Office Depot continues to close stores

Wall Street was oddly enthused about Office Depot's (ODP) lackluster quarter. 

Shares of Office Depot surged 15.6% to $4.79 in trading Wednesday as the struggling retailer's full-year profits exceeded expectations.

For the quarter ending Dec. 31, Office Depot booked sales of $2.73 billion, down 2% year over year, but slightly ahead of the expected $2.72 billion. Full-year sales of $11 billion were down 6% from 2015. These falls came despite the benefit of an extra 53rd week of 2016, which added sales of $143 million.

But full-year earnings of 46 cents a share, down from adjusted net income from continuing operations of $251 million last year, surpassed expectations. According to FactSet, analysts expected the Boca Raton, Fla.-based company to report earnings of 46 cents a share on revenues of $12.06 billion.

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This is the first quarterly earnings report for new CEO Gerry Smith, who began the job on Monday after being appointed Jan. 30. Smith was previously Chief Operating Officer at Lenovo.

Office Depot also completed its sale, announced Sept. 23, of its European business, to European asset manager Aurelius Group. The terms of the deal were not disclosed, although the European business generated annual revenues of about €2 billion ($2.12 billion). The company said it's currently marketing its Australia, New Zealand, South Korea and mainland China businesses for sale.

Sales are still expected to fall in fiscal 2017, but at a slower rate, as store closures and "continued challenging market conditions" are offset by "improvements in customer retention, implementation of new customer wins and continued growth in the contract channel sales pipeline."

The company closed 123 retail stores in 2016 and expects to shutter 75 more in 2017.

The results come about two years after Office Depot attempted to sell itself to peer Staples (SPLS) . On May 16, 2016, Staples and Office Depot announced they would terminate the merger agreement after a federal judge blocked it due to antitrust concerns.