BOCA RATON, Fla. (AP) â¿¿ Office supplier Office Depot Inc. said Tuesday that cutting its costs and selling more items at full price helped it return to fourth-quarter profitability, and its adjusted earnings beat analysts' average estimate.
The results sent shares up 50 cents, or 16.6 percent, to $3.52 by midday.
Office supply retailers are facing cautious consumers and small businesses alike, but Office Depot is making inroads in improving its business.
Its net income for the three months that ended Dec. 31 totaled $12.3 million, or 4 cents per share. That compares with a loss of $108.6 million, or 39 cents per share, in the 2010 fourth quarter.Excluding restructuring charges and tax benefits, it earned 3 cents per share. Analysts were expecting the company to break even on that bases, according to FactSet. Revenue edged up less than 1 percent to $2.97 billion from $2.96 billion last year. Analysts expected revenue of $3 billion. Office Depot's revenue in North America was flat at $1.2 billion. Its revenue from stores open at least a year, a key measure of a retailer's health, fell 5 percent, but it said the decline resulted from offering fewer specials and selling more items at full price, which improved its profitability. Revenue from sales to small business rose 4 percent to $832 million, while international sales fell 3 percent to $901 million. S&P Capital Markets analyst Michael Souers reiterated his "Hold" rating on Office Depot stock. "While we expect sales to remain weak in the near term, we think Office Depot will aggressively manage its cost structure to lift profitability," he said in a client note. For the full year 2011, net income totaled $60 million, or 22 cents per share, compared with a 2010 loss of $81.7 million, or 30 cents per share. Revenue for the year fell 1 percent to $11.49 billion from $11.63 billion a year ago.