Staples
Skip to Content

News and Events

News Release

BACK
Staples Inc. Posts 10 Percent Comp Sales Growth in Second Quarter; Staples.com revenue up 513 percent over second quarter 1999

FRAMINGHAM, Mass.--(BUSINESS WIRE)--Aug. 15, 2000--Staples Inc. (NASDAQ: SPLS), the pioneer of the office superstore industry, today announced that total comparable sales increased an industry-leading 10 percent for the second quarter ended July 29, 2000. Comparable sales include stores open for more than a year plus the Direct business and the Staples.com site.

Revenues grew 20 percent to $2.2 billion for the second quarter, compared with $1.84 billion for the same period last year. Net income for the quarter was $42.56 million, compared to $52.74 million for the second quarter of 1999. Earnings per share were $0.10, beating analysts' consensus by one cent, compared with $0.11 for the same period a year earlier.

Revenues for Staples' e-commerce operation, Staples.com, which are included in the overall Staples Inc. revenue figure of $2.2 billion, totaled $95.7 million for the second quarter, 513 percent above the second quarter of 1999. Staples.com pre-tax losses for the quarter were below plan at $29.8 million, chiefly as a result of stronger than expected revenues. The Staples.com operation includes Staples Inc.'s e-commerce sites: Staples.com, Quill.com and StaplesLink.com, and its Canadian e-commerce business.

"The second quarter marks our 30th consecutive quarter of meeting or beating analysts' earnings expectations," said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. "By paying attention to what our customers want and by executing on our business plan, we grew total comparable sales by 10 percent, the best rate in our industry. These impressive numbers were achieved even though we did not have events such as the Office 2000 and Microsoft Network Internet store promotions that drove sales during the second quarter a year ago.

"In order to build on our great momentum, Staples is developing three additional areas to help fuel longer-term growth: Europe, Staples.com and business services," Stemberg added.

Highlights of the quarter:

-- Edward C. Harsant, formerly president of The Business Depot, Staples' Canadian operations, was named to the newly created position of president, North American Superstores, in July. Harsant, who implemented many innovations while building The Business Depot into one of the strongest and most profitable Staples operations, is responsible for Staples' 943 U.S. stores and has oversight for the 162 Staples stores in Canada.

-- Staples' European operation continued to build on its strong growth of the past several quarters, with comparable sales increasing 18 percent. Staples opened six stores during the quarter in Europe. At the end of the quarter, the company operated 149 stores in Europe and is on track to open approximately 20 stores this year.

-- The Staples.com site, bolstered by a major site relaunch in May that has earned industry accolades, has been ranked first in the number of unique visitors in the office supply industry each of the past four months, according to research firm MediaMetrix. All site metrics have equaled or surpassed plan, including customer acquisition costs, revenue growth, revenues from repeat customers and gross profit.

-- Business services, launched on Staples.com in the past year, are expected to be an increasingly important part of the company's revenue stream in the future. Staples.com offers a variety of services, including printing and delivery, Web design and payroll management.

About Staples

Staples Inc. (NASDAQ: SPLS) is a $9 billion retailer of office supplies, furniture, technology and services to consumers and businesses, from home-based businesses to Fortune 500 companies in the United States, Canada, the United Kingdom, Germany, the Netherlands and Portugal. Headquartered outside Boston, Staples invented the office superstore concept and today is the largest operator of office superstores in the world. The company has over 50,000 employees serving customers through more than 1,200 office superstores, mail order catalogs, e-commerce and a contract business. More information about the company is available at http://www.staples.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Staples Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-Q for the most recently ended quarter. -0-

*T

                    STAPLES, INC. AND SUBSIDIARIES
                   Consolidated Statements of Income
           (Dollar Amounts in Thousands, Except Share Data)


                           (Unaudited)              (Unaudited)
                         13 Weeks Ended           26 Weeks Ended
                       July 29,    July 31,     July 29,    July 31,
                         2000        1999         2000        1999

Sales                 $2,201,297  $1,840,110   $4,757,083  $3,912,176
Cost of goods sold
 and occupancy costs   1,654,633   1,385,551    3,600,772   2,962,864
  Gross profit           546,664     454,559    1,156,311     949,312

Operating and
 other expenses:
 Operating and
  selling                361,796     271,275      781,153     587,004
 Pre-opening               6,545       4,899       14,528       9,407
 General and
  administrative          90,714      84,972      195,700     173,303
 Amortization of
  goodwill                 3,523       2,971        7,095       5,258
 Store closure credit       --          --         (7,250)       --
 Interest and
  other expense, net      11,952       3,976       18,092       5,392
  Total operating and
   other expenses        474,530     368,093    1,009,318     780,364

  Income before
   income taxes           72,134      86,466      146,993     168,948
Income tax expense        29,575      33,722       60,267      65,890
  Net income          $   42,559  $   52,744   $   86,726  $  103,058

Net income (loss)
 attributed to:
 Staples, Inc.  Stock $     --    $   52,744   $     --    $  103,058
 Staples RD Stock         44,571        --         91,580        --
 Staples.com Stock        (2,012)       --         (4,854)       --
                      $   42,559  $   52,744   $   86,726  $  103,058

Basic earnings per
 common share
 Net income per
  common share -
  Staples, Inc. Stock             $     0.11               $     0.22
 Net income per
  common share -
  Staples RD Stock    $     0.10               $     0.20
 Net loss per
  common share -
  Staples.com Stock   $    (0.14)              $    (0.35)

Diluted earnings
 per common share
 Net income per
  common share -
  Staples, Inc. Stock             $     0.11               $     0.22
 Net income per
  common share -
  Staples RD Stock    $     0.10               $     0.20
 Net loss per
  common share -
  Staples.com Stock   $    (0.14)              $    (0.35)

                    STAPLES, INC. AND SUBSIDIARIES
                      Consolidated Balance Sheets
           (Dollar Amounts in Thousands, Except Share Data)



                                              July 29,    January 29,
                                                2000         2000
ASSETS                                      (Unaudited)
Current Assets:
 Cash and cash equivalents                $    77,525    $   110,483
 Short-term investments                         1,049          1,071
 Merchandise inventories                    1,676,571      1,607,516
 Receivables, net                             445,564        360,901
 Deferred income taxes                         15,749         39,730
 Prepaid expenses and
  other current assets                         82,104         73,750
   Total current assets                     2,298,562      2,193,451

Property and Equipment:
 Land and buildings                           346,281        328,994
 Leasehold improvements                       501,649        442,119
 Equipment                                    612,542        547,309
 Furniture and fixtures                       327,579        286,260
   Total property and equipment             1,788,051      1,604,682
 Less accumulated
  depreciation and amortization               602,104        509,920
   Net property and equipment               1,185,947      1,094,762

Other Assets:
 Lease acquisition costs,
  net of amortization                          63,934         68,832
 Investments                                  152,150         34,755
 Goodwill, net of amortization                385,927        387,595
 Deferred income taxes                         16,068         34,912
 Other                                         37,893         31,769
   Total other assets                         655,972        557,863
                                          $ 4,140,481    $ 3,846,076

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                         $   907,418    $   897,523
 Accrued expenses and
  other current liabilities                   470,573        545,162
 Debt maturing within one year                 34,065         12,219
   Total current liabilities                1,412,056      1,454,904

Long-Term Debt                                826,568        500,903
Other Long-Term Obligations                    66,588         61,456
Stockholders' Equity:
 Preferred stock,
  $ .01 par value
  5,000,000 shares
  authorized;
  no shares issued                               --             --
 Common stock:
  Staples RD Stock,
   $.0006 par value
   1,500,000,000 shares
   authorized; shares
   issued: 473,801,951
   at July 29, 2000
   and 470,752,253 shares
   at January 29, 2000;
   outstanding: 453,710,214
   shares at July 29, 2000
   and 457,083,510 shares
   at January 29, 2000                            283            282
  Staples.com Stock, $.0006
   par value 600,000,000
   shares authorized;
   issued: 14,084,239 shares
   at July 29, 2000 and
   13,626,093 at January 29,
   2000; outstanding:
   13,867,241 shares at
   July 29, 2000 and
   13,626,093 at
   January 29, 2000                                 9              8
Additional paid-in capital                  1,233,144      1,196,512
Cumulative foreign
 currency translation
 adjustments                                   (7,335)        (4,473)
Unrealized gain
 on investments                                41,045          6,651
Retained earnings                           1,035,035        948,309
Less: Staples RD
 treasury stock
 at cost, 20,091,737
 shares at July 29, 2000
 and 13,668,743 shares
 at January 29, 2000                         (466,207)      (318,476)

Staples.com treasury
 stock at cost, 216,998
 shares at July 29, 2000
 and 0 shares at
 January 29, 2000                               (705)          --
  Total stockholders' equity               1,835,269      1,828,813
                                          $ 4,140,481     $3,846,076

                    STAPLES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Cash Flows
                     (Dollar Amounts in Thousands)


                                            (Unaudited)
                                          26 Weeks Ended
                                     July 29,       July 31,
                                        2000           1999
Operating Activities:
 Net income                      $    86,726    $   103,058
 Adjustments to reconcile
  net income to net cash
  (used in)/provided by
  operating activities:
  Depreciation and
   amortization                      109,360         81,577
  Store closure credit                (7,250)          --
  Expense from 401K and
   PARS stock contribution             4,478          8,460
  Deferred income tax
   expense/(benefit)                  18,327         (6,208)
  Change in assets and
   liabilities, net of
   companies acquired
   using purchase accounting:
    Increase in merchandise
     inventories                     (85,531)      (170,321)
    Increase in receivables          (88,184)      (136,723)
    Increase in prepaid
     expenses and other assets       (21,184)          (977)
    Increase/(Decrease) in
     accounts payable, accrued
     expenses and other
     current liabilities             (32,136)        32,566
    Increase in other
     long-term obligations             5,851          2,863
                                     (96,269)      (188,763)
Net cash used in
 operating activities                 (9,543)       (85,705)

Investing Activities:
 Acquisition of
  property and equipment            (199,392)      (145,841)
 Acquisition of businesses,
  net of cash acquired                  --         (137,625)
 Proceeds from sales and
  maturities of
  short-term investments                  74         32,765
 Purchase of
  short-term investments                --          (16,651)
 Purchase of
  long-term investments              (58,782)       (20,906)
 Other                                  (226)            88
 Net cash used in
  investing activities              (258,326)      (288,170)

Financing Activities:
 Proceeds from sale
  of capital stock                    23,982         25,243
 Proceeds from borrowings          2,343,485        316,984
 Payments on borrowings           (1,984,364)      (248,326)
 Settlement of equity
  forward purchase agreement         (78,684)          --
 Purchase of treasury stock          (66,736)       (78,246)
 Net cash provided by
  financing activities               237,683         15,655

Effect of exchange
 rate changes on cash                 (2,772)           227

Net decrease in cash
 and cash equivalents                (32,958)      (357,993)
Cash and cash equivalents
 at beginning of period              110,483        357,993
Cash and cash
 equivalents at end of period    $    77,525    $      --

*T


    CONTACT: Staples Inc.
             Tom Nutile
             508-253-1833
             tom.nutile@staples.com
              or
             Staples Inc.
             Laurel Lefebvre
             508-253-4080
             laurel.lefebvre@staples.com