profits fell 40% in the fourth quarter on rising costs, the company announced Wednesday.
The office-supplies chain earned $45.80 million, or 15 cents a share, in the quarter, compared with $62.88 million, or 21 cents a share, in the year-ago period. In contrast to the profit decline, Office Depot's sales rose 14.4% to $3.25 billion.
Profits declined partly because of expenses related to store closings, the company said. Without those costs, the company would have earned 22 cents a share.
That pro forma profit matched Wall Street's expectations, but the company's revenue fell a bit short of consensus. Analysts surveyed by
MultexNet service were expecting the company to earn 22 cents a share before charges on $3.33 billion in sales.
For the full year of 2003, Office Depot earned $276.30 million, or 88 cents a share, on $12.36 billion in sales. In fiscal 2002, the company posted a profit of $310.71 million, or 98 cents a share, on sales of $11.36 billion.
In the first quarter, the office-supplies retailer expects its earnings to grow 8% to 10% above the same period last year. In the first quarter of last year, Office Depot earned 25 cents a share, or 33 cents excluding charges, implying that the company expects to earn pro forma profits of about 36 cents a share in the current quarter.
Excluding charges, Office Depot expects to post 2004 earnings of $1.20 to $1.25 -- 15% to 20% above its 2003 pro forma profit of $1.04 a share. The company expects its full-year sales to exceed $13.6 billion, or greater than 10% growth.
Although analysts were expecting a bit more in first-quarter profits -- 39 cents a share excluding charges, according to MultexNet -- Office Depot's full-year guidance is above the consensus forecast of $1.19 in pro forma profits.
In the fourth quarter, Office Depot opened 22 stores, closed one outlet and relocated five more. For the full year last year, the company closed three stores and relocated another 12 while opening 36 new ones. Since 1999, the company has closed or relocated 125 stores, or about 15% of the stores it had open at that time.
Those store closings and other restructuring efforts affected the company's fourth-quarter results. In the quarter, Office Depot took a $32.4 million, or 7 cents a share, charge related to lease terminations and the writedown of some of its Internet investments.