Big Lots 2015 Annual Report Download - page 101

24
Real Estate
We have determined our average store size of approximately 22,000 selling square feet is appropriate for us to provide our core
customers with a positive shopping experience and properly present a representative assortment of merchandise categories that
our core customer finds meaningful. Accordingly, when we relocate or open new stores in the future, we intend to open stores
of a similar size. Additionally, we have established more stringent merchandise presentation and store layout requirements for
our new stores, which were established to ensure a more consistent shopping experience in each location.
As discussed in “Item 2. Properties,” of this Form 10-K, we have 266 U.S. store leases that will expire in 2016. During 2016,
we anticipate opening 15 new stores and closing approximately 30 of our existing locations. The majority of these closings are
to relocate stores to improved locations within the same local market, with the balance resulting from a lack of renewal options
or our belief that a location’s sales and operating profit volume are not strong enough to warrant additional investment in the
location. As part of our evaluation of potential store closings, we consider our ability to transfer sales from a closing store to
other nearby locations and generate a better overall financial result for the geographic market and the Company. For our
remaining store locations with fiscal 2016 lease expirations, we expect to exercise our renewal option or negotiate lease
renewal terms sufficient to allow us to continue operations and achieve an acceptable return on our investment.
Discontinued Operations
During the first quarter of 2014, we ceased our Canadian operations by closing all of our stores in Canada. Accordingly, we
reclassified the results of our Canadian operations to discontinued operations for all periods presented. In conjunction with the
wind down of our Canadian operations in the first quarter of 2014, we recorded $23.0 million in contract termination costs,
primarily associated with store operating leases, $2.2 million in severance costs associated with our store and corporate office
operations in Canada, and $5.1 million in foreign currency losses associated with the reclassification of the cumulative
translation adjustment from other comprehensive income. After the first quarter of 2014, we incurred approximately $2.1
million in costs, which were primarily associated with professional services and negotiating termination of our leased facilities
with our former landlords.
Additionally, we have elected to classify in discontinued operations the U.S. income tax benefit related to the excess tax basis
in the common shares of Big Lots Canada, Inc. that we expected to, and did, recover as a worthless stock deduction in 2014, as
this deduction was generated from our Canadian operations which we have also classified as discontinued operations. During
2014, the amount of this income tax benefit that we recognized was $13.8 million.
During 2013, we completed the wind down of our wholesale business, which was located in the U.S. As we ceased wholesale
operations in 2013, we reported the results of our wholesale business as discontinued operations for all periods presented. See
note 12 to the accompanying consolidated financial statements for a more detailed discussion of all of our discontinued
operations.