Office Depot swings to a loss in Q4
Despite posting a loss due to the new tax reform, Office Depot continues its evolution from a traditional office-supplies retailer to a broader business services provider.
For the fourth quarter ended Dec. 30, 2017, the office supplies company reported a net loss of $48 million, which was the result of a net tax expense of approximately $68 million associated with changes to the recent tax law reform. This is compared to a profit of $55 million in the fourth quarter of 2016.
Adjusted earnings per share came to $0.08, which beat the FactSet consensus of $0.07.
However, the company came up short on sales for the quarter, hitting $2.6 billion versus $2.7 billion in the same quarter in 2016. This was also just shy of the FactSet estimate of $2.61 billion. Comparable store sales dropped by 4% for the quarter.
For the full year of 2017, Office Depot’s net income hit $146 million, compared with a profit of $679 million in 2016. However, in 2016, the company reported $250 million of income related to a fee from Staples for terminating the $6.3 billion merger agreement.
Sales for the year were $10.2 billion, a decline of 7% compared to the prior year. Comparable store sales dropped by 5% for 2017.
Looking ahead, CEO Gerry Smith is considering 2018 “a year of transition,” one that will focus on revenue from more services.
“I’m very excited by the positive response we have received from our customers and key business partners since announcing our new strategic direction to transform and strengthen Office Depot,” said Smith. “We are accelerating a number of initiatives to drive this transformation including expanding the CompuCom technology services footprint, rolling out the BizBox services platform and accelerating the offering of new subscription-based services.”
The company also expects upcoming investments to advance the company’s multi-year transformation efforts and profitability. “I expect that 2018 will be our pivot year as the actions we have already taken, coupled with the additional initiatives and investments we have planned this year, should allow us to grow year-over-year profitability in 2019,” Smith added.
For the fourth quarter ended Dec. 30, 2017, the office supplies company reported a net loss of $48 million, which was the result of a net tax expense of approximately $68 million associated with changes to the recent tax law reform. This is compared to a profit of $55 million in the fourth quarter of 2016.
Adjusted earnings per share came to $0.08, which beat the FactSet consensus of $0.07.
However, the company came up short on sales for the quarter, hitting $2.6 billion versus $2.7 billion in the same quarter in 2016. This was also just shy of the FactSet estimate of $2.61 billion. Comparable store sales dropped by 4% for the quarter.
For the full year of 2017, Office Depot’s net income hit $146 million, compared with a profit of $679 million in 2016. However, in 2016, the company reported $250 million of income related to a fee from Staples for terminating the $6.3 billion merger agreement.
Sales for the year were $10.2 billion, a decline of 7% compared to the prior year. Comparable store sales dropped by 5% for 2017.
Looking ahead, CEO Gerry Smith is considering 2018 “a year of transition,” one that will focus on revenue from more services.
“I’m very excited by the positive response we have received from our customers and key business partners since announcing our new strategic direction to transform and strengthen Office Depot,” said Smith. “We are accelerating a number of initiatives to drive this transformation including expanding the CompuCom technology services footprint, rolling out the BizBox services platform and accelerating the offering of new subscription-based services.”
The company also expects upcoming investments to advance the company’s multi-year transformation efforts and profitability. “I expect that 2018 will be our pivot year as the actions we have already taken, coupled with the additional initiatives and investments we have planned this year, should allow us to grow year-over-year profitability in 2019,” Smith added.