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Office Depot’s fortunes on the rise?

June 18, 2018

As market analysis reveals that the company’s stocks are on an upswing, it seems that Office Depot’s fiscal outlook is looking positive.

As Market Realist reveals, the company’s stock “has been on an uptrend since its last earnings results.”

Although Office Depot’s fortunes had been looking rather grim, due to a decrease in sales linked to the expansion of ecommerce, which “made most of the paper-based supplies redundant”, the company has come up with some strategic initiatives designed to help it regain its footing.

These include “becoming a B2B […] services provider”, a move which resulted in Office Depot’s acquisition of CompuCom, the launch of Bizbox and a fresh focus on subscription-based processes. The company also kickstarted a new “comprehensive plan” known as ‘Workonomy’, which Office Depot has designed in order to provide “integrated business services to enterprise customers and small and medium business customers.”

The results of this manoeuvre could be seen at the recent Baird Global Consumer, Technology, and Services Conference, which took placed on 5 June 2018, during which Office Depot revealed that sales in the B2B sector made up the majority of its total sales.

In May this year, the company reported a positive Q1 performance, with CEO Gerry Smith saying, “I am encouraged by the progress we’ve made so far this year to strengthen our core businesses and expand the service and subscription offerings to our B2B and business-minded customers,” adding, “Our strategic growth initiatives are gaining traction and we expect to continue building momentum throughout the year on this transformation journey to deliver long-term, sustainable growth.”

Other changes being made by Office Depot which could affect the business’s finances include the closures of its international operations, which “could boost the company’s top line.”

Looking ahead, Wall Street analysts predict a rise in sales of 9.1 percent, a marked improvement on the decline reported by the company in Q2 2017. These positive predictions are due to “the services business picking up momentum” and the rising success of the company’s subscription-based model.

In terms of financials, “Office Depot expects an adjusted operating income of $360 million (€310.3 million) in 2018, compared to $350 million (€301.7 million) projected earlier.” As for the fiscal year spanning 2019/2020, “Office Depot’s sales are expected to witness a CAGR […] of 0 – 2 percent”, with revenues from services as percentage total sales “expected to be 20 percent”.

 

 

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