Office Depot Inc posted better-than-expected first-quarter results on Tuesday as cost cuts offset a sharp decline in sales, and the No. 2 U.S. office supplies retailer's shares jumped more than 23 percent.

The company, whose rivals include OfficeMax Inc and industry leader Staples Inc , has been closing stores and laying off workers in a bid to slash costs in the recession.

Office Depot reported a first-quarter net loss of $55 million, or 20 cents a share, compared with year-earlier net income of $69 million, or 25 cents a share.

Excluding charges, the Boca Raton, Florida-based company reported earnings of 10 cents a share, while analysts on average were expecting a loss of 10 cents, according to Reuters Estimates.

Office Depot has also been exploring ways to raise money in 2009, including selling and then leasing back U.S. and European properties, and selling certain accounts receivable in Europe.

Boca Raton, Florida-based Office Depot, which closed 107 stores and relocated one store in the first quarter, said it plans to open fewer than 12 stores in 2009, down from its prior outlook of 15.

Last month, Office Depot's top rival Staples also curtailed its store-opening plans for North America after reporting a 14 percent fall in fourth-quarter profit as customers put off purchases of business machines and furniture.

Office supplies sellers have been hit hard by the U.S. recession as consumers and small businesses cut back on buying big-ticket items like furniture and computers.

Office Depot's operating expenses, adjusted for charges, fell by $192 million in the quarter.

Sales at the company, whose products range from computer hardware to school supplies, fell 19 percent to $3.2 billion.

While Office Depot attributed most of the decline to macroeconomic factors, it said its decision to cut back on advertising promotions also took a toll on sales.

Sales at U.S. and Canadian stores open at least a year fell 17 percent. Office Depot blamed bleak sales at its Florida and California markets for about a third of its comparable-store sales decline in the first quarter.

Florida and California continue to weigh heavily on our results as our small-business customers in these two markets continue to be impacted by weak economic conditions, high unemployment levels and limited access to liquidity, said Carl Rubin, president of Office Depot's North American retail unit.

Office Depot shares rose to a high of $3.12, before paring some gains to trade up 49 cents at $3.02 Tuesday morning on the New York Stock Exchange. The stock was the top percentage gainer on the New York Stock Exchange.

OfficeMax' stock was up 5 cents at $6.02, while shares of Staples were up about 13 cents at $21.59.

(Reporting by Dhanya Skariachan; Editing by Derek Caney)