OfficeMax Suffers 3Q Loss
Itasca, IL-based OfficeMax (NYSE: OMX) posted a net loss of $3.9 million for the quarter ended Sept. 24, due largely to the sale of its paper and forest products units last year. For the comparable quarter of 2004 the company had reported net income of $62.2 million. Sales dropped 37%, to $2.29 billion from $3.65 billion last year.
“Our third-quarter results underperformed our expectations primarily due to weakness in our retail segment,” chairman/CEO Sam Duncan said in a statement. “That said, our contract segment continued to show operating margin improvement, and our retail segment did show areas of strength in key geographic regions and in certain product categories.” The company blamed soft back-to-school sales and the temporary closure of 24 stores because of damage from Hurricane Katrina for its disappointing retail showing.
OfficeMax contract sales rose to $1.14 billion from $1.10 billion last year. Retail was flat at $1.1 billion.
Direct Response Sales Up 13% at Guitar Center
Westlake Village, CA-based Guitar Center (Nasdaq: GTRC) increased its third-quarter net sales 19%, to $421.1 million for the three months ended Sept. 30. Net income rose 16%, to $14.4 million from $12.4 million a year ago. Net income includes a stock-based compensation after-tax expense of $883,000, resulting from a new incentive plan.
Direct response sales for the quarter, including revenue from the Musician’s Friend catalog, increased 13%, to $80.8 million from $71.8 million in last year’s third quarter. Gross margin was lower, however– 29% compared with 31% last year–reflecting reduced shipping and handling revenue. Selling, general and administrative expenses for the third quarter were 24% of net sales compared with 21% last year due to additional payroll costs and an increase in promotional expenses.