Staples 2004 Annual Report Download - page 5

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strong portfolio of stores, our first major market entry in several years; aggressively
growing our high margin copy and print business; exploring new retail channels of
distribution by partnering with grocery stores to reach customers we are not currently
serving; continued double digit sales increases in our Contract business where our
differentiated value proposition is the key to our market share gains; and developing a
stronger retail position in the UK by significantly expanding our store base through our
Office World acquisition. We’re also planting seeds for the more distant future with our
recent entries into South America and eastern Europe through acquisitions and China
through our joint venture, OA365. These new businesses form an attractive portfolio of
opportunities to learn about emerging markets, share best practices, gain purchasing
synergies and develop new outlets for own brand merchandise.
By focusing on these elements of our long term strategy, our team delivered strong results
in each of our three business units. Highlights of these achievements in 2004 include:
North American Retail:
Our North American Retail business achieved record results in 2004, with both our US
and Canadian businesses enjoying strong gains in sales and profitability. Sales grew 9%
to $8.3 billion, benefiting from balanced gains in customer traffic and order size which
drove robust same store sales growth of 4%. Operating income grew 30% to $681
million, or 8.2% of sales. We continued to roll out our easy-to-shop Dover store format
that customers love, and invested in our retail portfolio to keep our stores fresh and
inviting. We drove customer service improvements through better supply chain
management and enhanced labor, compensation, and customer interaction models. Strong
execution of key growth platforms like Staples brand products and our expanding copy
and print business drove both the top line and margin improvement. Store operations,
marketing, and merchandising teams worked together to drive record sales and earnings
for the year, while positioning our retail business for continued improvement.
North American Delivery:
North American Delivery maintained its position as the fastest growing and most
profitable business in our portfolio. Listening to our customers and adapting our
offering to a dynamic marketplace, investing in building a highly effective sales force,
and improving customer service through focus on our “perfect order” metric were the
foundation of our results in 2004. Sales grew 13% to $4.2 billion, while operating
income increased 22% to $377 million, or 9% of sales, leading the industry. Worldwide
e-commerce sales grew 25% to reach $3 billion, making Staples.com one of the busiest
and fastest-growing sites on the web. We see a great opportunity to continue to gain
market share in each of the three businesses that make up our North American
Delivery segment: Staples Business Delivery, Quill and Contract, each serving a unique
customer segment.