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  • Andrea Lillo

Big Lots: Look at us!

Gaining consumer awareness is on Big Lots' agenda for the future, as only 17 percent of people in its television advertising markets — and five percent of people in non-markets — are familiar with the retailer.

"We're just not that well known," Jeff Naylor, svp and cfo, said at the U.S. Bancorp Piper Jaffray consumer conference, and which is an opportunity for the broad-line closeout retailer, especially since "there's increased acceptance of the dollar/closeout format."

Having converted its divisions to the Big Lots nameplate in 2001, it can now be leveraged nationwide, he said. "The strategic repositioning risk is behind us. The company is positioned to attract different customer segments."

This includes a new national television campaign, launched in April.

The home area, consisting of domestics, furniture and home decor, totals 25 percent of its merchandise, and is a "very meaningful business," he said.

Domestics, which along with home decor, accounts for about 13 percent to 14 percent of merchandise, provides a great opportunity. "There's a great supply of sheets, towels, and comforters — and we've tapped into that," he said. In addition, its national brands will grow with another, high-end name with a launch in July.

"Never outs," which are items the company has in stock everyday, accounts for about 7 percent of the store, and domestics are included in that with a towel program in several colors. The category combines "never out" basics with branded merchandise — "which is how we approach a lot of categories."

The addition of furniture has been so successful that Big Lots will continue to grow this business, at the expense of apparel, and newer stores are slightly bigger than the 27,000-square-foot average because of that. Big Lots is getting out of hanging apparel, he said, in part because competitors such as TJX and Ross Stores do a "better job."

Its capital expenditures for the year will be $160 million to $165 million, largely due to the building plans for its fifth distribution center. Last year, the company achieved increases of 7.7 percent in comps, 2.8 percent in customer transactions and 4.9 percent in average basket, while reducing net debt by $126 million.

With more than half of its merchandise in closeouts, Big Lots believes that the United States can support 2,500 stores and that it's understored in the Northeast and upper Midwest. Now with 1,390 stores in 45 states, the retailer has already remodeled 650 stores.

With three test stores each in Columbus and Cincinnati, the retailer experiments with merchandise, store layout and adjacencies to see what might work chainwide. One recent test that will be added to the chain is a "closeout swing area," where the "hottest," most branded items are located. "It encourages customers to pick something up."

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