Big Lots 2014 Annual Report Download - page 97

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(c) On July 18, 2011, we completed our acquisition of Liquidation World Inc. (subsequently named Big Lots Canada, Inc.),
whose results are included in the consolidated results since that date. In the first quarter of 2014, we ceased the operations
of Big Lots Canada, Inc.; therefore, the results of operations for all fiscal years presented have been reclassified to reflect
Big Lots Canada, Inc. as discontinued operations.
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 2014 and 2013 were each comprised of 52 weeks. Fiscal year 2012 was comprised of 53 weeks. Fiscal
year 2015 will be comprised of 52 weeks.
Operating Results Summary
The following are the results from 2014 that we believe are key indicators of our operating performance when compared to
2013.
• Net sales increased $52.3 million, or 1.0%.
• Comparable store sales for stores open at least fifteen months increased $87.3 million, or 1.8%.
• Gross margin dollars increased $36.6 million with a 30 basis point increase in gross margin rate to 39.5% of sales.
• Selling and administrative expenses increased $35.8 million. As a percentage of net sales, selling and administrative
expenses increased 30 basis points to 32.8% of net sales.
• Operating profit rate decreased 20 basis points to 4.3%.
• Diluted earnings per share from continuing operations increased from $2.44 per share to $2.46 per share.
• Inventory decreased by 6.9% or $63.3 million to $851.7 million from 2013.
• We acquired 6.1 million of our outstanding common shares for $250.0 million, under our March 2014 Repurchase
Program and August 2014 Repurchase Program combined, at a weighted average price of $40.94 per share.
• We declared and paid three quarterly cash dividends in the amount of $0.17 per common share, for a total paid amount
of approximately $27.8 million.
The following table compares components of our consolidated statements of operations as a percentage of net sales:
2014 2013 2012
Net sales 100.0% 100.0% 100.0%
Cost of sales (exclusive of depreciation expense shown separately
below) 60.5 60.8 60.6
Gross margin 39.5 39.2 39.4
Selling and administrative expenses 32.8 32.5 31.5
Depreciation expense 2.3 2.2 2.0
Operating profit 4.3 4.5 6.0
Interest expense (0.0)(0.1)(0.1)
Other income (expense) 0.0 (0.0) 0.0
Income from continuing operations before income taxes 4.3 4.4 5.9
Income tax expense 1.6 1.7 2.2
Income from continuing operations 2.6 2.8 3.7
Loss from discontinued operations, net of tax (0.4)(0.3)(0.3)
Net income 2.2% 2.4% 3.4%