Office Depot Inc., awaiting regulatory approval for its deal to
be bought by rival Staples Inc., swung to a profit in the first
quarter of the year, though sales fell a worse-than-expected
11%.
The company also said it expects to close 135 stores this year
and at least 100 stores in 2016.
The office-supply retailer reiterated its view that its 2015
sales will likely be lower because of its plan to close stores,
ongoing market challenges and foreign exchange impacts.
Meanwhile, its deal with Staples is still expected to close by
the end of the year.
The deal would leave the U.S. with a single office-supply
superstore to compete with the discounters and Web retailers that
have invaded its turf. The acquisition, which comes after Office
Depot merged with OfficeMax, will have to win approval from
regulators who shot down a merger of the same companies 18 years
ago.
In March, the companies said the Federal Trade Commission
requested additional information about the deal.
In the latest quarter, Office Depot posted a profit of $45
million, or 8 cents a share, compared with a year-earlier loss of
$109 million, or 21 cents a share.
Excluding items, the company reported a profit of 13 cents a
share, compared with a year-earlier profit of 7 cents a share.
Sales fell to $3.88 billion from $4.35 billion.
Analysts polled by Thomson Reuters had projected earnings of 13
cents a share on revenue of $4.11 billion.
North American retail, Office Depot's biggest segment by sales,
posted a 8.7% decline in sales to $1.64 billion, hurt by store
closures. Same-store sales were down 2% on lower average order
value.
Sales in the North American business solutions unit fell 4.1% to
$1.48 billion in the period.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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