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 user 2005-02-12 at 10:31:00 am Views: 76
  • #10214

    Office Depot Posts Higher Quarterly Earnings

    DELRAY BEACH, Fla. (Feb.05) – Office Depot Inc., the
    world’s second-largest chain of office supply stores, said Thursday that
    fourth-quarter profit increased year-over-year on improved North American retail
    sales, which offset sluggish catalog sales in the Business Services group.

    Net income totaled $52.8 million, or 17 cents per share, up
    from $45.8 million, or 15 cents per share, a year ago. The latest quarter
    includes charges of 13 cents per share for goodwill impairment, the cancellation
    of a corporate headquarters project, other facility termination costs and tax
    rate changes.

    Excluding these items, Office Depot earned 30 cents per
    share in the latest quarter. Analysts surveyed by Thomson First Call were
    looking for the company to post earnings of 21 cents per share on sales of $3.39
    billion in the 2004 period.

    Total company sales grew 7 percent to $3.47 billion from
    $3.25 billion in the fourth quarter of 2003. Worldwide comparable sales in the
    956 stores and 45 delivery centers that have been open for more than one year
    increased 2 percent for the period.

    Neil Austrian, chairman & CEO, said, “On balance, 2004
    was a good year for Office Depot. We improved both the sales and profitability
    of North American Retail. Profitability increased in the Business Services
    Group, although sluggish catalog sales held back our overall growth rate.
    International earnings grew over last year, but the sales contribution from the
    Guilbert acquisition fell short of our targets.”

    North American retail sales increased 8 percent for the
    fourth quarter and 5 percent for the full year, on improved technology category
    sales. Gross margin improved slightly as increased vendor rebates and
    promotional support and reduced inventory clearance charges were partially
    offset by a higher sales mix of lower margin technology products.

    North American Business Services Group sales increased 3
    percent for the quarter and 2 percent for the full year, but total Direct sales
    - Office Depot catalog, Viking catalog and Tech Depot – were positive for the
    fourth quarter and flat for the full year, with growth in Tech Depot offset by
    an overall decline in the catalog channel. Gross margin remained flat for the
    quarter because of increased vendor program funding that offset higher paper
    costs and lower pricing on ink and toner.

    For the full year, Office Depot earned $338.2 million, or
    $1.07 per share, from $276.3 million, or 88 cents per share, a year ago.
    Excluding charges to adjust for fourth-quarter items as well as a $5 million
    gain to settle litigation, the company earned $1.19 per share. Analysts were
    expecting profit of $1.10 per share on sales of $13.48 billion.

    Total company sales for fiscal 2004 grew 10 percent to
    $13.56 billion from $12.36 billion last year, and same-store sales edged up 1

    The company said it has suspended its practice of issuing
    business performance and earnings guidance, given the expected arrival of a new
    CEO in