OfficeMax drops as after sales forecast reduced

OfficeMax Inc., the third-largest U.S. office-supply chain, fell as much as 15 percent in New York trading after forecasting a sales decline this quarter.

Sales will be "slightly lower" than a year earlier, when they reached $1.83 billion, the Naperville-based company said today in a statement. Analysts projected $1.86 billion, the average of 12 estimates compiled by Bloomberg.

Chief Financial Officer Bruce Besanko said he sees an "extremely tough" back-to-school season as reduced consumer spending contributed to two years of annual sales declines.

"Customers will be budget-conscious and retailers will be competitive and promotional, much like they were last year," Besanko said today in a telephone interview.

OfficeMax fell $2.10, or 14 percent, to $12.75 at 1:43 p.m. in New York Stock Exchange composite trading after touching $12.61, for the biggest intraday percentage drop since March 6, 2009.

Back-to-school shopping is off to a slow start, Charles Grom, an analyst with JPMorgan Chase & Co., said in a research note today. The second-largest sales period after the year-end holidays is crucial for retailers to recover from declines linked to consumer frugality.

Retail SlowdownThe Standard Poor's 500 Retailing Index today dipped as much as 2.3 percent. J.C. Penney Co. fell as much as 8 percent to $23.43 in New York Stock Exchange composite trading after Grom wrote that the company may miss July same-store sales estimates as traffic slows. Kohl's Corp. slid 4.5 percent and Macy's Inc. slipped 3.9 percent.Grom said he expects department stores to "likely just meet" market expectations for July same-store sales.Lack of jobs, with the unemployment rate hovering near a 26-year high, is damping U.S. consumer spending, according to government economic data. Sales at office-supply stores such as OfficeMax are tied to white-collar unemployment rates, Besanko said.Staples Inc. and Office Depot Inc. today fell as much as 4.8 percent and 5.9 percent respectively.Office Depot, which reported a narrower second-quarter loss last week, forecast a rise in contract-business revenue for the third quarter. The company said international retail sales will fall, while North American sales are expected to be little changed.OfficeMax has been closing stores and cutting costs as it fends off discount chains such as Wal-Mart Stores Inc. and Target Corp. OfficeMax plans to close about 15 stores in the U.S. this year, according to today's statement.