ATLANTA – Office Depot Inc. (ODP), the No. 2 U.S. office supply retailer, on Thursday posted a 34 percent rise in quarterly profit but said recent sales had softened, sending its shares down more than 10 percent.
The company said sales had been below expectations for the last few weeks, echoing softness at other retailers.
"Things are slowing," said Bernstein analyst Colin McGranahan, who said Office Depot showed margin improvement despite the sales weakness. "You're going to see a lot of retailers with poor June, July and continuing results."
McGranahan said he would have liked to have seen a better rise in sales at stores open more than a year in North America than the 3 percent Office Depot reported.
In a statement, Office Depot said it would have greater clarity about sales trends after the back-to-school season.
"We are not prepared at this time to change our overall outlook for 2004, but we approach the second half of 2004 with a mixture of both caution and optimism," Bruce Nelson, chairman and chief executive, said in the news release.
The Delray Beach, Fla.-based company said second-quarter net income rose to $79.9 million, or 25 cents per share, from $59.6 million, or 19 cents per share, a year earlier.
Sales rose about 12 percent to $3.16 billion. Sales at stores open at least a year, a closely watched measure for retailers, rose 2 percent, the company said.
Office Depot shares fell $1.86 to $15.65, while the stock of rival Staples Inc. (SPLS) dropped about 3.6 percent, or $1.05, to $27.98.