Categories Research Summary, Retail, Trending Stocks

ODP Corporation (ODP) shifts its focus from retail operations to digital transformation

ODP will spin off its Business-to-Business (B2B) division into an independent company

Shares of The ODP Corporation (NASDAQ: ODP) were up 7% on Wednesday. The stock has gained 55% since the beginning of the year and 113% in the past 12 months. The company reported mixed results for the first quarter of 2021, with earnings surpassing expectations while revenue fell short. ODP also announced that it was splitting into two independent, public companies.

Quarterly performance

Total sales for Q1 2021 fell 13% year-over-year to $2.4 billion and was shy of analysts’ projections. Adjusted EPS of $1.21 remained unchanged from last year but surpassed expectations. Sales during the quarter were hurt by fewer number of retail stores being in service as well as a reduction in sales caused by the effects of the COVID-19 pandemic. Both product and service revenues witnessed double digit declines during the quarter.

ODP recorded double-digit sales declines across all its business divisions mainly due to store closures and other effects related to the pandemic. Even though store sales suffered, other channels picked up pace during the quarter. Within the Business Solutions Division, the pandemic impacted operations driving sales 16% lower versus the prior year but demand in ecommerce climbed 3%.

Sales in the Retail Division fell 10% as the company closed several underperforming stores and thereby had fewer retail outlets at the end of Q1. At the same time, ODP saw a 35% growth in its buy online, pick up in store (BOPIS) offering. The CompuCom Division saw sales fall 17% as the pandemic led to lower service volumes and the malware incident led to lower billed service revenues.

Digital transformation

During the quarter, ODP made progress on its digital transformation initiatives. The company integrated the P2P eProcurement software platform BuyerQuest into its new technology platform business thereby expanding its customer base and its pipeline of opportunities. Capex decreased to $13 million in the quarter compared to last year as the company reduced its investments in retail operations while focusing more on its digital transformation, ecommerce capabilities and distribution network.


ODP announced that it is spinning off its Business-to-Business (B2B) division into an independent company. It will distribute the shares of the new company as a tax-free dividend to ODP’s shareholders who will own 100% of the equity in both the independent, public companies. The spin-off is expected to be completed during the first half of 2022. This move is expected to help both companies pursue their own strategies with their specific set of investment opportunities and growth objectives.

Click here to read more on retail stocks

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

Most Popular

KR Earnings: Kroger Q3 sales, profit increase and top expectations

Department store chain The Kroger Co. (NYSE: KR) on Thursday said its third-quarter sales and adjusted earnings increased year-over-year. The latest numbers also exceeded the market's expectations. Net earnings attributable to

CrowdStrike: Why this cybersecurity stock is a good investment for 2023

CrowdStrike Holdings, Inc. (NASDAQ: CRWD) has steadily expanded its subscriber base over the years, riding the ever-growing demand for cybersecurity solutions. As digital adoption continues -- which accelerated after the

CRM Results: Salesforce Q3 earnings beat; revenues rise 14%

Customer relationship management platform Salesforce, Inc. (NYSE: CRM) on Wednesday reported an increase in third-quarter adjusted earnings, aided by double-digit growth in revenues. The numbers surpassed analysts' predictions. Third-quarter profit,

Add Comment
Viewing Highlight