Big Lots 2013 Annual Report Download - page 163

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(c) On July 18, 2011, we completed our acquisition of Liquidation World Inc. (now known as Big Lots Canada, Inc.), whose
results are included in the consolidated results since that date.
(d) In the fourth quarter of 2013, we ceased the operations of our wholesale business; therefore, the results of operations for all
fiscal years presented have been reclassified to reflect the discontinuance of the wholesale business.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The discussion and analysis presented below should be read in conjunction with the accompanying consolidated financial
statements and related notes. Please refer to “Item 1A. Risk Factors” of this Form 10-K for a discussion of forward-looking
statements and certain risk factors that may have a material adverse effect on our business, financial condition, results of
operations, and/or liquidity.
Our fiscal year ends on the Saturday nearest to January 31, which results in some fiscal years with 52 weeks and some with 53
weeks. Fiscal years 2013 and 2011 were each comprised of 52 weeks. Fiscal year 2012 was comprised of 53 weeks. Fiscal
year 2014 will be comprised of 52 weeks.
Operating Results Summary
The following are the results from 2013 that we believe are key indicators of both our consolidated and segment operating
performance when compared to 2012.
Consolidated Highlights
• Net sales decreased $65.3 million, or 1.2%.
• Diluted earnings per common share from continuing operations decreased from $2.93 in 2012 to $2.15 in 2013.
◦ Our 2013 results included the impact of the Canadian Wind Down, which involved an aggregate of $23.7 million
in impairments, severance charges, and contract termination costs and increased markdowns to begin liquidating
our inventory, offset by a $23.9 million U.S. deferred tax benefit.
◦ Our 2012 results included the impact of a non-cash, non-recurring charge of $0.06 per diluted share related to a
change in accounting principle associated with the implementation of our new retail inventory systems in the U.S.
• Inventory decreased by 0.3%, or $3.1 million, to $915.0 million in 2013.
U.S. Segment Highlights
• Net sales decreased $87.6 million or 1.7%.
• Comparable store sales for stores open at least fifteen months decreased 2.7%.
• Gross margin dollars decreased $47.3 million and gross margin rate decreased 20 basis points from 39.4% to 39.2% of
sales.
• Selling and administrative expenses increased $24.4 million. As a percentage of net sales, selling and administrative
expenses increased 100 basis points to 32.5% of sales.
• Operating profit rate decreased 150 basis points to 4.5%.
Canadian Segment Highlights
• In the fourth quarter of 2013, we announced the Canadian Wind Down was to substantially occur during the first
quarter of 2014.
• Costs associated with the Canadian Wind Down are estimated to range from $60 million to $64 million, of which $24
million were incurred in 2013.