From: Reuters
Published February 19, 2008 07:42 AM

OfficeMax profit climbs as expenses fall

NEW YORK (Reuters) - OfficeMax Inc <OMX.N> posted a better-than-expected quarterly profit on Tuesday, helped by lower expenses and improved margins.

The nation's third-largest office supplies retailer said fourth-quarter profit rose to $71.5 million, or 92 cents a share, from $58 million, or 76 cents, a year earlier.

Excluding special items, OfficeMax said its profit was $51.1 million, or 65 cents a share.

Quarterly sales fell 2.6 percent to $2.2 billion.

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Analysts, on average, were expecting OfficeMax to earn 52 cents a share for the quarter, on $2.3 billion in sales, according to Reuters Estimates.

Sales at office supply chains have ebbed in recent quarters as slowing job growth, the weak U.S. housing sector, and credit market jitters have led small businesses to cut spending.

"We were able to generate further operating income margin improvement, while we navigated a weaker economic environment," Chief Executive Sam Duncan said in a statement.

Duncan said OfficeMax has experienced "pressure" on sales so far this year.

Sales in OfficeMax's contract business fell 0.8 percent during the quarter, while its retail segment saw a 4.5 percent drop in sales.

The company also said gross margin at its retail segment rose 30 percent during the quarter.

(Reporting by Justin Grant; Editing by Derek Caney)

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