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OfficeMax Q2 sales slump

NAPERVILLE, Ill. — OfficeMax has reported weak second-quarter retail sales as the merger with Office Depot, which reported weak second-quarter sales last week, moves forward.

Retail segment sales in the second quarter of 2013 decreased 5.6% to $683.4 million compared to the second quarter of 2012, reflecting a same-store sales decrease on a local currency basis of 3.6% primarily due to decreased traffic and lower technology product category sales. The decrease reflected a U.S. retail operations same-store sales decrease of 3.7%, and a Mexico retail operations same-store sales decrease of 3.4% on a local currency basis.

Retail segment gross profit margin was 29.5% in both the second quarter of 2013 and the second quarter of 2012 due to higher customer margins, offset by deleveraging of occupancy costs due to lower sales and an expiration of favorable purchase accounting for leases. Retail segment income was $1.9 million, or 0.3% of sales, in the second quarter of 2013 compared to $2.8 million, or 0.4% of sales, in the second quarter of 2012. 

"Sales declined in the second quarter, which impacted profitability compared to the prior year period. We continue to implement cost reduction measures to align our expenses with our revenue base and expect second-half profit performance to improve versus the first half. Further, we're pleased to have received additional cash proceeds from our Boise investment in July, bolstering our strong balance sheet," said Ravi Saligram, president and CEO of OfficeMax. "In spite of secular challenges and an uneven economic recovery, we remain committed to restoring sales growth by evolving our business model to focus more on services, innovating new products and categories, growing our adjacencies, and building our omnichannel capabilities."

Total sales for the quarter ended June 29 were $1.5 billion, as compared to $1.6 billion in the second quarter of 2012. For the second quarter of 2013, OfficeMax reported an operating loss of $0.9 million compared to operating income of $23.1 million in the second quarter of 2012, and a net loss available to OfficeMax common shareholders of $10 million, or $0.12 per diluted share, compared to net income of $10.7 million, or $0.12 per diluted share in the second quarter of 2012. 

OfficeMax ended the second quarter of 2013 with a total of 932 retail stores, consisting of 842 stores in the U.S. and 90 stores in Mexico. During the second quarter of 2013, OfficeMax closed four stores in the U.S. and opened one store and closed one in Mexico.  

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