ODP’s B2B shift under CEO Gerry Smith is a real strategic reallocation, not simply a new label for store closures. But the evidence available through the company’s second-quarter 2025 reporting period shows a plan still being tested: ODP was broadening its business-supply and logistics offer while total sales and adjusted earnings fell. The central question is whether new, profitable B2B demand can grow faster than legacy office-supply and retail operations contract.
What Gerry Smith’s B2B strategy means
During the 2025 restructuring, ODP CEO Gerry Smith was associated with a further stage in the company’s shift from a traditional office-products retailer toward a business-to-business distribution and supply-chain company. The move builds on existing operations; it is not a wholesale exit from retail or a sudden change in corporate identity. ODP’s earlier transformation included realigning business units and selling Varis in October 2024 while retaining a minority interest, as described in its 2025 proxy statement and 2025 second-quarter filing.
The board approved the “Optimize for Growth” plan on February 21, 2025. It calls for directing resources toward B2B opportunities, including hospitality, healthcare, adjacent product categories and third-party logistics, while suspending additional growth investment in consumer retail and reducing store and distribution-facility costs. That makes the plan both a growth strategy and a cost restructuring. The company’s 2024 Form 10-K describes the plan and its priorities.
How ODP’s B2B operation is organized
ODP Business Solutions sells to organizations
ODP Business Solutions serves small and midsize businesses, enterprise accounts, government customers and educational institutions. It reaches customers through sales representatives, e-commerce, catalogs, telesales and distribution operations. Its offer extends beyond traditional office supplies to janitorial and cleaning products, breakroom supplies, furniture, technology, copy and print, and hospitality products. The company describes its customer groups and categories in its second-quarter 2025 filing.
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The commercial logic is to sell more of a customer’s workplace and facility needs through existing account relationships, rather than relying mainly on paper and office-product demand. A broader assortment could raise the value of each account, but only if ODP can source products reliably and serve them at acceptable margins.
Veyer provides supply-chain and logistics capabilities
Veyer supports ODP’s own businesses with supply-chain and distribution services and also has a third-party logistics opportunity. That external business could make better use of ODP’s infrastructure and add revenue beyond product distribution. It has a distinct operating test, however: external customers bring their own service expectations, and their needs must not undermine fulfillment for ODP Business Solutions or Office Depot.
Where ODP is directing investment
The plan prioritizes capital expenditures and resources for supply-chain operations, distribution capacity and digital capabilities that support B2B growth. It also involves expanding product assortment and supplier relationships, alongside sales and fulfillment resources for new categories. This is a reallocation of attention and capital from consumer retail toward B2B—not evidence of an across-the-board spending increase.
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That selectivity is visible in the second quarter of 2025: ODP reported capital expenditures of $12 million, compared with $19 million in the year-earlier quarter, while saying it prioritized spending for B2B opportunities. The figures and management commentary appear in the company’s second-quarter 2025 results release.
Hospitality is the clearest disclosed category expansion
ODP expanded hospitality-supply categories beginning in the first quarter of 2025 and announced supplier agreements covering products such as hotel linens and amenities. Those steps show the strategy moved beyond presentation materials into assortment and supplier activity. They do not, on their own, establish the category’s revenue, profitability or scale. The company’s hospitality announcement provides details on the expansion.
Healthcare is a target, not yet a demonstrated earnings engine
Healthcare was named as a target market in the Optimize for Growth plan. The available disclosures establish strategic intent, but do not establish that healthcare had become a material source of revenue or profit by the period covered here. A target market should not be mistaken for proven customer wins or financial contribution.
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Adjacent products and third-party logistics broaden the opportunity
Janitorial, breakroom, furniture, technology, copy and print, and hospitality products can help ODP cross-sell into its current accounts. Third-party logistics could let Veyer serve customers outside ODP. Both routes add complexity: new suppliers, inventory patterns, product expertise and service requirements for adjacent products; and customer-specific fulfillment commitments for logistics. The 2024 Form 10-K identifies hospitality, healthcare, adjacent markets and third-party logistics among the plan’s opportunities.
Why ODP is reducing retail investment
Office-supply retail faces structural pressure from digital work and lower print demand, online substitution and price competition. Physical stores also carry fixed costs such as leases, labor, inventory and related distribution. ODP’s stated approach is to reduce those costs and stop further growth investment in consumer retail, not to claim that retail has disappeared. Office Depot remained part of the company’s operating structure in the period described in its 2025 annual report.
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Store reductions could improve the cost base, but they also risk weakening local access, brand visibility, print and service touchpoints, and pickup options that matter to small businesses. The strategic test is whether savings exceed the value of the customer relationships and practical reach those locations provide. Closures themselves do not show that B2B demand is growing.
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What the second-quarter 2025 results show
ODP’s second-quarter results offer both encouraging signals and reasons for caution. The figures below are company-reported comparisons with the second quarter of 2024, as presented in its earnings release.
| Measure | Q2 2025 | Q2 2024 | What it indicates |
|---|---|---|---|
| Total reported sales | Approximately $1.6 billion, down 8% year over year | Not stated separately in the cited release summary | Demand remained under pressure; sales fell in both consumer and B2B divisions. |
| GAAP operating income | $9 million | Approximately $0.4 million | Reported operating income improved from a very low comparison. |
| Adjusted operating income | $25 million | $33 million | Adjusted profitability declined. |
| Adjusted EBITDA | $47 million | $57 million | Adjusted earnings before interest, taxes, depreciation and amortization declined. |
| Adjusted free cash flow | $13 million | $5 million | Cash flow improved year over year, but that alone does not demonstrate stronger recurring demand. |
| Total available liquidity | $658 million, including $177 million in cash and equivalents | Not stated here | A reported liquidity position, not proof that the strategy is producing growth. |
Management also cited improved cash flow and operational execution, along with new business wins including a large multiyear B2B contract. Such a win can add recurring business, but its value depends on the economics, customer retention and delivery costs; the cited release does not make one contract equivalent to broad-based growth.
The distinction between reported and adjusted results matters. GAAP operating income rose sharply against a near-break-even prior-year quarter, while adjusted operating income and adjusted EBITDA fell. Restructuring charges and other adjustments can complicate comparisons, so no single profit measure settles whether the underlying business is strengthening.
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Why the early evidence is mixed
Total sales fell 8% year over year, and both consumer and B2B divisions recorded lower sales in the second quarter of 2025. ODP Business Solutions remained exposed to weak demand in traditional office products, while management’s new categories had not yet been shown to offset that weakness at scale. Improved adjusted free cash flow is welcome, but cash generation can move with working capital, capital spending and restructuring activity as well as underlying demand.
The strategy also carries a timing risk. Store and facility costs may come down before hospitality, healthcare or logistics activity produces meaningful revenue and profit. New categories require supplier relationships, sales expertise, forecasting and fulfillment capabilities. Large contracts can stabilize sales but may demand custom systems, service levels or competitive pricing, and losing one can leave a gap that is difficult to replace.
ODP must also compete with large generalists, digital procurement platforms and specialized distributors. In logistics, Veyer’s external customers may add utilization but can create peak-period conflicts with internal needs. In B2B distribution, broadening the catalog is useful only if ODP can maintain availability, service and margin.
How to judge whether the pivot is working
For investors and other readers tracking the company, the most useful evidence will be operating results that connect the strategy to durable economics—not announcements alone.
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- Customer durability: Track contract renewals, account expansion and whether large wins require pricing or service commitments that erode profitability.
- Category contribution: Seek disclosed evidence that hospitality and healthcare are generating material sales and earnings, rather than only new suppliers or product listings.
- Veyer’s external business: Watch for third-party logistics growth and profitability, while considering whether service to ODP’s own divisions remains reliable.
- Cash flow after restructuring: Assess whether free cash flow remains healthy as restructuring activity subsides, and distinguish operating improvement from working-capital changes or lower capital spending.
- Retail economics: Compare realized savings with the effect of a smaller store network on customer access, local fulfillment and small-business relationships.
- Investment mix and execution: Follow capital allocation to B2B capabilities, along with evidence that digital systems and distribution capacity improve customer ordering and fulfillment.
What Gerry Smith’s leadership can—and cannot—prove
Smith is the executive associated with ODP’s multi-stage transformation and its sharpened B2B prioritization in 2025. The company announced him as continuing CEO in the context of a planned business separation in its leadership announcement. The strategy’s credibility will ultimately depend on converting those decisions into revenue, margins and cash flow.
Those outcomes cannot be assigned to one executive alone. Results also reflect divisional execution, market demand, competitive pricing, restructuring and portfolio changes. The fairest assessment is against measurable operating evidence over time, rather than either crediting Smith for every improvement or treating every setback as a personal verdict.
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