Office product retailer Office Depot disclosed that third-quarter income declined almost 2%, mostly because of bad weather, weak European operations, and sluggish back-to-school sales.
The Delray Beach, Fla.-based company posted net income Wednesday of $489.9 million, down from $91.7 million in the same quarter of 2003. Sales rose 2.9% in the quarter to $3.33 billion from $3.24 billion.
Sales in both the company’s North American retail group and its business services group showed positive growth for the quarter. The retail segment saw a 3% sales increase in the quarter, while business services grew by 2%. Office Depot chairman and CEO Neil Austrian said in announcing the results that gross margins in the commercial-sales segment were pressured by increased catalog and e-commerce promotional activity. Growth in Office Depot catalog and 4Sure.com channels was offset by a decline in Viking catalog sales, he said.
Overseas, Office Depot’s third-quarter revenues declined in most countries as measured in local currencies, and positive performance in U.K. catalog sales was undercut by weakness in catalog sales in other major European countries. Operating profit for the segment declined 1% in the quarter.
“We will focus our efforts on improving the profitability of North American retail, growing market share in North American delivery and delivering on our expectations for [the recent acquisition of French office-supplies retailer] Guilbert,” Austrian said.
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