OfficeMax Rings Up a Profit

The retailer swings to a profit in the third quarter, beating the Street EPS estimate but falls just shy on revenue.
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OfficeMax

(OMX)

reported Thursday that it swung to a profit in the third quarter, beating the Street consensus estimate by a penny a share.

The office-products vendor posted net income of $31.4 million, or 41 cents a share, compared with a net loss of $3.9 million, or 7 cents a share, in the third quarter of 2005. Excluding one-time charges, however, third-quarter net income was $43.2 million, or 56 cents a share, compared with $9.9 million, or 12 cents a share, in the prior-year period.

Adjusted earnings beat the average analyst estimate from Thomson First Call, which projected 55 cents a share.OfficeMax posted third-quarter sales of $2.24 billion, down from the $2.29 billion it posted last year, and shy of the analyst consensus estimate of $2.22 billion.

"We are pleased with our third-quarter results," said CEO Sam Duncan. "In both our Contract and Retail segments, we continued to execute our turnaround plan objectives to deliver substantial operating-income margin growth."

Retail-segment operating income in the third quarter benefited from targeted cost-reduction programs, including reduced store labor and advertising expense, resulting in an increase to $54.8 million, from $16.1 million in the third quarter of 2005.

OfficeMax retail-segment same-store sales growth during the third quarter of 2006 was flat.

Looking forward, the Naperville, Ill., company expects full-year operating income margin to be in the middle of its previously announced range of 3% to 3.5%, excluding special items. Special items, including charges for retail store closures and consolidation of its headquarters, are expected to reduce operating income margin by some 1.5% for the full year.

Shares were up $1, or 2.2%, at $47.12 in midday trading Thursday.