At the close of the year, we operated a total of 825 office supply superstores in 46 states, the District of Columbia and Canada. This aggressive expansion was reflected in our 1999 Stores Division sales, which rose 15% to $5.8 billion, compared with $5.0 billion in 1998.

The year also included a number of improvements in store merchandising. These actions, along with growth in sales of technology-related items, contributed to our year-over-year comparable store sales improvement. Comparable sales in the 695 stores that have been open for more than one year rose 2% in 1999.

Store operating profit declined to $438.8 million, compared with $524.3 million in 1998. This decline resulted primarily from higher occupancy costs in our newer stores, increased advertising spending and costs to support our sales and re-merchandising initiatives. Gross profit was further decreased by higher paper costs and the lower margins generated from the increase in sales of technology products. Our operating profit also included a charge of $39.2 million to increase our provision for slow-moving and obsolete inventories.

As we begin the new millennium, we are sharply focused on pursuing targeted store growth, and plan to substantially grow our retail store chain over the next five years. To realize this goal, we anticipate opening approximately 100 new stores in the U.S. and Canada in 2000. In selecting sites for these stores, we are targeting both existing markets that have the potential for further development, and newer, smaller markets in regions that are still underserved by traditional office supply retailers. Moreover, our real estate strategy will stress a more analytical approach. During 1999, we conducted extensive customer and market research which will allow a more precise evaluation of the profit potential and return on investment of each new store opening.

We will augment our real estate expansion program by continuing to enhance our older stores, making them more appealing and customer friendly. Our program will include developing new signage, repositioning the technology areas, better accessorizing the furniture displays, and modernizing and accentuating the print and copy center in our older stores. We will also focus on improving our in-store merchandising program in all of our stores as a means of making our high-quality product selection more appealing.