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Staples Announces Aggressive Plans to Serve Needs of Small Businesses

Thursday, December 17, 1998 7:00 am EST

Dateline:

WESTBOROUGH, Mass.

Public Company Information:

NASDAQ:
SPLS

WESTBOROUGH, Mass.--(BUSINESS WIRE)--...Acquire Connecticut Company to Bolster Telecommunications and Network Services...

...Initiate Fast-Track Program to Relocate 58 Outdated Stores...

Staples Inc. (NASDAQ: SPLS) today unveiled a comprehensive program to aggressively meet the needs of its business customers by making substantial investments in its e-commerce operations; significantly increasing its ability to offer telecommunications products and services; and, relocating and upgrading 58 of its oldest stores over the next year.

``The needs of small businesses are changing quickly and dramatically,'' said Thomas G. Stemberg, Staples chairman and chief executive officer. ``Staples is dedicated to not only providing every day low prices, but to being the partner to whom small businesses turn to get their operations up and running smoothly with a minimum amount of hassle. The plans we're unveiling today represent our latest efforts executing on that strategy.''

Staples.com to Become Business Unit

Stemberg said Staples is recognizing the value of e-commerce across the company by making Staples.com its own business unit and will aggressively address the market through an additional investment of more than $10 million in personnel, technology and marketing during fiscal year 1999. The investment is above and beyond an already ambitious development plan, he said.

``We always have recognized the long term potential of e-commerce and see tremendous opportunities across all our businesses,'' Stemberg said. ``However, we have been overwhelmed by the market reception to Staples.com, which was launched just a month ago. We feel with the right investment, Staples.com holds significant opportunity in the short term, which also will position Staples to achieve long term growth in e-commerce company wide.''

Stemberg said Jeff Levitan, previously senior vice president for strategic planning and business development, will lead the Staples.com business. He reports directly to Stemberg. J.B. Lyon has been promoted to vice president for marketing for Staples.com. Lyon previously was director, Staples.com

``Establishing Staples.com as its own business unit underscores our commitment to the e-commerce market and our belief in the important role it will play at Staples,'' Stemberg continued. ``We plan to be the leader in the online office supplies market.''

Claricom Acquisition

Staples announced a definitive agreement to acquire privately held Claricom Holdings Inc. of Milford, Conn., an industry leader in providing innovative telecommunications products and services to small businesses, for $140 million in an all cash transaction.

The agreement is subject to approval under the Hart-Scott-Rodino Act, federal and state regulatory approvals, and customary closing conditions. The transaction will be completed as soon as possible.

``Our planned acquisition of Claricom will help address the technology and telecommunications services needs of our customers,'' said Stemberg. ``Building our services capabilities is an important part of Staples' growth strategy.''

Claricom is privately owned by Bain Capital, Triumph Capital and its senior management team.

Claricom currently has about 1,200 employees in more than 60 sales locations nationwide. Its 1998 revenues are expected to be about $200 million. Staples plans to operate Claricom as a separate subsidiary. Edward Lavin, Claricom's current chairman and chief executive officer, will continue to head the operation after the sale is completed and will report to Joseph Doody, president of Staples Contract and Commercial. Neil Lichtman will continue as Claricom's president and chief operating officer.

Claricom provides more than 100,000 business customers nationwide with advanced telecommunications services including key systems, PBX systems, voice messaging, automated call distribution systems, video conferencing, Internet, paging, wireless, long distance, data and other related network services.

Store Relocations

Stemberg said the fast-track relocation program targets those stores that are obsolete and cannot be expanded and upgraded to the company's innovative ``Concept 97'' model. The ``Concept 97'' model includes more comprehensive business products and services including copy and technology centers. The sales area of the ``Concept 97'' stores is about 20,000 square feet, while the sales square footage of the stores that are candidates for relocation is about 14,000.

``The stores we're targeting have an average age of eight years and cannot be renovated to meet the needs of our customers,'' Stemberg said. ``The stores even pre-date our first change to the ''Heartland`` model a number of years ago. We feel that by implementing this relocation program, Staples will continue to offer across-the-board, the latest and most comprehensive shopping experience available in the industry.''

Most of the stores are in the Northeast and California and will be relocated near their existing sites. The company will take an estimated $57 million charge against fiscal year 1998 fourth quarter earnings to recognize the expense for these relocations.

Stemberg said Staples plans to open 150 new North American stores in fiscal year 1999. The company is on track to open more than 160 stores in North America in the current fiscal year.

Certain information presented within this news release may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which are discussed in our most recent 10-Q and the prospectus for the recent secondary offering of common stock and other documents on file with the Securities and Exchange Commission.

About Staples Inc.

Staples Inc. is a $6 billion retailer of office supplies, furniture and technology to consumers and businesses from home-based businesses to Fortune 50 companies in the United States, Canada, the United Kingdom and Germany. Staples, headquartered outside Boston, invented the office superstore concept and today is the largest operator of office superstores in the world. The company has more than 37,000 associates serving the business customer through 900 office superstores, mail order catalogs, e-commerce and a contract business. More information on the company is available at http://www.staples.com.

Contact:

Staples Inc.
Public Relations
Dan Kaferle, 508/370-8635
dan.kaferle@staples.com
or
Staples Inc.
Investor Relations
Catherine Woods, 508/424-7342
catherine.woods@staples.com

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