Office Depot Q2 sales down 6%, will close 300 stores
Staff Writer |
Office Depot announced results for the second quarter ended June 25, 2016. Total reported sales were $3.2 billion compared to $3.4 billion in Q2 2015, a decrease of 6%.
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Office Depot reported operating income of $253 million and net income of $210 million, or $0.38 per share. In the second quarter of 2015, the company reported an operating loss of $51 million and a net loss of $58 million, or $0.11 loss per share.
Total adjusted sales in the second quarter of 2016 declined 3% compared to the prior year period, excluding the impact of U.S. retail store closures and foreign currency translation.
Adjusted operating income for the second quarter of 2016 was $67 million compared to an adjusted operating income of $73 million in the second quarter of 2015.
For the second quarter of 2016, adjusted operating income excludes a net credit totaling $187 million, comprised of a $250 million fee paid by Staples in connection with the termination of the merger agreement.
This was partially offset by charges including $34 million in Staples acquisition expenses, $25 million in expenses related to the Office Depot/OfficeMax integration and $4 million in restructuring activities.
Adjusted net income for the second quarter of 2016 was $19 million, or $0.03 per share, compared to adjusted net income of $32 million, or $0.06 per share, in the second quarter of 2015.
Adjusted net income in the second quarter of 2016 excludes the after-tax impact from the special charges and credits and reflects the negative impact of a higher tax rate due to losses in non-U.S. jurisdictions with valuation allowances.
As of June 25, 2016, Office Depot had $1.1 billion in cash and cash equivalents and approximately $1.1 billion available under the Amended and Restated Credit Agreement, for total available liquidity of approximately $2.2 billion.
Total debt was $654 million, excluding $808 million of non-recourse debt related to the credit-enhanced timber installment notes.
During the second quarter of 2016, Office Depot completed the first phase of the U.S. Retail Store Optimization that was launched in 2014.
This plan resulted in the closure of 400 stores, with sales transfer rates in excess of the company’s 30% stated target, leading to over $100 million in ongoing benefits.
Based on the success of this initiative, Office Depot is expanding this plan to include approximately 300 additional store closures over the next three years. ■