Office Depot Inc (NYSE:OPD) released the results from its first quarter, posting adjusted earnings of 7 cents per share—a 111% increase year over year—on $4.4 billion in revenue, compared to $2.7 billion last year. Analysts had been expecting earnings of 3 cents per share on $4.3 billion in revenue.
Office Depot posts reported losses
The retail chain reported $79 million in operating losses and net losses of $109 million attributable to common shareholders, which amounts to losses of 21 cents per share. Those losses include $151 million in special charges. Of those special charges, $96 million was related to the pending merger, while $41 million was in connection with IT-related impairment charges. Office Depot Inc (NYSE:OPD) attributes $9 million to store impairment charges and $5 million to international-related expenses and other operating expenses. The tax effect of the charges was $4 million.
Breaking down Office Depot’s results
Office Depot Inc (NYSE:OPD) reported sales of $1.8 billion in North American retail sales, compared to $1.1 billion in the same quarter a year ago. This reflects the inclusion of sales from OfficeMax in this year’s first quarter. Sales fell 5% on a combined pro forma basis, while same-store sales fell 3% year over year, mostly due to lower transaction costs, which were partially offset by higher average order values. The retail chain’s North American Business Solutions business reported $1.5 billion in sales, compared to $.8 billion last year, although on a combined pro forma basis, sales fell 2%.
International sales wre $1 billion during the quarter, compared to $.8 billion in the same quarter a year ago. Sales fell 1% in constant currency on a combined pro forma basis.
Office Depot raises guidance
The office supply chain also increased its guidance for adjusted operating income for the year to at least $160 million, compared to its previous guidance of at least $140 million. The company increased its estimate of annual run-rate merger synergies to over $675 million, which includes the optimization of the company’s retail stores in the U.S.
Office Depot Inc (NYSE:OPD) said it plans to close at least 400 U.S. stores, including 150 of them this year. Management expects annual run-rate synergies from the store closings to be at least $75 million by the end of 2016 and start being accredit to earnings in 2015. At the end of the first quarter, the retail chain had 1,900 retail stores in North America, including 1,082 Office Depot stores and 818 OfficeMax stores. The chain closed nine and opened two Office Depot stores and closed five OfficeMax stores during the quarter.