Office Depot 1Q Profit Falls

Delray Beach, Fla. Office Depot Inc. said Tuesday its first-quarter profit dropped 55% due to North American sales declines.

The company said earnings dropped to $68.8 million compared with $153.8 million a year earlier. Sales dipped 3% to $3.96 billion from $4.09 billion.

The company blamed housing-related issues for deterioration in profits across North America.

For the first quarter of this year, sluggish sales at Office Depot stores in Florida and California continued to hurt the company’s profit margin as small-business customers were affected by "difficult housing-related economic conditions," the company said in its earnings release.

In February, Office Depot said its fourth-quarter profit slid 85% as sales slumped in Florida and California.

First-quarter sales for the North American business solutions division were $1.1 billion, down 5% compared to the same period a year ago. Operating profit was $60 million for the quarter compared to $72 million for the same period last year, but $59 million higher than the fourth quarter of 2007, the company said.

The company's international division reported a sales increase of 6% in the first quarter of 2008 compared with the same period last year, but sales in local currency decreased by 4%, largely driven by an economic slowdown in the United Kingdom.

Last week, Office Depot announced that its shareholders re-elected all 12 of the office-supply retailer's directors at its annual meeting.