Office Depot Q2 beats Street as new strategy builds momentum
Office Depot’s transformation into a business services company is starting to pay off.
The company reported net income of $19 million, or 3 cents a share, in the second quarter, down from $21 million, or 4 cents a share, in the year-ago period. Adjusted per-share earnings came to 5 cents, ahead of analysts’ estimates of 3 cents.
Total revenue rose 11% to $2.63 billion, also ahead of estimates. Sales at Office Depot’s business solutions division rose 4%, driven by acquisitions and e-commerce growth. In fall 2017, the company acquired CompuCom, a provider of IT services, products and solutions. It followed that up with the acquisition of launch of BizBox, a business services platform that is offered on a subscription basis.
Sales in Office Depot’s retail division, however, decreased 5% to $1.1 billion. Same-store sales fell 2% amid fewer transactions and lower average order values.
“I am extremely pleased with our performance in the second quarter as the execution of our strategy is driving improved sales trends across all three of our operating divisions,” said Gerry Smith, CEO of Office Depot. “Sales in the Business Solutions Division were up an impressive 4% in the quarter driven by our acquisition strategy and growth in the adjacency categories beyond office products. I’m also encouraged by the early success of our initiatives to increase services, which now represent 16% of total sales.”
Office Depot’s new emphasis is reflected in its flagship in Austin, Texas. The location was revamped into a services-led shopping experience that puts the spotlight on offerings from its BizBox platform, which provides end-to-end services (from logo and website design to payroll, tech and more) to help small to mid-sized businesses start and grow their companies.
Office Depot provides business services and supplies, products and technology solutions with an omnichannel platform that includes approximately 1,400 stores, online presence, and dedicated sales professionals and technicians. Its banner brands include Office Depot, OfficeMax, CompuCom and Grand&Toy.
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