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Office Depot sheds light on strategy

May 17, 2018

Office Depot, Inc., an omni-channel provider of business services, products and technology solutions, is hosting an Investor and Analyst Day: Depot. Different!, to review the strategic transformation underway.

Office Depot Chief Executive Officer, Gerry Smith, joined by his Executive Leadership team, will outline the compelling market opportunity for business services and Office Depot’s pivot to becoming an omni-channel business services platform, providing end-to-end solutions for businesses of all sizes.

“We are building on our core business to create a unique omni-channel platform that delivers the products and services needed by our business-to-business (B2B) and business-minded customers now and into the future. Our company has an impressive set of assets with more than 6,000 employee information technology (IT) technicians, next day delivery reach to 98.5 percent of the US population and strong relationships with 28.6 million customers across the omni-channel,” said Gerry Smith, Chief Executive Officer of Office Depot. “With a clear strategy already producing results, we will compete and win in our legacy office products markets and new growing markets. With a relentless focus on our customers we will deliver expert services, innovative products and one cohesive omni-channel experience however the customer chooses to interact with us; in-person, online or through our outstanding B2B sales engine.”

Smith continued, “Already, we are seeing very promising results with omni-customers, who spend twice as much as ‘online only’ customers and three times more than ‘in-store only’ customers, growing 31 percent year-over-year in Q1. This continued positive momentum is creating meaningful results for our shareholders including an expected 5.5 percent growth in year over year sales in 2018, with an outlook to 2020 that sees services revenue growing to approximately 20 percent of total sales.”

The Office Depot executive leadership team will also use the meeting to introduce its plan for an integrated business services offering, Workonomy, designed to create a seamless customer experience. The comprehensive offering will serve both small- to medium-sized businesses (SMB) and enterprise customers, allowing them to create personalised support based on their business needs.

SMB services will include administrative, technology and marketing solutions ranging from digital marketing to 3D printing to packing and shipping offerings. Enterprise services will include managed workplace solutions, infrastructure modernisation, technology procurement and IT staffing.

Smith stated, “The formation of Workonomy is a reflection of how we are meeting the needs of our customers by creating a cohesive, omni-channel experience that helps them solve their most vital, modern business needs.”

Highlights of the presentation to the financial community include:

  • Utilising the unique assets of Office Depot’s omni-channel platform
  • Generating customer demand by exploiting digital media capabilities
  • Instilling customer focus and services mentality for growth
  • Strengthening the BSD segment
  • Leveraging CompuCom to accelerate technology-based services
  • Transforming the retail experience
  • Providing a three-year financial outlook for sustainable growth and strong cash generation

Outlook for 2018, 2019 and 2020

During the meeting, the company will reaffirm its 2018 outlook of:

  • Approximately $10.8 billion (€9.1 billion) in total sales
  • Services revenue of approximately 14 percent of total revenue
  • Adjusted operating income of approximately $360 million (€305 million)
  • Approximately $350 million (€296.5 million) of free cash flow

Office Depot will also outline expected 2019-2020 financial targets of:

  • Total sales growing at a 0 percent to 2 percent compound annual growth rate
  • Services revenue reaching approximately 20 percent of total revenue
  • Adjusted operating income growing at a 3 percent to 5 percent compound annual growth rate
  • Approximately $350 million (€296.5 million) of annual free cash flow

 

 

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