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FRAMINGHAM, MA-Though Staples posted $4.3 billion in sales in the second quarter, an 11% increase from Q2 2006, company executives said, many times during a conference call Tuesday, that they are not happy with a 2% decrease in North American Retail same store sales during the recent quarter. The company’s delivery services branch increased sales by 16% versus the same time last year, and international sales increased 18%, showing that US consumers and small business owners are still nervous about the economy, the Stables executives said. However, those at the firm’s helm said they are confident of the company’s abilities to hold down costs and bring in more customers, and still expect to open 100 new stores in the US this year.

“Last quarter I said I was cautious about the consumer, and this quarter I would say I’m probably a bit worried,” said Ron Sargent, chairman and CEO, during the call. “I would certainly say that consumer spending seems to be slowing. Costs are up, housing is down, and throughout retail, sales are soft. Consumers are buying less stuff because they’re nervous about the future. On the other hand, the business sector seems pretty healthy, job growth is okay. It’s more of a consumer slowdown than a business slowdown.”

Staples opened 23 new stores in the US in the second quarter, seven new stores in China, five new stores in Canada, one store in Portugal and closed a store in the UK. The company now operates 1,962 stores worldwide. “We now total 24 stores in China,” Sargent said. “We hope to begin retail operations in India this year.”

The company expects to see same store sales stay flat, or even decrease, in the third quarter, and low double-digit sales growth. For fiscal year 2007, Staples anticipates low double-digit sales growth for the total company, and flat same-store sales for North American Retail.

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