Office Depot narrows second-quarter loss on cost cutting, but revenue still declines

Office Depot narrows 2Q loss, but revenue falls

BOCA RATON, Fla. — Office Depot Inc. narrowed its loss in the second quarter on tax benefits and cost cutting but the office supply retailer’s sales continued to fall.

Results sent shares down 33 cents, or 7 percent, to close at $4.40. The stock has traded between $3.86 and $9.19 during the past year.

Office Depot has been undergoing a restructuring as it deals with weak sales in the U.S., brought on by the slumping economy. The office-products sector as a whole has been pressured as both shoppers and small businesses cut back on non-necessities.

The company said Tuesday it posted a loss after paying preferred stock dividends of $18.7 million, or 7 cents per share, in the three-month period ended June 26, which included significant tax benefits. In the same period last year, the company lost $82.6 million, or 31 cents per share.

Revenue fell 4 percent to $2.7 billion from $2.82 billion. North American retail revenue fell 2 percent to $1.1 billion. The average value per order rose, but the number of transactions was still down from last year. Sales at stores open at least a year fell 1 percent in the quarter. That’s considered a key measure of retailer health because it measures growth at existing stores rather than newly opened ones.

Sales in the company’s unit that caters to businesses in North America tumbled 6 percent to $820 million in the quarter. International sales fell 6 percent to $778 million partially due to the stronger dollar.

Analysts had predicted a steeper loss of 17 cents per share on revenue of $2.74 billion, according to Thomson Reuters.

William Blair & Co. analyst Jack Murphy said in a note to investors that while revenue continues to fall within each of the company’s divisions, the rate of decline has slowed compared with prior quarters within the company’s retail and delivery segments. Still, he said fundamental performance remains relatively weak.

Murphy maintained a “Market Perform” rating on the stock.