Staples 2007 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2007 Staples annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

include “M by Staples”, a high quality brand extension that offers products aimed at customers who want
distinctive value, the “Better Binder”, a uniquely durable binder, which significantly improved sales in the binder
category, as well as continued innovation in our shredder category.
2007 was a challenging year for North American Retail. In light of the tough macroeconomic environment we
remained focused on making it easy for our customers. We will continue to focus on customer service and
consistent execution as we invest in new growth ideas to gain market share and differentiate our offering.
North American Delivery
Our North American Delivery business continued its strong performance in 2007 and represented 34% of our
sales and 40% of our business unit income during the year. Excluding the 53rd week in 2006, sales grew 14% to
$6.6 billion and operating income rate expanded to 10.8%. We remain one of the largest internet retailers in the
world, recording $5.0 billion of our North American Delivery sales online.
Our strategy in North American Delivery focuses on acquiring new customers, retaining our existing customers,
and increasing our “share of wallet”. Each of our three delivery businesses, Contract, Quill, and Staples Business
Delivery, drove record sales and strong profits in 2007.
Investing in sales force productivity and enhanced web offerings once again helped us to continue attracting new
customers. We take pride in the differentiated sales model that we use in our Contract business. This model
involves separating the business acquisition process from the relationship management and category expansion
process. We created this approach to acquiring new customers many years ago, and continue to refine it, driving
industry leading profitability in both Fortune 1000 and mid-market customers.
Customer retention requires great service, and in 2007 we opened new fulfillment centers in Denver and Nova
Scotia to support rapid growth while improving our service metrics in our North American Delivery businesses.
J.D. Power and Associates recognized our commitment to customers by certifying all three of our delivery
businesses for outstanding customer service.
Increasing our “share of wallet” by selling new products to existing customers has been another key driver of our
success in North American Delivery. Responding to customer demand, we expanded into product categories like
cleaning and break room supplies, mail and ship supplies, copy and print and technology services driving both the
top- and bottom-line in 2007. Additionally, our acquisition of American Identity provided our delivery business with
the ability to bring greater value to our customers by offering promotional products.
As we enter 2008, we are confident in our ability to sustain solid growth and drive service improvements in North
American Delivery.
International Operations
We are very encouraged by the strong performance our International business delivered in 2007. This segment
includes 300 stores as well as catalog and internet operations in 20 countries throughout Europe, Asia and South
America. Our International operations represent 14% of our sales and 6% of our business unit income, and we
continue to build a strong foundation for growth and profit improvement. Excluding the 53rd week in 2006,
International sales grew 18% to $2.7 billion and operating income rate expanded to 3.6%. Our continued efforts
to build a sustainable, high margin global business are paying off, and we are confident in the prospects for
growth in our International business over the next several years.
Our European Retail business is a key driver of the recent success we have seen in our International business.
In 2007 we drove positive same store sales and significant operating margin improvement by focusing on store
execution, improved advertising and direct mail campaigns, better buying, increasing own brand penetration and
improving the efficiency of our distribution operations.
The strong performance of our European Catalog business also contributed to the success of our International
business. Similar to European Retail, our investments in distribution and supply chain in European Catalog are
paying off. Our continued focus on execution increased customer satisfaction, improved the perfect order metric,
and drove higher web penetration during 2007.