Cost Controls Lift OfficeMax 4Q Profit, But Revenue Disappoints

Despite booking a profit over a year ago loss, shares of OfficeMax (NYSE:OMX) tumbled nearly 6% after the retailer revealed a worse-than-expected decline in fourth-quarter revenue.

The Naperville, Ill.-based company posted net income of $12.1 million, or 14 cents a share, compared with a loss of $3.2 million, or 4 cents a share, in the same quarter last year.

Excluding one-time items, the company earned 16 cents a share, ahead of average analyst estimates polled by Thomson Reuters of 10 cents.

OfficeMax CEO Ravi Saligram said he was pleased with the results, noting the company achieved more than doubled adjusted operating income through improved gross margins and expense controls.

Revenue for the office products retailer was $1.76 billion, down 2.4% from $1.8 billion a year ago, narrowly missing the Street’s view of $1.79 billion.

Sales took a hit from lower U.S. and international contract operations sales, down 5.1% and 0.4%, respectively. Despite the lower revenue, the operations profit margin increased 22.8% year-over-year, due primarily to OfficeMax’s profitability initiatives.

Retail sales fell 1.1% to $852.8 million, reflecting lower same-store sales in the U.S., partially offset by stronger revenues in Mexico. The segment’s profit margin improved to 27.8% on reduced inventory shrinkage, occupancy and freight expense.