Office Depot (ODP) Tuesday reported second-quarter results that surpassed analysts’ estimate on both the top and bottom lines. During the quarter, the company’s net income from continuing operations fell to $19 million, or $0.03 per share, compared to $21 million and $0.04 per share a year ago. Excluding items, the company earned $0.05 a share, above the consensus estimate of $0.03 a share.
Office Depot shares gained over 1% during pre-market trading.
The year-over-year decrease in the earnings was mainly due to lower gross margins from store and supply chain cost deleverage, as well as higher expenses experienced primarily in Q1 2018.
Sales during the quarter rose 11% to $2.6 billion. Analysts had expected $2.58 billion. The company reported a marginal growth of 1% in its product sales, while service revenues soared 120% helped by CompuCom acquisition. Services represent approximately 16% of total company sales.
Business Solutions Division reported a 4% growth in its sales to $1.3 billion, riding on the recent acquisitions and eCommerce growth. Meanwhile, sales of the retail division dipped 5% to $1.1 billion, partially impacted by the adoption of the new revenue recognition standard.
During the quarter, the company closed two stores and ended the quarter with a total of 1,374 stores in the Retail Division.
During the quarter the company said it paid a quarterly cash dividend of $0.025 per share on June 15 to its shareholders.