OfficeMax results meet Street expectations

/ Source: The Associated Press

OfficeMax Inc. on Wednesday posted a wider loss for the fourth quarter as the office products retailer recorded losses for discontinued operations and other items. But excluding those items, its earnings matched Wall Street expectations.

The latest results come a month after the Itasca-based company released details of a new operating plan that first-year Chairman and CEO Sam Duncan said should halt a sales and financial slide.

The company’s quarterly loss, after preferred dividends, totaled $43.1 million, or 62 cents per share, compared with a loss of $1.4 million, or 2 cents per share, a year earlier.

The results included losses from discontinued operations and other items, including $28.2 million in costs related to the closure of a wood-polymer building materials facility near Elma, Wash. Excluding items, OfficeMax reported a profit of $6 million, or 7 cents per share, up from a loss of $18.7 million, or 24 cents per share.

The results matched analysts’ consensus profit estimate of 7 cents per share excluding items, according to a poll by Thomson Financial. Sales decreased 9 percent to $2.46 billion from $2.69 billion.

“We are pleased with the improved performance in the fourth quarter of 2005, including strong expense control in contract and substantial margin expansion in retail,” Duncan said in a statement. “We continue to believe that OfficeMax is positioned to achieve the 2006 and intermediate-term goals that we outlined in our turnaround plan last month.”

For the full year, the company’s loss after preferred dividends was $78.1 million, or 99 cents per share, down from a profit of $161.1 million, or $1.77 per share. Excluding items, OfficeMax posted a profit of $23.5 million, or 24 cents per share.

Sales declined to $9.16 billion from $13.27 billion in the previous year.

“When you strip everything out, the performance is pretty much as expected,” said Anthony Chukumba, an analyst with Morningstar Inc. in Chicago.

OfficeMax, the No. 3 office products retailer behind Staples Inc. and Office Depot Inc., said it expects 2006 sales to be flat to slightly up from 2005, with retail same-store sales growth in the low single digits, and contract sales growth in the mid-single digits.

In January, the company disclosed a turnaround plan to boost poor recent performance marked by sluggish sales.

Besides closing 110 stores, the plan calls for establishing a single supply chain for its retail and business customers and consolidating its information technology. It also outlined merchandising strategies to expand its small business customers and print and document services.

“OfficeMax is in the first inning of the ball game here in terms of the restructuring plan, they’ve got a lot of tough work ahead of them,” Chukumba said.