Big Lots to exit Canada after unprofitable venture
December 20, 2013,
In a statement, the company said the decision was part of a detailed evaluation of its current operations and business prospects that also led to a recent decision to close its wholesale division.
Currently, the company operates 73 stores in Canada under the Liquidation World or LW banners and five stores under the Big Lots banner as well as two distribution centers and an administration office.
"We intend to begin an orderly wind-down process immediately and expect that principal operations will cease during the first quarter of fiscal 2014," the company said in a statement.
Big Lots acquired the struggling Liquidation World in July 2011 with the intention of bringing its brand to Canadian consumers.
"Over the last two years, we have invested in this business and our team in Canada has worked diligently to turn it around. However, we have not been able to gain the necessary traction in the Canadian marketplace that had originally been anticipated and believe that the significant further capital investments and execution risk associated with continuing to pursue a turnaround would not be in the best interests of our company and shareholders," the statement said.
Big Lots reported sales in Canada of $38.3 million for the 13- week period ending Nov. 2, down 1.9% from the $39 million for the comparable period last year. The net loss incurred by the Canadian operation deepened to $5 million or nine cents per share from $4.3 million or seven cents per share last year.
For the 39-week period also ending Nov. 2, Canadian sales were $112.8 million, up 6.1% from $106.3 million for the comparable period. The net loss was $13.3 million or 23 cents per share, compared with $13.7 million or 22 cents per share.
"The strategic decision to exit Canada will enable us to focus our resources on introducing e-commerce and omni-channel capabilities, rolling out coolers and freezers to our chain of stores, launching a furniture financing program, significantly realigning our merchandising organization, and moving swiftly to implement our ‘edit to amplify' merchandising strategy," the company said.
Canadian distribution centers are expected to close during the fourth quarter of the company's 2013 fiscal year while the stores will cease operations during the first quarter of fiscal 2014.
Big Lots also said it anticipates a loss from the Canadian operations in the range of $38 million to $43 million, or 65 to 75 cents per share, including charges of $32 million to $34 million related to severance, lease liabilities and asset impairment.
For the full year of fiscal 2013, the loss is anticipated to be in the range of $52 million to $57 million, or 90 to 98 cents per share.
It said it will begin reporting its Canadian business as discontinued in the first quarter of fiscal 2014, with an anticipated loss in the range of $44 million to $47 million, or 75 to 80 cents per share.
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