Staples, Inc. Reports First Quarter Performance Earnings Per Share Rose 16 Percent and Sales Increased Eight Percent

Staples, Inc. (Nasdaq:SPLS) announced today the results for its first quarter ended May 5, 2007. Total company sales increased eight percent to $4.6 billion compared to the first quarter of 2006. Net income rose 12 percent year over year to $209 million, and earnings per share, on a diluted basis, increased 16 percent to $0.29, from the $0.25 achieved in the first quarter of last year. First quarter North American Retail comparable sales increased one percent versus 2006, reflecting strong comps in laptop computers, peripherals, and business software coupled with continued growth in copy and print services. This growth was offset by flat performance in core office supplies and weak performance in furniture and business machines. Total North American Retail sales grew three percent. North American Delivery continued its industry-leading growth, increasing sales 15 percent versus last year’s first quarter. International sales increased 16 percent in US dollars, benefiting from a $58 million foreign currency impact, and increased five percent in local currency. "We are pleased with our overall performance in the first quarter, growing earnings per share twice as fast as sales while maintaining our investments in new growth ideas,” said Ron Sargent, Staples’ chairman and chief executive officer. "Our North American Delivery business is benefiting from terrific top line sales momentum and our International business remains firmly on track to drive significant profit improvement. North American Retail gained market share in many categories and delivered solid operating profit margins despite softer than expected sales growth.” Highlights for the first quarter include: Total company operating income improved 28 basis points year over year to 7.03 percent, with all three business units growing profits faster than sales. North American Retail operating income was 8.02 percent, up 19 basis points versus 2006, reflecting strong expense control in a softer than expected sales environment. North American Delivery drove strong sales growth across all major product categories, achieved excellent customer satisfaction scores, and improved supply chain metrics, driving a 17 basis point improvement in operating income to 9.53 percent. The company agreed to purchase American Identity, one of the largest global distributors of promotional products, expanding the range of products available to Staples’ customers. Profits grew 47 percent in the International segment, reflecting sustained progress in the company’s profit improvement efforts in Europe and continued investment in Asia and South America. Inventory turns rose 4 basis points to 5.84 times. Staples opened 24 new stores in the United States, opened three new stores in Europe (one each in Germany, Portugal and Belgium), and added 17 stores in China, including those in the recent Pei Pei acquisition. The company now operates 1,927 stores worldwide. The company generated $128 million in free cash flow during the first quarter of the year after $64 million in capital expenditures. The company repurchased 7.2 million shares of its stock for $188 million and spent $208 million to pay its annual dividend during the quarter. Outlook In view of the softer than expected sales environment in our North American Retail business during the first quarter, the company is taking a more cautious approach regarding expectations for the remainder of the year. Staples is maintaining its earnings guidance for 15 to 20 percent growth for both the second quarter and the full year, but now anticipates earnings per share growth at the low end of the range. This guidance reflects adjustments to 2006 earnings, including the 53rd week benefit, favorable tax events and prior years’ stock-based compensation, and equates to a range of $1.43 to $1.49 for the fiscal year 2007. Staples anticipates double-digit sales growth for the total company and a low single digit comp for North American Retail for the second quarter. For fiscal year 2007, adjusting for the extra week in 2006, Staples anticipates double-digit sales growth for the total company and a low single digit comp for North American Retail. Today's Conference Call The company will host a conference call today at 8:00 a.m. (ET) to review these results and its outlook. Investors may listen to the call at http://investor.staples.com. About Staples Staples, Inc. invented the office superstore concept in 1986 and today is the world's largest office products company. With 74,000 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 2006 sales of $18.2 billion, Staples serves consumers and businesses ranging from home-based businesses to Fortune 500 companies in 22 countries throughout North and South America, Europe and Asia. Headquartered outside of Boston, Staples operates more than 1,900 office superstores and also serves its customers through mail order catalog, e-commerce and contract businesses. More information is available at www.staples.com. Staples in Europe In Europe, Staples operates through 2 major distribution channels: Staples superstores and the delivery business with Staples Europe Catalogue. Staples employs near 9 000 people in 16 countries. Staples in Europe operate strong brands Strong European Brands Staples European Retail operates with Staples Brand in UK, Germany and Portugal, with Office Centre in the Netherlands and Belgium Staples Europe Catalogue operates with several brands: JPG and Bernard in France, Belgium and Luxembourg, Mondoffice in Italy, STAPLES and Neat-ideas in Great Britain, STAPLES and Pressel in Germany, Pressel in France, Belgium and Switzerland, Kalamazoo in Spain and Quill Kontorslagret in Sweden , Pressel Quill in Austria, in The Czech Republic, in Hungary, Malling Beck in Denmark, Pressel in the Netherlands. 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 heading "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; fluctuations in our effective tax rate may adversely affect our business and results of operations; compromises of our information security may adversely affect our business; 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 most recent annual report on Form 10-K filed with the SEC, 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.