Big Lots 2011 Annual Report Download - page 127

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If we are unable to maintain or upgrade our information systems and software programs or if we are unable
to convert to alternate systems in an efficient and timely manner, our operations may be disrupted or become
less efficient.
We depend on a variety of information systems for the efficient functioning of our business. We rely on
certain software vendors to maintain and periodically upgrade many of these systems so that we can continue
to support our business. The software programs supporting many of our systems were licensed to us by
independent software developers. Costs and potential interruptions associated with the implementation of new
or upgraded systems and technology or with maintenance or adequate support of our existing systems could
disrupt or reduce the efficiency of our business.
If we are unable to successfully execute our SAP® for Retail system implementation, our operations may be
disrupted or become less efficient.
In January 2008, we announced our plans to implement SAP® for Retail solutions over the next few years.
New financial systems, including general ledger, accounts payable and fixed assets, were developed and tested
during 2008 and 2009. The new financial systems were placed in service in the first quarter of 2010. A new core
merchandising system was developed and placed in service in the first quarter of 2012. The implementation
of these systems is expected to have a pervasive impact on our information systems and across a significant
portion of our general office operations, including merchandising, technology, and finance. If we are unable to
successfully complete the transition to SAP® for Retail, it may have an adverse effect on our capital resources,
financial condition, results of operations, and liquidity.
If we are unable to retain existing and secure suitable new store locations under favorable lease terms, our
financial performance may be negatively affected.
We lease almost all of our stores and a significant number of these leases expire or are up for renewal each year,
as noted below in “Item 2. Properties” to this Form 10-K. Our strategy to improve our financial performance
includes sales growth while managing the occupancy cost of each of our stores. A significant component of our
sales growth strategy is to open new store locations. If the commercial real estate market tightens and we are not
able to negotiate favorable new store leases and lease renewals, our financial position, results of operations, and
liquidity may be negatively affected.
If we are unable to attract, train and retain highly qualified associates while also controlling our labor costs,
our financial performance may be negatively affected.
Our customers expect a positive shopping experience, which is driven by a high level of customer service
from our associates and a quality presentation of our merchandise. To meet the needs and expectations of our
customers, we must attract, train and retain a large and growing number of highly qualified associates, as
we continue to grow our operations, while at the same time control labor costs. We compete with other retail
businesses for many of our associates in hourly and part-time positions. These positions have historically had
high turnover rates, which can lead to increased training and retention costs. In addition, our ability to control
labor costs is subject to numerous external factors, including prevailing wage rates, the impact of legislation or
regulations governing labor relations or benefits, and health insurance costs.
If we lose key personnel, it may have a material adverse impact on our future results of operations.
We believe that we benefit substantially from the leadership and experience of our senior executives. The loss of
services of any of these individuals could have a material adverse impact on our business. Competition for key
personnel in the retail industry is intense and our future success will also depend on our ability to recruit, train,
and retain our senior executives and other qualified personnel.
Changes in accounting guidance could significantly affect our results of operations and the presentation of
those results.
Changes in accounting standards, including new interpretations and applications of accounting standards, may
have adverse effects on our financial condition, results of operations, and liquidity. The governing accounting
bodies, specifically the Financial Accounting Standards Board (“FASB”) and the International Accounting
Standards Board (“IASB”), have proposed numerous significant changes to current accounting standards.