Office Depot’s Parent ODP Shrinks Retail Footprint, Expands B2B Offerings

The ODP Corporation (NASDAQ:ODP) reported second-quarter results on Tuesday with adjusted earnings per share of 51 cents, beating the analyst consensus estimate of 36 cents.

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Growth-Focused Restructuring Outlook

Quarterly sales of $1.59 billion (down 8% year over year) was in line with the Street view.

Sales declined mainly because the Office Depot Division operated 60 fewer retail locations than a year ago and experienced reduced in-store and online consumer traffic.

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Additionally, the ODP Business Solutions Division posted lower sales despite showing improving year-over-year comparable revenue trends.

Adjusted operating income fell to $25 million in the second quarter, down from $33 million in the year-ago period. Adjusted EBITDA declined to $47 million versus $57 million year over year.

“In our B2B distribution business, we achieved approximately a 200-basis point improvement in year-over-year revenue trends, driven by stronger sales traction with new customers and early contributions from our expansion into the hospitality sector,” said CEO Gerry Smith.

“Sales trends improved month over month throughout the quarter, improving our position as we head into the second half of the year,” Smith added.

View more earnings on ODP

The company stated that, with its strong focus on cash, it expected to generate significantly higher adjusted free cash flow than the prior year, further strengthening its foundation and balance sheet.

As of June 28, the firm had total available liquidity of $658 million.

This included $177 million in cash and cash equivalents and $481 million of available credit under the Fourth Amended Credit Agreement. Total debt stood at $245 million.

Growth-Focused Restructuring

In the second quarter, the company advanced its “Optimize for Growth” plan to cut fixed-cost infrastructure and expand B2B offerings into hospitality, healthcare and other verticals.

It recognized $12 million of restructuring expenses, primarily severance and the closure of 23 retail stores, three distribution facilities and one satellite location.

Over the plan’s multi-year horizon, the company expects to invest $185-230 million to achieve roughly $380 million in EBITDA improvement and create over $1.3 billion in total value.

“While we are not immune from changes in the evolving tariff landscape, we believe that we are well positioned to adjust as necessary to limit potential impacts to our business,” the company said.

Outlook

The company anticipates continued improvement in the second half of 2025, driven by top-line gains in ODP Business Solutions and robust Office Depot results, to generate over $115 million in adjusted free cash flow for the year.

Price Action: ODP shares are trading higher by 0.17% to $17.58 at last check Tuesday.

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Photo by Hrach Hovhannisyan via Shutterstock

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