The ODP Corporation (ODP) – 1Q24 First Look


Thursday, May 09, 2024

Office Depot, Inc., together with its subsidiaries, supplies a range of office products and services. It offers merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture through its chain of office supply stores under the Office Depot, Foray, Ativa, Break Escapes, Worklife, and Christopher Lowell brand names. The company also provides graphic design, printing, reproduction, mailing, shipping, and other services through design, print, and ship centers. It has operations throughout North America, Europe, Asia, and Central America. The company also sells its products and services through direct mail catalogs, contract sales force, Internet sites, and retail stores, through a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 31, 2008, Office Depot operated 1,267 North American retail division office supply stores and 162 international division retail stores, as well as participated under licensing and merchandise arrangements in 98 stores. The company was founded in 1986 and is based in Boca Raton, Florida.

Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q24 Results. Net sales were $1.87 billion, down from $2.11 billion in 1Q23 and slightly below our $1.95 billion estimate. A challenging overall economic environment and 56 fewer Office Depot stores, y-o-y, drove the revenue contraction. Adjusted EBITDA totaled $82 million, down from $131 million and below our $123 million estimate. Net income declined to $15 million, or $0.40/sh, from $72 million, or $1.71/sh. We had forecasted $64 million, or $1.72/sh.

A Decision on Varis. Put out the “For Sale” sign. Responding to shareholder suggestions, among other things, management and the Board came to the decision to sell the Varis unit, which just has not begun to generate revenue as originally anticipated. While waiting for the sale to occur, the operating costs of Varis have been reduced by approximately one-third.


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