Office Depot struggles in Q1
BOCA RATON, Fla. -- Office Depot's position as a leader in the office retail space may be in jeopardy as the company reported a first-quarter loss and sales declines across all of its business platforms.
Office Depot announced that total company sales for the first quarter of 2011 were $3 billion, a decrease of 3% compared with the first quarter of 2010. Excluding sales related to asset dispositions and deconsolidation in the fourth quarter of 2010 and an acquisition in the first quarter of 2011, total company sales decreased 2% versus prior year.
The company reported a net loss, after preferred stock dividends, of $15 million or 5 cents per share in the first quarter of 2011, compared with net earnings of $20 million or 7 cents per share in the first quarter of 2010.
“Our first quarter operating results were lower than the prior year due to the impact of lower sales,” said Neil Austrian, Office Depot’s interim chairman and CEO. “However, we are encouraged by the progress we’re making throughout the enterprise to improve the future operating performance of the company.”
Office Depot reported that first-quarter sales at its North American retail stores were $1.3 billion, a decrease of 2% compared with the same period last year. Same-store sales in the 1,115 stores in the U.S. and Canada that have been open for more than one year decreased 1% in the first quarter compared with the prior year period.
During the first quarter, Office Depot closed seven stores, opened one and relocated two stores, bringing the total store count for North America to 1,141 as of March 26.
First quarter 2011 sales in the North American business solutions division were $806 million, a decrease of 3% compared to the same period last year, the company reported. The division’s first quarter average order value was flat versus the same period last year. Although lower customer transaction counts were the main driver of the sales decline during the quarter, the rate of decline has improved sequentially each quarter since the second quarter of 2009. Direct channel sales in the first quarter were flat versus one year ago while contract channel sales declined about 3% in the first quarter versus the prior year, attributable to the transition from certain expired to new purchasing consortiums.
Office Depot reported that first-quarter 2011 sales at its international division were $846 million, a decrease of 5% in U.S. dollars and 6% in constant currency, compared to the prior year. Excluding asset dispositions and deconsolidation in the fourth quarter of 2010, and an acquisition in the first quarter of 2011, constant currency sales were flat in the first quarter of 2011 versus the prior year.