Big Lots 2011 Annual Report Download - page 123

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by these cautionary statements, and there can be no assurance that the results or developments we anticipate will
be realized or that they will have the expected effects on our business or operations. We note these factors for
investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is
not possible to predict or identify all such factors. Consequently, you should not consider the following to be a
complete discussion of all potential risks or uncertainties.
Our ability to achieve the results contemplated by forward-looking statements is subject to a number of
factors, any one, or a combination, of which could materially affect our business, financial condition, results of
operations, or liquidity. These factors may include, but are not limited to:
The current economic conditions (including commodity price fluctuations, bankruptcies, and reduced
access to credit) give rise to risks and uncertainties that may adversely affect our capital resources, financial
condition, results of operations, and liquidity including, but not limited to the following:
• Fluctuating commodity prices, including but not limited to diesel fuel and other fuels used to
generate power by utilities, may affect our gross profit and operating profit margins.
• Our expectations regarding the demand for our merchandise may be inaccurate, which could cause
us to under buy or over buy certain categories or departments of merchandise, which could result in
customer dissatisfaction or require excessive markdowns to sell through the merchandise.
• The reaction of our competitors to the marketplace, including the level of liquidations occurring at
bankrupt retailers, may drive our competitors, some of whom are better capitalized than us, to offer
significant discounts or promotions on their merchandise, which could negatively affect our sales and
profit margins.
• Our vendors may be negatively impacted by current economic conditions due to insufficient
availability of credit to fund their operations or insufficient demand for their products, which may
affect their ability to fulfill their obligations to us.
• A downgrade in our credit rating could negatively affect our ability to access capital or could
increase the borrowing rates we pay.
If we are unable to continue to successfully execute our operating strategies in our U.S. segment, our
operating performance could be significantly impacted.
There is a risk that we will be unable to continue to meet or exceed our operating performance targets
and goals in the future if our strategies and initiatives are unsuccessful. In 2010, we announced operating
performance targets and goals as part of an updated strategic plan that we intend to use as our roadmap for the
near future. That plan includes a growth phase and a continued focus on merchandising, real estate, and cost
structure. Overall, for our U.S. segment, both our actual 2011 operating performance and our 2012 operating
performance outlook are materially consistent with the operating performance targets outlined in the strategic
plan announced in 2010 but there can be no assurance we will be able to continue to successfully execute our
operating strategies. See the accompanying MD&A in this Form 10-K for additional information concerning
our operating strategy.
If we are unable to successfully implement our operating strategies in our Canadian segment, our operating
performance could be significantly impacted.
During 2011, we acquired Liquidation World Inc. as an avenue for entry into the Canadian retail market, which
was not specifically included in the strategic plan announced in 2010, but fell within the growth phase goals of
our overall plan. The Company’s intent is to implement an operating strategy in Canada similar to that of our
U.S. segment. If we are unable to successfully implement this strategy in Canada, such failure could have a
material adverse affect on the consolidated operating performance and the value of our goodwill and intangibles
assets associated with the Canadian segment could be negatively affected. See the accompanying MD&A in this
Form 10-K for additional information concerning our operating strategy.