February 28, 2019
The retailer and supplier has announced its consolidated financial results for Q4 of 2018 and FY2018.
Office Depot’s sales for Q4 of 2018 hit $2.67 billion (€2.33 billion), up 3 percent year-on-year from Q4 2017’s figure of $2.58 billion (€2.26 billion). For the Full Year, sales reached $11.01 billion (€9.64 billion), up 8 percent from FY2017’s $10.24 billion (€8.97 billion).
Of these sales, $2.25 billion (€1.97 billion) came from product sales in Q4, down 1 percent from the previous year, with $420 million (€367.8 million) coming from services, a 34 percent growth. For the Full Year, $9.32 billion (€8.16 billion) came from product sales, roughly identical to FY2017, while $1.69 billion (€1.48 billion) was generated through services, an increase of 84 percent compared to FY2017.
There was less rosy news for the company’s operating income, however, which fell from $56 million (€49 million) in Q4 2017 to $24 million (€21 million) in the same period of 2018, and from $327 million (€286.4 million) to $254 million (€222.4 million) between FY2017 and FY2018.
In the company’s Business Solutions Division, there was more positivity, however, with Sales rising 3 percent in both Q4 2018 and FY2018, to $1.29 billion (€1.13 billion) and $5.28 billion (€4.62 billion) respectively.
“The year-over-year increase reflects the impact of acquisitions, without which sales were approximately flat with the prior year,” said Office Depot. “Organic sales performance was primarily driven by continued growth in adjacency categories and services.”
Again, however, operating income for the division fell, from $68 million (€59.5 million) to $54 million (€47.3 million) in Q4 and from $262 million (€229.5 million) to $243 million (€212.8 million) in FY.
Office Depot’s Retail Division bucked the trend, recording a 5 percent fall in Sales in Q4 2018, to $1.09 billion (€954.8 million), and a 4 percent drop in FY 2018, to $4.64 billion (€4.06 billion). The division’s operating income was also down, from $40 million (€35 million) to $28 million (€24.52 million) in Q4, and from $254 million (€222.5 million) to $193 million (€169 million) in FY.
“Planned closures of underperforming stores and an approximately $10 million (€8.76 million) negative impact to revenue resulting from the adoption of the new revenue recognition standard contributed to the reported decline,” explained Office Depot, with the company adding that “the decrease in operating income versus the prior year was due to deleveraging related to store closures, lower sales volume, and investments in additional service delivery capabilities adversely impacting gross profit and SG&A as a percentage of sales.”
During Q4 2018, the company opened one new store, replaced one store, and closed 13 stores, ending the quarter with a total of 1,361 stores in its Retail Division.
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