Office Depot (ODP, $2.88) posts disappointing outlook on Q1 revenue

Office Depot’s estimate for its first quarter revenue and operating income falls short of analysts’ expectations.

The office supplies company anticipates its quarterly revenue to come in at  $2.76 billion, which is lower than the $2.82 billion level analysts were expecting. The company attributed the disappointing performance to CompuComp’s disappointing results. Office Depot acquired the IT firm for $1 billion in 2017.

The company expects adjusted operating income to be about $65 million for the quarter. That includes a -$15 million operating loss from CompuCom, something that Office Depot blames on lower-than-expected revenue from existing customer projects. The company indicated that it is working on improving the situation by reorganizing its customer-facing organization and realigning the sales team to identify new opportunities.

According to Office Depot, its business solutions division faced headwinds from paper and paper-related cost increases. Paper costs have increased more than 20% during the year, and that could not be completely passed through to customers, according to the company. It promises to have begun initiatives to cushion the impact of such cost increases.