Office Depot Sees Revenue Drop In Q2

Second quarter sales at Office Depot were down as the office superstore retailer reported declines in its retail and business solutions divisions.

Total sales for the quarter ended July 1 was $2.4 billion, down from sales of $2.6 billion. Net income was $24 million, or $0.05 per share, compared to net income of $210 million, or $0.38 per share, for the comparable quarter the prior year.

Retail division sales for the quarter were $1.1 billion, down from sales of $1.2 billion in the second quarter of 2016. The drop in sales, according to the company, was due to the impact of planned store closures over the past 12 months and a 6% decline in comparable store sales.

Sales in Office Depot’s business solutions division were down 6% to $1.2 billion. Continued competitive pressures, prior period customer losses in the contract channel and an ongoing reduction in catalog sales were all factors in the decline, company officials said.

Office Depot continues to expect total company sales in 2017 to be lower than 2016, primarily due to the impact of planned store closures, prior year contract customer losses, continued challenging market conditions and returning to a 52-week fiscal year. However, the company said it expects the rate of sales decline to improve in the second half of 2017 based on improvements in customer retention, implementation of new customer wins and growth from strategic business initiatives.

In addition, Office Depot officials expect to be substantially complete with its OfficeMax integration and realize the majority of the synergy benefits by the end of 2017. Merger integration expenses are now estimated to total approximately $40 million in 2017 and approximately $15 million in merger-related capital expenditures.