The ODP Corp. reported better-than-expected second-quarter sales and updated plans for the separation of its businesses.
The parent company of Office Depot, OfficeMax, Compucom and more updated its plan to split the company into two, independent publicly traded companies, with the separation expected to be complete by the first half of 2022. The two companies will share commercial agreements, allowing them to continue to leverage scale benefits in areas such as product sourcing and supply chain.
Plans call for a tax-free spin-off of the consumer business, "NewCo," which will be an Office Depot-branded provider of retail consumer and small business products and services consisting of 1,100 Office Depot and OfficeMax retail locations and an eCommerce presence.
The other entity, which will keep the ODP Corp. name, will be a B2B business solutions provider. Most of the company's current management team is expected to stay on with the new ODP business.
“The separation is expected to allow ODP and Office Depot to pursue unique market opportunities and growth strategies, improving the value for shareholders and stakeholders,” the company stated.
ODP reported a net loss of $88 million, or $1.62 per share, for the quarter ended, compared to a loss of $439 million, or $8.19 per share, in the year-ago period. Adjusted earnings per share were $0.51, just missing analysts’ estimates of $0.52.
Total sales rose 6% to $2.286 billion, beating estimates of $2.221 billion.
"Our success in delivering improved results this quarter reflects the meaningful progress we’ve made on all of our initiatives to unlock shareholder value," said CEO Gerry Smith. "Simultaneously, demand for our core products and services grew in the quarter as customers and more businesses and schools returned to work and to in-class learning. These factors helped drive continued strong results in our retail division, which serves as the `home office and school supply headquarters' choice for customers, and improving performance in our business solutions division.”