The ODP Corp., better known by its flagship office supplies brand Office Depot, reported a 9% year-over-year drop in third-quarter sales, resulting from the headwinds of COVID-19.
But there was also good news: The company’s third-quarter sales increased by 18% sequentially from the second quarter, and ecommerce sales—covering both B2B and retail division sales—increased by more than 20% and put the company on course to surpass $1.2 billion in annualized online sales.
“We continue to drive a significant increase in demand from business customers and consumers through our ecommerce channel, which was up significantly over last year and now approaching over $1.2 billion in sales” on an annualized run-rate basis, CEO Gerry Smith says.
Q3 sales in the Retail Division declined by 2.5% year over year to $1.15 billion, as CompuCom’s sales fell by 22% to $197 million. The Retail Division also closed 16 stores during the quarter, for a total of 73 closed over the past year, for a net total of 1,244 when the company’s third quarter ended Sept. 26.
Smith asserts that the company’s mix of selling channels and product lines is helping it weather this year’s market disruption. As the Business Solutions Division lost some contract-based customer sales, he notes, the retail channel picked up sales of work-at-home products in its retail stores and ecommerce site at OfficeDepot.com.
Capital expenditures on B2B platform
“Our retail business has been a key source for our business customers and consumers to safely procure the products and services they need during the pandemic,” Smith said on a conference call with investment analysts last week, according to a transcript from Seeking Alpha. “We continue to offer curbside contactless pickup at all of our locations and are driving demand through our BOPUS (buy online, pick up in-store) offering. We have seen strong demand for work and learn from anywhere categories for our business customers and students helping us manage the mix shift in core supplies and copy and print.”
And “as the overall business environment is beginning to show signs of recovery, our BSD Division, consisting of our large enterprise contract channel and ecommerce channel, drove improving sequential revenue trends” from the second to the third quarter, Smith says.
Going forward, ODP is pushing ahead with plans to improve its B2B technology platform, distribution and related ecommerce operations. “Capital expenditures in the quarter were $14 million compared to $32 million in the prior-year period, reflecting lower investment in our retail operations, while continuing investments in our B2B platform, distribution network and ecommerce capabilities,” said Anthony Scaglione, executive vice president and chief financial officer.
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