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NAPERVILLE — Office-supply retailer OfficeMax Inc. said Thursday that profit fell 79 percent as weak demand from consumers and small businesses persisted. But cost-cutting efforts helped the retailer post results that sharply beat analyst expectations.
That sent shares climbing as much as 24 percent to a four-month high.
Still, OfficeMax said it expects 2009 sales to decline from year-ago levels.
Profit for the quarter that ended March 28 fell to $13.1 million, or 17 cents per share. That's down from $62.4 million, or 81 cents per share last year. Excluding costs related to closing stores and a tax benefit, profit totaled 23 cents per share.
Analysts polled by Thomson Reuters, on average, predicted a profit of 16 cents per share. Analyst estimates typically exclude one-time items.
Revenue fell 17 percent to $1.91 billion from $2.3 billion last year. Analysts predicted revenue of $1.95 billion.
"We continued to make improvements to our business and to contain costs," Chief Executive Sam Duncan said in a statement.
Contract sales fell 22 percent to $927.6 million, due to weaker sales from existing corporate accounts and tighter control on account acquisition. Retail sales fell 11 percent due to weaker small business and consumer spending.
The suburban Chicago-based retailer said April sales trends are worse than the first quarter, however, and OfficeMax expects sales to decline in 2009, due to the weak environment, from 2008 sales of $8.27 billion. Analysts expect sales of $7.37 billion.
OfficeMax has put in place a cost-cutting plan in an attempt to improve profitability amid slumping sales. Last year it suspended its quarterly cash dividend and cut jobs in an effort to trim $20 million in operating expenses from its budget.
OfficeMax shares rose $1.27, or 21.1 percent, to $7.28 in late-morning trading Thursday.
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