After missing Wall Street’s fourth-quarter estimates, ODP Corp., which operates Office Depot and OfficeMax, announced a new growth plan that includes deemphasizing retail operations in favor of business-to-business.
ODP missed a Zacks Investment Research analyst consensus estimate of 80 cents per adjusted diluted share. It missed a sales estimate by 1.92%.
Sales were $1.62 billion versus $1.8 billion in the year-prior quarter. Operating income was $20 million versus $52 million in the year-earlier period, while adjusted operating income was $32 million versus $57 million.
In the Office Depot Division, which operates both Office Depot and OfficeMax stores, sales were $784 million, down 13% in the quarter year over year. The decrease was partially driven by 47 fewer retail locations, lower demand in major product categories, lower average order volume and lower online revenue. Sales slipped 8% on a comparable store basis.
For the full fiscal year, net income from continuing operations was $106 million, or $3.08 per diluted share, versus $247 million, or $6.22 per diluted share, in the year previous. Adjusted net income from continuing operations was $114 million, or $3.30 per diluted share, versus $263 million, or $661 per diluted share, in the year before.
Sales were $6.99 billion versus $7.82 billion in the year prior. Operating income was $163 million versus $330 million in the year earlier while adjusted operating income was $173 million versus $351 million.
In announcing the financial results, Gerry Smith, ODP CEO, said the company had initiated what he termed an Optimize for Growth plan.
“This plan capitalizes on our core strengths, including a robust B2B infrastructure, supply chain assets, strong distribution network and loyal customer base, to expand and accelerate growth in the B2B distribution and 3PL market segments while reducing our retail exposure and associated obligations,” he said. “Supporting our strategy, we are realigning our organization, refining product assortments and reallocating capital to prioritize growth in the B2B marketplace. At the same time, we will suspend growth investments in our retail segment and continue to optimize our store footprint to better align with our long-term strategy. That said, we remain committed to supporting and providing an exceptional service experience at our active retail locations.”
He added that, in 2025, “our strategic priority remains centered on capturing the numerous opportunities in the B2B marketplace and pursuing growth in new industry segments. Although transformational progress takes time to fully materialize and macroeconomic conditions continue to present near-term challenges, we are confident in the strength of our strategy and steadfast in our commitment to delivering sustained, long-term value for our shareholders. We look forward to providing updates on our progress and offering deeper insights into our long-term growth plans in the quarters ahead.
