* Q2 EPS ex-items 12 cents vs Street view of break-even
* Sales down 0.3 pct at $1.65 billion; miss expectations
* Sees lower Q3 sales vs year-ago
* Shares down 9 pct, weigh on Staples, Office Depot
(Adds CFO, analyst comments, full-year outlook, shares)
By Dhanya Skariachan
NEW YORK, Aug 3 OfficeMax Inc OMX.N missed
quarterly sales expectations and forecast lower sales in the
current back-to-school quarter, citing a weak U.S. economy, and
its shares fell 9 percent.
The news came a week after larger rival Office Depot
ODP.N missed quarterly sales estimates and forecast a flat
operating profit in the current quarter. [ID:nN26197448] Shares
of Office Depot fell 3.9 percent, while industry leader Staples
(SPLS.O) slipped 2.7 percent.
Office supply sellers are viewed as a barometer of economic
health since demand for their products is closely tied to
white-collar employment rates. They have struggled in the weak
economy as consumers and small businesses cut spending.
"The second half (of 2010) is not going to be the tailwind
that we thought it would be earlier in the year," Chief
Financial Officer Bruce Besanko told Reuters in an interview.
A fresh batch of data on Tuesday showed U.S. consumer
spending and incomes unexpectedly flat in June while personal
savings were the highest in a year, implying an anemic economic
recovery for the remainder of 2010. [ID:nN03194366]
U.S. Commerce Department data released last Friday showed
economic growth slowed in the second quarter as companies
invested in equipment from abroad and consumers spent less.
SALES FALL SHORT
OfficeMax said second-quarter net income was $11.8 million,
or 14 cents a share, compared with a net loss of $17.7 million,
or 23 cents a share, a year ago.
Excluding one-time items, it earned 12 cents a share.
Analysts on average were expecting the company to break even,
according to Thomson Reuters I/B/E/S.
Sales slid 0.3 percent to $1.65 billion, while analysts on
average expected $1.67 billion.
Contract segment sales, which include sales to business and
government customers, slipped 0.1 percent, mainly on weakness
in the United States. Retail same-store sales fell 0.3
Besanko said many of OfficeMax business customers have
adopted a "substantially more disciplined" approach to
Credit Suisse's Gary Balter cut his 2010 earnings estimate
on OfficeMax to 65 cents a share from 83 cents a share to
reflect the lack of sales growth. He kept next year's estimate
intact on expectations a recovery will come at some point.
Besanko also said he expected a "very, very tough"
back-to-school season in the coming weeks, with shoppers being
even more selective and retailers looking more to promotions.
For the third quarter, OfficeMax said it expects sales to
be slightly lower than a year earlier, including a gain from
foreign currency translation. It also expects lower adjusted
operating income margin.
For the full year, OfficeMax expects sales to be flat to
slightly lower than 2009, including foreign currency benefits.
It sees a higher adjusted operating income margin rate than
2009, but significantly less than the 140 basis point
year-over-year margin improvement in the first half of 2010.
(Reporting by Dhanya Skariachan, editing by Maureen Bavdek,
John Wallace, Dave Zimmerman)