Office Depot reports 1st quarter loss

Office Depot takes loss in 1st quarter, as results fall short of Wall Street expectations

Associated Press

BOCA RATON, Fla. (AP) -- Office supply retailer Office Depot Inc. on Tuesday reported a net loss for the first quarter, hurt by lower sales and costs related to its pending merger with rival OfficeMax in a $1.2 billion deal.

Office Depot, which operates 1,628 stores worldwide, said its loss for the three months ended March 30, after paying preferred dividends, was $16.8 million, or 6 cents per share. That compares with net income of $41.3 million, or 14 cents per share, last year. Excluding one-time costs net income was break-even per share, below the 5 cents per share, analysts expected, according to FactSet.

Total sales fell 5 percent to $2.72 billion. Analysts expected $2.76 billion.

North American retail stores sales fell 6 percent to $1.1 billion, while sales in stores open at least a year fell 5 percent. That measure is a key gauge of a retailer's financial health, because it excludes stores that recently opened or closed. Results were hurt by customers buying more tablets than laptops, since tablets are cheaper and need fewer accessories. The average order and customer count also fell during the period.

Revenue from Office Depot's North American Business Solutions, which offers services to businesses, fell 1 percent to $816 million, hurt by lower contract sales.

International revenue fell 8 percent to $759 million.

The merger with OfficeMax is awaiting approval by the Federal Trade Commission. Earlier this month the companies said they received a second request for information from the FTC but said they still expect to get the deal approved late this year.

Office Depot's largest shareholder, Starboard Value LP, which holds a 14.8 percent stake, said earlier this month that it's disappointed with the company's failure to work with it to restructure the board. Starboard is working to install a slate of six nominees to Office Depot's board.

Office Depot shares fell 10 cents, or 2.7 percent, to $3.60 in premarket trading.

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