Viking Realignment Costs Office Depot

Delray Beach, FL-based Office Depot (NYSE: ODP) posted a $47.9 million loss during the quarter ended Sept. 24 because of charges due to the elimination of the domestic Viking Office Products catalog and the closure of 16 stores.

In the year-ago quarter, the office supplies cataloger/retailer enjoyed net earnings of $89 million. Without the charges, net earnings would have been $115 million, a 24% increase over last year.

Sales for the third quarter grew 5%, to $3.5 billion. Comparable sales in its North American retail division increased 4%, and sales in the Business Services division, which includes the catalogs, rose 5% due to increased sales in the contract channel, particularly large and national accounts.

Operating profit for the Business Services division fell 41%, to $60 million from $102 million for the third quarter of last year, because of the previously mentioned charges. Although hurricanes Katrina and Rita took a toll, including the closure of a distribution center for approximately one month, other improvements in operating cost efficiencies more than compensated for their impact.

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