OfficeMax off to a slow start in 2011
NAPERVILLE, Ill. -- OfficeMax started fiscal 2011 off with sales declines and lower earnings. The company announced that total sales were $1.8 billion in the first quarter of 2011, a decrease of 2.8% from the first quarter of 2010. For the first quarter of 2011, OfficeMax reported net income available to OfficeMax common shareholders of $11.4 million, or 13 cents per diluted share. For the first quarter of 2010, OfficeMax reported net income of $24.8 million, or 29 cents per diluted share.
The company reported that retail segment sales decreased 1.8% to $937.3 million in the first quarter of 2011 compared with the first quarter of 2010, reflecting a same-store sales decrease of 1.2%. A modest decline in same-store sales in the United States was partially offset by stronger same-store sales in Mexico.
Contract segment sales decreased 3.9% compared with the prior year period to $925.7 million in the first quarter of 2011 (a decrease of 6.2% on a local currency basis). This decline reflected a U.S. Contract operations sales decrease of 5.6% and an international Contract operations sales decrease of 0.5% in U.S. dollars (a sales decrease of 7.4% on a local currency basis).
Ravi Saligram, president and CEO of OfficeMax, said, "First quarter sales were lower than the prior-year quarter and adjusted operating income margin rate was significantly lower than the first quarter of 2010. We are disappointed with our start to the year. In recognition of current trends and upon a deeper evaluation of our existing capabilities, we have put in place strong actions, including significant cost mitigation programs to bring our expenses in-line with last year. We believe these actions should help drive improved performance."
OfficeMax ended the first quarter of 2011 with a total of 991 retail stores, consisting of 912 retail stores in the United States and 79 retail stores in Mexico. During the first quarter of 2011, OfficeMax closed six retail stores in the United States.
Bruce Besanko, EVP, CFO and chief administrative officer of OfficeMax, said, "While adverse weather impacted our results, sales declines in the first quarter were primarily the result of significantly lower spending by our existing Contract customers as well as weaker Retail store traffic. We are diligently working to address areas of concern and strengthen our core business, and therefore, are reaffirming our previous 2011 sales and operating income margin guidance."
Based on these trends, OfficeMax said it anticipates that for the second quarter, total company sales will be approximately flat to the prior year's second quarter, including the favorable impact of foreign currency translation, and the adjusted operating income margin rate will be lower than the prior year. For the full year 2011, OfficeMax said it anticipates that total company sales will be flat, to slightly higher than, the prior year, including the favorable impact of foreign currency translation and the benefit of a 53rd week, and the adjusted operating income margin rate will be in line with, to slightly lower than, the prior year.
In addition, OfficeMax said it expects a reduction in retail store count for the full year 2011, with approximately 15 store closures in the U.S., and approximately eight to 10 store openings in Mexico.