Big Lots 2009 Annual Report Download - page 144

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2008 Compared to 2007
Net Sales
Net sales by merchandise category, as a percentage of total net sales, and net sales change in dollars and
percentage in 2008 compared to 2007 were as follows:
2008 2007 Change
($ in thousands)
Consumables ..................... $1,410,383 30.4% $1,339,433 28.8% $ 70,950 5.3%
Home ........................... 713,103 15.4 783,047 16.8 (69,944) (8.9)
Furniture ........................ 698,276 15.0 687,292 14.8 10,984 1.6
Hardlines ........................ 646,563 13.9 629,119 13.5 17,444 2.8
Seasonal......................... 585,025 12.6 597,933 12.8 (12,908) (2.2)
Other ........................... 591,933 12.7 619,478 13.3 (27,545) (4.4)
Net sales ...................... $4,645,283 100.0% $4,656,302 100.0% $(11,019) (0.2)%
Net sales decreased $11.0 million, or 0.2%, to $4,645.3 million in 2008 compared to $4,656.3 million in
2007. There were fewer open stores in 2008 which caused a decrease of $34.0 million partially offset by our
comparable store sales increase of 0.5%, which increased sales by $23.0 million. Our comparable store sales
are calculated by using all stores that were open for at least two fiscal years as of the beginning of 2008. This
calculation may not be comparable to other retailers who calculate comparable store sales based on other
methods or criteria. Following a comparable store sales increase of 3.1% in the first half of 2008, sales trends
softened resulting in a comparable store sales decrease of 1.9% in the second half of 2008. We believe that our
comparable store sales results in the third and fourth fiscal quarters were in part due to the worsening general
economic trends.
From a merchandise perspective, the Consumables, Hardlines, and Furniture categories net sales increased
while net sales of Home, Other, and Seasonal declined. Consumables continued its consistent sales growth
throughout the year. As the year progressed, consumers chose to seek out value when shopping for the everyday
household use items that we offer in our Consumables business. We believe our strategy of offering name
brands at competitive prices has led to this consistently positive net sales performance in the Consumables
category. The Hardlines category increase in net sales was driven by the availability in the second half of 2008
of multiple closeout deals containing higher ticket electronics, highlighted by significant values on items such as
popular video games and personal computer laptops from national brand manufacturers. The Furniture category
increase was driven by sales of mattresses, which were attributable to the customer response throughout the
year especially when promotional pricing was coupled with holiday events such as the Labor Day mattress
promotion. The Home category net sales consistently underperformed throughout the year continuing a trend
which began in the first half of 2007. We believe our customers elected to defer purchases of this type of
merchandise. The Other category sales decline is primarily due to lower sales of toys principally in the latter
half of the year, when toys represent a relatively larger portion of our total net sales. The lower toys sales
results were partially offset within the Other category by higher sales driven by closeout deals of licensed kids
underwear during the first half of the year. The Seasonal category net sales produced positive results in the
first half of the year for lawn & garden and summer merchandise; however, the second half of the year’s net
sales underperformed due to lower comparable store sales for Christmas, Halloween, and harvest. Because
the Christmas selling season represents a higher portion of the total year’s sales in this category, the decline in
Christmas merchandise sales drove the category sales lower for the year.
Gross Margin
Gross margin dollars increased $17.1 million, or 0.9%, to $1,857.4 million in 2008 compared to $1,840.3 million
in 2007. Gross margin as a percentage of net sales was 40.0% in 2008 compared to 39.5% in 2007. The increase
in gross margin dollars was principally due to the higher gross margin rate, which increased gross margin
dollars by approximately $21 million. Partially offsetting the higher gross margin rate was lower net sales of
$11.0 million, which reduced gross margin dollars by approximately $4 million. The gross margin rate increase