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Soft Sales Slam Office Depot
7/2007 Shares of Office Depot tumbled more than 7% Thursday after the retailer reported a drop in second-quarter profits and weaker-than-expected sales.
Office Depot’s net income fell to $109.1 million, or 40 cents a share, from $118.3 million, or 41 cents a share, a year earlier.Excluding certain charges, the office-supply company earned 43 cents per share in the second quarter, meeting the average estimate of analysts surveyed by Thomson Financial.Sales rose 4% to $3.63 from $3.49 billion, missing analysts’ target of $3.69 billion.
North American retail sales in North America rose 1%, while international sales increased 14% in U.S. dollars and 7% in local currencies.But same-store sales, or sales at stores open at least a year, dropped 5% in North America.”As previously discussed, we knew we were facing significant headwinds as we entered the second quarter this year, a quarter which also is seasonally our lowest point for sales,” Chief Executive Steve Odland said in a statement. “While we are frustrated that we weren’t able to grow earnings at the same rate as in the previous two years, we are pleased that in this challenging sales environment we delivered earnings per share consistent with the prior year and were able to invest in our global business for the future.”Shares of Office Depot recently were down $2.18, or 7.5%, to $26.77. The decline brought the stock to a 52-week low of $26.53 earlier in the day, compared with a 52-week high of $44.69 in October. Shares have been hovering near year-lows for the past month.Rival OfficeMax was falling $3.59, or 9.8%, to $33.16, while Staples (SPLS) declined 68 cents, or 2.8%, to $23.41.
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