|Staples.com Revenue Grows More Than 450 Percent for the Fourth Quarter and Year|
FRAMINGHAM, Mass.--(BUSINESS WIRE)--March 2, 2000-- North American Same-Store-Sales Grow 10 Percent For The Quarter And The Year
Revenue Rises 25 Percent For The Quarter, 24 Percent For The Year
Staples Inc. (NASDAQ:SPLS), the pioneer of the office superstore industry, today announced that its Retail and Delivery business earned net income of $331.3 million or $.70 per common share on a diluted basis for the year ended January 29, compared with $240.7 million or $.53 per common share earned on a diluted basis for the prior year. In the fourth quarter of 1999, the company earned net income of $129.2 million or $.28 per common share on a diluted basis, compared with $101.6 million or $.22 per common share reported for the same quarter in the prior year.
Historical data has been restated to reflect the merger with Quill Corporation and a three-for-two stock split in January 1999, and excludes store relocation and merger charges in 1998. Staples Retail and Delivery results exclude the retained interest in Staples.com.
"Staples continues to deliver strong financial performance and this quarter marks our seventh year - 28 consecutive quarters -- of meeting or beating Wall Street expectations," said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. "Execution does make a difference. Finding great store locations, effectively displaying merchandise and controlling inventory and distribution are keys to our success. And we constantly listen to our customers to reinvent the shopping experience to offer the products and services they need at competitive prices."
Sales for the year rose 24 percent to $8.84 billion from $7.11 billion reported for fiscal year 1998. For the fourth quarter, sales rose 25 percent to $2.59 billion from $2.07 billion reported for the same period last year. Comparable store sales for the 938 stores open for more than one year and delivery hubs increased 9 percent for the year and increased 10 percent for the quarter.
Staples opened 23 new retail stores in the fourth quarter to end the fiscal year with 1,129 stores worldwide. Throughout the year, the company agreed to rent or purchase 18 Scotty's Home Centers locations to nearly double its presence in Florida, entered major markets such as Atlanta, and opened stores in new small and mid-sized markets. Staples also expanded its in-store offerings to consumers by adding special order furniture capabilities, pack and ship centers, payroll services and an increased depth of wireless products and services.
The company also made strides in integrating e-commerce into its retail stores, adding intranet special order kiosks in all its U.S. stores. In addition, Staples enhanced its PC business through build-to-order computer offerings from Compaq and Hewlett-Packard that enable customers to customize their own PC from Staples without the company carrying the inventory risk.
On the delivery side, Staples significantly improved service and efficiencies by rolling out three new multi-channel distribution centers to serve the company's contract, catalog and e-commerce customers and a multi-channel call center in Halifax, Nova Scotia and by adding 400 new trucks to its delivery fleet.
Staples continued to improve its European operations throughout the course of the year. A revised store format, tailored product assortment and a heavier emphasis on marketing have had a significant positive effect on same-store-sales. In addition, Staples acquired 42 office supply stores in Germany, the Netherlands and Portugal from Metro AG and launched its Quill brand in the United Kingdom.
Staples Inc. is a $9 billion retailer of office supplies, 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 46,000 employees serving customers through more than 1,100 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 presented within this news release may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which are discussed in our most recent filings with the Securities and Exchange Commission. -0-
STAPLES RETAIL AND DELIVERY Combined Statements of Income (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended 52 Weeks Ended January 29, January 30, January 29, January 30, 2000 1999 2000 1999 Sales $2,587,754 $2,069,322 $8,842,460 $7,106,303 Cost of goods sold and occupancy costs 1,924,812 1,541,671 6,647,769 5,384,202 Gross profit 662,942 527,651 2,194,691 1,722,101 Operating and other expenses: Operating and selling 355,249 271,339 1,268,099 990,239 Pre-opening 2,508 2,241 16,485 13,836 General and administrative 82,935 82,731 337,719 299,187 Amortization of goodwill 3,696 987 12,014 3,739 Merger-related and integration costs -- -- -- 41,000 Store closure charge -- 49,706 -- 49,706 Interest and other expense, net 6,744 2,391 17,183 17,342 Total operating and other expenses 451,132 409,395 1,651,500 1,415,049 Income before equity in loss of affiliates, retained interest and income taxes 211,810 118,256 543,191 307,052 Income tax expense 82,606 46,711 211,845 121,330 Net income before minority interest 129,204 71,545 331,346 185,722 Minority interest -- -- -- 135 Net income before retained interest in Staples.com 129,204 71,545 331,346 185,857 Loss related to retained interest in Staples.com (9,078) (285) (15,628) (487) Net income $ 120,126 $ 71,260 $ 315,718 $ 185,370 Historical earnings per common share: Basic earnings per common share Historical net income per common share for the 13 weeks ended January 29, 2000 $ 0.26 Diluted earnings per common share Historical net income per common share for the 13 weeks ended January 29, 2000 $ 0.26 Pro forma earnings per common share for tracking stock and S-Corporation conversion: Basic earnings per common share Pro forma net income per common share $ 0.26 $ 0.16 $ 0.69 $ 0.43 Diluted earnings per common share Pro forma net income per common share $ 0.26 $ 0.15 $ 0.67 $ 0.41 STAPLES RETAIL AND DELIVERY Combined Balance Sheets (Dollar Amounts in Thousands) January 29, January 30, 2000 1999 ASSETS Current Assets: Cash and cash equivalents $ 110,483 $ 357,993 Short-term investments 1,071 17,428 Merchandise inventories 1,607,516 1,340,432 Receivables, net 360,901 221,836 Deferred income taxes 39,730 75,261 Prepaid expenses and other current assets 72,172 50,117 Total current assets 2,191,873 2,063,067 Property and Equipment: Land and buildings 328,994 231,378 Leasehold improvements 442,119 372,451 Equipment 533,771 399,153 Furniture and fixtures 286,260 239,755 Total property and equipment 1,591,144 1,242,737 Less accumulated depreciation and amortization 508,810 403,462 Net property and equipment 1,082,334 839,275 Other Assets: Retained interest in Staples.com 16,254 1,962 Lease acquisition costs, net of amortization 68,832 75,127 Goodwill, net of amortization 387,595 148,201 Deferred income taxes 34,912 28,735 Other 31,769 22,814 Total other assets 539,362 276,839 $ 3,813,569 $ 3,179,181 LIABILITIES AND GROUP EQUITY Current Liabilities: Accounts payable $ 897,523 $ 794,427 Inter-business payable to Staples.com $ 23,660 Accrued expenses and other current liabilities 537,696 438,226 Debt maturing within one year 12,219 32,594 Total current liabilities 1,471,098 1,265,247 Long-Term Debt 500,903 205,015 Other Long-Term Obligations 61,456 52,033 Group Equity 1,780,112 1,656,886 $ 3,813,569 $ 3,179,181 STAPLES RETAIL AND DELIVERY Combined Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 52 Weeks Ended January 29, January 30, 2000 1999 Operating Activities: Net income $ 315,718 $ 185,370 Adjustments to reconcile net income to net cash (used in)/provided by operating activities: Minority interest - (135) Retained interest in loss of Staples.com 15,628 487 Depreciation and amortization 173,093 126,870 Merger-related and integration costs - 41,000 Store closure charge - 49,706 Expense from 401K and PARS stock contribution 18,374 12,764 Deferred income tax (benefit)/expense 29,265 (55,569) Change in assets and liabilities, net of companies acquired using purchase accounting: Increase in merchandise inventories (221,463) (211,052) Increase in receivables (112,980) (15,993) Increase in prepaid expenses and other assets (27,861) (8,806) Increase in accounts payable, accrued expenses and other current liabilities 110,474 273,195 Increase in other long-term obligations 7,747 9,597 (7,723) 222,064 Net cash used in operating activities 307,995 407,434 Investing Activities: Acquisition of property and equipment (342,615) (348,957) Acquisition of businesses, net of cash acquired (244,021) (13,500) Proceeds from sales and maturities of short-term investments 32,927 10,338 Purchase of short-term investments (16,651) (22,913) Proceeds from sales and maturities of long-term investments - 18,995 Purchase of long-term investments - (2,545) Capital contributions to Staples.com (29,920) (2,449) Acquisition of lease rights (549) (37,182) Other (1,875) 1,208 Net cash used in investing activities (602,704) (397,005) Financing Activities: Proceeds from sale of capital stock 46,503 63,996 Proceeds from borrowings 1,589,779 392,261 Payments on borrowings (1,308,311) (417,323) Purchase of dissenting shareholder S-Corporation stock - (48,102) Purchase of treasury stock (310,238) (7,892) Inter-business advance from Staples.com 27,940 - Dividends to shareholders of acquired S-Corp - (15,904) Net cash provided by/(used in)financing activities 45,673 (32,964) Effect of exchange rate changes on cash 1,526 (560) Net decrease in cash and cash equivalents (247,510) (23,095) Cash and cash equivalents at beginning of period 357,993 381,088 Cash and cash equivalents at end of period $ 110,483 $ 357,993 *T --30--kc/bos* CONTACT: Staples Inc. 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