ODP Corp Swings to Loss Amid Sales Slump, Soaring Impairments

TL;DR

**ODP's financials are a mess, with sales down and a net loss; steer clear until their B2B pivot shows real traction.**

AI Summary

The ODP Corporation reported a significant decline in financial performance for the 39 weeks ended September 27, 2025, with sales decreasing by 8.5% to $4.911 billion from $5.367 billion in the prior year. The company swung to a net loss of $6 million for the 39-week period, a stark contrast to the break-even net income in the same period of 2024. Operating income plummeted by 92.3% to $11 million from $143 million year-over-year. This decline was primarily driven by a substantial increase in asset impairments, which rose from $21 million in 2024 to $49 million in 2025, and higher merger and restructuring expenses, which increased from $47 million to $57 million. Basic earnings per share from continuing operations fell sharply to a loss of $0.21, compared to earnings of $2.72 in the previous year. Despite these challenges, the company improved its cash flow from operating activities, generating $163 million for the 39 weeks ended September 27, 2025, up from $102 million in the prior year, largely due to changes in working capital and other operating activities. The sale of its Varis Division on October 18, 2024, is presented as discontinued operations, and the company retained a 19.9% minority interest.

Why It Matters

ODP Corp's significant decline in sales and shift to a net loss signals a challenging environment for office supply retailers, impacting investor confidence and potentially leading to further strategic shifts. The substantial increase in asset impairments and restructuring costs suggests ongoing operational adjustments and potential store closures or divestitures, which could affect employees and local communities. For customers, this could mean changes in product offerings or service levels as the company navigates its transformation. In a competitive landscape dominated by e-commerce giants and big-box retailers, ODP's struggles highlight the urgent need for successful execution of its B2B distribution platform strategy to remain relevant.

Risk Assessment

Risk Level: high — The company reported a net loss of $6 million for the 39 weeks ended September 27, 2025, a significant deterioration from break-even in the prior year. Sales decreased by $456 million, or 8.5%, from $5.367 billion to $4.911 billion year-over-year. Operating income plunged by 92.3% from $143 million to $11 million, indicating severe pressure on core profitability.

Analyst Insight

Investors should exercise extreme caution and consider holding off on new investments in ODP Corp. The substantial decline in sales and profitability, coupled with rising impairment and restructuring costs, suggests ongoing operational challenges. Monitor future filings closely for signs of stabilization in revenue and a clear path to sustained profitability from its B2B strategy.

Financial Highlights

revenue

$4.911B

operating Margin

0.2%

net Income

-$6M

eps

-$0.21

revenue Growth

-8.5%

Revenue Breakdown

Key Numbers

• $4.911B — Sales for 39 weeks ended Sept 27, 2025 (Decreased by $456 million or 8.5% from $5.367 billion in 2024)
• $6M — Net loss for 39 weeks ended Sept 27, 2025 (Shifted from $0 net income in the prior year)
• $11M — Operating income for 39 weeks ended Sept 27, 2025 (Plummeted by 92.3% from $143 million in 2024)
• $49M — Asset impairments for 39 weeks ended Sept 27, 2025 (Increased significantly from $21 million in 2024)
• $57M — Merger and restructuring expenses for 39 weeks ended Sept 27, 2025 (Increased from $47 million in 2024)
• $0.21 — Basic loss per share from continuing operations for 39 weeks ended Sept 27, 2025 (Decreased from $2.72 earnings per share in 2024)
• $163M — Net cash provided by operating activities for 39 weeks ended Sept 27, 2025 (Increased from $102 million in 2024)
• 30,117,856 — Outstanding shares of common stock (As of October 29, 2025)
• 19.9% — Minority interest retained in Varis Division (After the sale on October 18, 2024)
• $70M — Legal matter monetization income (Recognized in Q3 2024, not present in Q3 2025)

Key Players & Entities

• The ODP Corporation (company) — Registrant and leading provider of products, services and technology solutions
• ODP Business Solutions, LLC (company) — Operating company of The ODP Corporation
• Office Depot, LLC (company) — Operating company of The ODP Corporation
• Veyer, LLC (company) — Operating company of The ODP Corporation
• Varis Division (company) — Division sold on October 18, 2024, now presented as discontinued operations
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• NASDAQ Stock Market (regulator) — Exchange where ODP common stock is registered
• October 18, 2024 (date) — Date of Varis Division sale
• September 27, 2025 (date) — End of current quarterly period

FAQ

Risk Factors

• Increased Asset Impairments [high — financial]: Asset impairments increased significantly to $49 million for the 39 weeks ended September 27, 2025, up from $21 million in the prior year. This substantial increase contributed to the company's swing to a net loss.
• Higher Merger and Restructuring Expenses [medium — financial]: Merger and restructuring expenses rose to $57 million for the 39 weeks ended September 27, 2025, from $47 million in the same period of 2024. These increased costs further pressured operating income.
• Decline in Operating Income [high — operational]: Operating income plummeted by 92.3% to $11 million from $143 million year-over-year. This sharp decline reflects the impact of increased impairments and restructuring costs on profitability.
• Shift to Net Loss [high — financial]: The company reported a net loss of $6 million for the 39 weeks ended September 27, 2025, a significant deterioration from break-even net income in the prior year. This is driven by the aforementioned expense increases.
• Reduced Earnings Per Share [high — financial]: Basic earnings per share from continuing operations fell to a loss of $0.21, a stark contrast to earnings of $2.72 in the previous year, reflecting the reduced profitability.
• Discontinued Operations Impact [medium — operational]: The sale of the Varis Division, while generating cash flow, results in the company retaining a 19.9% minority interest, which may introduce ongoing complexities and reporting requirements.

Industry Context

The office supply retail and B2B services industry is highly competitive, facing ongoing pressure from e-commerce giants and shifts in workplace dynamics. Companies are challenged to adapt their business models, optimize supply chains, and manage costs effectively amidst evolving customer demands and economic uncertainties.

Regulatory Implications

ODP Corp must ensure compliance with all financial reporting regulations, including accurate disclosure of discontinued operations and any retained interests. Changes in accounting standards or tax regulations could also impact future financial performance and reporting.

What Investors Should Do

1. Monitor the impact of increased asset impairments and restructuring costs on future profitability.
2. Analyze the performance and strategic implications of the retained 19.9% minority interest in the Varis Division.
3. Evaluate the drivers behind the improved operating cash flow despite declining revenues and profitability.

Key Dates

• 2024-10-18: Sale of Varis Division — This event is presented as discontinued operations, with ODP Corp retaining a 19.9% minority interest, impacting the consolidated financial statements and future reporting.
• 2025-09-27: End of 39-week reporting period — Key financial results for the period, including revenue decline, net loss, and improved operating cash flow, are reported as of this date.

Glossary

Asset Impairments

A reduction in the carrying value of an asset on the balance sheet when its fair value or recoverable amount falls below its book value. (A significant increase in asset impairments ($49M vs $21M) negatively impacted ODP Corp's net income and operating income.)

Merger and Restructuring Expenses

Costs incurred in connection with the integration of acquired businesses or the reorganization of company operations. (These expenses increased to $57 million from $47 million, contributing to the decline in operating income.)

Discontinued Operations

A component of a business that has been disposed of or is classified as held for sale, and whose operations and cash flows can be clearly distinguished from the rest of the entity. (The Varis Division sale is treated as discontinued operations, affecting how its results are presented.)

Minority Interest

The portion of a subsidiary's equity that is not attributable to the parent company. (ODP Corp retained a 19.9% minority interest in the Varis Division, meaning it still has a stake and potential influence or reporting obligations.)

Continuing Operations

The ongoing business activities of a company that are expected to continue into the future. (Basic earnings per share are reported from continuing operations, highlighting the profitability of the core business excluding discontinued segments.)

Year-Over-Year Comparison

ODP Corp's 39-week performance shows a significant downturn compared to the prior year. Revenue declined by 8.5% to $4.911 billion, and the company swung from break-even net income to a $6 million net loss. Operating income saw a dramatic 92.3% decrease to $11 million, primarily due to a substantial rise in asset impairments and higher merger/restructuring expenses. Consequently, basic EPS from continuing operations fell sharply to a loss of $0.21 from $2.72 in the prior year. The only positive note is an improvement in operating cash flow, which rose to $163 million from $102 million, largely due to working capital management.

Key Financial Figures

• $0.01 — ch Registered Common Stock, par value $0.01 per share ODP The NASDAQ Stock Mark

Filing Documents

• odp-20250927.htm (10-Q) — 2998KB
• odp-ex31_1.htm (EX-31.1) — 15KB
• odp-ex31_2.htm (EX-31.2) — 15KB
• odp-ex31_3.htm (EX-31.3) — 15KB
• odp-ex32.htm (EX-32) — 20KB
• img218055393_0.jpg (GRAPHIC) — 13KB
• 0001193125-25-266241.txt ( ) — 12383KB
• odp-20250927.xsd (EX-101.SCH) — 1201KB
• odp-20250927_htm.xml (XML) — 2920KB

Financial Statements

Financial Statements Page Condensed Consolidated Statements of Operations (Unaudited) 3 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) 4 Condensed Consolidated Balance Sheets (Unaudited) 5 Condensed Consolidated Statements of Cash Flows (Unaudited) 6 Condensed Consolidated Statements of Stockholders' Equity (Unaudited) 7 Notes to Condensed Consolidated Financial Statements (Unaudited) 9

Management's Discussion and Analysis (MD&A)

Management's Discussion and Analysis (MD&A) Overview 24 Operating Results by Division 27 Liquidity and Capital Resources 33 New Accounting Standards 35 Critical Accounting Policies 35 Other Information

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 36

Controls and Procedures

Controls and Procedures 36

Legal Proceedings

Legal Proceedings 36

Risk Factors

Risk Factors 36 Unregistered Sales of Equity Securities and Use of Proceeds 39 Other Information 39 Exhibits 40 Form 10-Q Cross-Reference Index 41

Signatures

Signatures 42 2 THE ODP CORPORATION CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS (In millions, except per share amounts) (Unaudited) 13 Weeks Ended 39 Weeks Ended September 27, September 28, September 27, September 28, 2025 2024 2025 2024 Sales $ 1,625 $ 1,780 $ 4,911 $ 5,367 Cost of goods and occupancy costs 1,294 1,416 3,910 4,252 Gross profit 331 364 1,001 1,115 Selling, general and administrative expenses 293 323 884 974 Asset impairments 8 7 49 21 Merger and restructuring (income) expenses, net ( 4 ) 2 57 47 Legal matter monetization — ( 70 ) — ( 70 ) Operating income 34 102 11 143 Other income (expense): Interest income 3 2 8 7 Interest expense ( 6 ) ( 6 ) ( 19 ) ( 16 ) Other income (expense), net — ( 3 ) ( 6 ) ( 4 ) Income (loss) from continuing operations before income taxes 31 95 ( 6 ) 130 Income tax expense (benefit) 8 27 — 35 Net income (loss) from continuing operations 23 68 ( 6 ) 95 Discontinued operations, net of tax — ( 10 ) — ( 95 ) Net income (loss) $ 23 $ 58 $ ( 6 ) $ — Basic earnings (loss) per share Continuing operations $ 0.75 $ 2.06 $ ( 0.21 ) $ 2.72 Discontinued operations — ( 0.31 ) — ( 2.71 ) Net basic earnings (loss) per share $ 0.75 $ 1.75 $ ( 0.21 ) $ 0.01 Diluted earnings (loss) per share Continuing operations $ 0.72 $ 2.04 $ ( 0.21 ) $ 2.65 Discontinued operations — ( 0.31 ) — ( 2.64 ) Net diluted earnings (loss) per share $ 0.72 $ 1.73 $ ( 0.21 ) $ 0.01 This report should be read in conjunction with the Notes to Condensed Consolidated Financial Statements herein and the Notes to Consolidated Financial Statements in The ODP Corporation Annual Report on Form 10-K filed on February 26, 2

View Full Filing

View this 10-Q filing on SEC EDGAR