The ODP Corporation (ODP) – Efficiency is the Key

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Thursday, February 29, 2024

Office Depot, Inc., together with its subsidiaries, supplies a range of office products and services. It offers merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture through its chain of office supply stores under the Office Depot, Foray, Ativa, Break Escapes, Worklife, and Christopher Lowell brand names. The company also provides graphic design, printing, reproduction, mailing, shipping, and other services through design, print, and ship centers. It has operations throughout North America, Europe, Asia, and Central America. The company also sells its products and services through direct mail catalogs, contract sales force, Internet sites, and retail stores, through a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 31, 2008, Office Depot operated 1,267 North American retail division office supply stores and 162 international division retail stores, as well as participated under licensing and merchandise arrangements in 98 stores. The company was founded in 1986 and is based in Boca Raton, Florida.

Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

4Q Results. Total sales were $1.8 billion, down 14% from last year or 9% excluding the 53rd week in 2022 that wasn’t repeated in 2023, driven by store closures, and a continued challenging economic environment. We had revenue of $1.85 billion. Adjusted net income was $35 million, or $0.92 per diluted share, compared to $40 million, or $0.85 per diluted share, in the fourth quarter of 2022. Adjusted EBITDA was $73 million compared to $89 million in the prior year.

Cost Savings Initiative. Project Core is the new plan to create more efficiencies in ODP’s low cost model, in which management expects the plan to realize annualized savings of $50-$60 million when fully implemented. Management expects the plan to take effect in Q2 of 2024. We are optimistic that management can fully implement the strategy into its model, with cost savings already being an important factor in management’s operating philosophy.

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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 


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