Office Depot increases sales by 11 percent

Stock prices surge after the news

Boca Raton-based Office Depot saw an 11 percent increase in sales for its second quarter, according to its earnings report released Tuesday.

Office Depot’s share price surged higher on the news, to $2.85 a share. The stock closed Tuesday at $2.86 a share, up 34 cents or 13.49 percent a share in trading on Nasdaq.

CEO Gerry Smith, who has been working to turn Office Depot into a business services company, credited an increase in sales and service to businesses.

During a conference call on Tuesday, Smith told Wall Street analysts there is “positive momentum” and “tangible evidence” of success in repositioning Office Depot.

He said business sales and subscription services grew by 8 percent in the quarter.

Total sales were $2.63 million, compared with $2.36 million in the same quarter in 2017. Net income fell to $19 million, or 3 cents a share, compared with $21 million, or 4 cents a share, in the prior-year quarter. Yet profits beat Wall Street analysts’ expectations.

IT services acquisition “CompuCom played a major role in the overall growth rate,” Smith said.

The company reported a 3 percent increase in sales in its CompuCom division, at $277 million compared with $269 million in the prior-year period before the South Carolina-based IT services company was acquired in 2017 by Office Depot for $1 billion.

He said business services

now represent 16 percent of sales. “This is double what it was in 2017,” Smith said during the conference call.

Office Depot, which operates 1,374 Office Depot and OfficeMax stores nationwide, said comparable store sales fell 2 percent from the second quarter of 2017.

Business and government contract sales have been under pressure since Office Depot and competitor Staples’ planned $6.3 billion merger fell more than two years ago. The Federal Trade Commission objected to the marriage, calling it anti-competitive for business sales. After a court battle, the companies called off the merger in May 2016.

Office Depot employs about 2,000 people at its headquarters in Boca Raton.