ODP Corporation Reports 9% Sales Decline and $29 Million Net Loss in Q1 2025

The ODP Corporation reported a significant decline in financial performance for the first quarter of 2025, with total sales of $1.699 billion, down 9% from $1.869 billion in the same period last year. The decrease was primarily driven by lower sales in both the ODP Business Solutions Division and the Office Depot Division, which saw declines of 8% and 11%, respectively. The company's gross profit also fell by 12% to $360 million, resulting in a gross margin of 21%, down from 22% in the prior year. The operating loss for the quarter was $32 million, compared to an operating income of $41 million in the first quarter of 2024.

The company's net loss from continuing operations was $29 million, translating to a diluted loss per share of $0.97, a stark contrast to the diluted earnings per share of $0.83 reported in the previous year. This decline in profitability was attributed to a combination of lower sales, increased costs, and $38 million in asset impairment charges related to the company's restructuring efforts. The effective tax rate for the quarter was 26%, up from 21% in the prior year, influenced by various tax adjustments.

Strategically, ODP is undergoing a significant restructuring initiative called "Optimize for Growth," 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 reallocating resources to expand into new market segments such as hospitality and healthcare. In the first quarter of 2025, the company closed nine retail stores as part of this initiative, which is expected to result in a smaller retail footprint by 2028.

Operationally, the company reported a decrease in customer counts and engagement metrics, with fewer business-to-business customers contributing to the decline in sales. The Office Depot Division operated 857 retail locations as of March 29, 2025, down from 903 a year earlier. The company also noted a decrease in comparable store sales, which fell by 5% in the first quarter of 2025, an improvement from a 10% decline in the same period last year.

Looking ahead, ODP Corporation anticipates continued challenges due to macroeconomic factors affecting consumer and business spending. The company has $185 million in cash and cash equivalents and $468 million in available credit, providing a total liquidity of $653 million to support its operations and restructuring efforts. However, the ongoing economic environment and potential new tariffs on imported goods may further impact the company's performance in the upcoming quarters.