Staples Reports Record Year

Contract division hits $1 billion in sales with 70 percent of orders coming in online

Framingham, MA Ñ March 7, 2003 Ñ Office supply giant Staples this week reported record results for its 2002 fiscal year, while its Staples Contract unit hit the hallmark of $1 billion in sales with 70 percent of its orders coming in through its StaplesLink Web storefront.

Staples as a whole recorded sales of $11.6 billion for its fiscal year ended February 1, an 8 percent increase over the previous fiscal year. Net income, excluding special items, came in at $417 million for the full year, despite the economic tribulations of the past year.

Total company sales for the fourth quarter grew to $3.3 billion, an increase of 14 percent over the same quarter of the previous. North American same-store sales increased 3 percent, up from 1 percent in the third quarter. Net income for the quarter was $165 million.

Meanwhile, the Staples Contract unit, which services the company's large and midsize clients, along with its online component, StaplesLink, contributed $1 billion in revenues to the mother company's top line. The Contract unit has seen double-digit growth in its sales for the past three years, and 2002 saw it acquire 10,600 new customers, including three Fortune 50 clients, versus 7,800 new customers in the 2001 fiscal year. Contract counts a total of more than 43,000 customers.

Significantly, Contract is now seeing 70 percent of its total orders come in online through StaplesLink, which offers a Web-based B2B procurement site for office equipment and supplies. Moreover, 95 percent of Contract's new customers are using StaplesLink.

In all, Staples said that about 4.2 million end users at nearly 20,000 organizations use the StaplesLink site, version 4.0 of which launched in February (see related story).

In an interview at the time of the 4.0 launch, Jay Baitler, senior vice president at Staples Contract, suggested that StaplesLink has played a large part in the contract division's 90 percent customer retention rate. He also said that the online component has seen return rates more than 35 percent lower than the offline side of the business, which he attributed in part to the greater sense of ownership that end users feel when they are able to place orders for products themselves.