As Office Depot works to transition from an office products retailer to a broader business services platform, the company highlighted progress with its business divisions, although income and retail comps declined in the first quarter.
For the first quarter ended March 31, Office Depot posted net income from continuing operations of $33 million, or six cents per diluted share, versus $74 million, or 14 cents per diluted share, in the year-prior period.
With one-time charges excluded, adjusted net income from continuing operations was $45 million, or eight cents per diluted share, versus $88 million, or 16 cents per diluted share, in the 2017 period. Adjusted diluted earnings per share matched a MarketBeat-published analyst average estimate.
Net sales were $2.83 billion versus $2.68 billion in the year-previous period. With service revenues excluded, net sales from products was $2.42 billion versus $2.46 billion in the quarter the year before. Operating income was $77 million compared with $124 million and adjusted operating income was $93 million compared with $148 million in the fiscal 2017 period.
Retail division sales were $1.24 billion in the first quarter versus $1.36 billion in the period in the year prior, with comparable sales slipping 4%. Operating income for the division came in at $72 million versus $112 million in the period a year earlier. According to the Office Depot, the decline in operating income versus the prior year derived from lower sales, impacted by store closures, and higher marketing and advertising investments made to drive future store traffic.
“I am extremely pleased that we continue to see positive momentum in our core businesses and delivered financial results in the first quarter which, although lower than the prior year, exceeded our recent outlook,” said Gerry Smith, Office Depot CEO. “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 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.”