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Staples, Inc. Hosts Annual Analyst & Investor Conference

Highlights Initiatives to Drive Future Growth; Confirms Q3 2006 and FY2006 Guidance; Announces FY2007 Guidance

Tuesday, October 10, 2006 7:00 am EDT

Dateline:

FRAMINGHAM, Mass.

Public Company Information:

NASDAQ:
SPLS

FRAMINGHAM, Mass.--(BUSINESS WIRE)--Today, Staples, Inc. (Nasdaq: SPLS) will host its annual Analyst and Investor Conference. The event will include presentations from the management team and will provide updates on company strategies and growth initiatives.

Highlights include:

-- Staples has entered the Miami market with three retail stores, with plans to add an additional 20-25 stores by the end of 2007. The next new retail market entry will be Denver, launching in 2007.

-- The company continues to differentiate itself through own brand products. Staples' new long-term goal for own brand sales penetration is 30 percent.

-- Staples will test a new stand-alone copy & print shop in the United States, with plans to open four shops featuring this format in the Boston area, starting this month.

-- Staples will expand its Easy Mobile Tech initiative and plans to roll out in-house techs in every store by year end.

-- Staples' delivery business expects to grow in the mid-teens for the next several years through customer acquisition, increasing purchases of existing customers, and geographic expansion. Staples plans to open a new multi-channel fulfillment center in Colorado in 2007.

-- The company announces goals for its North American Delivery Summit Supply Chain program, including increasing inventory turns from 12x to 15x, deferring capital expense, leveraging logistics expense, and improving customer service.

-- Staples International is well positioned for top line growth and profit recovery. The company's UK Retail and French Delivery businesses are showing signs of top line improvement and new businesses in emerging markets continue to experience rapid growth.

Q3 & FY2006 Outlook

For the third quarter of 2006, Staples reiterates its previous guidance of earnings per share growth of 15 to 20 percent, in line with average analyst estimates. For the full year, the company expects to continue to achieve earnings growth in line with average analyst estimates. For both the third quarter and the full year, Staples expects low double-digit growth for the total company on the top line and a positive, low single-digit comparable sales increase in North American Retail. For North American Delivery, the company expects to grow revenues in the mid-teens, and in International, Staples expects revenue growth to be positive in local currency. Staples expects free cash flow generation in the range of $700 million this year.

Earnings growth expectations for the third quarter and full year 2006 refer to 2005 earnings restated to include the impact of stock compensation expense under the Financial Accounting Standards Board's statement 123R, which the company implemented as of January 29, 2006. Pro forma restated financial statements are available on the "Financial Measures" section of the investor relations website on www.staples.com. The company's earnings outlook also reflects the impact of a 53rd week in fiscal 2006.

FY2007 Outlook

The company's guidance for 2007 is based on 2006 performance adjusted for the 53rd week. In line with Staples' long term objectives, the company expects to achieve sales growth of 10 to 15 percent and earnings growth of 15 to 20 percent for the full year 2007. Staples expects a positive, low single-digit comparable sales increase in North American Retail. For North American Delivery, the company expects to grow revenues in the mid-teens, and in International, Staples expects low double-digit growth in local currency.

Today's Event

This event is being webcast and can be accessed at Staples' web site at http://investor.staples.com. In addition, a replay of the event will be available on the web site from Wednesday, October 11th, through midnight on Tuesday, November 7th.

About Staples

Staples, Inc. invented the office superstore concept in 1986 and today is the world's largest office products company. With 69,000 talented associates, the company is committed to making it easy to buy a wide range of office products, including supplies, technology, furniture, and business services. With 2005 sales of $16.1 billion, Staples serves consumers and businesses ranging from home-based businesses to Fortune 500 companies in 21 countries throughout North and South America, Europe and Asia. Headquartered outside of Boston, Staples operates more than 1,800 office superstores and also serves its customers through mail order catalog, e-commerce and contract businesses. More information is available at www.staples.com.

Certain information contained in this news release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995 including, but not limited to, the information set forth under the headings "Q3 & FY2006 Outlook" and "FY2007 Outlook" and other statements regarding our future business and financial performance. Actual results may differ materially from those indicated by such forward-looking statements as a result of risks and uncertainties, including but not limited to: our market is highly competitive and we may not continue to compete successfully; we may be unable to continue to open new stores and enter new markets successfully; our growth may continue to strain operations, which could adversely affect our business and financial performance; our operating results may be impacted by changes in the economy that impact business and consumer spending; our business and financial performance is dependent upon our ability to attract and retain qualified associates; our stock price may fluctuate based on market expectations; our quarterly operating results are subject to significant fluctuation; our expanding international operations expose us to the unique risks inherent in foreign operations; our business may be adversely affected by the actions of and risks associated with our third-party vendors; our expanded offering of proprietary branded products may not improve our financial performance and may expose us to product liability claims; our debt level and operating lease commitments could impact our ability to obtain future financing and continue our growth strategy; a California wage and hour class action lawsuit may adversely affect our business and financial performance; and those other factors discussed or referenced in our quarterly report on Form 10-Q for the quarter ended July 29, 2006, under the heading "Risk Factors" and elsewhere, and any subsequent periodic reports filed by us with the SEC. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

Contact:

Staples, Inc.
Media Contact:
Paul Capelli/Owen Davis, 508-253-8530/8468
or
Investor Contact:
Laurel Lefebvre/Katie Sullivan, 508-253-4080/0879

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