The first quarter of 2024 saw a 11% decrease in total sales, primarily due to lower sales in Office Depot’s consumer division, Office Depot, due to planned store closures and lower retail and online consumer traffic.
Sales at ODP Business Solutions Division also decreased due to weaker economic activity, cautious spending among business customers, and challenges in onboarding new customers.
The company reported a GAAP operating income of $18 million in Q1 2024, down from $95 million in Q1 2023. The Q1 results included $33 million charges, mainly due to net merger and restructuring expenses and $6 million non-cash asset impairment.
Net income from continuing operations was $15 million, down from $72 million in Q1 2023, and the company’s net income from continuing operations was $0.40 per diluted share.
Accelerating Project Core and Maximizing In-Year and Run-Rate Savings
Project Core is a plan by ODP to enhance business efficiencies and increase shareholder returns through an expanded share repurchase program. The plan includes cost improvement actions across the entire enterprise, including routes to market, Varis, procurement, IT, and shared services. The company has reviewed strategic options for its Varis business unit and approved a plan to sell it.
The company is accelerating its efforts under Project Core, aiming to maximize in-year and full-year run-rate savings, resulting in in-year savings of approximately $50 million, excluding Varis, and annualized savings of over $100 million when fully implemented.
Restructuring and related charges are estimated to be $40 million to $50 million, incurred throughout 2024. The company plans to begin reducing costs in the second quarter of 2024, with most actions expected to be completed over the next 12 months.
Source: Business Wire
Source: ODP
