COLUMBUS, Ohio — For the first time, Big Lots is expanding its retail operations outside of the United States with the announcement that it has agreed to purchase all of the outstanding stock of Liquidation World Inc., an Ontario based retailer which operates 92 closeout stores in Canada.
Under the terms of the agreement, the company would, subject to closing conditions and approval by the shareholders of Liquidation World, acquire all outstanding shares of Liquidation World for 6 cents per share (CAD), or approximately $1.8 million (CAD). The company estimatesinitial investment would approximate $36 million (CAD), including payment for the acquisition of all outstanding shares, satisfying the debt of Liquidation World, and normalizing the working capital needs of the business. The company said it anticipates the transaction will be completed by July 31.
Big Lots news of its acquisition of Liquidation World followed the company's report of first-quarter net income of $52.5 million, or 70 cents per diluted share, compared with net income of $55.9 million, or 68 cents per diluted share, for the first quarter of fiscal 2010.
The company did report a decline in net sales of 0.6% to $1.23 billion from $1.24 billion for the same period last year, and same-store sales were down 3.6%.
For the second quarter of fiscal 2011, the company anticipates comparable-store sales in the range of flat to a decrease of 3% andincome from continuing operations is estimated to be in the range of 38 cents to 48 cents per diluted share, compared with income from continuing operations for the second quarter of fiscal 2010 of 48 cents per diluted share.
Big Lots expansion into Canada comes at a good time as more U.S. based retailers are setting there sights north of the border. In January, Target announced it had bought the rights to 220 Zeller’s leaseholds in Canada for $1.82 billion. And this past November, Dollar Tree marked its first expansion outside of the United States with the acquisition of Dollar Giant Store.
Commenting on the announcement, Steve Fishman, chairman, CEO and president stated, "Today is an exciting day for Big Lots as we expand beyond our borders and enter the Canadian marketplace. We have diligently studied and analyzed a number of opportunities or paths to enter Canada over the last couple of years and believe the acquisition of Liquidation World provides a long-term growth opportunity for our business and our shareholders. We look forward to working with the associates of Liquidation World and bringing extreme value merchandising to customers throughout Canada."