This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Staples, Inc. (SPLS) on March 4, 2008.
Management:
Chairman and Chief Executive Officer: Ron Sargent
President and Chief Operating Officer: Mike Miles
Vice Chairman and Chief Financial Officer: John Mahoney
Vice President of Investor Relations: Laurel Lefebvre
President of US Stores: Demos Parneros
President of North American Delivery: Joe Doody
Key Investors Issues
- EPS were 47 cents per share compared to 46 cents per share last year.
- Net income was $333.2 million compared to $336.5 million in the fourth quarter a year earlier.
- Sales rose 1% to $5.32 billion from $5.29 billion in the previous year''s fourth quarter.
Fourth Quarter Highlights
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 4% and North American Delivery sales increased 4%.
- International sales increased 13% in US dollars and increased 3% in local currency.
- On a GAAP basis, total company net income of $333 million declined from $336 million, and earnings per share of 47 cents rose 2% 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 increased 8% 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 4% and North American Delivery sales increased 12%. Excluding International sales of $31 million recorded during the extra week in the fourth quarter of 2006, sales grew 18% in US dollars and increased 8% in local currency. On a proforma basis to exclude the impact of the 14th week in the fourth quarter of 2006, earnings per share of 47 cents rose 15% 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.
Fiscal 2007 Highlights
- The company achieved sales of $19.4 billion.
- The company opened 159 stores worldwide, ending 2007 operating 2,038 stores.
- The company recorded 2007 total company e-commerce sales of $5.6 billion, a 14% increase versus last year.
- The company announced an agreement with Dell to be the exclusive supplier of Dell products in the office products channel.
- The company Launched “Security by Staples” providing innovative products and services to help reduce common information security threats.
- The company continued to increase sales of Staples own brand merchandise, which now represents 22% of total company sales.
- The company generated free cash flow of $891 million after $470 million in capital expenditures.
- The company returned $958 million to shareholders through $208 million dividend and $750 million in share repurchases.
- The company achieved sales of more than $10 billion in North American Retail.
- The company opened 120 stores, which included 11 stores in the Denver market, most recent market entry, and closed two stores, ending the year with 1,738 stores in North America.
- The company 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.
- The company rolled out “Business Cards in Minutes” in copy and print centers in all US stores.
- The company achieved sales of more than $6.6 billion in North American Delivery
.- The company increased operating income rate in North American Delivery by 21 basis points to 10.8%.
- The company increased North American Delivery e-commerce sales by 14% to $5 billion or 75% of sales.
- The company added promotional product offering through the strategic acquisition of American Identity.
- The company opened two new fulfillment centers, in Denver and Nova Scotia, to support continued growth while maintaining excellent service.
- The company recognized by J.D. Power and Associates for “outstanding customer service” in the call centers of all three North American Delivery businesses.
- The company achieved record sales of more than $2.7 billion in International.
- The company improved International operations operating income rate by 144 basis points to 3.6%.
- The company 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.
- The company drove strong top-line growth and operating income rate expansion while achieving record service levels in European Catalog.
- The company entered India through a joint venture with Future Group.
- The company 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.
- The company 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% increase versus 2007.
