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Bellwether Staples Sees Consumers Spending A Tad More Freely

On the other hand (see above item), Jenn Abelson finds that Staples shoppers are trading up, at least in the writing instrument category. Rollerball pens are again in vogue after falling behind stick pens, "as penny-pinching gives way to, if not extravagance, at least a return to prerecession tastes," she writes.

Lower sales and tough cost-cutting at Staples preceded the recession, Abelson writes, but now deliveries are being upgraded, and customers are splurging more on discretionary items. Computer sales increased by double digits in the fourth quarter, and the company's EasyTech business, which offers technology services, doubled compared to the same period in 2008.

"We believe the economy is recovering. But we're not expecting it to be a big bounce back," says Staples CFO John Mahoney. "We're optimistic, but we're planning for a realistic scenario." The company plans to increase its capital projects by $137 million, augment its advertising budget, and introduce more products and technology services at its 1,871 stores.

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