OfficeMax (OMX) is expected to report Q2 earnings after market close Tuesday, July 29, with a conference call scheduled for Wednesday at 11:00 a.m. ET.
Analysts are looking for a profit of 18c on revenue of $2.02B. The consensus range is 3c to 29c for EPS, and revenue of $1.98B to $2.1B, according to First Call. At June's Piper Jaffray Consumer Conference, the company said that uncertainty of the magnitude of the weakness will make it difficult to predict FY08 bottom line and performance. Executives said that the company expects to be impacted by the macroeconomic environment, which will require it to go be cautious going forward.
Following rival Office Depot's (ODP) negative Q2 pre-announcement, Piper Jaffray downgraded OfficeMax to Neutral from Buy. While the firm believes OfficeMax is a better company with better margin stability, and believes industry fundamentals for office product retailers are continuing to deteriorate.
Credit Suisse, however, upgraded shares to Outperform from Neutral, and said OfficeMax's balance sheet is "quite clean and cash flow positive." While OfficeMax shares are likely to weaken "a lot more," the firm does not expect a "disaster" like at Office Depot.
JP Morgan believes the office-goods sector is "under severe pressure," with some of the sharpest same-store sales declines in retail. The firm also said that "some combination" of store closings and consolidation is essential over time.