Office Depot Inc.’s (ODP) shares surged over 9% after the company reported better-than-expected sales and earnings for the third quarter of 2018 and raised its guidance for the full year of 2018.
Total sales increased 10% to $2.9 billion from the same period last year, with increases in product and service revenues. Service revenues grew 124%, when including revenues from the CompuCom acquisition. Excluding CompuCom and other revenue recognition impacts, service revenue grew 17%.
Reported net income was $60 million, or $0.11 per share, compared to $92 million, or $0.18 per share, in the prior-year period. Adjusted EPS totaled $0.13, beating analysts’ estimates of $0.12.
In the Business Solutions Division, sales rose 6%, driven by acquisitions, eCommerce growth, and growth in adjacency products, core supplies and services. The segment also recorded increases in product sales and service revenues.
The Retail Division posted a sales decline of 6% due to impacts from planned store closures and the adoption of a new revenue recognition standard. Product sales fell 7% while service revenues improved 11%. The CompuCom Division reported sales of $268 million in the quarter.
Office Depot raised its sales guidance for the full year of 2018 to $11 billion from the previous outlook of $10.8 billion. For the full year of 2019, the company expects sales of $11.1 billion.