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IT Solutions Provider CompuCom Improves Operating Profits

ODP Corp., parent of CompuCom and Office Depot, continues to closely manage costs in its CompuCom division — helping to improve the IT solutions provider’s operating profits during the challenging coronavirus economy. Among the key moves: Purposely shedding some of CompuCom’s less-profitable sales efforts, ODP executives said during an earnings call on August 5.

CompuCom’s sales were $214 million in Q2 of 2014,  down 17% compared to the corresponding quarter in 2019. prior year period. ODP blamed the CompuCom sales decline on “project-related customer-imposed delays, lower services volumes, and lower technology product demand as the COVID-19 health crisis impacted business operations of certain customers.”

Moreover, “targeted actions to reduce unprofitable sales activities in certain accounts impacted sales.”

CompuCom: Focusing On More Profitable Engagements

Read between the lines, and ODP remains focused on a ” deliberate effort to reduce certain unprofitable accounts to improve future profitability,” the company told Wall Street analysts during an earnings call.

The result is a more profitable business. Indeed, CompuCom’s operating income was $4 million in the second quarter of 2020 — compared to operating income of $1 million in Q2 of 2019.

CompuCom’s support for its customers during the pandemic “has been stellar,” ODP CFO Diego Scaglione said during the earnings call. “Combined with our core competency in supporting enterprises in a distributed environment, we believe that CompuCom remains in an excellent position going forward.”

Office Depot and CompuCom: Business History, Evolution

Office Depot acquired CompuCom in 2017 for $1 billion — or a lofty 10 times EBITDA. At the time, ChannelE2E warned that the struggling retail giant likely overpaid for the IT services provider.

The acquisition initially struggled to meet performance goals. In response, Office Depot shook up CompuCom’s executive team and services portfolio in June 2019.

Fast forward to early 2020, and CompuCom’s business was showing signs of a turnaround ahead of the coronavirus pandemic.

CompuCom Leadership: Mick Slattery’s First Year

CompuCom President Mick Slattery described some of the major business milestones and refinements in this June 2020 interview with ChannelE2E:

Fast forward to present day. ODP CEO Gerry Smith remains upbeat about the CompuCom business. In a prepared statement this week, Smith said:

“While near-term challenges remain due to COVID-19, CompuCom’s unique capabilities to support distributed work forces with state of the art technology, and a unique field force of over 6,100 field techs and support personnel, have it well positioned to capitalize on opportunities in this growing area.”

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