Staples Retail and Delivery Reports Double-Digit Same-Store-Sales for Fourth Quarter

Edge: Work-Group Computing Report, March 6, 2000

Staples Inc. (NASDAQ:SPLS), the pioneer of the office superstore industry, Thursday 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.