Office Depot Inc. (ODP) and rival OfficeMax Inc. (OMX) continued
to post declining sales during their last quarter as independent
concerns, underscoring the challenges the combined company will
face as they contend with stiffer online competition.
The two firms, which won backing from the Federal Trade
Commission to complete their $1.2 billion merger, unveiled their
latest results on Tuesday, the same day they completed their deal
to create a retailer with about $18 billion in annual sales.
The new company will use the name Office Depot Inc., and will
trade on the New York Stock Exchange under the symbol ODP. A chief
executive hasn't yet been named, so in the interim, Office Depot
Chairman and Chief Executive Neil Austrian and OfficeMax President
and CEO Ravi Saligram will serve together as co-CEOs. The company
will continue to operate in both Florida and Illinois until a new
CEO is picked and headquarters location is finalized.
But the latest results highlight the challenges the new company
will face, as office-supplies sector has faced heightened
competition from online sellers and a shift in the use of office
technology that has put pressure on sales. Results for both firms
mostly missed Wall Street's expectations.
Separately, Office Depot said five directors informed the
company they would not seek to be appointed to the new board, while
OfficeMax said two directors at its board won't seek appointments.
Those departures are effective Tuesday.
Office Depot, the larger of the two firms, reported a
third-quarter profit of $160.9 million, compared with a prior-year
loss of $61.9 billion. On a per-share basis, which includes
preferred stock dividends, profit in the latest period totaled 41
cents a share, compared with a loss of 25 cents last year.
Excluding a gain tied to the sale of the company's investment in
a Mexican joint venture, as well as asset impairment charges and
other items, adjusted profit fell to two cents a share from six
cents. Revenue slid 2.7% to $2.62 billion.
Analysts surveyed by Thomson Reuters expected a profit of six
cents on revenue of $2.6 billion.
Office Depot reported sales fell 4% at the company's North
American retail stores, and dropped 2% for that region's business
solutions unit. International sales slid 2%.
OfficeMax, meanwhile, posted a profit of $30.9 million, down
sharply from $433.5 million last year. On a per-share basis, which
includes preferred dividends, profit slid to 34 cents from $4.92 a
share.
Excluding investment-related gains and a $670.8 million gain
last year tied to the extinguishment of debt, as well as other
items, adjusted profit slid to 15 cents from 25 cents a share last
year. Revenue dropped 4.6% to $1.66 billion.
Wall Street analysts had expected 22 cents and $1.68 billion,
respectively.
-Drew FitzGerald contributed to this article
Write to John Kell at john.kell@wsj.com
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