Office Depot moves to 1st-quarter loss on charges, but adjusted results top analyst estimates

Office Depot moves to 1Q loss, but tops Street

BOCA RATON, Fla. — Office Depot Inc. said Tuesday that it moved to a first-quarter loss because of charges for a restructuring that included facility closings, but adjusted results beat Wall Street’s estimates.

The office supply retailer recorded a loss of $54.7 million, or 20 cents per share, compared with a year-ago profit of $68.8 million, or 25 cents per share.

Excluding $120 million in charges, earnings in the latest quarter were $27 million, or 10 cents per share. Revenue slid 18 percent to $3.23 billion from $3.96 billion.

Analysts polled by Thomson Reuters expected a loss of 10 cents per share on revenue of $3.26 billion. Analyst estimates typically exclude one-time items.

The charges included costs for lease accruals, severance and inventory write-down related to some facility closings. The actions were part of a strategic business review enacted during the quarter, but Office Dept warned that it will likely record additional charges of approximately $110 million over the course of the year for more items related to the review and legacy 2005 initiatives.

The company previously announced that it would close approximately 9 percent of its North American stores and cut 2,200 jobs. It also plans to open fewer locations next year.

Boca Raton, Fla.-based Office Depot has seen its sales and stock price slide as customers, especially small-business owners, cut spending because of the recession. But the retailer said the 16 percent decline in its North American retail unit’s first-quarter sales was also the result of less aggressive ad promotions for some categories.

The North American Business Solutions division’s sales fell 17 percent to $914 million on a pullback in customer spending, while the international division’s revenue slumped 24 percent to $875 million on the stronger dollar, higher costs and increased promotions.

Office Depot, which has about 42,000 workers, shut 107 stores and relocated one store during the quarter. Its total store count was 1,160 at the end of the quarter.