OfficeMax shares up as special dividend outweighs profit miss
(Reuters) - OfficeMax Inc OMX.N reported a lower-than-expected quarterly profit on Tuesday, hurt by continued weak sales of technology products and fewer shoppers visiting its stores, although it announced a special dividend of $1.50 per share.
Its shares rose 10 cents to $11.85 in premarket trading.
OfficeMax also said that sales continued to decline in April, yet were slightly better than in the first quarter. It expects sales to decline both this quarter and this year.
The news comes as the retailer awaits regulatory approval for its pending merger with rival Office Depot Inc (ODP.N). OfficeMax said on Tuesday that it is working on its responses to the Federal Trade Commission's request for additional information, and still expects to receive approval in order to close the deal late in 2013.
The duo trail Staples Inc (SPLS.O) in their share of the office supply market and are under much pressure from investors to boost profitability as well as shareholder value.
OfficeMax's first-quarter profit available to shareholders rose to $56.3 million, or 64 cents per share, from $4.9 million, or 6 cents per share, a year earlier.
Excluding items, the company earned 11 cents per share. Analysts on average were looking for a profit of 23 cents per share, according to Thomson Reuters I/B/E/S.
Sales fell about 6 percent to $1.77 billion, while analysts expected $1.83 billion.
WEAKNESS EXPECTED TO PERSIST
Office supply retailers, often seen as a barometer of economic health, have suffered as demand for their products fell after the recent U.S. recession. They also face strong competition from Amazon.com Inc (AMZN.O) and Wal-Mart Stores Inc (WMT.N) in selling everything from pens and notebooks to furniture.
OfficeMax expects sales to be down in both the current second quarter and the full year versus the same periods of 2012, including the projected favorable impact of foreign currency translation. Year-over-year declines in sales are expected to continue throughout the year, though at a less severe rate of decline than the first quarter of 2013, it said.
The company plans to close 15 to 20 of its U.S. stores this year, relocate and shrink the size of some others, and also open some smaller stores. In Mexico, it plans to open four stores and close one store.
(Reporting By Dhanya Skariachan and Aman Shah, additional reporting by Jessica Wohl in Chicago; Editing by Supriya Kurane and Chris Reese)
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