Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=230239
Story Retrieval Date: 7/24/2014 6:00:42 PM CST

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Osahon Okundaye/MEDILL

Office supply company ACCO Brands lost $7.8 million in the first quarter, but expects sales to pick up in the second half of the year as students head back to school.


ACCO Brands loses money but beats expectations, stock jumps

by Osahon Okundaye
Apr 30, 2014


Accelerating demand for office supplies in Central and South American markets helped offset softening demand for ACCO Brands Corp.’s office supply products, narrowing losses for the quarter ended March 31 by 13 percent to $7.8 million from $9 million a year ago and falling in line with analyst expectations.


The stock closed at $6.13 Wednesday, up 25 cents, or 4.25 percent.

In a brutally competitive market for office supplies, ACCO lost a diluted 7 cents per share in the quarter compared with an 8 cents-per-share loss in the year-ago quarter. Analysts estimated a loss of 6 cents.

 

Sales declined by 6 percent to $329 million from $352 million in the year-ago period.

The paperclip and notebook maker makes most of its revenue in the second half of the year when millions of North American students buy supplies as they return to class.

ACCO’s sagging sales were cushioned by gains in international markets. Double-digit growth in the less competitive Brazil market, combined with rising revenue in Mexico and parts of Europe, are cause for cautious optimism, according to William Chapell of SunTrust Banks Inc.

“They’re looking to outcompete other office suppliers,” said Kevin Steinke of Barrington Research Associates. He added, ACCO is “looking to be one of the last office products manufacturers standing in what is a consolidating industry.”

Retail chain Office Depot is one of ACCO’s key customers but is still trying to consolidate operations after finalizing a merger with former rival OfficeMax late last year, introducing uncertainty as to how much business the two will do moving forward, said ACCO CEO Boris Elisman.

The company anticipated the uncertainty and will continue business with Office Depot and other big box stores, “but we’re doing it prudently and making sure that we’re making money in the process,” Elisman said.

In a release, the company said expects to earn between 70 cents and 76 cents per share in the fiscal year ending December 31, 2014, which is in line with analysts’ expectation of 72 cents per share. The projected earnings would fall below the 85 cents per share ACCO earned in 2013.

Total earnings last year were $77.1 million, on $1.77 billion in revenue, compared with $115.4 million on $1.76 billion sales in 2012.