The ODP Corp., Office Depot’s parent company, had a solid start to the fiscal year with first-quarter financials surprising Wall Street even as its retail division lagged a bit.
Net income from continuing operations was $72 million, or $1.71 per diluted share, versus $55 million, or $1.09 per diluted share, in the year-previous quarter. Adjusted for one-time events, net income from continuing operations was $75 million, or $1.78 per diluted share, versus $64 million, or $1.27 per diluted share, in the year-prior period, ODP stated.
An analyst estimate published by Yahoo Finance called for adjusted diluted earnings of $1.34 and revenues of $2.1 billion.
Sales were $2.11 billion versus $2.18 billion in the year-before quarter. Operating income was $95 million versus $76 million in the year-earlier period while adjusted operating income was $99 million versus $88 million, according to the company.
In the Office Depot division, reported sales were $1.1 billion in the quarter, down 8% year over year, partially because of 73 fewer retail outlets in service due to planned store closures, ODP reported, as well as lower demand relative to last year in certain product categories and lower online sales. Office Depot closed 21 stores in the quarter to end the period with 959 retail locations. Comparable sales dipped 3%.
“We are off to a terrific start to the year as our ongoing commitment to operational excellence and our capital allocation plan both continue to drive strong earnings per share growth and shareholder value,” said Gerry Smith, ODP CEO. “Our low-cost business model again positioned us to deliver strong operating results against an ongoing difficult macroeconomic backdrop plagued with high inflation and sluggish consumer activity. We improved most of our operational KPIs in the quarter, while continuing to execute on our $1 billion share repurchase authorization, buying back over $200 million of our shares during the quarter.”
Smith added ODP is making progress on “the path we set during our investor day meeting, highlighted by driving organic growth at ODP Business Solutions, our $4 billion annual revenue B2B distribution business, and generating strong cash flow results in our consumer business, Office Depot. Our supply chain services provider, Veyer, made progress towards its 2023 goal of more than doubling its EBITDA from third-party services, and our recently launched digital procurement business, Varis, continues to enhance its capabilities and add customers to its platform. Moving ahead, we remain cautiously optimistic as we continue to navigate the challenging macroeconomic environment and its related negative impact on consumer activity. We remain in a position of strength, with a low-cost business model mindset, diverse routes to market, and a strong balance sheet. As we move through the year and monitor consumer activity, we will continue to prioritize capital allocation while prudently managing our four-business unit model, remaining focused on delivering strong shareholder returns.”
