Office Depot Q1 Sales Down

Company-wide first quarter sales at Office Depot were down 9% as officials with the office superstore chain pinned blame for the decrease largely on the ongoing regulatory review of the pending Staples acquisition.

For the period ending March 26, total reported sales were $3.5 billion, down from sales of $3.9 billion in the first quarter of 2015. Office Depot reported operating income of $71 million and net income was $46 million, or $0.08 per share. In the first quarter of 2015, the reported operating income was $88 million and net income was $45 million, or $0.08 per share.

“The protracted regulatory review of the pending Staples acquisition continues to have a substantial disruptive impact on our business,” said Roland Smith, chairman and CEO for Office Depot. “Our North American business solutions division and international division are more impacted by this disruption and accordingly, both failed to meet our sales and profit expectations this quarter. In spite of the uncertainty surrounding the acquisition, our associates around the world continue to demonstrate focus, drive and dedication as we finalize this process.”

Regarding Staples pending acquisition of Office Depot, Roland said he expects a decision on May 10.

Retail division sales were $1.5 billion in the first quarter of 2016 compared to $1.7 billion in the prior year period. First quarter sales declined 9%, primarily due to the impact of planned store closures in the fiscal 12 months through March 26. Same-store sales in the quarter declined 1% primarily due to lower transactions. Same-store sales benefited from the positive impact of transferred sales from closed stores and increased operational effectiveness.

Sales in the company’s North American business solutions division were $1.4 billion in the first quarter of 2016, a decline of 7% compared to the prior year period. Sales also declined 7% in constant currency, and were lower in both the contract and direct channels. The contract channel sales decline was driven by customer attrition and lower customer additions, primarily due to the substantial business disruption related to the pending acquisition by Staples.

In the direct channel, decommissioning of the company’s legacy OfficeMax ecommerce sites and the ongoing reduction in catalog sales through its call centers also contributed to the decline in sales.

Office Depot operates approximately 1,800 retail stores worldwide.