* Q1 adjusted EPS of $0.16 tops estimates of $0.12
* Q1 sales drop of 7 pct offset by lower costs
* Cost of sales down 7 pct, overhead costs down 10 pct
* Profit from continuing operations jumps 19 percent
* Shares rise as much as 7 percent
(Adds share movement, details)
May 9 Office supply chain Office Depot Inc
reported a bigger-than-expected quarterly profit as
expenses fell, in part due to a lower store count, sending the
retailer's shares up as much as 7 percent on Tuesday.
Following its failed merger with Staples Inc in May
last year, Office Depot has been streamlining its business by
shutting underperforming stores and cutting procurement and
The Boca Raton, Florida-based company is also sharpening its
focus on North America by divesting its operation in overseas
markets such as Australia, China and parts of Europe.
But, like other domestic retailers, Office Depot continues
to be hit by slowing foot traffic as consumers shift to online
shopping at e-commerce giants such as Amazon.com Inc.
Fewer stores in operation in the first quarter helped Office
Depot lower its cost of goods sold and occupancy costs by 7
percent, while general overhead expenses fell 10 percent and
restructuring costs nearly halved.
But fewer stores meant overall sales dropped 7 percent to
$2.68 billion, declining for the ninth straight quarter.
Office Depot's net income from continuing operations jumped
19 percent to $74 million. Including the results of discontinued
operations, net profit more than doubled to $116 million.
Excluding items, Office Depot earned 16 cents per share,
beating analysts average estimate of 12 cents, according to
Thomson Reuters I/B/E/S.
Office Depot's comparable sales in North America dropped 5
percent. That was much steeper than the 2.8 percent decline
estimated by analysts polled by research firm Consensus Metrix.
The company operated 1,439 stores in North America as of
April 1, the end of the quarter. It had 1,555 stores in the year
earlier quarter. The company has said it plans to close about
300 more stores in the next three years.
Office Depot said it expects sales in 2017 to be lower than
2016 due to store closures and challenging market conditions.
However, it expects the rate of sales decline to slow
through the year as it works to retain some old customers, win
new ones and boost its contract channel sales pipeline.
The company's shares were up 7 percent at $5.46 in early
trading on the Nasdaq.
(Reporting by Karina Dsouza in Bengaluru; Editing by Savio