Office Depot's profit dips

Office-supply store chain says its third-quarter results fell 9% due to lower consumer spending, U.K. slowdown, higher costs in North America.

Office Depot's third-quarter profit sinks on weakness in North America, which was hurt mostly by the slumping housing market.

DELRAY BEACH, Fla. (AP) -- Office Depot Inc., the nation's second biggest office-supply store chain, said Tuesday its third-quarter profit fell 9 percent, hurt by lower consumer spending, an economic slowdown in the U.K. and higher costs in North America.

The company had delayed its quarterly results in order to revise some past financial statements. An independent review of vendor-program accounting found weakness in its internal controls and led to the firing of four merchandising employees.

Office Depot (Charts, Fortune 500) has retained Peter J. Solomon Co. to review its capital structure options and independently advise the company on the proper course of action.

Net income fell to $117.5 million, or 43 cents per share, in the three months ended Sept. 29 from $129.1 million, or 45 cents, in the year-ago quarter. The latest period includes a $33 million tax benefit.

Sales climbed 2 percent to $3.94 billion from $3.86 billion in the prior-year period.

Analysts surveyed by Thomson Financial predicted profit of 40 cents on slightly higher revenue of $3.95 billion.

The company said North American retail same-store sales fell 5 percent for the quarter, hurt mostly by the slumping housing market. Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

North American business services segment sales fell 3 percent. While international sales grew 13 percent from the year-ago quarter, the company said the international division still hasn't met expectations.

"There are signs of an economic slowdown in the U.K. which, if it persists, could provide continued challenges to the division's operations in the future," Office Depot said in a statement.

It is second in the office-supply business behind Staples Inc (Charts, Fortune 500).