Office Depot 2Q Loss Narrows, Results Meet Expectations

Office Depot’s 2Q Loss

Jo Ling Kent reports Office Depot’s 2Q earnings report.

Office Depot (NYSE:ODP) reported a slightly lower second-quarter loss amid fewer charges, but weak sales continued to plague the office-supply retailer.

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North American retail same-store sales were down 4% during the period on weak demand for technology products, particularly mid-priced laptops.

The company’s loss was $54.2 million, compared to a year-ago loss of $57.4 million. On a per-share basis, earnings remained flat at 23 cents.

The latest period includes $30 million in pre-tax charges primarily related to Office Depot’s merger with OfficeMax (NYSE:OMX) and another $4 million in store asset impairment charges. Last year, the company recorded $33 million in pre-tax charges and a $16 million income tax credit.

Adjusted per-share earnings, which exclude those items, checked in at a loss of 10 cents versus a 14-cent loss a year earlier.

Revenue fell 3.5% to $2.42 billion.

The results met Wall Street expectations, as analysts projected a loss of 10 cents a share on revenue of $2.43 billion.

Gross margin narrowed to 22.6% from 22.8%.

On Monday, Office Depot and OfficeMax provided an update on their merger that was announced in February, although the companies have yet to name a CEO or reveal what they will call the combined retailer.

Office Depot’s largest shareholder, Starboard Value, has said it will launch a formal proxy contest to put four of its director nominees on the company’s board before the planned merger.

Shares closed Tuesday at $4.27, up 30.2% so far this year.