ODP Corporation Reports Decline in Q3 Financial Performance, Announces Restructuring and Merger Plans

The ODP Corporation reported a decline in financial performance for the third quarter and year-to-date periods ending September 27, 2025, as detailed in its latest 10-Q filing. The company generated $1.625 billion in sales for the third quarter, a decrease of 9% from $1.780 billion in the same period last year. Year-to-date sales also fell by 8%, totaling $4.911 billion compared to $5.367 billion in 2024. The decline was attributed to reduced demand from business-to-business customers and planned store closures, particularly impacting the Office Depot Division, which saw a 13% drop in sales.

In terms of profitability, ODP reported a net income of $23 million for the third quarter, down from $58 million in the prior year, resulting in diluted earnings per share of $0.72, compared to $1.73 in the same quarter of 2024. Year-to-date, the company recorded a net loss of $6 million, contrasting with a profit of $1 million in the previous year. The decrease in profitability was influenced by lower gross profit margins, which fell to 20% from 21% year-over-year, primarily due to increased supply chain and occupancy costs.

Strategically, ODP is undergoing significant restructuring efforts, including the "Optimize for Growth" plan aimed at realigning its operations to focus on higher growth opportunities in the business-to-business market. This plan includes closing underperforming retail stores and distribution facilities, with an estimated total cash restructuring cost of $185 million to $230 million. The company also announced a merger agreement with an affiliate of Atlas Holdings, which is expected to close by the end of 2025, pending regulatory approvals and stockholder consent. The merger will convert each share of ODP common stock into $28 in cash.

Operationally, ODP's divisions experienced varied performance. The ODP Business Solutions Division reported a 6% decline in sales, while the Office Depot Division's sales fell by 13%. Conversely, the Veyer Division saw a 64% increase in external sales, reflecting growth in supply chain services. The company closed 12 retail stores in the third quarter and a total of 44 year-to-date as part of its restructuring efforts. As of September 27, 2025, ODP had 822 retail locations, down from 885 a year earlier.

Looking ahead, ODP's management expressed cautious optimism regarding future performance, contingent on the successful execution of its restructuring plans and the anticipated merger. The company aims to enhance its market position and operational efficiency while navigating ongoing macroeconomic challenges and changes in consumer demand.