Shares of OfficeMax (OMX) climbed more than 11% on Tuesday after the leading office supply retailer posted stronger-than-expected third-quarter earnings.
The gains were led by tighter cost management that helped offset a decline in sales.
The Naperville, Ill.-based seller of copiers, printers, desks and pens reported adjusted operating income of $23.6 million, or 27 cents, compared with $21.5 million, or 25 cents, a year ago.
Analysts in a Thomson Reuters poll were looking for a profit of 25 cents.
Including a one-time non-cash gain of $670.8 million related to the extinguishment of debt guaranteed by Lehman Brothers, Office Max earned $433 million, or $4.92 a share.
Revenue for the three months ended Sept. 29 fell 1.7% to $1.74 billion from $1.77 billion, narrowly missing the Street’s view of $1.78 billion.
Same-store sales, a key growth metric for retailers that measures sales at stores open longer than a year, slipped by 2.1%.
Improvements in its U.S. and international contract business were offset by softer demand for technology products, particularly personal computers, which pushed retail sales down 3.1% year-over-year.
“Our team's focus on strengthening the core business resulted in stronger operating margins for the quarter,” OfficeMax CEO Ravi Saligram said in a statement.
In the current quarter, OfficeMax said total sales will either be in line with or slightly below sales in the fourth quarter of 2011. It also is anticipating lower sales for the full year, which it is partially blaming on an extra week in the year-earlier period that generated an additional $86 million in sales.
Meanwhile, smaller rival Office Depot (ODP) said same-store sales fell 4% in the third quarter. The No. 2 office supply chain posted third-quarter net loss of $70 million, or 25 cents a share, compared with year-earlier earnings of $92 million, or 28 cents, but said EPS excluding one-time items was 6 cents and topped the consensus.
OfficeMax was served with a series of positive notes from analysts following its quarterly report, including by Oppenheimer, which raised its price target on the retailer by a dollar to $7 and BB&T Capital Markets, whose analyst Anthony Chukumba said he was encouraged by OfficeMax’s performance amid a weak global macroeconomic backdrop.