* Fourth-qtr adjusted loss $0.03/share vs est earnings
* Revenue $3.49 bln vs est $4.03 bln
* Shares fall as much as 14 pct
(Adds executive comments from conference call, details; updates
By Maria Ajit Thomas
Feb 25 Office Depot Inc reported a
surprise quarterly loss and said it expected sales to continue
to fall in 2014, sending its shares down 14 percent in early
Office supply retailers such as Office Depot have been
struggling as more shoppers buy paper and gadgets from online
retailers such as Amazon.com Inc as well as drugstores
and mass merchants such as Wal-Mart Stores Inc.
Shares of market leader Staples Inc fell more than
"Revenue declined in 2013 versus the prior year and we
expect that trend to continue in 2014," Office Depot Chief
Executive Roland Smith said on a post-earnings call on Tuesday.
Office Depot, which bought OfficeMax Inc in November to help
it better compete with Staples, said it expected 2014 sales to
be less than the $16.83 billion the companies would have
generated had they operated as a single entity in all of 2013.
Analysts on average were expecting sales of $16.40 billion
for the year, according to Thomson Reuters I/B/E/S.
Office Depot reported a 4 percent fall in North America
retail same-store sales in the fourth quarter ended Dec. 28.
Sales of office supplies and furniture declined by
low-single-digit percentages, while technology sales dropped by
a mid-single-digit percentage, Chief Financial Officer Stephen
Hare said on the call.
"A sharp decline in tablet revenues was a significant driver
of the technology category decline," Hare said.
Office Depot said its net loss widened to $144 million, or
34 cents per share, in the quarter from $17 million, or 6 cents
per share, a year earlier.
The results include acquisition-related charges of more than
On an adjusted basis, Office Depot reported a loss of 3
cents per share. Analysts expected a profit of 3 cents per
Sales rose 33 percent to $3.49 billion but fell short of the
average analyst estimate of $4.03 billion. Sales included $939
million from OfficeMax. Excluding OfficeMax's contribution,
sales fell 2.9 percent in the quarter.
Office Depot's $976 million acquisition of OfficeMax was
announced last February and closed on Nov. 5.
About 40 percent of Office Depot's sales came from its North
American retail business. The North America business solutions
division, which caters to corporate customers and institutions,
contributed about 34 percent of revenue.
Office Depot also has an international division.
A drop in store traffic resulted in fewer transactions in
the North America retail business, the company said. The average
order value also fell.
The company, which appointed turnaround expert Roland Smith
as chief executive in November, said it expects $400 million of
integration expenses between 2014 and 2016. About $300 million
would be incurred in 2014.
The company said it expected synergies of more than $600
million from the merger, up from its earlier forecast of $400
Office Depot shares were down 12.5 percent at $4.68 after 30
minutes of trade on the New York Stock Exchange. The stock rose
27 percent in the year to Monday's close.
Staples shares, which were down 5 percent at 12.71, rose
less than 1 percent in the same period.
As of Monday's close, Office Depot shares were trading at
20.70 times forward earnings, while Staples shares were trading
at 10.41 times.
(Reporting by Maria Ajit Thomas in Bangalore; Editing by