Big Lots 2010 Annual Report Download - page 101

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27
Discontinued Operations
There was minimal activity in discontinued operations in 2010 compared to a loss of $1.0 million, net of
tax, in 2009. The 2009 loss from discontinued operations was primarily due to the KB-II Bankruptcy Lease
Obligations (see note 11 to the accompanying consolidated financial statements). In the fourth fiscal quarter
of 2009, we obtained assignment of a lease for the former KB-II corporate office and recorded a charge
of $0.7 million, net of tax, in loss from discontinued operations. The remaining $0.3 million loss from
discontinued operations, net of tax, in 2009 pertained to other KB-II Bankruptcy Lease Obligations.
2009 Compared to 2008
Net Sales
Net sales by merchandise category, in dollars and as a percentage of total net sales, and net sales change in
dollars and percentage in 2009 compared to 2008 were as follows:
2009 2008 Change
($ in thousands)
Consumables ................... $ 1,456,370 30.8% $ 1,410,383 30.4% $ 45,987 3.3%
Home ......................... 717,744 15.2 713,103 15.4 4,641 0.7
Furniture ...................... 716,785 15.2 698,276 15.0 18,509 2.7
Hardlines ...................... 677,790 14.3 646,563 13.9 31,227 4.8
Seasonal ....................... 591,321 12.5 585,025 12.6 6,296 1.1
Other ......................... 566,762 12.0 591,933 12.7 (25,171) (4.3)
Net sales .................... $4,726,772 100.0% $ 4,645,283 100.0% $ 81,489 1.8%
Net sales increased $81.5 million, or 1.8%, to $4,726.8 million in 2009 compared to $4,645.3 million in 2008.
The increase in net sales was principally due to our comparable store sales increase of 0.7%, or approximately
$32 million, and non-comparable store sales, which increased by approximately $37 million. Our comparable
store sales were calculated by using all stores that were open for at least two fiscal years as of the beginning of
the current fiscal year. This calculation may not be comparable to other retailers who calculate comparable store
sales based on other methods or criteria. The average number of stores in operation throughout 2009 and 2008
was approximately 1,354 stores and 1,356 stores, respectively. Following a comparable store sales decrease of
1.5% through the first half of 2009, sales trends improved resulting in a comparable store sales increase of 2.8%
in the second half of 2009 thereby producing an annual comparable store sales increase of 0.7%. Comparable
store sales increased in the low to mid-single digits from September through January due to improvements
in our merchandise offering, and improved discretionary spending trends as we met the first anniversary of
the significant economic turmoil that began to impact us in our fourth fiscal quarter of 2008. Specifically,
comparable store sales increased 5.1% in the fourth fiscal quarter of 2009.
From a merchandise perspective, sales in most major merchandise categories increased in 2009 compared to
2008. Consumables continued its consistent sales growth throughout the year. Consumers continued to seek
out value when shopping for the everyday household use items that we offer in our Consumables business. The
Home category net sales consistently underperformed through the second fiscal quarter. However, accelerating
sales trends in the second half of 2009 due to certain merchandise assortment changes and the improvement
experienced in consumer discretionary spending trends led to a total sales increase for fiscal 2009. The
Furniture category also underperformed through the third fiscal quarter principally due to lower sales in our
mattress department. However, new key items in upholstery and case goods along with a sales rebound in
our mattress department led to a fourth fiscal quarter comparable store sales increase in the high single digits
leading to our overall sales increase of 2.7% for 2009. The Hardlines category continued its increase in net sales
driven by sales of electronics, particularly DVDs, cameras and televisions. The Seasonal category net sales
produced positive results in the second half of the year due to a comparable sales increase of our Christmas
merchandise in the fourth fiscal quarter. The Other category sales decline was primarily due to three large
closeout deals (drugstore merchandise, furniture, and apparel) that occurred in 2008; fewer closeout deals
were sold in the Other category in 2009. Partly offsetting the closeout deals decline was an increase in toy
department sales.