Soft back-to-school sales hurt OfficeMax 3Q results
Naperville-based OfficeMax Inc. reported sales for the third quarter of 2011 were down 2.1 percent due to a continued sluggish economy and lower than expected back-to-school sales.
Total sales for the quarter were $1.77 billion, a decrease of 2.1% from $1.81 billion during the same period last year.
“In the quarter, we maintained our profit margins in a tough economic climate and a soft back-to-school season,” said Ravi Saligram, president and CEO of OfficeMax. “With our new senior management team largely in place, we remain focused on driving operational efficiencies as we position the company for long-term growth.”
Retail segment gross profit margin increased to 29 percent in the third quarter from 28.9 percent last year primarily due to increased product margins, partially offset by deleveraging of occupancy costs. Retail segment operating, selling and general and administrative expenses as a percentage of sales were 25.8 percent in the third quarter of 2011 compared with 25.4 percent in the third quarter of 2010 primarily due to deleveraging of store payroll and favorable sales/use tax settlements in third quarter of 2010, which were partially offset by lower incentive compensation expense. Retail segment income was $28.5 million, or 3.2 percent of sales, in the third quarter of 2011 compared to $32.4 million, or 3.5 percent of sales, last year.
“Sales trends remain soft, however, the domestic total company sales percentage decline in October, on a year-over-year basis, was slightly less than the percentage decline we experienced in the third quarter. We remain diligent on cost reductions and expense control as we manage through challenging sales results,” said Bruce Besanko, executive vice president, chief financial officer and chief administrative officer,
OfficeMax ended the third quarter of 2011 with a total of 983 retail stores, consisting of 900 Retail stores in the U.S. and 83 Retail stores in Mexico. During the third quarter of 2011, OfficeMax opened four retail stores in Mexico and closed four stores in the U.S.
Based on the current environment, OfficeMax anticipates that total company sales for the fourth quarter will be slightly higher than the fourth quarter of 2010, including the favorable impact of foreign currency translation and the benefit of the additional fiscal week in the fourth quarter. For the full year 2011, OfficeMax anticipates that total company sales will be slightly lower than the prior year, including the favorable impact of foreign currency translation and the benefit of a 53rd week. Additionally, OfficeMax anticipates that for both the fourth quarter and full year 2011, the adjusted operating income margin rate will be in line with the 1.7% rate for the first nine months of 2011.