Staples Fiscal Q4 N.A. Sales Increase 7%

Framingham, Mass.— Although office products retailer Staples has continued its transition from a primarily North American business to more of a global operation, it did bring in a 7 percent increase for fiscal-fourth-quarter North American sales, hitting $2.1 billion, up from $1.9 billion in the year-ago period. Same-store North American sales rose 3 percent in the quarter.

Income in Staples North American segment climbed to $172.6 million in the fourth quarter, ended Feb. 1, a 16 percent increase, compared with $142 million in the same three months a year earlier. Income for the earlier fiscal fourth quarter includes a $7.4 million charge.

The retailer said its North American business benefited from strong sales during the holiday season and through January, the start of its important "back to business" selling season, which continues into the first quarter of 2003.

Staples, which is enjoying the results of an ongoing shift in its customer mix — selling more to small businesses and power users, rather than relying on less profitable casual consumers — grew total company sales for the fourth quarter by 14 percent. The chain hit $3.3 billion in consolidated sales, up from $2.9 billion in the same quarter a year earlier.

Consolidated net income climbed to $164.7 million in the fourth quarter, an 18 percent increase over the $135.7 million, excluding special items, reported in the fourth quarter of last year.

Staples, which attributes much of its sales and earnings success to selling more Staples-brand products, a differentiated store format and by growing its higher margin delivery business faster than its retail operation, reported 52-week North American segment sales of $7.2 billion, compared with $6.9 billion year over year. North American segment 52-week income reached $413.9 million, up from $321.4 million in the previous year.

Consolidated 52-week sales jumped to $11.6 billion, an 8 percent increase over the $10.7 billion reported for the same period a year earlier, while net income, excluding special items, increased to $417.1 million, compared with $306.9 million year over year.

Looking to the current first quarter, Staples expects North American comp-store sales to hit the low single-digit range, with overall revenue forecast to increase in the range of high single to low double digits.

For the current fiscal year, the retailer anticipates North American comp-store sales will remain in the low single digits. Overall, the retailer anticipates an overall 20 percent growth in earnings and mid- to high-single-digit organic revenue growth, combined with 2 to 3 percent additional growth from recent acquisitions.