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News Release

Staples, Inc. Announces Third Quarter Results; Achieves 11 Percent Earnings Per Share Growth In The Third Quarter

FRAMINGHAM, Mass.--(BUSINESS WIRE)--Nov. 20, 2001--Staples, Inc. (Nasdaq:SPLS) today reported sales of $2.83 billion for the third quarter, which ended November 3, a one percent increase versus the $2.80 billion reported for the same period last year. The company recorded net income for the quarter of $91.31 million, or $0.20 per diluted common share, an 11 percent earnings per share increase compared with the $84.66 million, or $0.18 per diluted common share for the same period last year, adjusted to reflect the conversion of Staples.com stock. Overall comparable sales for the quarter were negatively impacted by two percentage points by the events of September 11, and were down three percent, with retail comparable sales down five percent.

"Despite challenging economic times and the tragic events of September 11, Staples delivered on earnings expectations and achieved earnings growth," said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. "Our performance is clearly improving and we are back on track to deliver sustained earnings growth through strategic initiatives including a more conservative real estate strategy, a successful new store format and expense containment."

In the North American Retail business, store sales for the quarter were $1.85 billion, down one percent versus a year ago. Focusing on profitable growth, Staples plans to open fewer than 80 new stores in the United States in 2002, significantly down from previous guidance of 100 stores. Additionally, the successful new Dover store format, chain-wide customer service initiatives and an enhanced labor model are improving revenue productivity and returns.

Sales for the Staples Delivery business, including Staples Direct, Staples Contract and Quill, combined with their e-commerce counterparts, were $778 million, a nine percent increase over the third quarter of last year.

Through customer acquisition combined with increasing customer loyalty, traffic across all Staples' businesses continues to experience growth. Staples North American Retail customer count comparables for the third quarter were up two percent. In the StaplesDirect.com business, customer count comparables grew by 19 percent in the quarter. The Staples Contract business dramatically outperformed the industry during the quarter, acquiring more than 2,000 new accounts, adding to 3,500 new accounts in the first half of the year.

Staples European business revenues were $205 million representing 23 percent top line growth. Comparable sales growth was 11 percent and the business broke even for the quarter.

"We have planned conservatively for the year and expect to achieve earnings for the fourth quarter in the range of $0.25 to $0.27 per share. Looking ahead to next year, a strong management team, expense control initiatives and a renewed focus on improving returns all position Staples for solid earnings growth," added Stemberg.

Staples will host a live Internet broadcast of its third quarter 2001 earnings conference call today at 8:00 a.m. (Eastern). Individuals may access the broadcast from Staples' Web site directly at http://investor.staples.com. A replay of the quarterly earnings conference call will be available at http://investor.staples.com from 11:30 a.m. (Eastern) on November 20, through midnight on Tuesday, November 27.

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 1,400 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' Quarterly Report on Form 10-Q dated September 17, 2001, which is on file with the Securities and Exchange Commission.

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


                            (Unaudited)             (Unaudited)
                          13 Weeks Ended           39 Weeks Ended
                      November 3, October 28,  November 3, October 28,
                            2001        2000         2001        2000

Sales                $ 2,833,861 $ 2,801,769  $ 7,815,166 $ 7,558,852
Cost of goods
 sold and
 occupancy costs       2,146,724   2,125,486    5,961,692   5,726,258
  Gross profit           687,137     676,283    1,853,474   1,832,594

Operating and
 other expenses:
 Operating and
  selling                431,337     406,655    1,238,888   1,187,808
 Pre-opening               3,245       5,064       12,392      19,592
 General and
  administrative          95,997     103,732      295,496     299,433
 Amortization of
  goodwill                 1,646       3,621        4,938      10,716
 Store closure credit       --          --           --        (7,250)
 Interest and
  other expense, net       6,437      13,718       23,432      31,809
  Total operating
   and other expenses    538,662     532,790    1,575,146   1,542,108

  Income before
   income taxes          148,475     143,493      278,328     290,486
Income tax expense        57,163      58,832      107,156     119,099
  Net income         $    91,312 $    84,661  $   171,172 $   171,387

Net income/(loss)
 attributed to:
 Staples, Inc. Stock $    91,312 $      --    $    91,312 $      --
 Staples RD Stock           --        86,039       79,740     177,619
 Staples.com Stock          --        (1,378)         120      (6,232)
                     $    91,312 $    84,661  $   171,172 $   171,387

Basic earnings/(loss)
 per common share:
 Earnings per
  common share:
  Staples, Inc.
  Stock              $      0.20 $      --    $      0.20 $      --
 Earnings per
  common share -
  Staples RD Stock   $      --   $      0.19  $      0.18 $      0.39
 Earnings/(loss)
  per common share -
  Staples.com Stock  $      --   $     (0.10) $      0.01 $     (0.45)

Diluted
 earnings/(loss)
 per common share
 Earnings per
  common share -
  Staples, Inc.
  Stock              $      0.20 $      --    $      0.20 $      --
 Earnings per
  common share -
  Staples RD Stock   $      --   $      0.19  $      0.17 $      0.38
 Earnings/(loss)
  per common share -
  Staples.com Stock  $      --   $     (0.10) $      0.01 $     (0.45)


Number of shares
 used in computing
 basic earnings/(loss)
 per common share:
 Staples, Inc. Stock     459,864        --        459,864        --
 Staples RD Stock           --       453,307      455,399     454,972
 Staples.com Stock          --        13,893        7,980      13,923

Number of shares
 used in computing
 diluted earnings/(loss)
 per common share:
 Staples, Inc. Stock     465,508        --        465,508        --
 Staples RD Stock           --       457,613      461,379     461,874
 Staples.com Stock          --        13,893        9,819      13,923



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


                                       November 3,
                                          2001        February 3,
                                       (Unaudited)       2001

ASSETS
Current Assets:
   Cash and cash equivalents           $ 111,315      $ 263,560
   Merchandise inventories             1,580,922      1,639,698
   Receivables, net                      473,451        297,916
   Deferred income taxes                  66,242         43,955
   Other current assets                  120,389        110,982

         Total current assets          2,352,319      2,356,111

Property and Equipment:
   Land and buildings                    425,207        400,971
   Leasehold improvements                559,989        519,681
   Equipment                             788,823        692,783
   Furniture and fixtures                393,713        352,712

         Total property and equipment  2,167,732      1,966,147

   Less accumulated depreciation
    and amortization                     806,275        665,622

         Net property and equipment    1,361,457      1,300,525

Other Assets:
   Lease acquisition costs,
    net of amortization                   54,295         58,596
   Goodwill, net of amortization         233,598        238,536
   Other                                  65,967         30,155

         Total other assets              353,860        327,287
                                      ----------      ----------
                                     $ 4,067,636    $ 3,983,923


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                    $ 956,736      $ 983,851
   Other current liabilities             557,267        542,923
   Debt maturing within one year         177,142        184,505

         Total current liabilities     1,691,145      1,711,279

Long-Term Debt                           372,425        441,257
Deferred Tax Liability                       268          8,916
Other Long-Term Obligations               77,198         73,047
Stockholders' Equity:
   Preferred stock, $.01 par value
    5,000,000 shares authorized;
    no shares issued                         -              -
   Common stock:
    Staples, Inc. Stock, $.0006 par
     value 2,100,000,000 shares
     authorized; issued 488,503,011
     shares at November 3, 2001              293            -
    Staples RD Stock, $.0006 par
     value 1,500,000,000 shares
     authorized; issued 477,111,602
     shares at February 3, 2001              -              285
    Staples.com Stock, $.0006 par
     value 600,000,000 shares
     authorized; issued 14,105,821
     shares at February 3, 2001              -                8
   Additional paid-in capital          1,326,049      1,285,719
   Cumulative foreign currency
    translation adjustments              (22,609)       (14,353)
   Unrealized gain on investments            -               (1)
   Retained earnings                   1,179,193      1,008,021
   Less: Staples, Inc. treasury
    stock at cost, 27,540,507 shares
    at November 3, 2001, and
    24,743,420 shares at
    February 3, 2001                    (556,326)      (530,255)

        Total stockholders' equity     1,926,600      1,749,424
                                      -----------    -----------
                                     $ 4,067,636    $ 3,983,923



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


                                             (Unaudited)
                                            39 Weeks Ended

                                     November 3,         October 28,
                                        2001                2000

Operating Activities:
 Net income                         $  171,172           $ 171,387
 Adjustments to reconcile net
  income to net cash provided
  by operating activities:
   Depreciation and amortization       183,450             168,594
   Store closure credit                   -                 (7,250)
   Other non-cash items
    affecting income                   (25,671)             15,149
   Change in assets and liabilities,
    net of companies acquired/divested
    using purchase accounting:
   Decrease/(Increase) in
    merchandise inventories             31,582             (90,972)
   Increase in receivables            (131,378)           (171,890)
   Increase in retained securitized
    accounts receivable                (86,109)                -
   Increase in other assets            (12,060)            (20,410)
   Increase in accounts payable and
    other current liabilities           53,752             162,440
   Increase in other long-term
    obligations                          5,954               9,212
                                     ----------           ---------
                                        19,520              64,873

Net cash provided by operating
 activities                            190,692             236,260

Investing Activities:
 Acquisition of property and
  equipment                           (258,232)           (327,632)
 Proceeds from the sale of
  short-term investments                 8,938                 108
 Purchase of long-term investments        (250)            (58,947)
 Proceeds from the sale and
  maturity of long-term investments      1,654               1,951
 Other                                    (515)             (2,861)

Net cash used in investing activities (248,405)           (387,381)

Financing Activities:
 Proceeds from sale of capital stock    26,347              37,885
 Proceeds from borrowings              597,110           2,819,719
 Payments on borrowings               (683,800)         (2,528,069)
 Settlement of equity forward
  purchase agreement                      -                (78,684)
 Purchase of treasury stock            (26,071)            (97,583)
Net cash (used in)/provided by
 financing activities                  (86,414)            153,268

Effect of exchange rate changes on cash (8,118)             (7,361)

Net decrease in cash and cash
 equivalents                          (152,245)             (5,214)
Cash and cash equivalents at
 beginning of period                   263,560             110,483

Cash and cash equivalents
 at end of period                    $ 111,315           $ 105,269



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

                          (Unaudited)               (Unaudited)
                        13 Weeks Ended            39 Weeks Ended

                   November 3,  October 28,   November 3,  October 28,
                      2001         2000          2001         2000


Sales by Segment:
North American
 Retail          $ 1,851,660   $ 1,877,586   $ 4,985,389   $4,935,100
North American
 Delivery            777,598       715,072     2,243,955    1,997,643
European Operations  204,603       165,820       560,642      492,721

Total             $ 2,833,861  $ 2,758,478   $ 7,789,986  $ 7,425,464
Divested Businesses     -           43,291        25,180      133,388

Consolidated      $ 2,833,861  $ 2,801,769   $ 7,815,166  $ 7,558,852

Business Unit Income/(Loss):
North American
 Retail             $ 100,464    $ 129,781   $ 179,318      $ 289,481
North American
 Delivery              54,710       41,860     138,959         74,816
European Operations      (262)      (6,521)    (14,980)       (26,498)
Total business unit
 income             $ 154,912    $ 165,120   $ 303,297      $ 337,799
Divested Businesses     -           (7,909)     (1,537)       (22,754)
Store closure credit    -              -           -            7,250
Interest and other
 expense, net          (6,437)     (13,718)    (23,432)       (31,809)
Income before income
 taxes              $ 148,475    $ 143,493   $ 278,328      $ 290,486

CONTACT: Staples, Inc.
INVESTOR CONTACT
Laurel Lefebvre
Director, Investor Relations
508-253-4080
or
MEDIA CONTACTS
Tom Nutile
Vice President, Public Relations
508-253-1833
or
Deborah Hohler
Public Relations Manager
508-253-8509