Staples
Skip to Content

News and Events

News Release

BACK
Staples, Inc. Announces Second Quarter Results; Staples.com Achieves Profitability Six Months Ahead of Expectations; Customer Comps and New Store Productivity Are Up
FRAMINGHAM, Mass., Aug 21, 2001 (BUSINESS WIRE) -- Staples, Inc. (Nasdaq:SPLS) today reported sales of $2.3 billion for the second quarter, which ended August 4, a 5 percent increase versus the $2.2 billion reported for the same period last year. The company recorded net income for the quarter of $40.35 million, or $.09 per diluted common share, compared with $42.56 million, or $.10 per diluted common share, for the same period last year. Overall comparable sales for the quarter were flat, with retail comparable sales down 3 percent.

"In the face of a difficult economic environment, Staples aggressively contained expenses and increased productivity during the quarter without sacrificing marketing or customer service levels," said Staples Chairman and CEO Thomas G. Stemberg. "We have seen an increase in customer traffic in all channels, including our retail stores, as a result of our marketing efforts and our ability to stay focused on the needs of our customers.

"In addition, we're pleased to report that Staples.com again outperformed expectations, and reached the significant milestone of profitability for the first time this quarter, 18 months ahead of our original expectations, and six months ahead of more recent projections," Stemberg added.

In the North American Retail business, customer count comps, the increase in customer traffic compared with the previous year, were up 3 percent, demonstrating the effectiveness of marketing programs. Sales per store week for new North American stores were up 3.5 percent in the quarter over the prior year, reversing a downward trend. Early sales results are positive for the 41 new "Dover" format stores, which Staples launched in March after a year of customer research and analysis. Best practices from this new prototype have been implemented through more than 300 store reflows that better merchandise products and leverage higher growth categories.

Staples delivery businesses, including Staples Direct, Staples Contract and Quill, combined with their e-commerce counterparts, grew sales 14 percent. Revenues for e-commerce businesses, including Staples.com, StaplesLink.com, BusinessDepot.com and Quill.com, were $234 million, up 144 percent versus last year. Staples.com achieved profitability with net income of $5 million for the quarter.

Said Stemberg, "We continue to plan conservatively for the remainder of the year and our earnings outlook remains in line with analyst expectations in the range of $0.65 to $0.70 per diluted share for fiscal 2001. Through solid execution and new strategic initiatives, we are in a terrific position for growth when the economy rebounds."

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)                (Unaudited)
                        13 Weeks Ended             26 Weeks Ended
                     August 4,    July 29,     August 4,     July 29,
                       2001        2000          2001          2000
Sales              $ 2,314,229  $ 2,201,297  $4,981,305   $4,757,083
Cost of goods sold
 and occupancy
 costs               1,764,499    1,654,633   3,814,968    3,600,772
  Gross profit         549,730      546,664   1,166,337    1,156,311
Operating and other expenses:
 Operating and
  selling              380,127      361,796     807,551      781,153
 Pre-opening             3,971        6,545       9,147       14,528
 General and
  administrative        89,610       90,714     199,499      195,701
 Amortization of
  goodwill               1,646        3,523       3,292        7,095
 Store closure credit      -            -           -         (7,250)
 Interest and other
  expense, net           8,762       11,952      16,995       18,091
   Total operating and
    other expenses     484,116      474,530   1,036,484    1,009,318
  Income before income
   taxes                65,614       72,134     129,853      146,993
Income tax expense      25,261       29,575      49,993       60,267
  Net income          $ 40,353     $ 42,559    $ 79,860     $ 86,726
Net income (loss) attributed to:
 Staples RD Stock     $ 40,057     $ 44,571    $ 79,740     $ 91,580
 Staples.com Stock         296       (2,012)        120       (4,854)
                     ---------     ---------   ---------   ----------
                      $ 40,353     $ 42,559    $ 79,860     $ 86,726
Basic earnings/(loss) per common share
 Historical net income
  per common share -
  Staples RD Stock      $ 0.09       $ 0.10      $ 0.18       $ 0.20
 Historical net
  income/(loss) per
  common share -
  Staples.com Stock     $ 0.04       $(0.14)     $ 0.01       $(0.35)
Diluted earnings/(loss) per common share
  Historical net income
   per common share -
   Staples RD Stock     $ 0.09       $ 0.10      $ 0.17       $ 0.20
  Historical net
   income/(loss) per
   common share -
   Staples.com Stock    $ 0.03       $(0.14)     $ 0.01       $(0.35)
Number of shares used in computing basic net income/(loss)
 per common share:
  Staples RD Stock     456,004      455,183     455,399      455,805
  Staples.com Stock      7,429       14,075       7,980       13,938
Number of shares used in computing diluted net income/(loss)
 per common share:
  Staples RD Stock     461,227      462,819     461,379      464,004
  Staples.com Stock      9,332       14,075       9,819       13,938

                    STAPLES, INC. AND SUBSIDIARIES
                      Consolidated Balance Sheets
           (Dollar Amounts in Thousands, Except Share Data)
                                        August 4,
                                          2001          February 3,
                                       (Unaudited)         2001
ASSETS
Current Assets:
 Cash and cash equivalents            $   60,070       $  263,560
 Merchandise inventories               1,681,809        1,639,698
 Receivables, net                        376,482          297,916
 Deferred income taxes                    49,907           43,955
 Other current assets                    131,549          110,982
  Total current assets                 2,299,817        2,356,111
Property and Equipment:
 Land and buildings                      415,496          400,971
 Leasehold improvements                  547,570          519,681
 Equipment                               762,236          692,783
 Furniture and fixtures                  379,074          352,712
  Total property and equipment         2,104,376        1,966,147
Less accumulated depreciation
 and amortization                        755,166          665,622
  Net property and equipment           1,349,210        1,300,525
Other Assets:
 Lease acquisition costs, net of
  amortization                            55,857           58,596
 Goodwill, net of amortization           235,243          238,536
 Other                                    61,585           30,155
     Total other assets                  352,685          327,287
                                      ----------       ----------
                                      $4,001,712       $3,983,923
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                     $  915,064       $  983,851
 Other current liabilities               481,285          542,923
 Debt maturing within one year           212,959          184,505
   Total current liabilities           1,609,308        1,711,279
Long-Term Debt                           457,851          441,257
Deferred Tax Liability                    15,181            8,916
Other Long-Term Obligations               76,070           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 480,855,122 shares at August 4,
   2001 and 477,111,602 shares at
   February 3, 2001                          287              285
  Staples.com Stock, $.0006 par value
   600,000,000 shares authorized;
   issued 14,116,918 shares at August 4,
   2001 and 14,105,821 shares at
   February 3, 2001                            8                8
Additional paid-in capital             1,312,468        1,285,719
Cumulative foreign currency
 translation adjustments                 (19,664)         (14,353)
Unrealized gain on investments               -                 (1)
Retained earnings                      1,087,881        1,008,021
Less: Staples RD treasury stock
 at cost, 22,979,414 shares at
 August 4, 2001 and 22,787,300
 shares at February 3, 2001             (505,001)        (505,001)
Less: Staples.com treasury stock
 at cost, 6,689,699 shares at
 August 4, 2001 and 4,449,773
 shares at February 3, 2001              (32,677)         (25,254)
  Total stockholders' equity           1,843,302        1,749,424
                                      ----------       ----------
                                      $4,001,712       $3,983,923

                    STAPLES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Cash Flows
                     (Dollar Amounts in Thousands)
                                            (Unaudited)
                                           26 Weeks Ended
                                  August 4,            July 29,
                                     2001                2000
Operating Activities:
 Net income                       $ 79,860            $ 86,726
 Adjustments to reconcile
  net income to net cash
  used in operating activities:
   Depreciation and amortization   119,319             107,780
   Store closure credit               -                 (7,250)
   Other non-cash items affecting
    income                           3,742              13,193
   Change in assets and liabilities,
    net of companies acquired/divested
    using purchase accounting:
       Increase in merchandise
        inventories                (61,438)            (85,531)
       Increase in receivables     (56,084)            (88,184)
       Increase in retained
        securitized accounts
        receivable                 (61,109)                -
       Increase in other assets    (23,711)            (21,184)
       Decrease in accounts
        payable and other
        current liabilities        (78,381)            (20,944)
       Increase in other long-term
        obligations                  4,327               5,851
                                ------------        -------------
                                  (153,335)            (96,269)
Net cash used in operating
 activities                        (73,475)             (9,543)
Investing Activities:
 Acquisition of property and
  equipment                       (183,065)           (199,392)
 Proceeds from the sale of
  short-term investments             8,938                -
 Purchase of long-term investments    (250)            (58,782)
 Other                                (446)               (152)
Net cash used in investing
 activities                       (174,823)           (258,326)
Financing Activities:
 Proceeds from sale of capital
  stock                             18,252              23,982
 Proceeds from borrowings          530,070           2,343,485
 Payments on borrowings           (493,634)         (1,984,364)
 Settlement of equity forward
  purchase agreement                  -                (78,684)
 Purchase of treasury stock         (7,423)            (66,736)
Net cash provided by financing
 activities                         47,265             237,683
Effect of exchange rate changes
 on cash                            (2,457)             (2,772)
Net decrease in cash and cash
 equivalents                      (203,490)            (32,958)
Cash and cash equivalents at
 beginning of period               263,560             110,483
Cash and cash equivalents at
 end of period                    $ 60,070            $ 77,525

                    STAPLES, INC. AND SUBSIDIARIES
                           Segment Reporting
                     (Dollar Amounts in Thousands)
                            (Unaudited)                (Unaudited)
                          13 Weeks Ended             26 Weeks Ended
                        August 4,   July 29,    August 4,    July 29,
                          2001        2000        2001        2000
Sales by Segment:
North American Retail  $1,427,628  $1,374,463  $3,133,729  $3,057,514
Contract and Commercial   488,862     583,450   1,045,176   1,201,613
Staples.com               233,806      95,692     446,361     171,055
European Operations       163,933     147,692     356,039     326,901
 Total sales           $2,314,229  $2,201,297  $4,981,305  $4,757,083
Business Unit Income/(Loss):
North American Retail  $   40,129  $   78,298  $   78,854  $  159,700
Contract and Commercial    36,276      46,003      75,814      86,442
Staples.com                 9,600     (29,149)      6,898     (68,331)
European Operations       (11,629)    (11,066)    (14,718)    (19,977)
 Total business unit
  income               $   74,376  $   84,086  $  146,848  $  157,834
Store closure credit         -            -          -          7,250
Interest and other
 expense, net              (8,762)    (11,952)    (16,995)    (18,091)
Income before income
 taxes                 $   65,614  $   72,134  $  129,853  $  146,993

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