For the second quarter, ODP Corp. posted better-than-expected results, although comparable sales fell in its Office Depot division.
Net income from continuing operations was breakeven in the quarter versus a net loss of $4 million, or 12 cents per diluted share, in the year-prior period. Adjusted for one-time events, the company reported net income of $15 million, or 51 cents per diluted share, versus $20 million, or 56 cents per diluted share, in the year-earlier quarter.
An analyst consensus estimate from Zacks Investment Research pegged earnings per adjusted diluted share at 33 cents and revenues at $1.57 billion.
Total sales were $1.59 billion, down 8% from the year-before quarter with the decline related mainly to lower sales in the company’s Office Depot Division, primarily due to 60 fewer retail locations in service compared to the previous year and reduced retail and online consumer traffic, as well as lower sales in the B2B ODP Business Solutions Division. Operating income was $9 million versus $400,000 in the year-previous period, ODP stated, while adjusted operating income was $25 million versus $33 million.
At the Office Depot Division, which operates both Office Depot and OfficeMax stores, comparable sales declined 5% in the quarter and overall sales were down 10% to $716 million year over year, reflecting a trend improvement but impacted by the fewer retail locations, lower demand in certain product categories, and reduced online sales. Operating income was $12 million versus $17 million in the year-ago period.
“In our consumer segment, we meaningfully improved same-store sales trends versus last year, underscoring the effectiveness of our targeted sales strategies and strong value proposition,” said Gerry Smith, ODP CEO, in announcing the financial results. “Meanwhile, in our B2B distribution business, we achieved approximately a 200-basis-point improvement in year-over-year revenue trends, driven by stronger sales traction with new customers and early contributions from our expansion into the hospitality sector. Sales trends improved month over month throughout the quarter, improving our position as we head into the second half of the year.”
Smith added, “On a consolidated basis, our strong performance resulted in solid adjusted EBITDA and drove adjusted free cash flow more than double last year’s level, further strengthening our balance sheet. As we look to the second half of the year, we remain confident in our ability to drive continued improvement and value creation. We expect continued strength in performance in our consumer segment while driving improved revenue trends in our B2B distribution business, as we continue to onboard new customers and begin to penetrate the hospitality segment. Additionally, with our strong focus on cash, we expect to generate significantly higher adjusted free cash flow versus last year, further strengthening our foundation and balance sheet.”
In providing insight on the company’s outlook for the second half of the year, ODP noted that the company expects to deliver continued improvement in performance, driven by top-line trend improvement at ODP Business Solutions, continued robust results in the consumer business, and generation of more than $115 million in adjusted free cash flow for the full year 2025.
As regards the outlook, Smith noted, “We are encouraged by our improved performance and progress in the first half of the year, and we remain optimistic about driving further improvements to areas of our business in the second half. Our outlook considers stable macroeconomic and business conditions. Additionally, while we are not immune to changes in the evolving tariff landscape, we believe that we are well-positioned to adjust as necessary to limit potential impacts to our business.”
