Office Depot Inc. (ODP) reported discouraging results for fourth quarter and full year 2009.
During the quarter, total revenue declined 6% year over year to $3.1 billion. Full year 2009 revenues were $12.1 billion, down 16% from 2008, principally driven by adverse economic conditions throughout the company’s sales territories.
However, gross profit improved 3.5% during the quarter due to a 9.6% decrease in the cost of goods sold. During full year 2009, gross profits fell 15.3% despite a 16.6% drop in the cost of goods sold.
During the quarter, the company delivered a loss of 28 cents a share, a vast improvement over the loss of $5.64 per share in the prior-year quarter. Results beat the Zacks Consensus Estimate of a loss of 21 cents per share. However, during the full year 2009, Office Depot reported a loss per share of $2.30 compared to a loss per share of $5.42 in 2008. Reported loss per share was much higher than the Zacks Consensus Estimate of a loss of 41 cents.
During the quarter, North American Retail division’s revenue dipped 9% to $1,262.8 million. The decrease was driven by a 4% drop in comparable-store sales and the opening of 115 fewer stores in the quarter. However, operating profit more than doubled to $2 million due to a rise in product margins for the sixth consecutive quarter, the closing of less profitable stores and lower operating expenses. During full year 2009, revenue was down 16% and reached $5,113.6 million. Operating profit was $105.5 million compared to a loss of $29.2 million in 2008.
In the quarter, North American Business Solutions' revenue slipped 11% to $821.1 million due to a decline in the number of consumer transactions. Operating profit was up 2.6% year over year to $21.3 million. During fiscal year 2009, revenue was down 16% to reach $3,483.7 million, and the company also reported a decrease in operating profit to $98.2 million from $119.8 million from 2008 level.
International division’s revenue fell 2% to $982 million during the quarter. However, operating profit increased to $63.8 million from $10.0 million in the year-ago period. During 2009, revenue again fell 16% to $3,547.2 million and operating profit fell to $119.6 million from $157.2 million in the previous year.
Office Depot, the operator of office supply stores under brand names such as Office Depot, Foray, Ativa, Break Escapes, Worklife and Christopher Lowell, generated free cash flow of $165.6 million during full year 2009 compared to $138.2 million in the previous year.
Office-supply retailers have been grappling with a sluggish demand for big-ticket items like furniture and computers as consumers and smaller businesses cut back on their spending in the economic downturn.