Office Depot, Inc. (NASDAQ:ODP) has reported on Wednesday a net income of $210 million or an earnings per share (EPS) of $0.38 for the second quarter. The company had a 6% year-over-year plunge in revenue, coming in at $3.22 billion for the period.
This marks the third consecutive period that the company missed its financial guidance. In line with this, Office Depot has adjusted its full-year profit guidance to between $450 million and $470 million from a previous guidance of approximately $500 million.
Challenges in the Industry
Office Depot is expecting further drop in sales as it plans to close 300 more stores in the next three years, nearly doubling the 400 stores it has already closed over the last two years.
As it works on its strategic growth plans, Office Depot is launching smaller format retail stores measuring about 15,000 square feet. By the end of the year, these stores will be all over 24 locations. The office supplies giant has also rolled-out new cost-cutting efforts that seek to save more than $250 million over the next two years.
The company has also taken a blow after US regulators did not back its merger with Staples, Inc. (NASDAQ:SPLS) under a $6.30-billion deal. According to antitrust officials, Office Depot and Staples, the two remaining companies in the office supplies industry, merging will suppress the competition in the market. The company believes that its relatively poor quarterly performance has something to do with its failure to get the coveted approval for its deal with Staples. More so, Office Depot is having a difficult time to keep up with the shift to digital solutions, which have long been threatening the office supplies industry. Technology giants like Amazon.com Inc (NASDAQ:AMZN) have constantly been pushing the industry to the edge.
Office Depot has also declared a quarterly dividend of $0.025 per share, which indicates an annualized dividend yield of $0.10, on Wednesday. The quarterly dividend is payable on September 15 to shareholders of record on August 25.