In its just-released Q2 earnings, Office Depot’s owner the ODP Corporation posted a net sales drop of 10% from the identical period last 12 months. It cited a difficult macroeconomic environment. In the course of the same quarter, Office Depot’s sales were down 12% 12 months over 12 months.
Office Depot is No. 21 within the Top 1000, Digital Commerce 360’s database of the most important North American online retailers by annual web sales. Within the Top 1000, Office Depot falls under the Office Supplies category. Digital Commerce 360 projects that Office Depot’s web sales will reach $5.13 billion in 2024.
Office Depot web sales by 12 months
Results for Office Depot, Q2 earnings for ODP Corporation
ODP Corporation CEO Gerry Smith addressed the lower earnings head-on.
“We’re dissatisfied on this performance and examine this as unacceptable,” Smith said throughout the company’s earnings call. “We’ve faced ongoing macroeconomic headwinds in a difficult business environment, which reduced the extent of corporate and private spending, impacting our ability to realize top-line traction back to the extent we were expecting.”
The difficult macro environment included sluggish electronics and office supplies sales. Those aspects, he said, pushed numbers down at Office Depot stores and in the corporate’s B2B unit, ODP Business Solutions. As well as, the corporate cited planned store closures, which resulted in 58 fewer stores over the past 12 months. Meanwhile, it saw a decrease in online sales as well. The Company closed
Some key numbers from the report highlight the challenges ODP has faced.
- 9 Office Depot store closures throughout the past quarter, leading to 894 open stores at Q2’s end.
- Sales decreased 7% on a comparable store basis.
- Office Depot sales down 12% to $799 million.
- ODP Business Solutions sales down 8% to $917 million.
- Updated fiscal 12 months 2024 guidance: Sales of not less than $7 billion.
Hope that Project Core will deliver savings
Smith touted Project Core as one among the important thing aspects in achieving what the corporate believes will probably be a turnaround. He believes that will probably be achievable within the 12 months ahead.
“It’s being achieved through cost efficiency measures across your entire enterprise, including our organizational structure, supply chain, and price of products sold savings through further efficiencies,” Smith said, adding that the corporate has also launched into and implemented business processes and AI transformation that can position it to generate significant growth and savings in the long run.
Fates of Veyer and Varis
While ODP is best known for its flagship public-facing Office Depot stores that sell every part from copier paper to swivel chairs, the corporate has stakes in B2B solutions and the provision chain, which delivered mixed results.
A wrinkle in the corporate’s 2024 outlook is its plans to sell Varis, a unit that matches buyers and suppliers in a marketplace-type format. The corporate launched Varis in 2021, however the separate unit failed to realize traction.
Smith addressed the fate of Varis in the decision.
“We’ve entered right into a nonbinding term sheet with a 3rd party for the sale of Varis, retaining an roughly 20% current stake within the entity,” Smith said, adding that further details of the transaction will probably be provided upon closing, which is anticipated in Q3.
Meanwhile, Veyer — a supply chain solutions company that ODP owns — delivers solid results for ODP.
“Veyer continues to make strong progress, efficiently providing service for its internal customers while continuing to grow its business with third-party customers,” Smith said.
Furthermore, Smith said he anticipated an extra boost to Veyer’s performance from a deal reached just before the Aug. 8 earnings call
“From a Veyer perspective, now we have a verbal agreement that was just awarded literally about half-hour to 40 minutes ago that can — out of the gate, has the potential to almost double the Veyer top line from the prior 12 months,” he explained. “So I’ll say that again, so everyone hears that it is a trajectory pivot for the business overall and for Veyer. But we’ve signed a deal — a verbal deal — with a big ecommerce company for a warehouse- and provide chain-providing deal that, again, has the potential to be almost double the previous 12 months’s revenue level, which may be very, very significant.”
He expects the deal to be implemented sometime during Q3.
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