Staples 2006 Annual Report Download - page 5

well as sales and profits improve in the UK during the year. We also delivered strong performance in all our other
European retail businesses, with overall same store sales rising 3% for the year.
In our European Catalog business, we drove solid top line growth and doubled our operating income margin. We
saw particular strength in our French catalog business, which represents more than half of our delivery sales in
Europe. We continue to focus on service, supply chain, own brand, Web sites, and systems integration
throughout our Delivery business in Europe, and we’re encouraged to see our turnaround efforts gaining traction.
We are very excited about the opportunity to build meaningful businesses in Asia and South America, and we
expect that these markets will begin to play a larger role in our success in the not-too-distant future. Our
delivery business in China recorded $100 million in sales in 2006, and we recently announced a partnership to
launch both retail and delivery operations in India.
We are pleased with the progress we made in 2006, but have plenty of work to do to achieve our medium-term
operating income margin goal of 7.5% for our International business. This will require significant progress in our
European operations while building a solid platform for growth in Asia and South America.
I’m proud of the strong financial results we delivered and the growth ideas we nurtured across all of Staples’
businesses in 2006. Going forward, we aim to keep driving market share gains by winning with more customers
in more places, wherever we do business around the world.
Our consistent financial performance, coupled with our commitment to new growth initiatives, gives us very good
visibility into our future performance. We expect to deliver 10 to 15% sales growth and 15 to 20% earnings per
share growth for the next several years. How will we accomplish this? By truly differentiating Staples in our
customers’ eyes through our Easy brand positioning, and by continuing to develop competitive advantages like
our Contract sales model, customer service, and our extensive retail network. We’ll push forward with our
portfolio of promising growth and margin opportunities that will drive our performance in both the short and long
term, and develop new ones as our customers’ needs evolve.
We’ll also continue to build a great culture at Staples by striving to do the right things for our associates, our
customers, our communities, our shareholders, and the environment. To track our progress, we’ve published a
Corporate Social Responsibility report on our website and have included a summary in this annual report.
I would like to thank Brenda Barnes for her many contributions and leadership as a member of Staples’ Board of
Directors during the last five years. Brenda will retire from our Board at our 2007 annual meeting. Brenda’s
insight and focus on customers have brought great value to Staples during her tenure. I would also like to
welcome Vijay Vishwanath, the newest member of our Board of Directors. Vijay leads the consumer products
practice at Bain & Company, a global business consulting firm. His wealth of consumer products knowledge and
global expertise make him a great addition to our strong Board.
Finally, I’d like to recognize the 74,000 dedicated Staples associates who work hard every day to drive our
success. We’re fortunate to have a very strong, tenured, and talented team in place to execute our ambitious
plans, and help us achieve our vision to be the world’s best office products company. I would also like to thank
our customers, suppliers, and most importantly, our shareholders, for their continued support.
Ron Sargent
Chairman of the Board and Chief Executive Officer
April 17, 2007