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News Release First Quarter Revenue Grows 545 Percent

FRAMINGHAM, Mass.--(BUSINESS WIRE)--May 16, 2000--

Delivers Sequential Quarterly Revenue Growth of 75 Percent

Repeat Customer Purchases 57 Percent of Sales, Staples Inc.'s (NASDAQ:SPLS) electronic marketplace that provides office supplies, services, content and community over the Internet, today announced revenues of $75.36 million for the first quarter 2000, which ended April 29, 2000, up 545 percent from the $11.69 million reported for the same period in the prior year and up 75 percent from the $43.07 million reported for the fourth quarter 1999. The business reported a net loss of $23.4 million.

"With the Business Solutions Center, plus our newly enhanced Web site launched just last week, offers a one-stop shop for small businesses -- from paper to payroll," said Jeanne B. Lewis, president of "This quarter, we exceeded our revenue projections with fewer losses than we originally anticipated. The power of the Staples brand, combined with our innovative Internet marketing strategies, are attracting the customers we want to; our award-winning site and top-notch customer service keep them coming back. The number of repeat shoppers at grew by 75 percent this quarter." -0-


                            Q1`99    Q2`99   Q3`99    Q4`99     Q1`00

Sales                        421%     455%    493%     453%      545%
(increase over same
quarter, prior year)
Sales                         50%      34%     54%      80%       75%
(increase over previous
Gross Profit Rate             23%      23%     23%      20%       20%
Number of Repeat Customers                 53,000   82,000   143,500
(repeat customers making
at least one
purchase during the quarter)


   During the quarter,

--Ranked first, among the online businesses of the office supply superstore industry, in number of unique visitors in March by MediaMetrix and in unique audience size at home and at work by Nielsen NetRatings during the week of April 9, and was ranked the eighth most visited e-tail site in the U.S. during April, according to PC Data Online;

--Launched an enhanced Business Solutions Center with a request-for-quote purchasing option with 70 different types of business services and 20,000 sellers, content and community for small business;

--Added four new strategic "Click and Buy" service partners, including for digital printing and delivery, application service provider McAfee, TaxLogic for online professional tax preparation service, and CloudSource, a Web site developer;

--Expanded internationally with its Canadian site launch in both English and French versions, localized with regional product and delivery;

--Premiered a national, comprehensive marketing campaign to increase brand awareness and drive customers to;

--Increased the number of active partners in its affiliate program by launching a new, all-cash reward system;

--Announced plans to integrate with nine leading business-to-business purchasing solutions and e-marketplaces, including Ariba, Commerce One, Intelisys, Oracle Corporation, RightWorks Corporation, Requisite Technology, Inc., Clarus Corporation, TPN Register, LLC and Trilogy Software, Inc.; and

--Acquired the domain name and redesigned the Web site.

About, a division of Staples Inc. (NASDAQ: SPLS), is creating a business-to-business electronic marketplace offering a comprehensive solution for the office needs of business customers. currently provides an electronic marketplace where small, mid-sized and large businesses can procure office products and business services and obtain business information and expert content. includes the operations of Staples Inc.'s e-commerce sites:, and, and its Canadian e-commerce business.

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. -0-


                     (A DIVISION OF STAPLES, INC.)
                        Combined Balance Sheets
                     (Dollar Amounts in Thousands)

                                                April 29,  January 29,
                                                   2000       2000
Current Assets:
   Cash and cash equivalents                     $    --    $    --
   Prepaid expenses and other current assets         1,655      1,578
   Inter-business receivable from Staples RD          --       23,660
      Total current assets                           1,655     25,238

   Equipment                                        17,884     13,538
   Less accumulated depreciation                     2,778      1,110
      Net equipment                                 15,106     12,428

Other Assets
   Investments                                     239,414     34,755

                                                 $ 256,175  $  72,421

Current Liabilities:
   Accrued expenses and other
    current liabilities                          $  17,756  $   7,466
   Inter-business payable to Staples RD            100,208       --
      Total current liabilities                    117,964      7,466

Divisional Net Worth:
   Common stock: Stock, $ .0006 par
      value 600,000,000 shares authorized;
      14,028,672 shares issued and outstanding
      at April 29, 2000 and 13,626,093 at
      January 29, 2000                                   8          8
   Additional paid-in capital                       78,231     75,604
   Cumulative foreign currency
    translation adjustments                              3       --
   Unrealized gain on investments                  100,756      6,695
   Accumulated deficit                             (40,787)   (17,352)
      Total divisional net worth                   138,211     64,955
                                                 $ 256,175  $  72,421

                 (A DIVISION OF STAPLES, INC.)
               Combined Statements of Operations
        (Dollar Amounts in Thousands, Except Share Data)

                                               13 Weeks Ended
                                            April 29,     May 1,
                                              2000         1999

Sales                                       $ 75,363    $ 11,692
Cost of goods sold and occupancy costs        60,607       9,022
    Gross profit                              14,756       2,670

Operating and other expenses:
  Operating and selling                       33,248       3,683
  Site development costs                       7,653         518
  General and administrative                  13,491       1,845
  Interest and other expense, net                 85          15
    Total operating and other expenses        54,477       6,061

   Loss before income taxes                  (39,721)     (3,391)
  Income tax benefit                         (16,286)     (1,322)
    Net loss                                $(23,435)   $ (2,069)

    Net loss attributed to (Note A): Stock                       (2,842)       --
      Staples RD Stock                       (20,593)     (2,069)
                                            $(23,435)   $ (2,069)

  Basic net loss per common share
     Historical net loss per common share    $ (0.21)

  Diluted net loss per common share
     Historical net loss per common share    $ (0.21)

 Pro forma net loss per common share
  for tracking stock:

  Basic net loss per common share
     Pro forma net loss per common share                 $ (0.02)
  Diluted net loss per common share
     Pro forma net loss per common share                 $ (0.02)

                     (A DIVISION OF STAPLES, INC.)
                   Combined Statements of Cash Flows
                     (Dollar Amounts in Thousands)

                                                 13 Weeks Ended
                                              April 29,      May 1,
                                                2000         1999
Operating Activities:
 Net loss                                     $(23,435)   $ (2,069)
 Adjustments to reconcile net loss
  to net cash provided by (used in)
  operating activities:
   Depreciation and amortization                 2,418          71
   Change in assets and liabilities:
    Increase in prepaid expenses
     and other assets                              (77)        251
    Increase in accounts payable, accrued
     expenses and other current liabilities     10,290         739
                                                12,631       1,061
 Net cash used in operating activities         (10,804)     (1,008)

Investing Activities:
 Acquisition of property and equipment          (4,346)       (104)
 Purchase of long-term investments             (44,862)       --
 Net cash used in investing activities         (49,208)       (104)

Financing Activities:
 Net proceeds from sale of capital stock         1,877        --
 Repayment of inter-business
  advance to Staples RD                         27,940        --
Proceeds from borrowings from Staples RD        30,195      1,008
Capital contributions from Staples RD            --           104
 Net cash provided by financing activities      60,012       1,112

Net (decrease) increase in
 cash and cash equivalents                        --          --
Cash and cash equivalents
 at beginning of period                           --          --
Cash and cash equivalents
 at end of period                             $   --      $   --


    CONTACT: Shannon Lapierre
             Public Relations Manager
             Bonnie Monahan
             Vice President of Investor Relations