Shares of Office Depot Inc. (NASDAQ:ODP) tumbled after the retailer posted weak second-quarter results.
The stock was down 22.4% as of 12:15 p.m. EDT.
The office-supply specialist said comparable sales declined 6% as the shift away from paper products and physical retail continues to weigh on the company. Revenue slipped 9% to $2.36 billion, which was worse than expectations at $2.46 billion, while adjusted earnings per share were unchanged from a year ago at $0.06. However, that also missed estimates of $0.09.
CEO Gerry Smith said the company is focused on "driving omnichannel growth opportunities we have identified in the North American market." Office Depot also closed 31 stores in the quarter as it continues to rightsize its footprint to match falling demand.
Looking ahead, management said that it expected 2017 sales to be lower than 2016, citing continued "challenging market conditions" among other factors, but that the sales slump would be mitigated in the second half of the year. It also held its operating income guidance at $500 million for the year.
Shares of Office Depot have actually done well since the deal with Staples (NASDAQ:SPLS) fell apart, but today's news indicates that continued profit growth will be tricky as revenue continues to fall. This may be a good opportunity for investors to take any profits they've made over the last year or two.