My OfficeMax Inc. shares have done better lately. What does the future hold?
The No. 3 U.S. office products firm is continuing its cost-cutting efforts in an attempt to improve its profitability and sales in a highly competitive business hampered by the weak economy.
It isn’t, for example, opening any new stores this year. It is increasing the number of private-label products bearing its name to lure shoppers with lower prices while expanding profit margins. About one-fourth of its sales are currently private-label.
It expects sales to decline in the second half due to cutbacks in corporate America, the economy and what is projected to be a lackluster back-to-school season.
Shares are up 31 percent this year following drops of 61 percent last year and 57 percent in 2007. While the company lost $17.7 million in the second quarter, the fact that Wall Street had expected far worse provided a boost to its stock.
OfficeMax sells through a direct sales force, the Internet and catalogs. It has improved its profitability but still lacks the economies of scale of its larger rivals and must compete with numerous retailers that have begun to sell office products.
No. 1 Staples, whose profits were down 33 percent in the past quarter, has more than 1,500 stores and is taking market share away from OfficeMax’s main Chicago sales area. It bought the Dutch office-supply firm Corporate Express NV last year. In comparison, No. 2 Office Depot has more than 1,200 stores and OfficeMax fewer than 1,000.
The consensus recommendation on OfficeMax shares is "hold," according to Thomson Reuters, which consists of one "strong buy," three "buys" and seven "holds."
Yet OfficeMax remains aggressive. It recently signed a multiyear deal that will allow it to use some FedEx Corp. services in about 900 U.S. retail locations. It is offering domestic FedEx Express and ground shipping, while it will accept drop-off packages from FedEx customers at its in-store print and document services center car loans for bad credit.
The company has also forged an alliance with Lyreco, a global distributor of office products in 36 countries, and has a partnership to distribute co-branded office products through 1,600 Safeway grocery stores.
Earnings are expected to decline 75 percent this year compared with a 6 percent gain projected for the office supplies industry. The forecast is for a 50 percent gain next year versus a 13 percent rise industrywide.
Is there any advantage to having my various individual retirement accounts with the same investment firm, or does it make no difference?
It can make things easier having your investments with one firm because you can check them online in the same place and will have fewer statements to contend with.
Too often investors with funds at several firms also own similar funds, just in different places.
You can find an array of choices in most any investment style at larger fund firms. In addition, for mutual funds sold with "loads," or sales charges, there can also be discounts for those who invest certain amounts of money with them.
"You’re picking the investments, so you’re not giving up that control to the investment firm," said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.
"Within your account, however, you want to make sure that you have diversified investments."
Still, there’s nothing that should tie you to keeping investments with one firm if you feel that you can find some better funds at an additional firm and keeping everything together won’t meet your goals.