Margin Magic at Office Depot - TheStreet

Margin Magic at Office Depot

Profits jump 27%, bolstered by cost cuts.
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Office Depot

(ODP) - Get Report

posted a 27% increase in fourth-quarter earnings, as improved margins helped to bolster results amid a modest rise in sales.

The Delray Beach, Fla.-based office supply company earned $135 million, or 48 cents a share, up from $106.3 million, or 34 cents a share, a year ago.

Excluding certain items, Office Depot earned $152 million, or 54 cents a share, in the most recent quarter. Analysts polled by Thomson Financial projected earnings of 52 cents a share on this basis.

Sales climbed 3% to $3.84 billion, slightly shy of Wall Street's target of $3.89 billion. North American same-store sales, or sales at stores open at least a year, increased 1%.

Operating profit margin, adjusted for one-time items, increased 40 basis points to 5.3% from 4.9% in the prior year.

"The strategic initiatives that we have implemented have led to sales growth in each of our divisions as well as lower operating expenses and expanded total company margins," Steve Odland, Office Depot's chairman and CEO, said in a statement. "This overall growth in sales and operating margin expansion was realized despite a highly promotional holiday retail environment and reduced technology sales due to the impending release of Microsoft Windows Vista at the end of January."

Shares recently were trading down $1.12, or 3%, to 36.39.