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Big Lots shifting ad dollars

Big Lots Stores Inc. laid out key initiatives for this year, including advertising and merchandising upgrades, during the Wachovia Securities 14th annual Nantucket Equity conference last week.

Efforts to better merchandising include improved in-stock performance, said Michael Potter, chairman and CEO. For the near future, the chain is looking to "bring in more talent and update systems," he said. "We still have more work to do in our merchandising initiatives."

Big Lots this year embarked on the second year of a national television advertising campaign which has helped grow the store's national awareness.

"We have only a 15 to 16 percent national awareness," Potter said. "TV helps us reach a broader audience."

The store said it used to release 42 circulars per year but recently cut back to 25 circulars annually and is spending the other half of this advertising budget on the TV ads.

"We're excited about this mix because it puts the product in front of the customer and brings them into the stores," Potter said.

The TV ads, he added, "have also started to behave as fixed expenses rather than variable."

The 1,450-unit national discount chain is expanding its ready-to-assemble furniture offerings, "mainly bookcases and computer desks," said Potter. The expansion will occupy about 700 square feet in stores at the expense of hanging apparel, which he said was an underperforming category. That rollout will be completed by end of this summer, Potter added.

Also this year, Big Lots will remodel/open 68 units as part of its earlier, larger plan to reconfigure its brand and update its aging units. Some of the new units will be located in one of the company's fastest growing markets — the Northeast, Potter said.

Over the past few years, Big Lots has made strides in improving its identity as a discount retail chain, he said. It converted its four nameplates — Odd Lots, Big Lots, MacFrugal's and Pick 'N Save — into a single brand, Big Lots.

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