Big Lots 2012 Annual Report Download - page 101

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Canadian Segment Highlights
x Net sales increased $92.7 million to $154.8 million compared to 2011 net sales of $62.1 million,
which covered the period from the date of acquisition (July 18, 2011) through the year end.
x Operating loss rate decreased to 8.8% in 2012 compared to 19.7% in 2011.
The following table compares components of our consolidated statements of operations as a percentage of
net sales:
2012 2011 2010
Net sales ....................................................... 100.0% 100.0% 100.0%
Cost of sales (exclusive of depreciation expense shown separately below) .... 60.8 60.2 59.4
Gross margin .................................................... 39.2 39.8 40.6
Selling and administrative expenses .................................. 31.7 31.4 31.8
Depreciation expense ............................................. 2.0 1.7 1.6
Operating profit .................................................. 5.5 6.6 7.2
Interest expense .................................................. (0.1) (0.1) (0.1)
Other income (expense) ........................................... 0.0 (0.0) 0.0
Income from continuing operations before income taxes .................. 5.5 6.6 7.2
Income tax expense ............................................... 2.2 2.6 2.7
Income from continuing operations .................................. 3.3 4.0 4.5
Loss from discontinued operations, net of tax .......................... (0.0) (0.0) (0.0)
Net income ..................................................... 3.3% 4.0% 4.5%
See the discussion below under the captions “2012 Compared To 2011” and “2011 Compared To 2010” for
additional details regarding the specific components of our operating results.
In 2012, the cost of sales increase included a charge of $5.6 million (0.1% of net sales) due to a change in
accounting principle resulting from our successful implementation of new retail inventory management
systems. This non-cash charge reduced both income from continuing operations and net income by $3.4 million,
or 190 basis points. Please see note 1 to the accompanying consolidated financial statements for a more detailed
discussion regarding this change in accounting principle.
Seasonality
As discussed in “Item 1. Business - Seasonality” of this Form 10-K, our financial results fluctuate from
quarter to quarter depending on various factors such as timing of new or closed stores, timing and extent
of advertisements and promotions, and timing of holidays. We expect the Christmas holiday selling season
to continue to produce a significant portion of our sales and operating profits. If our sales performance is
significantly better or worse during the Christmas holiday selling season, we would expect a more pronounced
impact on our annual financial results than if our sales performance is significantly better or worse in a
different season.