Big Lots 2013 Annual Report Download - page 150

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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 and sustained underemployment) 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.
• Our customers may experience reduced disposable income due to the implementation of new governmental programs,
such as the Affordable Care Act.
• The reaction of our competitors to the marketplace 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.
If we are unable 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 meet or exceed our operating performance targets and goals in the future if our
strategies and initiatives are unsuccessful. From May through the end of 2013, we hired a new Chief Executive Officer and
replaced several members of our senior leadership team. Together with our new CEO, the senior leadership team is in the
process of developing a strategic plan for 2014 and beyond. Our ability to develop and execute our strategic plan and to
execute the business activities associated with our strategic and operating plans, could impact our ability to meet our operating
performance targets. See the accompanying MD&A in this Form 10-K for additional information concerning our operating
strategy.
If we are unable to effectively and efficiently wind down the operations of our Canadian segment, our operating
performance could be impacted more negatively than anticipated.
In 2011, we acquired Liquidation World Inc. in order to penetrate the Canadian retail market. In 2012, we began implementing
an operating strategy in Canada similar to that of our U.S. segment. In the fourth quarter of 2013, as part of our strategic
planning process under our new management team, we announced our intention to wind down the operations of our Canadian
segment as our new senior leadership team and our Board of Directors determined that an orderly wind down would allow us to
better focus our financial and management resources on our U.S. segment opportunities that provide a greater likelihood of
more attractive long-term financial returns. If we are unable to effectively and efficiently execute our Canadian segment wind
down activities, both our estimated costs and expected cash outflows could be negatively impacted (see the discussion under
the caption “Critical Accounting Policies and Estimates” in the accompanying MD&A in this Form 10-K for additional
information regarding our accounting policies for costs associated with exit or disposal activities).
If we are unable to compete effectively in the highly competitive discount retail industry, our business and results of
operations may be materially adversely affected.
The discount retail industry, which includes both traditional brick and mortar stores and online marketplaces, is highly
competitive. As discussed in Item 1 of this Form 10-K, we compete for customers, products, employees, real estate, and other
aspects of our business with a number of other companies. Certain of our competitors operate a larger number of stores and
more advanced online selling capabilities than we do. Moreover, some of our competitors also have greater financial, broader
distribution (e.g., more stores and a current online presence), marketing, and other resources than us. It is possible that
increased competition or improved performance by our competitors may reduce our market share, gross margin, and operating
margin, and may materially adversely affect our business and results of operations in other ways.