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Big Lots Expanding Closeouts

Items Will Be 60 Percent of Assortment

Columbus, Ohio — Having completed all “heavy lifting and defensive strategies” over the past three years to better build brand nationally, tidy up its units and improve marketing to customers, Big Lots Inc. is focusing this year and beyond on expanding closeout offerings to all areas of its stores.

The company said last week during its presentation at the Piper Jaffray Consumer Conference that it is in the process of anteing up closeout product offerings to 60 percent from half of its assortment.

With external factors, namely rising gas prices, negatively impacting consumer traffic and transactions, Big Lots said it is relying on closeouts to differentiate itself.

“Closeouts are clearly how we will win as we go forward,” said Joe Cooper, senior vice president and chief financial officer. “It's how we have won in the past, and what we are singularly focused on at this point.”

He added that with 2004 “behind us, we are cautiously optimistic about 2005. And what we're really focusing on at this point is what we can control … and that's merchandising.”

Aside from continuing to depend on its longtime vendor partners for closeouts, Big Lots is turning to new sources, pursuing bankruptcies, liquidations, insurance claims and others — “closeouts we really weren't focused on in the past,” Cooper said — to add new offerings, including new product categories, to its assortment.

“Recently, we had wooden outdoor swing sets, trampolines and camping supplies — things we would not have had before in regular closeout,” Cooper said.

Additionally, he said, all Big Lots merchants at this point are responsible for closeouts.

“A portion of their open-to-buy is to go after more closeouts,” Cooper continued. “In the past, a number of our merchants were very focused principally on hard lines and consumables, which are very, very heavily closeout and are great deals in our stores.

We're trying to expand that throughout the store to increase the productivity throughout the box and make the store more consistently exciting for the customer.”

The company is also placing more emphasis on its higher margin categories, especially home décor, which Cooper said has experienced “a good turnaround in the past 12 to 18 months.” Seasonal and furniture are other higher margin categories getting more attention at the store level.

“These are our higher margin categories that really perform, and where we see a lot of opportunity,” he added.

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