ODP Corp., parent of Office Depot and OfficeMax, registered a beat on earnings in the fourth quarter while announcing Project Core, a move to streamlining operations, reemphasize the main business and increase shareholder returns.
Net loss from continuing operations in the fourth quarter was $37 million, or 99 cents per diluted share, versus net income of $36 million, or 76 cents per diluted share, in the year-past period. Adjusted for one-time events, operating income was $35 million, or 92 cents per diluted share, versus $40 million, or 85 cents per diluted share, in the year-previous quarter.
A Yahoo Finance-published analyst consensus estimate called for adjusted diluted earnings per share of 78 cents and sales of $1.84 billion.
Net sales were $1.81 billion versus $2.11 billion in the year-earlier quarter. Operating loss was $31 million versus operating income of $55 million in the year-before period while adjusted operating income was $43 million versus $58 million.
Office Depot Division sales were $900 million, down 18% year over year – or 13% when the effect of a 53rd week in fiscal 2022 is eliminated – with the decline partially driven by 64 fewer retail outlets in service associated with planned store closures, as well as lower demand versus the year prior in certain product categories and lower online sales, ODP noted. Operating income was $43 million versus operating income of $57 million during the same period in fiscal 2022, which included a $15 million favorable impact related to the extra week. Store and online traffic slipped year over year due to customers returning to the office post pandemic and weaker macroeconomic activity.
For the full fiscal year, net income from continuing operations was $139 million, or $3.50 per diluted share, versus $178 million, or $3.61 per diluted share, in the year past. Adjusted operating income was $223 million, or $5.60 per diluted share, versus $216 million, or $4.40 per diluted share, in the year previous.
Net sales were $7.83 million versus $8.49 million in the year earlier. Operating income was $201 million versus $243 million in the year before while adjusted operating income was $290 million versus $296 million.
“In the first year of operating under our new structure, we delivered strong adjusted EBITDA and adjusted earnings per share results throughout an ongoing challenging macroeconomic environment, underscoring our commitment to our low-cost business model and capital allocation strategy,” said Gerry Smith, ODP CEO. “We expanded margins at ODP Business Solutions, drove strong external EBITDA growth at Veyer, expanded our product and service offerings at Office Depot, and began our strategic review of Varis in late Q4. In addition, our operational excellence helped drive free cash flow above our forecasted guidance, supporting our return to shareholders of nearly $300 million through our share repurchase program during 2023.
“As we continue to evolve and consistent with our low-cost model approach, we are announcing today Project Core, a comprehensive initiative aimed at streamlining operations, sharpening our focus on our core business, and increasing shareholder returns through an expanded new $1 billion share repurchase program,” Smith continued. “We expect this broad-based plan to generate annualized savings in the range of $50 million to $60 million when fully implemented, achieved through cost efficiency measures across the entire enterprise including all routes to market, including Varis, as well as corporate support functions, leading to further optimization of our organization and supporting future profitable growth. During this effort, we are working to complete a strategic review of Varis, and we expect to provide a full update of that review by our first quarter earnings call in early May 2024.”
