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Higher priced home goods working at Big Lots   

New Orleans – Closeout retailer Big Lots will continue to add higher price point items to the mix, while looking to furniture, electronics, seasonal, and home textiles as growth categories, said Joe Cooper, svp and cfo, speaking at the Johnson Rice & Co. Annual Consumer Conference here.

Home, including home décor and textiles products, comprises about 15% of the mix, while furniture makes up another 15% at the $4.7 billion closeout chain, which is in the third year of a three-year strategic overhaul dubbed “WIN” for “what’s important now.”

The Big Lots customer is demanding “higher quality goods” while typically mentioning “prices,” “value,” and “fun,” as key reasons to shop the chain, said Cooper. A continuing focus on brands is part of the company’s response.

Cooper said Big Lots projects a stabilized gross margin rate at about 40% for next 3 years, bolstered by new merchants, new sourcing opportunities, higher sales to offset “some lower margin strategies,” and faster inventory turn to help keep cost levels low.

The 1,370-store chain reported six-month earnings per share at the record level of $0.47, dramatically up from $0.17 for the same period one year ago.

Full-year guidance calls for a 3% to 4% comp gain, steady gross margin rate of 39.9% of sales, SG&A costs trimmed from 36.3% for 2006 to about 34.7%, a 3.5% uptick in operating profit, and a leap in EPS from $1.01 in 2006 to a range of $1.43 - $1.48 for this year.

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