Net income for the quarter, excluding one-time items, was $94 million, or $.21 per diluted share, compared to $119 million, or $.26 per diluted share, for the same period in the prior year.

In the fourth quarter, the company recorded a previously announced $206 million charge related to the write-down of its investments in Staples Communications and a number of Internet companies. In addition, sales comparisons include the benefit from the 53-week year in fiscal year 2000.

The fourth quarter and the year clearly challenged us, said Staples Chairman and Chief Executive Officer Thomas G. Stemberg. The continued deterioration of the economy during the back half of the year, coupled with our own aggressive growth initiatives, hampered our performance. For 2001, we’re employing a more conservative approach to growth, with a stronger focus on fewer initiatives.

FY 2000 Results

For the year, sales grew 19 percent to $10.7 billion from the $8.9 billion reported for fiscal year 1999. Comparable sales increased 7 percent overall and 4 percent for the retail business. Net income for the year, excluding one-time items, was $261 million, or $.58 per diluted share, compared with $315 million, or $.67 per diluted share, for the prior year.

2000 Accomplishments

During fiscal year 2000, Staples reached a number of milestones.

Staples.com revenue grew more than five-fold. The company solidified its position as the leading office supply site for small businesses, ranking #1 in MediaMetrix’s work and combined work/home categories for 11 consecutive months.

Internet touch points were integrated in all Staples U.S. stores, adding a virtual inventory of more than 100,000 products and serving as an invaluable sales tool for associates.

The company’s European retail business turned profitable for the first time, setting the stage for more significant, profitable growth in the coming years.

Quill’s direct marketing business continued to grow at a double-digit pace, with operating profit at its highest level ever.

Major advancements were made in the company’s supply chain, with new systems and tools in place to increase efficiencies and sales effectiveness. Inventory turns improved by 21 basis points for the year.

Outlook

Commenting on the outlook for 2001, Stemberg said, We see tremendous opportunities for Staples to reap the rewards of the many growth investments it has made over the past few years. Our Internet business is on track to turn profitable in the fourth quarter of 2001 and our European business is positioned for a strong year. In North America, we have curtailed our store growth from 17 percent in 2000 to 12 percent in 2001, as we benefit from our aggressive real estate program of the last two years. We will also make use of remodels and reflows to better merchandise existing stores.

We don’t expect to see significant improvements in the economy until the second half of the year and, as a result, we expect to earn $.09 per share for the first quarter of 2001. Our longer-term guidance is for earnings growth of 20 percent to 25 percent and comparable sales in the mid-single-digit range, added Stemberg.