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Staples Reports 4Q Results

March 4, 2008

Staples, Inc. (Nasdaq: SPLS) announced today the results for its fourth quarter (13 weeks), and fiscal year (52 weeks) ended February 2, 2008. Including the impact of an extra week of sales in the fourth quarter of 2006, total company sales grew one percent to $5.3 billion. North American Retail revenues decreased four percent and North American Delivery sales increased four percent. International sales increased 13 percent in US dollars and increased three percent in local currency. On a GAAP basis, total company net income of $333 million declined slightly from $336 million, and diluted earnings per share of $0.47 rose two percent compared to the fourth quarter of 2006.

Excluding $370 million of sales recorded during the 14th week in the fourth quarter of 2006, total company sales for the fourth quarter increased eight percent to $5.3 billion compared to the same quarter of 2006. Excluding North American Retail sales of $209 million and North American Delivery sales of $130 million recorded during the extra week in the fourth quarter of 2006, North American Retail sales increased four percent and North American Delivery sales increased 12 percent. Excluding International sales of $31 million recorded during the extra week in the fourth quarter of 2006, sales grew 18 percent in US dollars and increased eight percent in local currency. On a proforma basis to exclude the impact of the 14th week in the fourth quarter of 2006, diluted earnings per share of $0.47 rose 15 percent compared to 2006. Comparable store sales for the fourth quarter decreased six percent in North American Retail, and decreased one percent in Europe versus last year.

For fiscal year 2007, sales reached $19.4 billion, a seven percent increase compared to 2006. Full year North American Retail sales rose one percent and North American Delivery revenues increased 12 percent. International sales rose 16 percent in US dollars and grew seven percent in local currency. On a GAAP basis, total company net income increased to $996 million versus $974 million last year, and diluted earnings per share of $1.38 rose five percent versus 2006.

Excluding the 53rd week of sales in 2006, total company sales increased nine percent versus last year, North American Retail sales increased three percent, North American Delivery revenues increased 14 percent, and International sales grew 18 percent in US dollars or eight percent in local currency. On a proforma basis to exclude the impact of the previously disclosed settlement of California wage and hour class action litigation reported in the third quarter of 2007, as well as the 53rd week in 2006 and the impact of favorable tax events and the correction for prior years’ stock-based compensation reported in the third quarter of 2006, diluted earnings per share increased 15 percent to $1.42. Comparable store sales for the full year decreased three percent in North American Retail and increased two percent in Europe versus last year.

“We are pleased to deliver profitable growth in what turned out to be a challenging 2007,” said Ron Sargent, Staples’ chairman and chief executive officer. “We have a strong team dedicated to doing the right things for customers while investing in growth ideas.”

Key accomplishments in 2007:

Total Company

• Achieved record sales of $19.4 billion.
• Opened 159 stores worldwide, ending 2007 operating 2,038 stores.
• Recorded 2007 total company e-commerce sales of $5.6 billion, a 14 percent increase versus last year.
• Announced an agreement with Dell to be the exclusive supplier of Dell products in the office products channel.
• Launched “Security by Staples” providing innovative products and services to help reduce common information security threats.
• Continued to increase sales of Staples own brand merchandise, which now represents 22 percent of total company sales.
• Generated record free cash flow of $891 million after $470 million in capital expenditures.
• Returned $958 million to shareholders through $208 million dividend and $750 million in share repurchases.

North American Retail

• Achieved record sales of more than $10 billion.
• Opened 120 stores, which included 11 stores in the Denver market, our most recent market entry, and closed two stores, ending the year with 1,738 stores in North America.
• Opened three stand alone Copy & Print shops in New York City during 2007 and ended the year with a total of six Copy & Print shops.
• Rolled out “Business Cards in Minutes” in copy and print centers in all US stores. North American Delivery
• Achieved record sales of more than $6.6 billion.
• Increased FY2007 operating income rate in North American Delivery by 21 basis points to 10.8 percent.
• Increased North American Delivery e-commerce sales by 14 percent to $5 billion or 75 percent of sales.
• Added promotional product offering through the strategic acquisition of American Identity.
• Opened two new fulfillment centers, in Denver and Nova Scotia, to support continued growth while maintaining excellent service.
• Recognized by J.D. Power and Associates for “outstanding customer service” in the call centers of all three North American Delivery businesses.

International



• Achieved record sales of more than $2.7 billion.
• Improved International operations operating income rate by 144 basis points to 3.6 percent for the full year.
• Opened three stores in Portugal, two stores in Netherlands, one store in Germany and one store in Belgium, and closed three stores in the UK during 2007, ending the year with 268 stores in Europe.
• Drove strong top-line growth and operating income rate expansion while achieving record service levels in European Catalog.
• Entered India through a joint venture with Future Group.
• Announced a joint venture with UPS and opened the first two StaplesUPS Express stores in China and ended the year with a total of 32 stores in China.
• Surpassed $200 million in sales in China, more than doubling 2006 performance.

The company also announced an annual cash dividend of $0.33 per share payable on April 17, 2008, to shareholders of record on March 28, 2008. This represents a 14 percent increase versus 2007.

Outlook

The company expects the weak economic climate to continue throughout 2008. Based on the cautious outlook, and continued investment in growth initiatives, the company now expects to achieve mid single-digit sales growth for 2008. The company expects to achieve high single-digit earnings per share growth for 2008, excluding the previously disclosed impact to 2007 earnings for the $38 million pre-tax charge ($24 million aftertax) related to the settlement of California wage and hour class action litigation. The company’s guidance for future periods excludes any potential impact relating to our previously announced proposal to acquire the ordinary shares of Corporate Express NV.