Big Lots 2014 Annual Report Download - page 103

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25
2014 COMPARED TO 2013
Net Sales
Net sales by merchandise category (in dollars and as a percentage of total net sales), net sales change (in dollars and
percentage), and comps in 2014 compared to 2013 were as follows:
(In thousands) 2014 2013 Change Comps
Furniture & Home Décor $ 1,160,640 22.4% $ 1,072,410 20.9% $ 88,230 8.2% 8.3%
Consumables 953,028 18.4 918,124 17.9 34,904 3.8 5.0
Seasonal 888,146 17.2 907,787 17.7 (19,641)(2.2)(2.7)
Food 821,915 15.9 747,840 14.6 74,075 9.9 11.0
Hard Home 499,034 9.6 565,126 11.0 (66,092)(11.7)(8.8)
Soft Home 460,256 8.9 427,137 8.4 33,119 7.8 8.6
Electronics & Accessories 394,059 7.6 486,331 9.5 (92,272)(19.0)(17.8)
Net sales $ 5,177,078 100.0% $ 5,124,755 100.0% $ 52,323 1.0% 1.8%
We periodically assess, and make minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise
categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise
category for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared
to previously reported amounts.
Net sales increased $52.3 million or 1.0% to $5,177.1 million in 2014, compared to $5,124.8 million in 2013. The increase in
net sales was principally due to a 1.8% increase in comps, which increased net sales by $87.3 million, partially offset by the net
decrease of 33 stores since the end of 2013, which decreased net sales by $35.0 million. The Food category experienced
positive comps in all departments due to an improved consistency of assortment and more branded products, particularly in our
new coolers and freezers. During 2014, we began the roll-out of our coolers and freezers program, which had been installed in
approximately 750, or 50%, of our stores as of the end of third quarter of 2014. Our Soft Home category experienced net sales
and comp increases in many departments, with the primary driver being improved quality, brand, fashion, and value. The
Furniture & Home Décor category experienced a positive and improving comp during 2014, primarily as a result of the
completion of the roll-out of our lease-to-purchase program during the second quarter of 2014. Consumables experienced a
comp increase, which was driven by growth in all departments, particularly our pet department in the first quarter of 2014,
which benefited from a product and space expansion at the end of the first quarter of 2013 and has been an area where we have
expanded our assortment. The negative comps in our Seasonal category were primarily driven by our decision to narrow our
assortments in toys and Halloween in response to a multi-year trend of lower customer demand. Hard Home experienced
negative comps as a result of our decision in late 2013 to narrow the product offerings in this category through “edit” activities
in our Edit to Amplify strategy, specifically in our home maintenance, auto, tools, and paint departments. The negative comps
in Electronics & Accessories were also a result of our “edit” activities in our Edit to Amplify strategy, as we continue to narrow
the merchandise assortment in our electronics department, particularly in our tablet, digital camera, gaming and DVD products,
based on our customer’s response to our product offerings, and overall trends for this category in the retail marketplace.
For 2015, we expect net sales to be approximately flat compared to 2014, which is based on an anticipated increase in comps in
the low single digits partially offset by a lower expected store count. We expect above average comps from our Furniture &
Home Décor, Food, Consumables, and Soft Home categories, driven by growth from our lease-to-own program, continued
investment in coolers and freezers, and the slight expansion in the space allocated to Soft Home. We anticipate below average
comps in our Seasonal category, due to the continued downsizing of our Toys department based on our expectations of
customer demand, and our Hard Home and Electronics & Accessories categories.