August 13, 2019
“This quarter was a compelling demonstration of how we are implementing our strategy and utilizing our B2B platform to serve our business customers,” said Gerry Smith, Chief Executive Officer of Office Depot. “Our strong operating results were driven by growth in our BSD division and improving performance at our CompuCom division. Our strategic focus on our B2B businesses, which consists of our BSD and CompuCom divisions, generated over 60 percent of our revenue and over 90 percent of our division level operating income in the second quarter. Relative to the first quarter 2019, BSD operating income was up 87 percent and performance at CompuCom improved significantly, reflecting our intense focus on profitability enabled by our Business Acceleration Program. As we announced last quarter, this program is expected to achieve significant cost savings of at least $40 million (€35.69 million) this year and over $100 million (€89.23 million) at full run-rate thereafter.”
“We are also thrilled that Mick Slattery and Stephen Mohan, two highly experienced and proven leaders, have joined us to lead CompuCom and BSD, respectively,” Smith added. “Our strong performance in the second quarter, traction of our profitability initiatives, and addition of key senior leaders underlie our confidence in our strategic direction and positions us to drive profitable growth in the second half of 2019,” he added.
Total reported sales for the second quarter of 2019 were $2.6 billion (€2.31 billion), a decrease of two percent compared to the second quarter of 2018. The decrease in revenue over the same period last year was the result of lower sales in the Retail division, primarily driven by lower same store sales combined with fewer retail stores, and lower sales in the CompuCom division, Office Depot explained.
The sales decline in the second quarter was partially offset by stronger sales performance in the BSD division. Product sales in the second quarter were down one percent relative to the prior year period. Service revenue was down six percent year-on-year related to lower comparable sales at CompuCom, partially mitigated by a five percent and seven percent year-on-year increase in service revenue in the BSD and Retail divisions, respectively. On a same store comparable basis, service revenue increased by approximately 12 percent in the Retail division. On a consolidated basis, service revenue represented approximately 16 percent of total company sales in the second quarter of 2019.
In the second quarter of 2019, Office Depot reported an operating loss of $15 million (€13.38 million), compared to operating income of $48 million (€42.83 million) in the prior year period. The reduction of operating income was primarily driven by a $55 million (€49.078 million) increase in merger and restructuring costs primarily associated with BAP-related charges recognized in the quarter.
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