Friday, February 11, 2011

OfficeMax Inc. (NYSE: OMX): Q4 Earnings Preview 2010

OfficeMax Inc. (NYSE: OMX), the third-largest office-supply retailer in the U.S., is scheduled to release its fourth-quarter earnings before the opening bell on Wednesday, February 16, 2011. Analysts, on average, expect the company to report earnings of 10 cents per share on revenue of $1.79 billion. In the year ago quarter, the company post a loss of 3 cents per share on revenue of $1.81 billion.

OfficeMax Incorporated, together with its subsidiaries, distributes business-to-business and retail office products. At the end of third quarter, OfficeMax operated 998 retail stores, comprising 920 retail stores in the U.S. and 78 retail stores in Mexico.

In the preceding third-quarter, the Naperville, Illinois-based company's net income was $19.97 million or $0.23 per share, compared with a profit of $5.66 million or $0.07 per share in the same quarter a year ago. Revenue dropped 1.0% to $1.81 billion. Analysts, on average, expected the company to report earnings of $0.12 per share on revenue of$1.82 billion.

At its last earnings call in October, the company said that it expects total sales to be slightly lower than its prior year fourth quarter. “We don’t expect any meaningful improvement in U.S. employment trends” — a key benchmark for OfficeMax’s performance, said Chief Financial Officer Bruce Besanko. However, adjusted operating profit as a percentage of sales will be "significantly higher" because the year-earlier period included an unusually large amount of incentive compensation, the company said.

For the  full year 2010, OfficeMax expects total sales to be slightly lower than its prior year results. Adjusted operating margin for fiscal 2010 is expected to be in line with or marginally higher than the 120-basis point margin improvement achieved in the first-nine months of 2010.

OfficeMax has struggled to keep up with its two main competitors, Staples (NASDAQ: SPLS) and Office Depot (NYSE: ODP). In addition, mainline retailers Wal-Mart (NYSE: WMT), Target (NYSE: TGT) and Costco (NASDAQ: COST) have ramped up office-product offerings.

The demand for office products is closely tied to the health of the economy. The recovery in the economy still lacks luster. As a result, consumers and small businesses still remain cautious on their spending. 

To lower buying costs, the company has centralized its pricing team and given it greater tools to analyze contracts signed to ensure they make economic sense for the company. The retailer has increased profit margins through store closings and cost cutting. OfficeMax is also tailoring more products to women and offering more services and items tied to computers.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire