Office Depot 3Q adjusted results beat Street
BOCA RATON, Fla. (AP) — Office Depot reported a loss for the third-quarter as it pursued an expansive review of how it does business, but adjusted results beat expectations and shares jumped 17 percent.
The company took an $8 million charges related to restructuring, and approximately $88 million related to non-cash asset impairment charges. About $73 million occurred in North America, and $15 million was devoted to the international division.
Office Depot and others in the sector have cut costs aggressively to offset lower spending by consumers and businesses in the shaky economy, and it is revamping operations to turn its business around. Office Depot's rival OfficeMax also reported on Wednesday that cost controls helped boost its third-quarter net income.
Office Depot's loss for the three months ended Sept. 29, totaled $61.9 million, or 25 cents per share. That compares with net income of $91.7 million, or 28 cents per share, last year. Excluding restructuring and impairment charges, net income was 6 cents per share.
That was much better than the penny per share that Wall Street was looking for, according to FactSet.
Analysts have been lowering expectations throughout the year, but Office Depot topped the average 5 cent per-share prediction put out by analysts at the beginning of the year.
Revenue, however, continues to be a concern.
Revenue fell 5 percent to $2.69 billion from $2.84 billion a year ago, worse than $2.73 billion analyst had predicted. Expectations for revenue have been declining for most the year, too.
Revenue from the company's North American retail division fell 5 percent to $1.2 billion. Revenue in stores open for at least one year fell 4 percent in the third quarter. Sales of computers were down, while sales of tablets and e-readers increased.
Copy and print sales rose but office furniture sales fell.
In its North American business solutions division, which serves businesses, revenue rose 1 percent, to $827 million. Education-related customers increased but federal and state government accounts were weaker.
International revenue fell 12 percent to $692 million, hurt by the stronger dollar and a decrease in European contract sales.
Shares of Office Depot Inc. rose 44 cents, or 17.5 percent, to $2.95 in afternoon trading. The stock is up about 37 percent since the beginning of the year.