Staples 2015 Annual Report Download - page 109

APPENDIX B
STAPLES B-6
STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
(Amounts in millions) 2015
% of Sales 2014 % of Sales 2013 % of SalesBusiness Unit Income: 2015 2014 2013
North American Stores & Online $429 $473 $733 4.5% 4.5% 6.6%
North American Commercial 599 571 604 7.2% 6.9% 7.5%
International Operations (41) (21) (15) (1.3)% (0.6)% (0.4)%
Business unit income $987 $1,023 $1,322 4.7% 4.5% 5.7%
Store Activity Stores Open at Beginning of Period Stores Opened Stores Closed Stores Open at End of Period
2014 North American Stores & Online 1,846 2 169 1,679
2014 International Operations 323 9 28 304
2014 Total 2,169 11 197 1,983
2015 North American Stores & Online 1,679 1 73 1,607
2015 International Operations 304 4 8 300
2015 Total 1,983 5 81 1,907
North American Stores & Online
2015 Compared with 2014
Sales decreased by $911 million or 8.7% for 2015 compared
to 2014. The decrease was driven by approximately a 3%
unfavorable impact from store closures, a 3% negative impact
from changes in foreign exchange rates and a 4% decline in
comparable store sales resulting from a lower average order
size and lower customer traffic. Comparable sales, which
include comparable store sales and growth in Staples.com as
defined further below, declined 3%. Declines in computers and
mobility, and business machines and technology accessories
were partially offset by increased sales of copy and print, and
facilities supplies.
Business unit income as a percentage of sales was 4.5%
for both 2015 and 2014. A favorable impact from increased
product margin rates, reduced labor and rent expense in retail
stores primarily as a result of store closures and lower incentive
compensation expense was offset by the negative impact of
lower sales on fixed expenses.
2014 Compared with 2013
Sales decreased 5.9% for 2014 compared to 2013. This
decrease was driven by a 4% decline in comparable store
sales primarily due to lower traffic, an approximate negative
2% impact from store closures, and a $159 million negative
impact from changes in foreign exchange rates. Sales declines
were partially offset by an 8% increase in Staples.com (in local
currency) driven by increased business customer acquisition,
improved customer conversion and an expanded assortment
beyond office supplies. Comparable sales declined 2%.
Declines in business machines and technology accessories,
computers, and ink and toner were partially offset by growth in
facilities supplies and breakroom supplies, copy and print, and
mobile phones and accessories.
Business unit income as a percentage of sales decreased to
4.5% for 2014 from 6.6% for 2013. The decrease was primarily
driven by investments to accelerate growth in Staples.com,
increased incentive compensation, and increased marketing
expense to drive awareness of our expanded product offerings.
These expenses were partially offset by reduced retail labor
costs and increased gross margin rates in retail stores.
North American Commercial
2015 Compared with 2014
Sales increased by $91 million or 1.1% for 2015 compared
to 2014 (2.0% increase in local currency). The increase was
primarily due to increased sales of facilities supplies, breakroom
supplies, and furniture, partially offset by decreased sales of
ink and toner and a decline in paper sales.
Business unit income as a percentage of sales was 7.2% in
2015 compared to 6.9% for 2014. The increase was primarily
driven by increased gross margin rates, reduced incentive
compensation expense and lower marketing expense in Quill,
partially offset by continued investments in sales force to drive
growth in categories beyond office supplies.