Office Depot CEO touts progress
Despite anemic sales growth in the second quarter, Office Depot CEO Gerry Smith said he was extremely pleased with the company's performance and named a new head of investor relations to help spread the word.
Smith touted the company's service revenues, which grew 120% primarily due to revenues contributed by its CompuCom acquisition. On a consolidated basis, services represent approximately 16% of total company sales. Service revenue excluding CompuCom grew 8% in the second quarter ended June 30.
“I am extremely pleased with our performance in the second quarter as the execution of our strategy is driving improved sales trends across all three of our operating divisions,” said Gerry Smith, chief executive officer of Office Depot. “Sales in the Business Solutions Division were up an impressive 4% in the quarter driven by our acquisition strategy and growth in the adjacency categories beyond office products. I’m also encouraged by the early success of our initiatives to increase services, which now represent 16% of total sales. In addition to the sales performance, our efficiency and cost control initiatives allowed us to deliver an increase in year-over-year operating income and cash flow for the Company in the quarter. I’m confident that we have the right strategy in place to grow the business long term and we have assembled a talented and dedicated team that is focused on driving continued execution across the enterprise.”
Office Depot also named a new vice president of investor relations. Timothy Perrott will report directly to Joe Lower, EVP and chief financial officer.
In this role, Perrott will oversee the development and execution of Office Depot’s investor relations strategy. He will also lead the dialogue with the investment and analyst community about the company’s business strategies and financial performance. Perrott joins Office Depot from CommandScape, a building services technology company, where he served most recently as chief financial officer and head of investor relations.
“Tim brings a wealth of relevant experience to our organization and we are excited to welcome him to our team,” said Lower. “I am certain his broad expertise and proven track record will further strengthen our investor relations initiatives and deepen the understanding of Office Depot’s transformational strategy within the financial community.”
The company said that it had $0.05 in earnings per share (EPS) and $2.63 billion in revenue in the second quarter. In the same period of last year, the specialty retailer said it had EPS of $0.06 and $2.36 billion in revenue.
In terms of its segments, the company reported as follows:
- Business Solutions Division sales grew 4% year over year to $1.30 billion, with an operating income of $67 million.
- Retail Division sales decreased 2% to $1.05 billion, with an operating income of $22 million.
- CompuCom Division sales increased 3% to $277 million, with an operating income of $6 million.
Looking ahead to the 2018 full year, the company expects to see sales of roughly $10.8 billion with an adjusted operating income of about $360 million.
Office Depot Inc. operates approximately 1,400 stores, with banners including Office Depot, OfficeMax, CompuCom and Grand&Toy.