Staples
Skip to Content

News and Events

News Release

BACK
Staples Inc. Announces First Quarter Results

FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 22, 2001--Staples, Inc. (NASDAQ:SPLS) today reported sales of $2.7 billion for the first quarter, which ended May 5, a four percent increase versus the $2.6 billion reported for the same period last year. Comparable sales for the quarter increased one percent overall and were down two percent for the retail business. The company recorded net income for the quarter of $40 million, or $.09 per diluted common share, even with the $40 million, or $.09 per diluted common share, excluding one-time items, for the same period last year.

"The first quarter was challenging for most retailers, and Staples was no exception," said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. "By aggressively controlling costs in this difficult economic environment, we delivered earnings expectations, despite the shortfall in expected revenues. Our plans for the year have been built assuming no improvement in the macroeconomic environment and we will continue to relentlessly drive efficiencies, while maintaining our levels of customer service to enhance the long-term health of the business," Stemberg added.

In its North American Retail business, Staples announced that it further reduced U.S. store expansion plans for the year. The company now expects to add 100 stores in the U.S., 10 fewer than previously planned. A new store format is being rolled out and extensive new merchandising efforts have been put in place to energize the business. In addition, the company has implemented a new in-store labor model to control labor expenses while improving customer service.

Staples.com continues to exceed expectations, with revenues of $213 million in the quarter, up 182 percent versus last year's first quarter. Marking an important milestone, for the first time, Staples.com achieved an operating profit, before corporate allocated general and administrative expenses.

Commenting on the overall performance of the quarter, Stemberg remarked, "While we are disappointed with the overall results of the quarter, we are pleased with strong results from many areas of our business, especially Staples.com, Contract and Quill. In addition, the initial results indicate our market-leading Internet Access Points, rolled out to all U.S. stores last year, are performing well. We continue to deliver industry-leading results and gain market share in many key categories."

Outlook for the full year remains in line with the current analyst estimates. For the second quarter, the company does not expect to register growth and anticipates earnings in the range of 8 to 10 cents per share. "We are cautiously optimistic for the remainder of the year, have built a very conservative plan, and are confident that we will deliver a respectable financial performance even in this tough economy," added Stemberg.

About Staples

Staples, Inc. is an $11 billion retailer of office supplies, business services, furniture and technology 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 1,300 office superstores, mail order catalogs, e-commerce and a contract business. More information about the company is available at http://www.staples.com.

Certain information contained in this news release constitutes forward looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors including risks related to Staples' ability to compete in its highly competitive market, Staples' ability to continue to successfully open new stores, Staples' quarterly operating results being subject to significant fluctuation, Staples' stock price fluctuating based on the expectations of professional securities analysts, the strain on operations due to Staples' rapid growth which can affect operating results, the ability of Staples' foreign operations and Staples.com to become profitable and the ability of Staples to obtain adequate future financing. Additional information concerning these factors is contained in Staples' Annual Report on Form 10-K dated March 15, 2001, which is on file with the Securities and Exchange Commission.

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

                                              (Unaudited)
                                             13 Weeks Ended
                                     May 5,                April 29,
                                      2001                   2000

Sales                            $ 2,667,076              $ 2,555,786
Cost of goods sold and
 occupancy costs                   2,050,469                1,946,139
   Gross profit                      616,607                  609,647

Operating and other expenses:
 Operating and selling               427,424                  419,357
 Pre-opening                           5,176                    7,983
 General and administrative          109,889                  104,987
 Amortization of goodwill              1,646                    3,572
 Store closure charge                    -                     (7,250)
 Interest and other expense, net       8,233                    6,139
   Total operating and other
    expenses                         552,368                  534,788

   Income before income taxes         64,239                   74,859
Income tax expense                    24,732                   30,692
   Net income                       $ 39,507                 $ 44,167

Net income/(loss) attributed to:
 Staples RD Stock                     39,683                   47,009
 Staples.com Stock                  $   (176)                $ (2,842)
                                  -----------             ------------
                                    $ 39,507                $ 44,167

Basic earnings/(loss) per common share:
 Net income per common share
  - Staples RD Stock                  $ 0.09                  $ 0.10
 Net loss per common share
  - Staples.com Stock                 $(0.02)                 $(0.21)


Diluted earnings/(loss) per common share:
 Net income per common share
  - Staples RD Stock                  $ 0.09                  $ 0.10
 Net loss per common share
  - Staples.com Stock                 $(0.02)                 $(0.21)

Number of shares used in computing
 basic net income/(loss) per common
 share:
   Staples RD Stock                  454,793                 456,427
   Staples.com Stock                   8,531                  13,801

Number of shares used in computing
 diluted net income/(loss) per
 common share:
   Staples RD Stock                  461,530                 465,190
   Staples.com Stock                   8,531                  13,801

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


                                             May 5,
                                              2001        February 3,
                                           (Unaudited)      2001

ASSETS
Current Assets:
 Cash and cash equivalents                 $ 41,848     $ 263,560
 Merchandise inventories                  1,575,491     1,639,698
 Receivables, net                           370,520       297,916
 Deferred income taxes                       48,890        43,955
 Other current assets                       130,704       110,982
  Total current assets                    2,167,453     2,356,111

Property and Equipment:
 Land and buildings                         403,922       400,971
 Leasehold improvements                     530,997       519,681
 Equipment                                  729,407       692,783
 Furniture and fixtures                     360,556       352,712
  Total property and equipment            2,024,882     1,966,147
 Less accumulated depreciation and
  amortization                              703,899       665,622
   Net property and equipment             1,320,983     1,300,525

Other Assets:
 Lease acquisition costs, net of
  amortization                               57,221        58,596
 Goodwill, net of amortization              236,890       238,536
 Deferred income taxes                        5,974         5,490
 Other                                       59,099        30,155
  Total other assets                        359,184       332,777
                                        -----------    ----------
                                         $3,847,620    $3,989,413

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                         $ 824,660     $ 983,851
 Other current liabilities                  483,855       542,923
 Debt maturing within one year              220,596       184,505
  Total current liabilities               1,529,111     1,711,279

Long-Term Debt                              429,501       441,257
Other Long-Term Obligations                  74,372        73,047
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;
   issued 479,109,243 shares at
   May 5, 2001 and 477,111,602 shares
   at February 3, 2001                          286           285
  Staples.com Stock, $.0006 par value
   600,000,000 shares authorized;
   issued 14,108,773 shares at May 5, 2001
   and 14,105,821 shares at February 3, 2001      8             8
Additional paid-in capital                1,297,504     1,285,719
Cumulative foreign currency translation
 adjustments                                  6,931            53
Unrealized gain on investments                   -             (1)
Retained earnings                         1,047,528     1,008,021
Less: Staples RD treasury stock at cost,
 22,787,300 shares at May 5, 2001 and
 22,787,300 shares at February 3, 2001     (505,001)     (505,001)
Less: Staples.com treasury stock at cost,
 6,672,211 shares at May 5, 2001 and
 4,449,773 shares at February 3, 2001       (32,620)      (25,254)
   Total stockholders' equity             1,814,636     1,763,830
                                        -----------   ------------
                                         $3,847,620    $3,989,413


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


                                                  (Unaudited)
                                                13 Weeks Ended
                                         May 5,             April 29,
                                          2001                 2000

Operating Activities:
 Net income                            $ 39,507             $ 44,167
 Adjustments to reconcile net
  income to net cash used in
  operating activities:
   Depreciation and amortization         58,558               49,908
   Store closure charge                     -                 (7,250)
   Other non-cash items                   2,853                2,464
 Change in assets and liabilities:
   Decrease in merchandise inventories   43,600               70,341
   Increase in receivables              (25,307)             (79,815)
   Increase in retained securitized
    accounts receivable                 (86,109)                 -
   Increase in other assets             (14,855)             (21,942)
   Decrease in accounts payable
    and other current liabilities      (167,606)             (81,766)
   Increase in other long-term
    obligations                           2,618                1,749
                                      ----------            ----------
                                       (186,248)             (66,311)
                                      ----------            ----------
   Net cash used in operating
    activities                         (146,741)             (22,144)

Investing Activities:
 Acquisition of property and equipment  (88,332)             (81,404)
 Purchase of long-term investments         (250)             (49,917)
 Other                                     (251)                  34
 Net cash used in investing activities  (88,833)            (131,287)

Financing Activities:
 Proceeds from sale of capital stock      5,095                8,926
 Proceeds from borrowings               323,110              584,278
 Payments on borrowings                (304,432)            (514,137)
 Purchase of treasury stock              (7,366)             (37,972)
 Net cash provided by financing
  activities                             16,407               41,095

 Effect of exchange rate changes on cash (2,545)               2,504

Net decrease in cash and cash
 equivalents                           (221,712)            (109,832)
Cash and cash equivalents at beginning
 of period                              263,560              110,483
Cash and cash equivalents at end
 of period                             $ 41,848                $ 651


                    STAPLES, INC. AND SUBSIDIARIES
                           Segment Reporting
                     (Dollar Amounts in Thousands)


                                              (Unaudited)
                                            13 Weeks Ended

                                  May 5,                   April 29,
                                   2001                       2000


Sales by Segment:
North American Retail         $ 1,706,101                $ 1,683,051
Contract and Commercial           556,314                    618,163
Staples.com                       212,555                     75,363
European Operations               192,106                    179,209
 Total sales                  $ 2,667,076                $ 2,555,786

Business Unit Income/(Loss):
North American Retail            $ 38,725                   $ 81,402
Contract and Commercial            39,538                     40,439
Staples.com                        (2,702)                   (39,182)
European Operations                (3,089)                    (8,911)
 Total business unit income      $ 72,472                   $ 73,748
Store closure credit                  -                        7,250
Interest and other expense, net    (8,233)                    (6,139)
 Income before income taxes      $ 64,239                   $ 74,859

--30--jr/bos* es/bos

CONTACT: Staples Inc.
Maria Sceppaguercio
Senior Vice President, Investor Relations
508-253-7963
or
Staples Inc.
Tom Nutile
Vice President, Public Relations
508-253-1833
tom.nutile@staples.com
or
Staples Inc.
Deborah Hohler
Public Relations Manager
508-253-8509
deborah.hohler@staples.com