Office Depot Profit More Than Doubles in 4th Quarter

By Jaclyn Giovis, South Florida Sun-Sentinel

Feb. 16–Thanks in part to an unusually strong holiday season, Office Depot, Inc., the nation’s second largest office supply retailer, saw fourth quarter profits more than double compared with the same period last year.

The Delray Beach-based office supply retailer announced Wednesday that profits for the quarter jumped to $106 million, compared with $52 million in the fourth quarter of 2004. Diluted earnings per share were 34 cents per share versus 17 cents per share in last year’s fourth quarter. Results were impacted by one-time charges, the company said.

Office Depot’s North American retail division reported its eighth consecutive quarter of sales increases for stores open at least one year, said Office Depot Chairman and CEO Steve Odland, who next month marks his first year with the company. Same-store sales grew 5 percent for the quarter and 3 percent for the entire year.

Results, he said, were driven by success during the heavily promotional holiday shopping season.

“Tech was on fire during the holiday season,” said Odland during the company’s conference call Wednesday. He urged analysts, however, not to expect similar same-store sales performance going forward because technology is not typically a strong product category.

Fourth-quarter gross profit margins were flat from last year, partly because of significant declines in the company’s international business, the company said. International sales for the quarter slid 8 percent.

“Our international division results are still not where we would like them to be,” Odland said. Office Depot is optimistic about long-term potential abroad, but remains “cautious about immediate marked improvements” because of tough economic conditions abroad, especially in Europe, and increased competition, he said. “It may take us some time to stabilize this division.”

For 2005, total sales were $14.3 billion and net profit was $274 million. Year-end results were impacted by one-time tax charges.

This year, the retailer has plans to open more than 100 stores and remodel at least 60 existing store locations. As of Dec. 31, 2005, the company had 1,047 stores in North America. The company also will continue to grow its private brand products offerings in 2006, Odland said.

For the past year, Office Depot’s stock has steadily climbed and the company has far outperformed its competitors. On Wednesday, the company’s stock price hit a 52-week-high, closing at $33.94 per share, up 57 cents or 1.71 percent compared with the previous day.

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