Is This the Turnaround Office Depot Has Been Seeking?

By Chris Lange Updated Jan 11, 11:53PM EST · Published May 9, 10:15AM EDT

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Is This the Turnaround Office Depot Has Been Seeking? — © courtesy of Office Depot

Office Depot Inc. (NASDAQ: ODP) released its first-quarter earnings report before the markets opened on Wednesday.

The office supply retailer said that it had $0.08 in earnings per share (EPS) on $2.83 billion in revenue, which compares with consensus estimates from Thomson Reuters of $0.08 in EPS on revenue $2.72 billion. The same period of last year reportedly had EPS of $0.16 and $2.68 billion in revenue.

In terms of its segments, the company reported as follows:

The Business Solutions Division reported sales were $1.3 billion in the first quarter of 2018, up 1% compared to the first quarter of 2017. Operating income was down slightly from $58 million to $55 million.
Retail Division sales were $1.2 billion. Comparable store sales were down 4% and operating income was $72 million, down from $112 million.
CompuCom Division results are only included in the total results for the first quarter of 2018, as this business was not part of Office Depot in the prior year period. CompuCom had sales of $257 million, with an operating income of $5 million.

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Looking ahead to the 2018 full year, the company expects to see sales of roughly $10.8 billion on adjusted operating income of about $360 million. Consensus estimate call for $0.31 in EPS on $10.75 billion in revenue for the year.

The board of directors declared a dividend of $0.025 per share ($0.10 per share on an annualized basis) on the common stock of the company. The dividend is payable on June 15 to shareholders of record at the close of business on May 25.

CEO Gerry Smith commented:

We achieved a major milestone this quarter with the Business Solutions Division reporting positive sales growth for the first time since 2012. This is largely driven by our focus on growing the customer base with our demand generation efforts and successfully expanding our offerings beyond office products. When combined with CompuCom, these business-to-business (B2B) focused divisions represent nearly 60% of total sales. I’m also pleased that our continued focus on working capital management allowed us to generate strong cash flows in the quarter, which further strengthens our liquidity and provides additional capital to strengthen our operations and invest in growth initiatives.

Shares of Office Depot were last seen up 7% at $2.54 on Wednesday. The consensus analyst price target is $3.10, and the 52-week trading range is $2.00 to $6.26.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.