ODP 2025 Q1 Earnings Misses Targets as Net Income Falls 293%

ODP (ODP) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company posted a net loss of $29 million, or $0.97 per share, compared to a net income of $31 million, or $0.83 per share, in the same period last year. The results fell short of market expectations, largely due to lower sales across its divisions. Despite the earnings miss, ODP provided guidance indicating confidence in its strategic direction, with expected improvements in the hospitality segment in the latter half of the year.

Revenue
The revenue for ODP in the first quarter of 2025 was $1.70 billion, reflecting a decline of 9.1% compared to the same period in 2024. The ODP Business Solutions Division generated $850 million, the Office Depot Division contributed $832 million, and the Veyer Division added $17 million, culminating in the total revenue figure. This decrease was attributed to lower sales in both consumer and B2B divisions, influenced by fewer retail locations and reduced consumer traffic.

Earnings/Net Income
ODP experienced a significant downturn in earnings, moving from a profit of $0.42 per share in Q1 2024 to a loss of $0.97 per share in Q1 2025, marking a 331% negative change. Net income also suffered, with a net loss of $29 million, contrasting sharply with the $15 million net income of the previous year, reflecting a 293.3% deterioration. These figures highlight the challenging financial performance for the quarter.

Price Action
The stock price of ODP saw a sharp decline of 15.86% on the latest trading day. Despite this drop, the stock edged up 0.80% over the most recent full trading week but remained down 0.58% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing ODP shares following a revenue increase and holding for 30 days yielded a 12.28% return over the past five years, significantly underperforming the benchmark by 71.81%. This approach exhibited a maximum drawdown of -15.96% and a Sharpe ratio of 0.21, emphasizing the difficult risk-return profile and underscoring the necessity of risk management in such volatile conditions.

CEO Commentary
“We are off to a better start to the year, with our overall performance reflecting positive momentum and improving trends in the first quarter,” said Gerry Smith, Chief Executive Officer of The ODP Corporation. He noted solid operational results, driven by the consumer division, which contributed to stronger top-line trends and improved cash flow. Smith highlighted significant strides in the B2B distribution business, securing meaningful contracts and accelerating customer onboarding. He emphasized ongoing progress in the hospitality industry and exceptional performance in the supply chain business, expressing encouragement while acknowledging the work ahead.

Guidance
Smith indicated confidence in the company's trajectory, stating, “We believe our progress has us on track to begin driving more meaningful results in the hospitality segment beginning in the second half of this year.” He emphasized a focus on executing foundational strategies to capitalize on opportunities for sustained, profitable growth while closely monitoring the tariff environment to mitigate potential impacts.

Additional News
In recent developments, ODP Corporation has announced a strategic partnership with CoreTrust, a purchasing collective serving various industries. This collaboration aims to enhance ODP's presence in the hospitality sector, providing products and services to over 15,000 members. Additionally, ODP has made significant strides in its B2B distribution capabilities by signing agreements with key suppliers like Sobel Westex and Hunter Amenities. These partnerships are expected to bolster ODP’s position and drive growth in new segments. Moreover, the company remains focused on optimizing its store footprint, having closed several retail locations as part of its restructuring plan to prioritize B2B growth opportunities.