|Staples Retail and Delivery Reports 10 Percent Same-Store-Sales for First Quarter|
FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 16, 2000--
Revenue Up 20 Percent; Net Income Jumps 21 Percent; Earnings Per
Share Grow 27 Percent; Opens Record Number of New Stores
Staples Inc. (NASDAQ:SPLS), the pioneer of the office superstore industry, today announced that its Retail and Delivery business earned net income of $63.3 million, or $.14 per common share, on a diluted basis, for the first quarter which ended April 29, 2000, compared with $52.4 million or $.11 per common share, on a diluted basis, for the prior year.
Staples Retail and Delivery results exclude the retained interest in Staples.com and an adjustment to the store closure charge taken in the fourth quarter 1998.
"We've proven, once again, that there is tremendous room for profitable growth in the office supply superstore business with our 29th consecutive quarter of meeting or beating analysts' expectations," said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. "Staples' outstanding first quarter results were predicated on our solid business strategy and ability to execute, merchandise, enhance our distribution capabilities and locate the best real estate sites for our stores."
Sales for the quarter rose 20 percent to $2.48 billion from $2.06 billion reported for the same period last year. Comparable sales for the 976 stores open for more than one year and delivery hubs increased 10 percent for the first quarter. Sales per store week improved slightly, 1.52 percent, despite the record number of stores the company opened during the quarter.
Gross margins for the quarter improved 10 basis points to 24.0 percent over the same period in the prior year, and return on net assets improved to 13.2 percent, 120 basis points over the same quarter in the prior year.
Staples opened 69 new stores this quarter, ahead of its office superstore competitors, and is on track to open 170 new stores in fiscal year 2000. The company also reinvested in its business with the first phase launch of Staplespartners.com, a Web-based technology that will enable vendors to have better visibility into Staples' sales data and inventory levels to improve fulfillment and delivery to the company. This and other supply chain initiatives, such as the new retail distribution center in Terre Haute, Ind., have resulted in lower distribution costs, lower inventory levels and better in-store stock levels in the retail business.
Recent multi-channel fulfillment enhancements, including the addition of a new 330,000-square-foot facility in Ontario, Calif., and an expanded delivery fleet - to 500 trucks by year end - have allowed Staples to better serve delivery customers, improve service and reduce distribution costs in its contract, catalog and e-commerce operations.
Staples' European operations continued on an upward trend, reporting a 16 percent same-store-sales increase, and management believes the company is well positioned for continued growth overseas. The company also has benefited from the 42 store locations it acquired from Metro last year.
About Staples Retail and Delivery
Staples Retail and Delivery, a division of Staples Inc., is a $9 billion provider of office supplies, furniture, technology and services to consumers and businesses of all sizes in the United States, Canada, the United Kingdom, Germany, the Netherlands and Portugal. Headquartered near Boston, Staples invented the office superstore concept and is the largest operator of office superstores in the world. The company has 50,000 employees who help customers slash the cost and hassle of running their businesses through more than 1,100 retail superstores, an e-commerce business, direct mail order operations under the brands of Staples and subsidiary Quill Corporation, and a national accounts 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 Proxy Statement on file with the Securities and Exchange Commission.
STAPLES RETAIL AND DELIVERY (A DIVISION OF STAPLES, INC.) Combined Balance Sheets (Dollar Amounts in Thousands) April 29, January 29, 2000 2000 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 651 $ 110,483 Short-term investments 1,047 1,071 Merchandise inventories 1,547,780 1,607,516 Receivables, net 438,383 360,901 Inter-business receivable from Staples.com 100,208 -- Deferred income taxes 40,095 39,730 Prepaid expenses and other current assets 83,257 72,172 Total current assets 2,211,421 2,191,873 Property and Equipment: Land and buildings 336,445 328,994 Leasehold improvements 463,060 442,119 Equipment 563,194 533,771 Furniture and fixtures 311,888 286,260 Total property and equipment 1,674,587 1,591,144 Less accumulated depreciation and amortization 558,095 508,810 Net property and equipment 1,116,492 1,082,334 Other Assets: Retained interest in Staples.com -- 16,254 Lease acquisition costs, net of amortization 67,000 68,832 Investments 5,055 -- Goodwill, net of amortization 389,406 387,595 Deferred income taxes -- 34,912 Other 35,383 31,769 Total other assets 496,844 539,362 $ 3,824,757 $ 3,813,569 LIABILITIES AND GROUP EQUITY Current Liabilities: Accounts payable $ 842,113 $ 897,523 Inter-business payable to Staples.com -- 23,660 Accrued expenses and other current liabilities 510,806 537,696 Debt maturing within one year 27,498 12,219 Total current liabilities 1,380,417 1,471,098 Long-Term Debt 543,781 500,903 Deferred Income Taxes 29,223 -- Investment in Capital Deficiency of Staples.com 4,337 -- Other Long-Term Obligations 64,063 61,456 Divisional Net Worth: Preferred stock, $ .01 par value-authorized 5,000,000 shares; no shares issued -- -- Common stock: Staples RD Stock, $ .0006 par value 1,500,000,000 shares authorized; 472,312,364 shares issued and outstanding at April 29, 2000 and 470,752,253 at January 29, 2000 283 282 Additional paid-in capital 1,168,258 1,153,784 Cumulative foreign currency translation adjustments (5,167) (4,473) Unrealized gain on investments (38) (44) Retained earnings 996,048 949,039 Less: treasury stock at cost, 15,571,243 shares at April 29, 2000 and 13,668,743 shares at January 29, 2000 (356,448) (318,476) Total divisional net worth 1,802,936 1,780,112 $ 3,824,757 $ 3,813,569 STAPLES RETAIL AND DELIVERY (A DIVISION OF STAPLES, INC.) Combined Statements of Income (Dollar Amounts in Thousands, Except Share Data) (Unaudited) 13 Weeks Ended April 29, May 1, 2000 1999 Sales $ 2,480,423 $ 2,060,374 Cost of goods sold and occupancy costs 1,885,532 1,568,291 Gross profit 594,891 492,083 Operating and other expenses: Operating and selling 378,456 311,528 Pre-opening 7,983 4,508 General and administrative 91,496 86,486 Amortization of goodwill 3,572 2,287 Store closure charge (7,250) -- Interest and other expense, net 6,054 1,401 Total operating and other expenses 480,311 406,210 Income before income taxes 114,580 85,873 Income tax expense 46,978 33,490 Net income before retained interest in Staples.com 67,602 52,383 Loss related to retained interest in Staples.com (20,593) (2,069) Net income $ 47,009 $ 50,314 Basic net income per common share Historical net income per common share $ 0.10 Diluted net income per common share Historical net income per common share $ 0.10 Pro forma net income per common share for tracking stock: Basic net income per common share Pro forma net income per common share $ 0.11 Diluted net income per common share Pro forma net income per common share $ 0.11 STAPLES RETAIL AND DELIVERY (A DIVISION OF STAPLES, INC.) Combined Statements of Cash Flows (Dollar Amounts in Thousands) (Unaudited) 13 Weeks Ended April 29, May 1, 2000 1999 Operating Activities: Net income $ 47,009 $ 50,314 Adjustments to reconcile net income to net cash (used in)/provided by operating activities: Retained interest in loss of Staples.com 20,593 2,069 Depreciation and amortization 48,259 34,385 Store closure charge (7,250) Expense from 401K and PARS stock contribution 3,192 4,625 Deferred income taxes (benefit)/expense (1,497) (2,800) Change in assets and liabilities, net of companies acquired using purchase accounting: Decrease in merchandise inventories 62,345 47,238 Increase in receivables (78,056) (100,995) (Increase)/Decrease in prepaid expenses and other assets (20,519) 11,027 Decrease in accounts payable, accrued expenses and other current liabilities (76,126) (42,499) Increase in other long-term obligations 1,749 526 (47,310) (46,424) Net cash (used in)/provided by operating activities (301) 3,890 Investing Activities: Acquisition of property and equipment (77,058) (60,519) Acquisition of businesses, net of cash acquired -- (137,625) Proceeds from sales and maturities of short-term investments 34 10,572 Purchase of short-term investments -- (16,651) Purchase of long-term investments (5,055) -- Capital contribution to Staples.com -- (104) Acquisition of lease rights 335 656 Other (11,374) 2,553 Net cash used in investing activities (93,118) (201,118) Financing Activities: Proceeds from sale of capital stock 7,049 9,973 Proceeds from borrowings 584,278 13,150 Payments on borrowings (514,137) (11,914) Purchase of treasury stock (37,972) (19,779) Repayment of inter-business advance from Staples.com (27,940) -- Inter-business advance to Staples.com (30,195) (1,008) Net cash used in financing activities (18,917) (9,578) Effect of exchange rate changes on cash 2,504 483 Net decrease in cash and cash equivalents (109,832) (206,323) Cash and cash equivalents at beginning of period 110,483 357,993 Cash and cash equivalents at end of period $ 651 $ 151,670 *T CONTACT: Staples Retail and Delivery Shannon Lapierre Public Relations Manager 508/253-8468 firstname.lastname@example.org or Bonnie Monahan Vice President of Investor Relations 508-253-7963 email@example.com