OfficeMax delivers a profit despite weak economy
NAPERVILLE, Ill. — OfficeMax's sales were down for the third quarter, but the company managed to deliver higher net income growth during a period of executive transitions and a tough economy.
OfficeMax announced that total sales were $1.8 billion in the third quarter of 2011, a decrease of 2.1% from the third quarter of 2010. For the third quarter of 2011, OfficeMax reported net income of $21.5 million, or 25 cents per diluted share, compared with $20 million, or 23 cents per diluted share, in the third quarter of 2010.
OfficeMax's retail segment reported a sales decrease of 4.8% to $891.5 million in the third quarter of 2011 compared with the third quarter of 2010, reflecting a same-store sales decrease of 4.3%. A decline in same-store sales in the U.S. was partially offset by stronger same-store sales in Mexico, the company said. Retail segment income was $28.5 million, or 3.2% of sales, in the third quarter of 2011 compared to $32.4 million, or 3.5% of sales, in the third quarter of 2010.
OfficeMax ended the third quarter of 2011 with a total of 983 retail stores, consisting of 900 stores in the United States and 83 stores stores in Mexico. During the third quarter of 2011, OfficeMax opened four retail stores in Mexico and closed four retail stores in the United States.
At OfficeMax's contract segment, sales increased 0.7% to $883.3 million from the prior year period. This increase reflected a U.S. contract operations sales decrease of 2.4% and an international contract operations sales increase of 7.7% in U.S. dollars (a decrease of 3% on a local currency basis).
"In the quarter, we maintained our profit margins in a tough economic climate and a soft back-to-school season," said Ravi Saligram, president and CEO of OfficeMax. "With our new senior management team largely in place, we remain focused on driving operational efficiencies as we position the company for long-term growth."
For the fourth quarter, OfficeMax said it is expecting an increase in total sales over 2010. For the full year 2011, OfficeMax said it expects that total company sales will be slightly lower than the prior year. Additionally, OfficeMax anticipates that for both the fourth quarter and full year 2011, the adjusted operating income margin rate will be in line with the 1.7% rate for the first nine months of 2011.
Bruce Besanko, EVP, CFO and chief administrative officer of OfficeMax, said, "Sales trends remain soft, however, the domestic total company sales percentage decline in October, on a year-over-year basis, was slightly less than the percentage decline we experienced in the third quarter. We remain diligent on cost reductions and expense control as we manage through challenging sales results."