ODP Corp. is moving ahead with strategic plans to separate its B2B and retail operations to maximize the company’s overall potential, CEO Gerry Smith says. The corporation is a holding company for the Office Depot B2B and retail brands, as well as OfficeMax and other operations including the relatively new Varis B2B digital commerce technology unit.
“Using the flexibility forward by our holding company restructuring that we implemented in 2020, we have completed the separation of most of the operational components of the business and are aligning our assets to support our routes to market across our B2B and B2C businesses,” Smith said on a Q1 earnings call, according to a transcript from Seeking Alpha. “We also continue to invest in the capabilities of our B2B digital platform and in our supply chain and sourcing assets.”
B2B ecommerce sales dip on lower pandemic-related demand
ODP also announced on the day Q1 results came out that it had promoted Office Depot veteran David Centrella to corporate vice president and president of the ODP Business Solutions. Until recently, it was known as the Business Solutions Division. Centrella, who joined Office Depot in 1998, has served in finance, merchandising, sales, and B2B sales operations. He most recently was senior vice president of financial planning and analysis. There, he led several companywide initiatives, including the Separation Management Office and its strategic review of ODP’s consumer business.
In ODP’s fiscal first quarter ended March 26, it said B2B sales grew 9% year-over-year to $1.2 billion. Retail sales fell 9% to under $1 billion ($943.0 million), and total sales were essentially flat at $2.2 billion. ODP noted a year-over-year drop in B2B ecommerce sales offset the gain in total B2B sales, as online customers purchased fewer pandemic-related products. It did not break out ecommerce sales.
Launching Varis and Veyer B2B businesses
ODP said its board decided in the first quarter to delay its previously announced plan. It was going to split its B2B and retail operations into separate public companies. That would allow the company to consider a non-binding proposal from a third party to acquire ODP’s consumer business. It did not disclose the terms of that proposal.
The company is also moving ahead with other plans to focus on and grow its B2B business. It is planning a broad launch later this year of Varis, its B2B digital commerce platform for sourcing, purchasing and managing supply chains. Led by Prentis Wilson, Varis conducted a first-quarter preview launch on the Microsoft Dynamics 365 Business Central platform. Wilson was the first head of Amazon Business. He brought it to more than $10 billion in annualized sales within its first six years.
ODP is also developing Veyer Logistics. Veyer will provide supply chain and logistics technology and services to ODP’s B2B and B2C units. It will also provide them to third-party customers eventually.
“This year will mark an important milestone for Veyer, as the business is formally established,” Smith said.
For the first quarter ended March 26, ODP reported a 3.8% increase in net income to $55 million.
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