increased.The world’s No. 2 office-supplies retailer
behind Staples Inc. (Charts, Fortune 500) said comparable-store sales
at stores open at least a year declined 3 percent in the U.S. and
Canada. It attributed the decline to lower sales of personal computers
because of the launch of Microsoft Corp.’s (Charts, Fortune 500)
Windows Vista operating system and to a drop in sales of office
furniture.”Sales in the second quarter may be similarly affected if the
current business conditions persist in North America,” Chief Executive
Steve Odland said in a release.The Delray Beach, Florida-based company,
which operates nearly 1,200 retail stores in the United States and
Canada, said quarterly sales rose 7.1 percent to $4.1 billion, missing
the analysts’ average forecast of $4.2 billion, according to Reuters
Estimates.Net income rose to $156 million, or 56 cents a share, from
$130 million, or 43 cents a share a year earlier.Excluding charges,
Office Depot (Charts, Fortune 500) said quarterly income was 60 cents a
share. On that basis, analysts on average were expecting 59 cents,
according to Reuters Estimates.The company said higher international sales contributed to the profit increase.
Total
sales at the North American division rose 3 percent to $1.8 billion,
while international sales increased 21 percent, Office Depot said.In
recent quarters, Office Depot has expanded its private-label business,
while closing and remodeling stores as part of its efforts to close its
competitive gap with Staples.Office Depot shares were off $1.30, or 3.6
percent, at $35.20 in morning New York Stock Exchange trade, while
Staples slipped 1.3 percent to $25.70 on Nasdaq.Staples trade at a
forward price-to-earnings ratio of 17.6 times, compared with a 15.9
multiple for Office Depot.
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