The ODP Corp. posted second-quarter sales and earnings below expectations, reflecting fewer retail locations in operation and cautious spending by businesses and consumers.
Net loss from continuing operations was $4 million, or 12 cents per diluted share, versus net income from continuing operations of $43 million, or $1.09 per diluted share, in the year-before period, the company stated. Adjusted for one-time events, net income from continuing operations was $20 million, or 56 cents per diluted share, versus $48 million, or $1.22 per diluted share in the previous year period.
OPD missed a Zack Investment Research analyst consensus estimate of $1.13 per adjusted diluted share and fell short of a revenue estimate by 0.8%.
Sales were $1.72 billion, down 10% versus the prior-year quarter. The decline in reported sales was largely related to lower revenues in the Office Depot division, attributed by the company to 58 fewer retail locations in service versus the year-past period and fewer transactions, as well as lower sales in the ODP Business Solutions division. Operating income was $400 thousand versus $60 million in the year-earlier period, while adjusted operating income was $33 million versus $67 million.
Office Depot division comparable sales slipped 7% in the quarter year over year. Sales were $799 million, down 12% year over year due to store closures, lower demand relative to major product categories, and softer online sales. Operating income was $17 million versus $35 million in the 2023 period.
In announcing ODP’s financial results, CEO Gerry Smith said the company continues to advance its strategic initiatives.
“We are executing Project Core while taking actions to improve top-line trends in both our B2B and B2C businesses,” he said. “Our performance in the quarter was below our expectations, impacted by more cautious business spending and weaker consumer activity, along with new customer onboarding challenges impacting revenue traction at ODP Business Solutions. Additionally, retail store traffic trends, while improving sequentially, remained sluggish.
Smith added, “While we are pacing below our prior expectations for the year, we are not standing still. We’re taking action to improve our top-line trajectory and we remain focused on capturing the long-term opportunities derived by our strong value proposition, solid balance sheet and flexible foundation. In addition to our efforts under Project Core, which we expect will create over $100 million in annual cost savings when fully implemented, we are executing on initiatives to accelerate sales pipeline conversion, drive additional avenues for growth with existing customers and leverage our deep customer relationships to solve more of their procurement challenges.”
