Office Depot Inc (NYSE:ODP) posted its second quarter results on Tuesday where sales came in at $2.4 billion, a decline of 4 percent compared to the corresponding quarter of the last year in both U.S. dollars and constant currency basis. The sales were impacted by the Easter holiday but were counterbalanced by the company’s exit from International division, in late 2012, and in the first quarter of 2013.
Net loss similar as before
Office Depot Inc (NYSE:ODP) posted a net loss of $64 million, in both U.S. dollars and in constant currency, as against a net loss after preferred stock dividend of $64 million or $0.23 per share in the second quarter of 2012.
Earnings before interest and taxes came in at negative $8 million after excluding merger and certain shareholder-related expenses, restructuring activities, and store asset impairment charges compared to negative $22 million for the second quarter in the previous year.
Results in line with the company’s estimate
Neil Austrian, Chairman and Chief Executive Officer of Office Depot Inc (NYSE:ODP) said that the results of the quarter were in line with the expectations as the company was eyeing a multi-year strategic plan. There was pressure on sales due to sluggish technology category primarily laptops along with budget constraints on federal accounts of the company. Austrian said that the company has made significant cost cuts and progress on key initiatives.
On the proposed merger with OfficeMax, Chairman said “we remain actively engaged in integration planning related to the proposed merger with OfficeMax, which we continue to expect to close by the end of the year.”
Office Depot tax strategies working
For the quarter, gross profit margin for the company declined slightly when compared to the second quarter of the previous year. North America retail and North America Business solutions witnessed improvements. Operating expenses for Office Depot came down by $39 million in the second quarter of 2013 compared to the corresponding quarter of the previous year. Total operating expenses for the company declined $38 million compared to the previous year period after adjusting for merger and certain shareholder related expenses and impairment and restructuring charges.
Office Depot Inc (NYSE:ODP) earned a slight tax benefit in the second quarter, which shows the ongoing effect of valuation allowances, the timing of earnings within various tax jurisdictions along with alterations made in 2012 to recognize tax on the United States portion of company’s Mexico joint venture earnings.
For the second quarter, free cash flow was $34 million, decrease of $32 million in usage from the previous year’s quarter. Cash and cash equivalents at the end of the quarter amounted to $472 million on hand and $742 million under the Amended and Restated Credit Agreement, for a total of approximately $1.2 billion in available liquidity.