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 user 2005-05-20 at 3:53:00 pm Views: 45
  • #9665

    Staples’ earnings up 27% !< ?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />< ?:NAMESPACE PREFIX = O />

    Record profit amid founder’s loss Office supply giant adds business clients, builds market share
    May , 2005
    Staples Inc. reported record first-quarter profits yesterday by adding thousands of new business customers, revamping copy centers, and building demand for Staples-branded products, like the desk caddy featured on an episode of Donald Trump’s ”The Apprentice” last month.

    The Framingham company said first-quarter net income rose to $159.4 million from $125.7 million in the same period last year, cushioning its lead as the nation’s number one office supply chain.

    ”Staples is having a lot of success with their own brands, their copy center, and their delivery business,” said Michael Baker, a retail analyst with Deutsche Bank. ”They are continuing to run a more efficient supply chain and be one of the best executors in retailing.”

    For the first time, Staples, which saw total sales grow 13 percent to $3.9 billion from $3.45 billion in the same quarter a year ago, made forays into Chicago. The office supplies giant opened eight stores in the city, going head-to-head with rivals  aOFFICE DEPOT And OffiCE MAX of Itasca, Ill. — companies that have long dominated this Midwest market.

    Sales at the Chicago stores have already exceeded company expectations, according to Michael Miles, Staples’ chief operating officer, and Staples is planning to launch another 12 stores there this year.

    Meanwhile, Office Depot last month said operating profits decreased 5 percent, and OfficeMax reported a 2 percent decline in sales in its retail segment during the first quarter of 2005.

    ”Staples is taking market share from their competitors,” Baker said.

    The company’s increasing focus on copy centers and private branded labels also has helped Staples shore up new revenue. Its ”One Touch Stapler” drove up stapler sales 30 percent since the product was launched in March 2004.

    The margins for Staples private branded products are about 10 percent wider than national brands and the company is aiming to generate 17 percent of revenue from these items by the end of the year, according to Staples chief executive Ronald Sargent.

    Analysts say that won’t be too hard with private brands already making up 15 percent of revenue and with company plans to manage a Staples aisle of office and school supplies in all 550 Stop & Shop Co. and Giant Food LLC stores in the Northeast and Middle Atlantic.

    And last week, Staples said it would sell black and color inkjet cartridges that can be used in Dell printers, making it the first national retailer to sell Dell-compatible ink.

    Staples, which operates 1,695 stores worldwide, saw total retail sales at North American stores grow 9 percent and the company added nearly 9,000 customers to its North American delivery business, which sells products through contracts, catalogs, and the Internet.

    ”The momentum we’ve been building for 3Æ years is continuing,” Sargent said. ”Our stores are doing better selling more products.”