Office Depot Sales Up 55%, Continues to Benefit From Merger

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Office Depot Sales Up 55%, Continues to Benefit From Merger

 user admin 2014-11-04 at 12:01:32 pm Views: 246
  • #41387

    Office Depot Sales Up 55%, Continues to Benefit From Merger
    Office-Supplier Retailer Completed Its Merger With OfficeMax Last November

    By Angela Chen

    Office Depot Inc. said its sales for the third quarter rose 55% from a year earlier, as it continued to benefit from the merger with OfficeMax.

    The results beat analyst expectations, leading the company to raise its outlook for the year. The company now expects operating income of $255 million to $265 million, up from its previous outlook of about $200 million. Its preliminary estimate for next year is about $475 million.

    The office-supply retail rivals completed their merger last November, a deal meant to improve their prospects in an oversaturated office-supply sector that faces stiff competition from the likes of Inc. Office Depot in May said it plans to close at least 400 locations in the U.S., with 150 closures pegged for 2014, citing overlap created by the merger.

    The moves came after rival Staples Inc., which reaps nearly half of its sales from e-commerce, announced plans to trim its retail footprint by closing as much as 12% of its North American stores over the next couple of years.

    Overall, Office Depot posted a profit of $29 million, or five cents a share, compared with a year-earlier profit of $133 million, or 41 cents a share. Excluding merger-related expenses and other items, the company posted a profit of 10 cents a share, compared with a year-earlier profit of five cents a share.

    Office Depot’s sales jumped 55% to $4.07 billion.

    Analysts had predicted earnings of nine cents a share on revenue of $4.05 billion.

    Selling, general and administrative expenses jumped 45% to $859 million, while merger, restructuring and other operating expenses grew to $72 million from $44 million.

    North American retail, Office Depot’s biggest segment by sales, posted a 52% increase in sales to $1.72 billion, reflecting the OfficeMax deal. On a pro forma basis, however, sales in the division declined 7%, hurt by store closures, and same-store sales declined 3% amid lower transaction counts.

    Sales in the business solutions unit climbed 88% to $1.52 billion in the period, although pro forma sales declined 1% due to lower sales in Canada and weak currency rates.