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Merger magic evident at Office Depot


Sales continued to decline at Office Depot in the third quarter, but CEO Roland Smith said excellent execution allowed operating profits to more than double.

Total company sales on a pro-forma basis to reflect the merger of Office Depot and OfficeMax declined 3% to $4.1 billion during the period ended Sept. 27. The top line decline was steeper at the company’s 1,851 unit North American retail division where sales declined 7% to $1.7 billion due to store closures and a 3% same store sales decline driven by a reduced transaction volume.

Smith said challenging market trends and store closures would continue to negatively affect sales in the fourth quarter, but the executive noted merger related synergies are allowing the company to exceed profitability expectations.

"Our third quarter results reflect excellence in execution against our critical priorities and merger integration objectives, and we are very pleased to have more than doubled our adjusted operating income from last year's combined pro forma results,” Smith said. "We continue to make significant progress on merger integration and have exceeded our synergy targets for the quarter. Accordingly, we are raising our 2014 outlook for adjusted operating income to a range of $255 million to $265 million, which is more than 150% higher than pro forma 2013. Looking ahead, our preliminary estimate for 2015 adjusted operating income is approximately $475 million, which is an 80% increase from our 2014 outlook."

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