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Staples Reports Record Sales, Earnings

8/15/2006 11:28:00 AM Eastern

Framingham, Mass. – Staples posted record sales and earnings for its second quarter, ended July 29, with market share gains in North America and a 19 percent increase in net income.

Total company sales rose 12 percent to $3.88 billion compared with the $3.47 billion reported for last year at this time. Net income increased 19 percent year-over-year to $161 million, and earnings per share, on a diluted basis, increased 22 percent.

Second quarter North American retail comparable store sales increased four percent vs. 2005, reflecting positive customer traffic, the company noted. North American retail continued to see strength in categories mobile computing and accessories, core office supplies (copy and print, ink and toner) and improved performance in the furniture category. Total North American retail sales rose 10 percent and North American Delivery grew sales 17 percent vs. last year.

Highlights for the second quarter include:

  •  Top-line growth accelerated as the company benefited from recent investments in key growth platforms, such as its copy and print center, contract sales force, Web platforms, and expansion into new geographies.

  •  Total company operating margin improved 30 basis points to 6.5 percent, a record second quarter performance.

  • Customer service metrics continue to improve, reaching all-time highs in both retail and delivery in North America.

  • The company is on track to reach its goal of 20 percent of sales from Staples brand products. During the quarter, Staples launched over 200 new branded products in time for back-to-school.

  • Staples opened two new multi-channel fulfillment centers, in Atlanta and Orlando, to support the rapid growth in North American delivery.

  • Gross profit margin increased in North American retail, but overall gross profit margin decreased 24 basis points, primarily due to costs associated with new fulfillment centers, fuel and paper in North American Delivery.

  • Inventory turns increased 16 basis points to 5.77 times, as the company continues to focus on its supply chain improvement programs in both retail and delivery.

  • Staples opened 11 new stores and closed one store in the United States, opened two stores in Canada, two stores in Portugal, and one store in Germany. The company now operates 1,801 stores worldwide.

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