Office Depot Q2 Adjusted Loss Narrows, Sales Slide

(RTTNews) - Office products retailer Office Depot, Inc. (ODP) Tuesday reported a loss for the second quarter that was nearly unchanged from last year, as sales dropped amid sluggish demand for laptops. Adjusted loss narrowed from the prior year.

Neil Austrian, CEO, said, "Our second quarter results came in largely as expected, as we remain focused on executing against our multi-year strategic plan...we were pleased with our cost reduction actions and progress on our key initiatives."

Net loss available to common stockholders was $64.38 million or $0.23 per share compared to $64.28 million or $0.23 per share last year.

The latest results included $30 million of pre-tax charges, comprised primarily of merger and certain shareholder-related expenses, restructuring activities, and $4 million related to non-cash store asset impairment charges in the North American Retail Division.

The prior year results included $33 million of pre-tax charges, including $24 million in non-cash store asset impairment charges and $9 million in restructuring costs. Additionally, there was a $16 million income tax credit in the quarter.

Adjusted loss was $0.10 per share while it totaled $0.14 per share last year. On average, 17 analysts polled by Thomson Reuters expected a loss of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Sales slipped to $2.42 billion from $2.51 billion. Analysts expected revenues of $2.43 billion.

The shift in the timing of the Easter holiday had a small positive impact on sales, which was offset by country exits in the International Division in late 2012 and in first quarter 2013.

According to the company, sales continue to be impacted by a sluggish technology category, particularly laptops, as well as ongoing budgetary pressure on federal accounts.

Sales dropped 5 percent in the North American Retail Division to $939 million. Comparable store sales in the 1,077 stores decreased 4 percent, largely driven by decreased sales of technology and peripherals, particularly mid-priced laptops.

Sales slid 2 percent in the North American Business Solutions Division to $781 million. Contract channel sales dropped low-single digits compared to last year.

Sales slipped 3 percent in the International Division to $698 million. Within the segment, European Contract sales decreased, as growth in Switzerland and Austria was more than offset by sales weakness in other countries.

The company, which has agreed to merge with OfficeMax Inc. (OMX), said the deal is expected to close by the end of the year.

The stock closed at $4.27 on Monday.