Office Depot's Q4 overshadowed by 2015 outlook

Office Depot posted a larger profit in the fourth quarter, but the retailer says currency pressures, market challenges and its tentative merger with Staples could negatively affect sales in 2015.

Office Depot reported a profit of 7 cents a share, compared with a year-earlier loss of 5 cents a share. Analysts polled by Thomson Reuters had projected earnings of four cents a share on revenue of $3.91 billion.

Office Depot's North America retail same-store sales fell 2% in the quarter ended Dec. 27, the eighth straight quarter of decline. Analysts on average had expected a 2.2 percent fall, according to research firm Consensus Metrix.

“We were pleased to deliver strong fourth quarter results, and full year 2014 adjusted operating income that was almost three-fold higher than the prior year pro forma. Our teams executed extremely well on all of our 2014 critical priorities, and we exited 2014 with an annualized run rate of more than $500 million in merger integration synergies,” said Roland Smith, chairman and CEO for Office Depot Inc. “Our operating priorities for 2015 primarily focus on driving continued synergies and efficiencies and improving the customer experience.”

Total revenue rose nearly 10 percent to $3.83 billion. Office Depot and Staples said earlier this month that they would merge to better compete with online retailers. The cash-and-stock deal is valued at $6.3 billion.

Smith added: “On Feb. 4, we entered into a definitive agreement for Staples to acquire all of the outstanding shares of Office Depot. This transaction, which is expected to close by the end of 2015, delivers great value for our shareholders and is also an endorsement of the tremendous success we’ve had integrating Office Depot and OfficeMax over the past year. We remain on track with the Office Depot/OfficeMax merger integration and our European restructuring plans.”

The Office Depot-Staples deal would leave the U.S. with a single office-supply superstore to compete with the discounters and Web retailers that have invaded its turf. The acquisition, which comes a little over a year after Office Depot merged with OfficeMax, will have to win approval from regulators who shot down a merger of the same companies 18 years ago.