OfficeMax says cost controls boosted profit
Tighter cost controls pushed third-quarter net income higher at Naperville-based Officemax even with weak demand for electronics is cutting into sales for almost all office supply retailers.
The company also shed debt that had been guaranteed by the now defunct Lehman Brothers, leading to a $670.8 million gain.
OfficeMax earned $433 million, or $4.92 per share, for the period ended Sept. 29. That's compared with $21.5 million, or 25 cents per share, in the year ago period. Not including the investment gain and other one-time items, the company earned 27 cents per share in the period.
That edged out Wall Street estimates by a penny, though revenue fell 1.7 percent to $1.74 billion, just shy of analyst predictions, according to a poll by FactSet.
The company said gross profit edged higher by a tenth of a point to 22.8 percent as the cost of goods and lease costs declined almost 2.4 percent.
However, comparable stores sales slid as people and businesses cut back on spending for computers and other technology products.
Sales at stores open at least a year declined 2.1 percent when excluding the impact of currency exchange rates.
Citing a rough economic climate, the company said sales this year will not match last year. As recently as September, the company expected sales in line with 2011.
However, the company's ability to control costs signaled a healthy company to investors, who pushed share prices up 5 percent to $7.78.
OfficeMax Inc. has 960 retail locations in the U.S. and Mexico.
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