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OfficeMax Inc. (OMX) eked out a third-quarter profit, following a year-earlier period that had a $735.8 million write-down from a Lehman Brothers Holdings guaranteed-installment note.

Revenue and margins continued to fall as earnings fell well short of analysts' expectations. Still, Chairman and Chief Executive Sam Duncan said, "We are proud of the progress we are making with our business in this tough economy. While continued lower sales levels strained our profitability this quarter, we managed to mitigate the impact by reducing costs and improving our operations."

OfficeMax shares fell 0.88% to $10.14 in recent trading. Shares have pulled back about 25% the past several weeks after a three-month run-up that tripled OfficeMax's stock.

Investors' disappointment isn't surprising, said Oppenheimer analyst Brian Nagel in a research report.

"Investors have grown accustomed to EPS beats at OfficeMax with results topping estimates by an average of more than 45% the past two quarters," he said in the note. "We expect today's report to weigh on shares."

Still, JPMorgan analyst Christopher Horvers said in a note that OfficeMax's "miss may be made out to be more than it should be, considering how little third quarter matters to the longer-term story."

OfficeMax performed a bit better-than-expected during the crucial back-to-school season, as private label items did well and promotions were well-received, its Chief Operating Officer Sam Martin said in an interview with Dow Jones Newswires.

However, the average basket size was smaller, he noted, and in a conference call with analysts, Martin emphasized the back-to-school season was still "challenging."

"Our same store sales for this season were better than our sales for the full quarter although still in the negative high single digits," CEO Duncan said in the call .

The company also forecast lower sales in the fourth quarter, but a smaller decline than the third quarter's 14% drop. It also anticipates a loss. Analysts' mean estimates, as surveyed by Thomson Reuters, were break-even results on a 9% sales drop to $1.72 billion.

Chief Financial Officer Bruce Besanko said in an interview that although the company forecast lower fourth-quarter sales, OfficeMax's sales trends have improved sequentially so far this year. However, the company is "planning cautiously" moving forward.

"We are quite pleased with our performance in a very tough environment," Besanko said.

Besanko said OfficeMax doesn't plan on the macroeconomic environment significantly improving until the second half of next year.

Both corporate and consumer frugality have weighed on industry-wide sales, as rival Staples Inc. (SPLS) has attempted to weather the economic slowdown by marketing more lower-cost products and run promotions on high-end items, such as computers, printers and furniture, with others following suit.

Lower-margin items and deeper discounts only exacerbate already lagging sales in a consumer market that also includes big-box retailers such as Target Corp.(TGT) and Wal-Mart Stores (WMT), as well as business and consumer retailer Office Depot (ODP).

OfficeMax, the No. 3 office-supply retailer, reported earnings of $6.3 million, or 7 cents a share, compared with a year-earlier loss of $431.9 million, or $5.70 a share. Excluding impacts like the prior-year write-down, earnings fell to 8 cents from 36 cents.

Revenue slipped 13% to $1.83 billion as same-store sales dropped 11.5%.

Analysts polled by Thomson Reuters expected earnings of 14 cents on revenue of $1.81 billion.

Gross margin fell to 23.7% from 25.1% amid the revenue decline.

Sales at OfficeMax's contract segment--its business-to-business office-products distributor --dropped 14% amid particular weakness in the U.S.

-By Kelly Nolan and Kevin Kingsbury; Dow Jones Newswires; 212-416-2167; kelly.nolan@dowjones.com

(Adam Manzor contributed to this article.)