000076883500007688352021-03-032021-03-03


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): March 3, 2021


BIG LOTS, INC.
(Exact name of registrant as specified in its charter)
Ohio 001-08897 06-1119097
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

4900 E. Dublin-Granville Road, Columbus, Ohio 43081
(Address of principal executive offices) (Zip Code)

(614) 278-6800
(Registrant's telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common shares BIG New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
                                Emerging growth company     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Item 2.02    Results of Operations and Financial Condition.

On March 5, 2021, Big Lots, Inc. (“we,” “us,” “our” or “Company”) issued a press release (the “Earnings Press Release”) and conducted a conference call, both of which: (i) reported our fourth quarter 2020 unaudited results; (ii) provided initial guidance for the first quarter of fiscal 2021; and (iii) provided an update on the status of our quarterly cash dividend program.

The Earnings Press Release and conference call both included “non-GAAP financial measures,” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). Specifically, the following non-GAAP financial measures were included: (i) adjusted gross margin; (ii) adjusted gross margin rate; (iii) adjusted selling and administrative expenses; (iv) adjusted selling and administrative expense rate; (v) adjusted gain on sale of distribution center(s); (vi) adjusted gain on sale of distribution center(s) rate; (vii) adjusted operating profit; (viii) adjusted operating profit rate; (ix) adjusted income tax expense; (x) adjusted effective income tax rate; (xi) adjusted net income; and (xii) adjusted diluted earnings per share.

The non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) the following items for the periods noted:
Item Fiscal 2020 Full Year Fiscal 2019 Full Year
After-tax adjustment for gain on sale of distribution centers of $341.9 million, or $8.75 per diluted share
X
After-tax adjustment for cost of inventory impairment as a result of a merchandise department exit of $4.5 million, or $0.11 per diluted share
X
After-tax adjustment for cost of transformational restructuring initiatives of $28.5 million, or $0.72 per diluted share
X
After-tax adjustment for loss contingencies recorded for estimated legal settlements of $5.6 million, or $0.14 per diluted share
X
After-tax adjustment for gain on sale of distribution center of $136.6 million, or $3.47 per diluted share
X

The Earnings Press Release posted in the Investor Relations section of our website contains a presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and a reconciliation of the difference between the non-GAAP financial measures and the most directly comparable financial measures calculated and presented in accordance with GAAP.

Our management believes that disclosure of the non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, which our management believes are more indicative of our ongoing operating results and financial condition. These non-GAAP financial measures, along with the most directly comparable GAAP financial measures, are used by our management to evaluate our operating performance.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Non-GAAP financial measures as reported by us may not be comparable to similarly titled items reported by other companies.

Attached as exhibits to this Form 8-K are copies of the Earnings Press Release (Exhibit 99.1) and the transcript of our March 5, 2021 conference call (Exhibit 99.2), including information concerning forward-looking statements and factors that may affect our future results. The information in Exhibits 99.1 and 99.2 is being furnished, not filed, pursuant to Item 2.02 of this Form 8-K. By furnishing the information in this Form 8-K and the attached exhibits, we are making no admission as to the materiality of any information in this Form 8-K or the exhibits.





Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 3, 2021, the Compensation Committee of the Board of Directors of the Company approved forms of award agreements that will be used to make awards to officers of the Company under the Big Lots 2020 Long-Term Incentive Plan that was approved by shareholders during the 2020 Annual Meeting. The forms of Performance Share Units Award Agreement and Restricted Stock Units Award Agreement are attached hereto as Exhibits 10.1 and 10.2, respectively.

Item 8.01    Other Events.

On March 5, 2021, the Company issued a press release announcing that our Board of Directors declared a quarterly cash dividend on March 4, 2021 for the first quarter of fiscal 2021 of $0.30 per common share payable on April 2, 2021 to shareholders of record as of the close of business on March 19, 2021. This press release is filed herewith as Exhibit 99.3 hereto and incorporated by reference herein.

Item 9.01    Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement.
Form of Big Lots 2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement.
Big Lots, Inc. press release on operating results and guidance dated March 5, 2021.
Big Lots, Inc. conference call transcript dated March 5, 2021.
Big Lots, Inc. press release on dividend declaration dated March 5, 2021.
104 Cover Page Interactive Data File (formatted as Inline XBRL).


Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BIG LOTS, INC.
Date: March 9, 2021 By: /s/ Ronald A. Robins, Jr.
Ronald A. Robins, Jr.
Executive Vice President, General Counsel
and Corporate Secretary



EXHIBIT 10.1


BIG LOTS 2020 LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE UNITS AWARD AGREEMENT

Grantee: _______________________
Grant Date: _______________________
Target Number of PSUs: _______________________
Performance Period: _______________________


In accordance with the terms of the Big Lots 2020 Long-Term Incentive Plan, as may be amended (“Plan”), this Performance Share Units Award Agreement (“Agreement”) is entered into as of the Grant Date by and between you, the Grantee, and Big Lots, Inc., an Ohio corporation (“Company”), in connection with the Company’s grant of these Performance Share Units (“PSUs”) and related Dividend-Equivalent Rights (“DERs”) to you. The PSUs and DERs are subject to the terms and conditions of this Agreement and the Plan. Except as otherwise expressly provided herein, capitalized terms used but not defined in this Agreement (including Exhibit A and Exhibit B) shall have the respective meanings ascribed to them in the Plan.

This Agreement describes the PSUs and DERs you have been granted and the conditions that must be met before the PSUs vest and you become entitled to receive the Shares underlying the PSUs and any cash accrued under the DERs. To ensure that you fully understand these terms and conditions, you should carefully read the Plan and this Agreement.

Description of the PSUs

The PSUs represent a right to receive one Share for each Performance Share Unit that vests based on the performance achieved under the Performance Metrics during the Performance Period. The Company shall transfer to you one Share for each PSU that vests, provided you comply with the terms of this Agreement and the Plan. However, you shall forfeit any rights to the PSUs and the underlying Shares (i.e., no Shares will be transferred to you) to the extent the PSUs do not vest or you do not comply with the terms of this Agreement and the Plan.

No portion of the PSUs that has not vested or been settled nor any underlying Shares that have not yet been transferred to you may be sold, transferred, assigned, pledged, encumbered or otherwise disposed of by you in any way (including a transfer by operation of law); and any attempt by you to make any such sale, transfer, assignment, pledge, encumbrance or other disposition shall be null and void and of no effect.

Vesting of the PSUs

Subject to the terms and provisions of this Agreement and the Plan, if you are continuously employed by the Company or an Affiliate from the Grant Date through the end of the Performance Period (or the date of your death, Disability or Retirement or the date of a Change in Control, as applicable and described in sections B, C or D below), then your PSUs shall vest (if at all) and the underlying Shares shall be transferred to you as indicated below:

A.     If at least the threshold vesting level of the three-year average attainment of any applicable Performance Metric set forth in Exhibit B is satisfied, and the Committee has certified attainment of that Performance Metric, the PSUs shall vest, based on the Vesting Table set forth in Exhibit B, on the trading day1 after the Company files an Annual Report on Form 10-K with the U.S. Securities and Exchange Commission reporting the Applicable Financial Statement for the final fiscal year of the Performance Period. The






1 As used in this Agreement, a “trading day” shall be as determined by the New York Stock Exchange or other national securities exchange or market that regulates the Shares.


number of PSUs that vest for each applicable Performance Metric, shall be equal to the product of: (i) the target number of PSUs granted under this Award and (ii) the Performance Metric Weighting for such Performance Metric; multiplied by (iii) the applicable Performance Vesting Factor determined under the Vesting Table based on the level of attainment for such Performance Metric (such product to be rounded down to the nearest whole unit).
    
B.    If you die or incur a Disability before the end of the Performance Period, a fraction of your PSUs shall vest based on the following formula: (i) the total number of PSUs that would have vested (if any, based on actual performance as certified, reported and calculated in accordance with section A above) if you had remained employed for the full Performance Period (or the number of PSUs determined in accordance with section D below if a Change in Control occurs after your death or Disability but before the end of the Performance Period); multiplied by (ii) a fraction, the numerator of which is the number of days of service or employment that you have completed with the Company or its Affiliates since the beginning of the Performance Period as of the date of your death or Disability and the denominator of which is _____ (such product to be rounded down to the nearest whole unit).

C.    If your Retirement occurs before the end of the Performance Period, a fraction of your PSUs shall vest based on the following formula: (i) the total number of PSUs that would have vested (if any, based on actual performance as certified, reported and calculated in accordance with section A above) if you had remained employed for the full Performance Period (or the number of PSUs determined in accordance with Section D below if a Change in Control occurs after your Retirement but before the end of the Performance Period); multiplied by (ii) a fraction, the numerator of which is the number of days of service or employment that you have completed with the Company or its Affiliates since the beginning of the Performance Period as of the date of your Retirement and the denominator of which is _____ (such product to be rounded down to the nearest whole unit).

D.    If a Change in Control occurs before the Outside Date and where the Participant incurs a separation from service (as defined in Code Section 409A) within the thirty (30) days preceding or the twenty-four (24) months following the Change in Control, then any PSUs subject to this Award Agreement that have not vested prior to the later of the date of the separation from service or the date of the Change in Control shall vest upon the date of the Change in Control in an amount equal to the greater of (i) the target number of PSUs or (ii) the Average Performance Earned PSUs.

E.    If threshold performance is not achieved during the Performance Period (unless a Change in Control occurs before the end of the Performance Period), then this Agreement will expire and all of your rights in the PSUs will be forfeited.

F.    If your employment or service terminates before the end of the Performance Period (other than as described in sections B, C or D above), then this Agreement will expire and all of your rights in the PSUs will be forfeited.

Shares underlying PSUs that vest pursuant to this Agreement shall be transferred to you as soon as administratively practicable after the date the PSUs vest after the Performance Period has ended and the Performance Metrics have been certified, as described above.

Your Rights in the PSUs

Subject to the Company’s insider trading policies and applicable laws and regulations, after any underlying Shares are delivered to you in respect of vested PSUs, you shall be free to deal with and dispose of such underlying Shares. You have no rights in the Shares underlying unvested PSUs. You shall have none of the rights of a shareholder (including,

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without limitation, the right to vote or receive dividends) with respect to any Shares underlying these PSUs until such time as you become the record holder of such Shares.

Notwithstanding the foregoing, for each PSU granted under this Agreement you have been granted _____ DERs. Each DER represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to a Share. The cash dividends shall accrue without interest and all or a portion of the accrued dividends shall vest and be paid in cash at the time any PSUs vest, calculated by multiplying (i) the total accrued cash dividends by (ii) a fraction, the numerator of which is the number of PSUs that vest and the denominator of which is the maximum number of PSUs that could vest if the Maximum Performance Level is attained for all Performance Metrics. Any accrued cash dividends that do not vest pursuant to this section shall be forfeited.

Tax Treatment of the PSUs

You should consult with a tax or financial adviser to ensure you fully understand the tax ramifications of your PSUs.

This brief discussion of the federal tax rules that affect your PSUs is provided as general information (not as personal tax advice) and is based on the Company’s understanding of federal tax laws and regulations in effect as of the Grant Date. Article 21 of the Plan further describes the manner in which withholding may occur.

Under normal federal income tax rules, the grant of PSUs is a nontaxable event. However, you will be required to pay income taxes (at ordinary income tax rates) when, if and to the extent your PSUs and DERs vest. The amount of ordinary income you will recognize is the value of your PSUs and the cash value accrued under the DERs when the PSUs and DERs vest.

You may elect to allow the Company to withhold, upon settlement of the PSUs a number of shares sufficient to satisfy the withholding obligation, from the Shares to be issued pursuant to your vested PSUs that would satisfy at least the required statutory minimum (or you may elect such higher withholding provided that such higher amount would not have a negative accounting impact on the Company) with respect to the Company’s tax withholding obligation. If you wish to make the withholding election permitted by this paragraph, you must give notice to the Committee in the manner then prescribed by the Committee. All such elections by you shall be irrevocable, made by you in a manner approved by the Committee, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. If you have not made an election to satisfy the withholding requirement by paying the taxes in cash or making the withholding election permitted by this paragraph, you shall be deemed to have elected to have the Company withhold a number of Shares that would satisfy the minimum statutory total tax that could be imposed on the transaction.

Any appreciation of the Shares you receive in connection with vested PSUs may be eligible to be taxed at capital gains rates when you sell the Shares. If your PSUs do not vest, your PSUs and DERs shall expire and no taxes will be due.

This Award is intended to comply with the applicable requirements of Code Section 409A and shall be administered in accordance with Code Section 409A. Refer to Section 23.13 of the Plan for more information on compliance with Code Section 409A, including the applicability of a six (6) month delay on the settlement of the PSUs for “specified employees,” within the meaning of Code Section 409A.

No Section 83(b) Election

Because the PSUs are not property under the Code, you may not make an election under Section 83(b) of the Code with respect to your PSUs.
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General Terms and Conditions

Nothing contained in this Agreement obligates the Company or an Affiliate to continue to employ you in any capacity whatsoever or prohibits or restricts the Company or an Affiliate from terminating your employment at any time or for any reason whatsoever; and this Agreement does not in any way affect any employment agreement that you may have with the Company.

This Agreement shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts of laws, of the State of Ohio.

If any provision of this Agreement is adjudged to be unenforceable or invalid, then such unenforceable or invalid provision shall not affect the enforceability or validity of the remaining provisions of this Agreement, and the Company and you agree to replace such unenforceable or invalid provision with an enforceable and valid arrangement which in its economic effect shall be as close as possible to the unenforceable or invalid provision.

You represent and warrant to the Company that you have the full legal power, authority and capacity to enter into this Agreement and to perform your obligations under this Agreement and that this Agreement is a valid and binding obligation, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereinafter in effect relating to creditors’ rights generally and to general principles of equity. You also represent and warrant to the Company that you are aware of and agree to be bound by the Company’s trading policies and the applicable laws and regulations relating to the receipt, ownership and transfer of the Company’s securities. The Company represents and warrants to you that it has the full legal power, authority and capacity to enter into this Agreement and to perform its obligations under this Agreement and that this Agreement is a valid and binding obligation, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereinafter in effect relating to creditors’ rights generally and to general principles of equity.


Acceptance

By accepting your PSUs, you acknowledge receipt of a copy of the Plan, as in effect on the Grant Date, and agree that your PSUs are granted under and are subject to the terms and conditions described in this Agreement and in the Plan. You further agree to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any issues arising under this Agreement or the Plan. You also represent and warrant to the Company that you are aware of and agree to be bound by the Company’s insider trading policies and the applicable laws and regulations relating to the receipt, ownership and transfer of the Company’s securities.

Date:
Chair, Compensation Committee








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EXHIBIT A


As used in this Agreement, the following terms shall have the meanings set forth below:

Applicable Financial Statement shall mean a particular fiscal year’s or a particular fiscal quarter’s (as the calculation may require) financial statements that appear in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission.

Average Performance Earned PSUs shall mean: (1) if one fiscal year during the Performance Period has been completed prior to a Change in Control, the number of PSUs equal to the sum of (a) the EPS Vesting Factor attained for the fiscal year multiplied by the target number of PSUs for the EPS Performance Metric and (b) the ROIC Vesting Factor attained for the fiscal year multiplied by the target number of PSUs for the ROIC Performance Metric; or (2) if two fiscal years during the Performance Period have been completed prior to a Change in Control, the number of PSUs equal to the sum of (a) the average of the EPS Vesting Factors attained for the first two fiscal years multiplied by the target number of PSUs for the EPS Performance Metric and (b) the average of the ROIC Vesting Factor attained for the first two fiscal years multiplied by the target number of PSUs for the ROIC Performance Metric.

Effective Tax Rate shall mean the decimal fraction (expressed without a denominator and rounded to the nearest 10,000th) that results by taking income tax expense (as it so appears in the Applicable Financial Statement) as adjusted to remove the effect of any events selected by the Committee, when it establishes the annual ROIC target performance goal for each fiscal year within the Performance Period pursuant to Exhibit B, and dividing it by income from continuing operations before income taxes (as it so appears in the Applicable Financial Statement) as reported in the Applicable Financial Statement for each applicable fiscal year during the Performance Period.

Earnings Per Share or EPS shall mean earnings (loss) per common share – diluted from continuing operations (or, if such measure is not reported in the Applicable Financial Statement, then the earnings (loss) per common share – diluted) for a fiscal year as reported in the Applicable Financial Statement for each applicable fiscal year service period during the Performance Period, as adjusted to remove the effect of any events selected by the Committee when it establishes the annual EPS target performance goal for each fiscal year within the Performance Period pursuant to Exhibit B.

Invested Capital for any fiscal year shall mean the average of the total shareholders’ equity (as it so appears in the Applicable Financial Statement) for the most recent five fiscal quarters ending with the last date of the applicable fiscal year; plus the average of the long-term obligations associated with debt instruments (as it so appears in the Applicable Financial Statement) for the most recent five fiscal quarters ending with the last date of the applicable fiscal year, all as reported in the Applicable Financial Statement for each respective fiscal period during the Performance Period.

Net Operating Profit After Tax or NOPAT shall mean the operating profit (as it so appears in the Applicable Financial Statement) for a fiscal year multiplied by the difference between one and the Effective Tax Rate for that fiscal year, both as reported in publicly filed financial statements for each applicable fiscal year during the Performance Period.

Performance Metrics shall mean EPS and ROIC.

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Performance Metric Weighting shall mean _____ percent (__%) for the EPS Vesting Factor and _____ percent (__%) for the ROIC Vesting Factor.

Performance Period shall mean a period of three consecutive fiscal years beginning at the start of the fiscal year in which the Grant Date occurs, with each such fiscal year comprised of a service period.

Performance Vesting Factor shall mean the EPS Vesting Factor and the ROIC Vesting Factor, both as set forth in the Vesting Table on Exhibit B.

Retirement shall be deemed to have occurred upon the Termination of Employment or Service of a Grantee who, upon the effective date of his or her Termination of Employment or Service, has: (i) attained the age of 55 years or older; (ii) completed at least five years of employment with or service to the Company or its Affiliates; (iii) submitted a written request, in a form satisfactory to the Company, to the Committee or the Company’s human resources department requesting retirement under the terms of this Agreement; and (iv) had such written request approved in writing by a member of the Committee or an authorized officer of the Company.

Return on Invested Capital or ROIC shall mean, for each fiscal year service period within the Performance Period, the (i) NOPAT for that fiscal year, as adjusted to remove the effect of any events selected by the Committee when it establishes the annual ROIC target performance goal for each fiscal year within the Performance Period pursuant to Exhibit B, divided by (ii) Invested Capital for that fiscal year.

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EXHIBIT B


The following shall be the Vesting Table referenced in this Agreement:

Except as set forth in this Agreement or the Plan, the portion of the target number of PSUs that do not vest in accordance with the tables set forth below shall be forfeited to the Company.

Linear interpolation shall be used to determine the applicable Performance Vesting Factor between threshold and target and between target and maximum EPS Performance Level and the ROIC Performance Level in the tables below.

EPS Performance Goal
An annual EPS target performance goal shall be established by the Committee for each fiscal year service period within the Performance Period. After the end of each fiscal year in the Performance Period, the actual EPS for such fiscal year, expressed as a percentage of the annual target EPS goal, will be determined. After the end of the Performance Period, the average of the percentage EPS attainment for each service period during the Performance Period as provided in the prior sentence will be determined (“Average EPS Attainment”). The percentage of the target number of PSUs that shall vest will then be determined in accordance with the applicable Performance Metric Weighting and the EPS Vesting Factor from the following table:
EPS Performance Level Average EPS Attainment EPS Vesting Factor
Threshold ___% ___%
Target ___% ___%
Maximum ___% ___%

ROIC Performance Goal
An annual ROIC target performance goal shall be established by the Committee for each fiscal year service period within the Performance Period. After the end of each fiscal year in the Performance Period, the actual ROIC for such fiscal year, expressed as a percentage of the annual target ROIC goal, will be determined. After the end of the Performance Period, the average of the percentage ROIC attainment for each service period during the Performance Period as provided in the prior sentence will be determined (“Average ROIC Attainment”). The percentage of the target number of PSUs that shall vest will then be determined in accordance with the applicable Performance Metric Weighting and the ROIC Vesting Factor from the following table:
ROIC Performance Level Average ROIC Attainment ROIC Vesting Factor
Threshold ___% ___%
Target ___% ___%
Maximum ___% ___%

No fractional Shares shall be issued or delivered pursuant to this Agreement. If the calculations under this Agreement would otherwise result in the vesting of less than a whole number of Shares, the result shall be rounded down to the nearest whole Share.

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EXHIBIT 10.2


BIG LOTS 2020 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNITS AWARD AGREEMENT

Grantee: _______________________
Grant Date: _______________________
Number of RSUs: _______________________

In accordance with the terms of the Big Lots 2020 Long-Term Incentive Plan, as may be amended (“Plan”), this Restricted Stock Units Award Agreement (“Agreement”) is entered into as of the Grant Date by and between you, the Grantee, and Big Lots, Inc., an Ohio corporation (“Company”), in connection with the Company’s grant of these Restricted Stock Units (“RSUs”) and related Dividend-Equivalent Rights (“DERs”) to you. The RSUs and DERs are subject to the terms and conditions of this Agreement and the Plan. Except as otherwise expressly provided herein, capitalized terms used but not defined in this Agreement (including Exhibit A) shall have the respective meanings ascribed to them in the Plan.

This Agreement describes the RSUs and DERs you have been granted and the conditions that must be met before the RSUs vest and you become entitled to receive the Shares underlying the RSUs and any cash accrued under the DERs. To ensure that you fully understand these terms and conditions, you should carefully read the Plan and this Agreement.

Description of the RSUs

Each RSU represents a right to receive one Share after such RSU vests. The Company shall transfer to you one Share for each RSU that vests, provided you comply with the terms of this Agreement and the Plan. However, you shall forfeit any rights to the RSUs and the underlying Shares (i.e., no Shares will be transferred to you) to the extent the RSUs do not vest or you do not comply with the terms of this Agreement and the Plan.

No portion of the RSUs that have not vested or been settled, nor any underlying Shares that have not yet been transferred to you may be sold, transferred, assigned, pledged, encumbered or otherwise disposed of by you in any way (including a transfer by operation of law); and any attempt by you to make any such sale, transfer, assignment, pledge, encumbrance or other disposition shall be null and void and of no effect.

Vesting of the RSUs

Subject to the terms and provisions of this Agreement and the Plan, if you are continuously employed by the Company or an Affiliate from the Grant Date through the applicable event(s) described below, which occur after the Grant Date and during your continuous employment, then your RSUs shall vest (if at all) and the underlying Shares shall be transferred to you as indicated below:

A.     If the Performance Trigger, as defined in Exhibit A, is satisfied based on the Company’s performance in the fiscal year immediately preceding the first anniversary of the Grant Date and the Committee has certified attainment of the Performance Trigger, then: (i) 33% of the RSUs shall vest on the later of the first anniversary of the Grant Date or the second trading day[1] after the Company files a Current Report on Form 8-K (“Form 8-K”) with the U.S. Securities and Exchange Commission reporting measures reflecting the attainment of the Performance Trigger; (ii) 33% of the RSUs shall vest on the later of the second anniversary of the Grant Date or the second trading day after the Company files a Form 8-K








1 As used in this Agreement, a “trading day” shall be as determined by the New York Stock Exchange or other national securities exchange or market that regulates the Shares.


    reporting its results from the most recently completed fiscal year; and (iii) the remainder of the RSUs shall vest on the later of the third anniversary of the Grant Date or the second trading day after the Company files a Form 8-K reporting its results from the most recently completed fiscal year.
    
B.    If the Performance Trigger was not satisfied based on the Company’s performance in the fiscal year immediately preceding the first anniversary of the Grant Date, but is satisfied based on the Company’s performance in the fiscal year immediately preceding the second anniversary of the Grant Date and the Committee has certified attainment of the Performance Trigger, then: (i) two-thirds of the RSUs shall vest on the later of the second anniversary of the Grant Date and the second trading day after the Company files a Form 8-K reporting measures reflecting the attainment of the Performance Trigger; and (ii) the remainder of the RSUs shall vest on the later of the third anniversary of the Grant Date and the second trading day after the Company files a Form 8-K reporting its results from the most recently completed fiscal year.

C.    If the Performance Trigger was not satisfied based on the Company’s performance in the two fiscal years immediately preceding either the first anniversary or second anniversary of the Grant Date, but is satisfied based on the Company’s performance in the fiscal year immediately preceding the third anniversary of the Grant Date and the Committee has certified attainment of the Performance Trigger, then all of the RSUs shall vest on the later of the third anniversary of the Grant Date and the second trading day after the Company files a Form 8-K reporting measures reflecting the attainment of the Performance Trigger.

D.    If you die or incur a Disability before the Outside Date, as defined in Exhibit A, a fraction of your RSUs shall vest upon your death or Disability, based on the following formula: (i) the total number of RSUs granted herein; multiplied by (ii) a fraction, the numerator of which is the number of days of employment or service that you have completed with the Company or its Affiliates between the Grant Date and the date of your death or Disability and the denominator of which is 1,095; and (iii) reducing that product (such product to be rounded down to the nearest whole unit) by the number of RSUs that had vested, if any, prior to the date of your death or Disability.

E.    If your Retirement, as defined in Exhibit A, occurs and the Performance Trigger is satisfied before the Outside Date (and the certification and reporting events occur as described in sections A, B or C above, as applicable), a fraction of your RSUs shall vest upon your Retirement, based on the following formula: (i) the total number of RSUs granted herein; multiplied by (ii) a fraction, the numerator of which is the number of days of employment or service that you have completed with the Company or its Affiliates between the Grant Date and the date of your Retirement and the denominator of which is 1,095; and (iii) reducing that product (such product to be rounded down to the nearest whole unit) by the number of RSUs that had vested, if any, prior to the date of your Retirement.

F.    If your employment is terminated under circumstances making you eligible for benefits under the Big Lots Executive Severance Plan and the Performance Trigger is satisfied before the Outside Date (and the certification and reporting events occur as described in sections A, B or C above, as applicable), a fraction of your RSUs shall vest upon your termination of employment, based on the following formula: (i) the total number of RSUs granted herein; multiplied by (ii) a fraction, the numerator of which is the number of days of employment or service that you have completed with the Company or its Affiliates between the Grant Date and the date of your termination of employment and the denominator of which is 1,095; and (iii) reducing that product (such product to be rounded down to the nearest whole unit) by the number of RSUs that had vested prior to the date of your termination of employment.

G.    If a Change in Control occurs before the Outside Date and where the Participant incurs a separation from service (as defined in Code Section 409A) within the thirty (30) days preceding or the twenty-four (24) months following the Change in Control, then any RSUs subject to this Award Agreement that have not

2


vested prior to the later of the date of the separation from service or the date of the Change in Control shall vest upon the date of such Change in Control.

H.    If the Performance Trigger is not met before the Outside Date occurs or the events described in sections D, E, F or G above do not occur before the Outside Date, this Agreement will expire and all of your rights in the RSUs will be forfeited.

Shares underlying RSUs that vest pursuant to this Agreement shall be transferred to you as soon as administratively practicable after the date the RSUs vest.

Your Rights in the RSUs

Subject to the Company’s insider trading policies and applicable laws and regulations, after any underlying Shares are delivered to you in respect of vested RSUs, you shall be free to deal with and dispose of such underlying Shares. You have no rights in the Shares underlying unvested RSUs. You shall have none of the rights of a shareholder (including, without limitation, the right to vote or receive dividends) with respect to any Shares underlying these RSUs until such time as you become the record holder of such Shares.

Notwithstanding the foregoing, for each RSU granted under this Agreement you have been granted one DER. Each DER represents the right to receive the equivalent of all of the cash dividends that would be payable with respect to the Shares underlying the RSUs to which the DERs relate. Such cash dividends shall accrue without interest and shall vest and be paid in cash when the RSUs vest, or shall be forfeited if the RSUs and underlying Shares are forfeited.

Tax Treatment of the RSUs

You should consult with a tax or financial adviser to ensure you fully understand the tax ramifications of your RSUs.

This brief discussion of the federal tax rules that affect your RSUs is provided as general information (not as personal tax advice) and is based on the Company’s understanding of federal tax laws and regulations in effect as of the Grant Date. Article 21 of the Plan further describes the manner in which tax withholding may occur.

You are not required to pay income taxes on your RSUs on the Grant Date. However, you will be required to pay income taxes (at ordinary income tax rates) when, if and to the extent, your RSUs and corresponding DERs vest. The amount of ordinary income you will recognize is the value of your RSUs and the cash value accrued under the DERs when the RSUs and DERs vest. You may elect to allow the Company to withhold, upon settlement of the RSUs a number of Shares sufficient to satisfy the withholding obligation, from the Shares to be issued pursuant to your vested RSUs that would satisfy at least the required statutory minimum (or you may elect such higher withholding provided that such higher amount would not have a negative accounting impact on the Company) with respect to the Company’s tax withholding obligation. If you wish to make the withholding election permitted by this paragraph, you must give notice to the Company in the manner then prescribed by the Company. All such elections by you shall be irrevocable, made by you in a manner approved by the Committee, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. If you have not made an election to satisfy the withholding requirement by paying the taxes in cash or making the withholding election permitted by this paragraph, you shall be deemed to have elected to have the Company withhold a number of Shares that would satisfy the minimum statutory total tax (but no more than such minimum) that could be imposed on the transaction.

Any appreciation of the Shares you receive in connection with vested RSUs may be eligible to be taxed at capital gains rates when you sell the Shares. If your RSUs do not vest, your RSUs and DERs shall expire and no taxes will be due.

This Award is intended to comply with the applicable requirements of Code Section 409A and shall be administered in accordance with Code Section 409A. Refer to Section 23.13 of the Plan for more information on compliance with Code
3


Section 409A, including the applicability of a six (6) month delay on the settlement of the RSUs for “specified employees,” within the meaning of Code Section 409A.

No Section 83(b) Election

Because the RSUs are not property under the Code, you may not make an election under Section 83(b) of the Code with respect to your RSUs.

General Terms and Conditions

Nothing contained in this Agreement obligates the Company or an Affiliate to continue to employ you in any capacity whatsoever or prohibits or restricts the Company or an Affiliate from terminating your employment at any time or for any reason whatsoever; and this Agreement does not in any way affect any employment agreement that you may have with the Company.

This Agreement shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts of laws, of the State of Ohio.

If any provision of this Agreement is adjudged to be unenforceable or invalid, then such unenforceable or invalid provision shall not affect the enforceability or validity of the remaining provisions of this Agreement, and the Company and you agree to replace such unenforceable or invalid provision with an enforceable and valid arrangement which in its economic effect shall be as close as possible to the unenforceable or invalid provision.

You represent and warrant to the Company that you have the full legal power, authority and capacity to enter into this Agreement and to perform your obligations under this Agreement and that this Agreement is a valid and binding obligation, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereinafter in effect relating to creditors’ rights generally and to general principles of equity. You also represent and warrant to the Company that you are aware of and agree to be bound by the Company’s trading policies and the applicable laws and regulations relating to the receipt, ownership and transfer of the Company’s securities. The Company represents and warrants to you that it has the full legal power, authority and capacity to enter into this Agreement and to perform its obligations under this Agreement and that this Agreement is a valid and binding obligation, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereinafter in effect relating to creditors’ rights generally and to general principles of equity.



Acceptance

By accepting your RSUs, you acknowledge receipt of a copy of the Plan, as in effect on the Grant Date, and agree that your RSUs are granted under and are subject to the terms and conditions described in this Agreement and in the Plan. You further agree to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any issues arising under this Agreement or the Plan. You also represent and warrant to the Company that you are aware of and agree to be bound by the Company’s insider trading policies and the applicable laws and regulations relating to the receipt, ownership and transfer of the Company’s securities.

Date:
Chair, Compensation Committee




4


EXHIBIT A

As used in this Agreement, the following terms shall have the meanings set forth below:

Performance Trigger shall mean _________________________________________________________________.

Outside Date shall mean the third (3rd) anniversary of the date upon which the RSU Award was granted to the Grantee.

Retirement shall be deemed to have occurred upon the Termination of Employment or Service of a Grantee who, upon the effective date of his or her Termination of Employment or Service, has: (i) attained the age of 55 years or older; (ii) completed at least five years of employment with or service to the Company or its Affiliates; (iii) submitted a written request, in a form satisfactory to the Company, to the Committee or the Company’s human resources department requesting retirement under the terms of this Agreement; and (iv) had such written request approved in writing by a member of the Committee or an authorized officer of the Company.

5

Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE Contact: Tom Filandro - ICR, Inc.
Managing Director
tom.filandro@icrinc.com
(646) 277-1235

BIG LOTS REPORTS RECORD FULL YEAR PERFORMANCE

FULL YEAR COMPS UP 16.1% WITH EPS MORE THAN DOUBLE PRIOR YEAR

RECORD Q4 COMPS OF 7.9%

Q4 EPS OF $2.59 AHEAD OF GUIDANCE


Columbus, Ohio – March 5, 2021 – Big Lots, Inc. (NYSE: BIG) today reported net income of $98.0 million, or $2.59 per diluted share, for the fourth quarter of fiscal 2020 ended January 30, 2021, which compares to the company’s guidance, as provided on January 13, 2021, of $2.40 to $2.50 per diluted share. Net income for the fourth quarter of fiscal 2019 was $93.8 million, or $2.39 per diluted share. Net sales for the fourth quarter of fiscal 2020 totaled $1,738 million, an 8.1% increase compared to $1,607 million for the same period last year, with the growth resulting from a 7.9% increase in comparable sales, and sales growth from new and relocated non-comp stores, offset by a slightly lower average store count year-over-year.

Remarking on today’s announcement, Bruce Thorn, President and CEO of Big Lots stated, “I am pleased to report that our fiscal fourth quarter ended strongly, with a record fourth quarter comparable sales increase despite softer than planned traffic in December and inventory and supply chain challenges during the quarter. We also delivered another stellar quarter of growth across our ecommerce and omnichannel platforms with sales increasing over 130%. Throughout the quarter, our strategic investments and the nimbleness of our teams allowed us to serve our customers better than ever, as well as adjust to market dynamics to deliver excellent top-line and bottom-line results.”

Mr. Thorn further remarked, “Fiscal 2020 was the strongest year in the history of Big Lots, occurring against the backdrop of an unprecedented year of uncertainty for our nation and industry. The results were the culmination of the tremendous efforts of our associates in our distribution centers, our stores, and our corporate headquarters, combined with the ongoing and successful rollout of our Operation North Star strategies. Beyond our 2020 results, we believe these strategies position us for ongoing success, supported by our steadfast focus on customer service, our assortment of everyday essentials and stay-at-home products, and our growing customer file. During 2021, we will continue the roll-out of our Lot and Queue Line programs to the balance of our stores, expand our offerings under the Broyhill brand, further scale our greatly enhanced ecommerce capabilities, and accelerate new store openings. With the dedication and commitment of our 37,000 associates to drive these initiatives, we’re confident that 2021 will be another successful year in the evolution of Big Lots.”











LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors


Earnings per Share
Q4 2020 Q4 2019 FY 2020 FY 2019
Earnings per diluted share $2.59 $2.39 $16.11 $6.16
Gain on sale of distribution centers (1)
($8.75) ($3.47)
Impact of the costs associated with the implementation of the strategic transformation (1)
$0.83
Impact of legal settlement loss contingencies (1)
$0.14
Earnings per diluted share - adjusted basis $2.59 $2.39 $7.35 $3.67
(1) Non-GAAP detailed reconciliation provided in our statements below.

FISCAL 2020
For fiscal 2020, net income totaled $629.2 million, or $16.11 per diluted share. Excluding non-recurring items detailed in this release, adjusted net income for the full year period ended January 30, 2021, totaled $287.3 million, or $7.35 per diluted share (non-GAAP), compared to adjusted net income of $144.4 million, or $3.67 per diluted share (non-GAAP), for fiscal 2019.

Net sales for fiscal 2020 totaled $6,199 million, a 16.5% increase compared to $5,323 million last year, with the increase resulting from a comparable sales increase of 16.1% and sales growth in high volume new and relocated non-comp stores.

Inventory and Cash Management
Inventory ended the fourth quarter of fiscal 2020 at $940 million compared to $921 million for the same period last year. The 2% increase was driven by in-transit inventory, which continues to be substantially higher year-over-year as the company has increased its order volume to restore on-hand merchandise and accommodate longer lead times on imported merchandise. Excluding in-transit, on-hand inventory was down approximately 5% to the prior year.

The company ended the fourth quarter of fiscal 2020 with $560 million of Cash and Cash Equivalents and $36 million of Long-term Debt, compared to $53 million of Cash and Cash Equivalents and $279 million of Long-term Debt as of the end of the fourth quarter of fiscal 2019.

Share Repurchase Authorization
As previously announced, on August 27, 2020 the company’s Board of Directors authorized the repurchase of up to $500 million of the company’s outstanding common shares. The authorization may be utilized to repurchase shares in the open market and/or in privately negotiated transactions at the company’s discretion, subject to market conditions and other factors. In the fourth quarter of fiscal 2020, the company invested $73 million to repurchase 1.6 million shares at an average price of $46.38. Through the end of the fourth quarter of fiscal 2020, the company had utilized $173 million under this authorization to repurchase 3.8 million shares, at an average price of $46.05.

Dividend
As announced in a separate press release, on March 4, 2021, the Board of Directors declared a quarterly cash dividend of $0.30 per common share. This dividend payment of approximately $11 million will be payable on April 2, 2021, to shareholders of record as of the close of business on March 19, 2021.


LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors


Company Outlook
The company expects that its financial performance in 2021 will be significantly affected by the ongoing Covid-19 pandemic, including the impact of continued evolution in consumer shopping behaviors, and potential impact of further government stimulus. As such, the company does not have the visibility to provide full year guidance for fiscal 2021 at this time. Based on currently available information, for the first quarter of fiscal 2021 the company expects to achieve diluted earnings per share in the range of $1.30 to $1.45, based on a low-single-digit comparable sales increase. The foregoing first quarter guidance does not incorporate further anticipated share repurchases pursuant to the remaining $327 million available under the $500 million share repurchase authorization approved by the company’s Board of Directors on August 27, 2020.

Conference Call/Webcast
The company will host a conference call today at 8:00 a.m. to discuss the financial results for the fourth quarter of fiscal 2020. A webcast of the conference call is available through the Investor Relations section of the company’s website http://www.biglots.com. An archive of the call will be available through the Investor Relations section of the company’s website after 12:00 p.m. today and will remain available through midnight on Friday, March 19, 2021. A replay of this call will also be available beginning today at 12:00 p.m. through March 19 by dialing 877.660.6853 (Toll Free) or 201.612.7415 (Toll) and entering Replay Conference ID 13715962. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a neighborhood discount retailer operating 1,410 stores in 47 states, as well as a best-in-class ecommerce platform with expanded capabilities via BOPIS, curbside pickup, Instacart and PICKUP with same day delivery. The company’s product assortment is focused on home essentials: Furniture, Seasonal, Soft Home, Food, Consumables, Hard Home, and Electronics, Toys & Accessories. Big Lots’ mission is to help people Live BIG and Save Lots. The company strives to be the BIG difference for a better life by delivering unmatched value to customers through surprise and delight, being a "best place to work" culture for associates, rewarding shareholders with consistent growth and top-tier returns, as well as doing good in local communities. For more information about the company, visit www.biglots.com.

Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “anticipate,” “estimate,” “approximate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly, descriptions of objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance and are applicable only as of the dates of such statements. Although the company believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect business, financial condition, results of operations or liquidity.

LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors




Forward-looking statements that the company makes herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, developments related to the COVID-19 coronavirus pandemic, current economic and credit conditions, the cost of goods, the inability to successfully execute strategic initiatives, competitive pressures, economic pressures on customers and the company, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of the company’s most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the company makes on related subjects in public announcements and SEC filings.


LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors


BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
JANUARY 30 FEBRUARY 1
2021 2020
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $559,556  $52,721 
Inventories 940,294  921,266 
Other current assets 85,939  89,962 
   Total current assets 1,585,789  1,063,949 
Operating lease right-of-use assets 1,649,009  1,202,252 
Property and equipment - net 717,216  849,147 
Deferred income taxes 16,329  4,762 
Other assets 68,914  69,171 
$4,037,257  $3,189,281 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $398,433  $378,241 
Current operating lease liabilities 226,075  212,144 
Property, payroll and other taxes 109,694  82,109 
Accrued operating expenses 138,331  118,973 
Insurance reserves 34,660  36,131 
Accrued salaries and wages 49,830  39,292 
Income taxes payable 43,601  3,930 
   Total current liabilities 1,000,624  870,820 
Long-term debt 35,764  279,464 
Noncurrent operating lease liabilities 1,465,433  1,035,377 
Deferred income taxes 7,762  48,610 
Insurance reserves 57,452  57,567 
Unrecognized tax benefits 11,304  10,722 
Other liabilities 181,187  41,257 
Shareholders' equity 1,277,731  845,464 
$4,037,257  $3,189,281 




BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
13 WEEKS ENDED 13 WEEKS ENDED
JANUARY 30, 2021 FEBRUARY 1, 2020
% %
(Unaudited) (Unaudited)
Net sales $1,737,915  100.0  $1,606,982  100.0 
Gross margin 685,173  39.4  634,019  39.5 
Selling and administrative expenses 520,617  30.0  471,064  29.3 
Depreciation expense 33,586  1.9  37,409  2.3 
Operating profit 130,970  7.5  125,546  7.8 
Interest expense (2,575) (0.1) (3,170) (0.2)
Other income (expense) 1,533  0.1  (250) (0.0)
Income before income taxes 129,928  7.5  122,126  7.6 
Income tax expense 31,942  1.8  28,362  1.8 
Net income $97,986  5.6  $93,764  5.8 
Earnings per common share
Basic $2.68  $2.40 
Diluted $2.59  $2.39 
Weighted average common shares outstanding
Basic 36,509  39,037 
Dilutive effect of share-based awards 1,316  165 
Diluted 37,825  39,202 
Cash dividends declared per common share $0.30  $0.30 






BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
52 WEEKS ENDED 52 WEEKS ENDED
JANUARY 30, 2021 FEBRUARY 1, 2020
% %
(Unaudited) (Unaudited)
Net sales $6,199,186  100.0  $5,323,180  100.0 
Gross margin 2,497,386  40.3  2,114,682  39.7 
Selling and administrative expenses 1,965,555  31.7  1,823,409  34.3 
Depreciation expense 138,336  2.2  134,981  2.5 
Gain on sale of distribution centers (463,053) (7.5) (178,534) (3.4)
Operating profit 856,548  13.8  334,826  6.3 
Interest expense (11,031) (0.2) (16,827) (0.3)
Other income (expense) (911) (0.0) (451) (0.0)
Income before income taxes 844,606  13.6  317,548  6.0 
Income tax expense 215,415  3.5  75,084  1.4 
Net income $629,191  10.1  $242,464  4.6 
Earnings per common share
Basic $16.46  $6.18 
Diluted $16.11  $6.16 
Weighted average common shares outstanding
Basic 38,233  39,244 
Dilutive effect of share-based awards 834  107 
Diluted 39,067  39,351 
Cash dividends declared per common share $1.20  $1.20 





BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
13 WEEKS ENDED 13 WEEKS ENDED
JANUARY 30, 2021 FEBRUARY 1, 2020
 (Unaudited)  (Unaudited)
  Net cash provided by operating activities $131,939  $258,422 
  Net cash used in investing activities (32,222) (33,249)
  Net cash used in financing activities (87,992) (234,246)
Increase (decrease) in cash and cash equivalents 11,725  (9,073)
Cash and cash equivalents:
  Beginning of period 547,831  61,794 
  End of period $559,556  $52,721 





BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 WEEKS ENDED 52 WEEKS ENDED
JANUARY 30, 2021 FEBRUARY 1, 2020
 (Unaudited)  (Unaudited)
  Net cash provided by operating activities $399,349  $338,970 
  Net cash provided by (used in) investing activities 452,987  (74,480)
  Net cash used in financing activities (345,501) (257,803)
Increase in cash and cash equivalents 506,835  6,687 
Cash and cash equivalents:
  Beginning of period 52,721  46,034 
  End of period $559,556  $52,721 





BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

The following tables reconcile: gross margin, gross margin rate, selling and administrative expenses, selling and administrative expense rate, gain on sale of distribution center(s), gain on sale of distribution center(s) rate, operating profit, operating profit rate, income tax expense, effective income tax rate, net income, and diluted earnings per share for the full year 2020 and the full year 2019 (GAAP financial measures) to adjusted gross margin, adjusted gross margin rate, adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of distribution center(s), adjusted gain on sale of distribution center(s) rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share (non-GAAP financial measures).

Full Year 2020 - Fifty-two weeks ended Janaury 30, 2021
As Reported Adjustment to exclude gain on sale of distribution centers and related expenses  As Adjusted
(non-GAAP)
 Selling and administrative expenses $ 2,497,386  $ (3,956) $ 2,493,430 
 Selling and administrative expense rate 40.3  % (0.1  %) 40.2  %
 Gain on sale of distribution centers (463,053) 463,053  — 
 Gain on sale of distribution centers rate (7.5  %) 7.5  % — 
 Operating profit 856,548  (459,097) 397,451 
 Operating profit rate 13.8  % (7.4  %) 6.4  %
 Income tax expense 215,415  (117,194) 98,221 
 Effective income tax rate 25.5  % (0.0  %) 25.5  %
 Net income 629,191  (341,903) 287,288 
 Diluted earnings per share $ 16.11  $ (8.75) $ 7.35 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of distribution centers, adjusted gain on sale of distribution centers rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share are “non-GAAP financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) a gain resulting from the sale of our Columbus, OH; Durant, OK; Montgomery, AL; and Tremont, PA distribution centers and the related expenses of $459,097 ($341,903, net of tax).






Full Year 2019 - Fifty-two weeks ended February 1, 2020
As Reported Impact to exclude department exit inventory impairment Impact to exclude transformational restructuring costs Adjustment to exclude legal settlement loss contingencies Adjustment to exclude gain on sale of distribution center  As Adjusted (non-GAAP)
 Gross margin $ 2,114,682  $ 6,050  $ —  $ —  $ —  $ 2,120,732 
 Gross margin rate 39.7  % 0.1  % —  —  —  39.8  %
 Selling and administrative expenses 1,823,409  —  (38,338) (7,250) —  1,777,821 
 Selling and administrative expense rate 34.3  % —  (0.7  %) (0.1  %) —  33.4  %
 Gain on sale of distribution center (178,534) —  —  —  178,534  — 
 Gain on sale of distribution center rate (3.4  %) —  —  —  3.4  % — 
 Operating profit 334,826  6,050  38,338  7,250  (178,534) 207,930 
 Operating profit rate 6.3  % 0.1  % 0.7  % 0.1  % (3.4  %) 3.9  %
 Income tax expense 75,084  1,553  9,836  1,696  (41,930) 46,239 
 Effective income tax rate 23.6  % 0.0  % 0.1  % (0.0  %) 0.6  % 24.3  %
 Net income 242,464  4,497  28,502  5,554  (136,604) 144,413 
 Diluted earnings per share $ 6.16  $ 0.11  $ 0.72  $ 0.14  $ (3.47) $ 3.67 

The above adjusted gross margin, adjusted gross margin rate, adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of distribution center, adjusted gain on sale of distribution center rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share are “non-GAAP financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with GAAP (1) an inventory impairment amount of $6,050 ($4,497, net of tax) as a result of a merchandise department exit; (2) the costs associated with a transformational restructuring initiative of $38,338 ($28,502, net of tax); (3) a pretax charge related to estimated legal settlement of employee class actions of $7,250 ($5,554, net of tax); and (4) a gain resulting from the sale of our Rancho Cucamonga, CA distribution center of $178,534 ($136,604, net of tax).

Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.








Exhibit 99.2
Big Lots
Fourth Quarter 2020 Earnings Call
March 5, 2021
Presenters
Bruce Thorn - President and Chief Executive Officer
Jonathan Ramsden - Executive Vice President, Chief Financial and Administrative Officer

Q&A Participants
Spencer Hanus – Wolfe Research
Joe Feldman – TAG
Chandni Luthra – Goldman Sachs
Peter Keith – Piper Sandler
Anthony Chukumba – Loop Capital Markets
Jason Haas – Bank of America
Brad Thomas – KeyBanc Capital Markets



Operator
Ladies and gentlemen, good morning and welcome to the Big Lots Fourth Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star-zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

On the call today are Bruce Thorn, President and CEO, and Jonathan Ramsden, Executive Vice President, Chief Financial, and Administrative Officer. Before starting today’s call, the company would like to remind you that any forward-looking statements made on the call involve risks and uncertainties and are subject to the company’s safe harbor provisions as stated in company’s press release and SEC filings, and that actual results can differ materially from those described in forward-looking statements.

The company would like to also point out, where applicable, commentary today is focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP adjusted results are available in today’s press release.

I will now turn the call over to Bruce Thorn, President and CEO of Big Lots. Mr. Thorn, please go ahead.

BRUCE THORN
Thank you and good morning everyone.

2020 was a remarkable year for Big Lots and I am proud of our strong finish, which is reflected in the results we reported this morning. Comparable sales for the fourth quarter increased 7.9%
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and our diluted earnings per share were $2.59. This resulted in our strongest ever sales and earnings for a fiscal year, with a comp of 16.1% and $7.35 per share in adjusted earnings. Along with these results, I’ve been amazed by the evolution of our entire organization, which has been strongly aligned around our Operation North Star goals while working extremely hard to navigate what has been a very difficult external environment. For that, I want to say a BIG thank you to all of our associates across our stores, distribution centers, and corporate headquarters. Our accomplishments in 2020, which I will talk more about in a moment, were truly a team effort.

As we enter 2021, there are reasons to be hopeful that the global pandemic that has up-ended so many things will recede, and that we will be on a path to greater stability as the year progresses. However, we will not take our eye off the ball with regard to making our stores and workplaces as safe as possible, and we will continue to work with clear and rigorous safety standards, social distancing, and cleaning protocols in all of our stores and workplaces. During the course of 2020, we incurred more than $50 million in Covid-related expenses, including health and safety measures, as well as incremental pay and bonuses to stores and distribution center associates. We expect to incur further expense in 2021, albeit at a lower level. In addition, we are encouraging, supporting and facilitating our associates to get vaccinated as soon as they have the opportunity.

Coming back to the fourth quarter, we saw two distinct levels of performance – strong performance in November and in January when we had more appropriate inventory levels, and what I would refer to as a solid performance in December, where we continued to see underlying strength in our business, but were too sold-through on our Christmas seasonal assortment to maintain the double-digit comps that marked the balance of the year. Traffic was also clearly softer in December driven by Covid-19-related stay-at-home orders and different consumer shopping patterns caused by the pandemic. However, our core business continued to perform well and, following Christmas, for the balance of the quarter comp growth returned to double-digit levels, benefiting from broad-based category strength, and new stimulus payments that began to flow in early January. As our inventory levels were sold through, we were able to navigate through the Holiday period with fewer promotions than last year. This reduction in markdowns significantly mitigated the pressures felt from increased spot freight rates and higher supply chain charges we incurred.

Across all categories other than Food and Seasonal, we saw double-digit comps for the quarter as a whole.

Furniture sales increased 15% versus last year with strong growth in Upholstery, Ready to Assemble, and Mattresses. The home office trend continued throughout Q4, doubling year over year. Upholstery delivered a 20% increase and Mattresses grew 11%. The Broyhill brand had a strong impact on furniture, representing 17% of total furniture sales in the quarter – Upholstery was particularly strong for Broyhill, driving 30% of total upholstery sales.

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Soft Home had a double-digit comp increase led by strong trends within the Window, Home Organization, and Basic Bedding categories. Window continued strong performance for the year and was up over 35% for the quarter with Curtains up over 40% driven by incremental Broyhill and national brand offerings. Home Organization saw 25% growth driven by plastic storage and closet organization. Basic bedding was driven by strong performance in throws, pillows, and mattress toppers all delivering 20% comp or greater. Broyhill bedding, bath, window, and décor also delivered strong results delivering 20% of division sales in the quarter.

Our Seasonal business started the quarter off with strong double-digit comps. However, given a reduced buy of Christmas merchandise, and the strong early sell-through, we saw a lack of inventory to drive sales during the key selling weeks leading up to Christmas, resulting in a sales decline versus last year for the quarter of 12%. This negatively impacted the sales growth, but we saw a quick rebound in our Spring/Summer and Patio businesses in late January and early February.

Apparel continued to grow in sales penetration with nearly a 50% comp fueled by recognizable branded closeouts and key value items throughout the season. We saw strong sell through in graphic tees, fashion tops, cold weather fleece and sports apparel. As our customer is responding strongly to our well curated assortment, we will continue to lean into Apparel, a category that is margin accretive and highly productive. We are targeting another year of strong double-digit Apparel growth in 2021.

Hard Home Comps were up nearly 20% to last year with all departments delivering double digit increases. Key areas such as Kitchen Appliances, Cookware, Dinnerware, and Drinkware delivered over 30% comps, in part due to the “Cook and Dine at Home“ trend. With this trend we saw excellent performance from our Keurig pods and Keurig brewers and momentum has clearly continued into 2021.

We launched Pantry Optimization in the third quarter of 2020. As a reminder this involved repositioning footage from food staples to food entertainment as well as expanded space for consumables, including cleaning products and health & beauty; combining competitively priced national brands with an expanding assortment of closeouts. This creates a significant value differentiation from the competition. With the increased intensity of the pandemic during the colder winter months, this strategy outperformed our expectations. Customers were surprised and delighted to find more items on their shopping lists, at tremendous values. These categories drove repeat traffic and conversion lifting total sales productivity for Food and Consumables while driving margin dollar expansion.

Consumables had 15% sales growth. With key changes in Laundry/Household Chemicals and Health and Beauty, these departments grew at 23% and 19%, respectively. Food was up 1% in the quarter, a very good result considering we reduced and redistributed space in September. Our Holiday gift sets helped drive a 6% comp increase in the candy/gift area. We also saw a nice
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6% increase across our beverage, baking, and coffee departments thanks to the new assortments implemented during the Pantry Optimization initiative.

Across all categories, closeout sales in the 4th quarter were up 50% over the same quarter in 2019. Closeouts are an important part of our heritage and a significant reason why she shops us. In the quarter, she was able to find closeouts including brands such as Reeboks, Black & Decker, Nautica, Scott Brothers Bedding, Ann Taylor and Sealy. Given our expanding range of closeouts and strong heritage, we see continued growth here as a clear opportunity, especially as we strengthen our buying relationships and take advantage of space made available through our Queue Line project or identified through space planning and optimization in-store.

Our active rewards membership reached an all-time high in Q4, with positive 9.5% growth year over year. Rewards customers spent 21% more than last year in Q4 and 11% more per customer. Big Heroes continued in Q4 with our now “always-on” 10% discount for Military and Veterans. 25% of participants were new BIG Rewards members. We also successfully ran a targeted campaign to reactivate lapsed customers and at-risk of lapsing shoppers. Enrollment was another great growth story, up 38% to Q4 2019. We enrolled 9 million customers to Big Rewards for the full year – our biggest enrollment year ever. With all of these strong drivers, Rewards-attached sales exceeded 70% of our total sales for the quarter, representing more than 700 basis points in penetration expansion to last year. Rewards has been on an incredible trend, up around 10% per year for each of the past three years.

Throughout the quarter, we saw significant benefits from our Operation North Star strategies. These include our expanded ecommerce capabilities, Broyhill, the Lot, and our front-end Queue Line initiative. All of these initiatives have been successful and position us well to drive further gains in 2021, as we also accelerate additional closeout investments and depth in our apparel assortment.

Our ecommerce business was a huge success story throughout 2020, with the pandemic increasing customer expectations to be able to shop how, when and where they want. To that end, we have focused heavily on removing purchase friction and creating better customer experiences. During 2020, we introduced curbside pickup, same day delivery in partnership with Instacart and same-day delivery with biglots.com with PICKUP, allowing customers to order any item available at their local Big Lots store. Our Instacart and PICKUP delivery services continued to accelerate during the fourth quarter, making a significant contribution to our overall ecommerce-driven growth. As we detailed in our third quarter call, we now have Ship from Store capabilities in 47 stores, strategically identified to ensure 2-day delivery to 90% of our customers across the country. Last, over the past year we have expanded payment type choices available on-site to now include gift cards, the Big Lots Credit Card, and Lease Online / Pickup in Store, each of which have driven incremental volume. As you know, all of these achievements resulted in us being ranked number one in Total Retail’s Top Omnichannel Retailers Report.

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In total, ecomm and omnichannel sales grew over 130% versus Q4 last year, contributing close to 300 basis points to the overall company comp. KPIs were strong across the business, with site traffic up close to 40% and conversion more than doubling. Even with our increased demand, we were able to offer improved delivery times through 2-day shipping, same day delivery, and curbside pickup – all new compared to Holiday 2019. While we are pleased with ecomm’s success in 2020, we still have a long way to go on our omnichannel journey and this will be a key area for our future investment as I will detail in a moment. We believe there is tremendous runway as we reach new customers and drive incremental growth beyond 2020’s performance.

Our Broyhill lines – which launched in the spring – far outperformed our expectations in 2020. The line expanded beyond core home furniture to include area rugs, bed sheets, and decorative pillows. The customer reaction to the entire offering of this iconic brand remains very favorable, and we remain extremely excited about our 2021 extension of Broyhill into housewares and kitchen textiles. Broyhill generated over $400 million in first year sales and we firmly believe it is on track to being a billion-dollar brand. Broyhill customers spend twice as much as non-Broyhill customers and 10 times as much as non-furniture customers. This dynamic is driven both by basket size and visit frequency. One-third of Broyhill customers are new to Big Lots and 50% of Broyhill customers have already returned to make a second purchase either in stores or through Biglots.com.

Likewise, The Lot and Queue Line strategies were very successful in 2020. We rolled these strategies out to 750 stores, which performed well upon launch and accelerated in the fourth quarter driving close to 3 incremental comp points across these stores. Based on this success, we are now increasing our anticipated Lot and Queue Line conversions to 550 additional stores in 2021; most rolling out in spring. Meaning that by mid-year, over 90% of our stores will feature The Lot and Queue Line footprint features and assortments.

Another key aspect of our Operation North Star has been a keen focus on our expense architecture. Through our Fund the Journey initiative, I am proud to announce that we have secured $130 million of SG&A reductions to date, including savings baked into our 2021 operating plan. Additionally, through partnerships with our vendor base and through more thoughtful in-store markdown activities, we have expanded margin by approximately $30 million. Our efforts to drive more savings will continue in 2021 and beyond.

As we turn to 2021, a key focus will be to make investments in our supply chain to increase throughput, improve efficiencies, and support omni-channel demand. Late this summer, we will open two third-party operated Forward Distribution Centers, one in the Northeast and one in the Southeast, to help process bulk items, primarily our Furniture offerings and palletized goods such as bottled water. In addition, we will invest in centralized repacking capabilities at our DC in Columbus that will allow for more efficient and cost-effective picking – on a per store basis – of less than a full case of items, even as our store count and demand grow. These capabilities will help make our other regional distribution centers more efficient, as they can focus on case
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picking. These investments will enable us to get merchandise to our stores more quickly, efficiently and responsively, improving our in-stocks in many items. In addition, Forward Distribution Centers will provide a scalable platform to support our future growth, and we expect to stand up additional FDC locations beyond 2021.

Another 2021 prioritization is to enhance the customer experience in our stores, particularly those stores that did not go through a full remodel under our Store of the Future program. Starting in 2021, and extending over the next few years, we will invest in a store refresh program encompassing new exterior signage, internal repainting, and updated floors and bathrooms. This program will be much less expensive on a per store basis than our prior Store of the Future program, but will deliver a more consistent brand experience across our stores.

We will work in 2021 to further strengthen our ecommerce capabilities and customer data insights. We will invest to improve user experience, omni-channel capabilities with ship-to-store, and personalization capabilities through expanded use of customer data platforms, online customer panels and more advanced segmentation.

We are excited by new merchandising initiatives in 2021. These include the strengthening of our value-driving assortment with Closeouts across our merchandise categories; the aforementioned Apparel expansion; additional Broyhill growth into adjacent departments; expanding our Pet offerings given the acceleration of pet adoptions during 2020, and the trend for the humanization of the pet and the productivity of pet products; also our Big Buys initiative that will increase our value price impressions throughout the main aisles and featured end-cap presentations. Finally, Seasonal is a key area of opportunity for us as we know we left sales on the table with depleted inventory levels in 2020.

We continue to enhance our value-focused proposition. Our newly launched Onederland program offers a selection of products priced at $1 to drive conversion and excitement.

Additionally, we are transforming how we work. As an example, in 2021, we will launch data-driven space planning capabilities for the first time in the company’s history. Focusing on space productivity, we will have better analytical tools to impact future buy cycles, optimize floorplans per store, further optimize allocation & replenishment, and improve store compliance for planogram execution. We expect that these capabilities will greatly enhance our productivity, store by store and category by category, with a focus on on-shelf availability of relevant products. Most importantly, it will create a more relevant customer assortment to increase sales and increase customer satisfaction, fueling return visits. We are excited to be adding this tool to our merchandise program as we transform the way we work.

As a result of all of these initiatives, we are entering 2021 with momentum and excitement about the opportunities ahead of us this year. While unusually cold and snowy winter weather impacted traffic trends mid-February, the year is off to a strong start. Comps will moderate in March as we lap the stock-up period during the first phase of the pandemic last year, and again
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from mid-April when we are up against the first stimulus-driven sales period. However, we expect to end with positive comps for the quarter and growth in EPS on top of a strong growth quarter last year. Overall, while comparatives will be challenging throughout this year, and especially in Q2 and Q3, we expect to continue driving significant improvements in our underlying performance and shareholder value creation. Over the past year, we have clearly benefited from government stimulus, and from the nesting trend that resulted from the pandemic. However, we are very confident that our performance is also being driven significantly by our Operation North Star strategies, and that week by week we are becoming a stronger company.

I’ll now turn the call over to Jonathan for more insight on our financial results for the quarter and our outlook for 2021.

JONATHAN RAMSDEN
Thanks Bruce, and good morning everyone. I would like to add my heartfelt thanks to the entire Big Lots team for their amazing efforts and commitment over the past year. And the team is pulling together as we enter 2021 to continue the great progress we made in 2020.

Net sales for the fourth quarter were $1.738 billion, an 8% increase compared to $1.607 billion a year ago. The growth was driven by a record fourth quarter comparable sales increase of 7.9%. Comps were driven by strong growth in basket across both channels. Transactions were down slightly, driven by store traffic, which was impacted by stay at home orders, particularly on the West coast, as well as the generally softer traffic we have seen on peak shopping days during the pandemic. As Bruce mentioned, in terms of cadence through the quarter, the underlying trend by month was strongest in November and January with relative softness in December, given slower traffic and lower levels of seasonal inventory. Our strong fourth quarter comps drove us to record annual sales of $6.2 billion, an increase of $876 million from 2019.

Net income for the fourth quarter was $98.0 million, compared to $93.8 million in Q4 of 2019. Diluted EPS for the quarter was $2.59, nine cents above the high end of our guidance range provided in early January. As a reminder, we reported EPS of $2.39 last year. For the full year, we achieved adjusted diluted earnings per share of $7.35, more than twice what we reported for 2019, and resulting in record earnings on both a GAAP and adjusted non-GAAP basis.

The gross margin rate for Q4 was 39.4%, down slightly from last year’s fourth quarter rate, with freight headwinds offsetting a significant reduction in markdowns. Our gross margin rate was essentially in line with expectations at the beginning of the quarter, although the freight impact and markdown benefit were both somewhat greater than expected.

Total expense dollars for the quarter, including depreciation, were $554 million, up from $508 million last year, again essentially in line with beginning of quarter expectations. Drivers of the increase were $12 million of additional expense from the sale and leaseback of our distribution
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centers, $11 million of additional store and corporate bonus expense, $6.5 million of higher non-cash equity comp expense, on-going Covid-related cleaning costs and supplies of approximately $5 million, and some expense flex on higher sales.

Interest expense for the quarter was $2.6 million, down from $3.2 million in Q4 last year, primarily as a result of paying off the balance on our unsecured line of credit earlier in 2020, partially offset by notional interest associated with the gain deferral on our sale/leaseback transactions.

The income tax rate in the fourth quarter was 24.6%, compared to last year’s adjusted rate of 23.2%, both impacted by the resolution of discrete items. The impact of favorable discrete items was similar in value in 2020 compared to 2019, but the impact on the tax rate was less significant due to much higher pre-tax income. Prior to discrete items, this year’s income tax rate was 25.9% compared to last year’s adjusted rate of 26.0%.

Moving on to the balance sheet, inventory on-hand was down mid-single digits, but total inventory was up 2.1% to $940.3 million, driven by higher in-transit inventory as we worked to have product ship prior to the lunar new year, drive replenishment after strong fourth quarter sell throughs, and to match underlying stronger business trends versus the close of 2019.

During Q4, we had no new store openings and closed 3 stores, leaving us with 1,408 stores and total selling square footage of 32.0 million. For the full year, we opened 24 stores and closed 20. Our new store openings were impacted by decisions we made at the beginning of the pandemic to defer some openings into 2021, but we were pleased to still achieve net store count growth. This was aided by our new store performance intervention program, along with successful lease renewal negotiations, which reduced the number of store closures. We expect to accelerate net store count growth in 2021, and more significantly beyond, and continue to believe that unit growth can be a major driver of our performance.

Capital expenditures for the quarter were $32 million, compared to $33 million last year. Full year capex was $135 million versus $265 million last year, with the reduction driven by our evolution away from Store of the Future, as well as fewer new store openings and lapping investments in our new California distribution center. Depreciation expense in Q4 was $33.6 million, approximately $3.8 million lower than the same period last year.

We ended the fourth quarter with $560 million of Cash and Cash Equivalents and $36 million of long-term debt. This represents a $750 million year over year increase in our net cash position, driven both by tremendous free cash flow and the net proceeds from the sale and leaseback of our distribution centers completed in June. As a reminder, at the end of 2019, we had $53 million of Cash and Cash Equivalents and $279 million of long-term debt.

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We repurchased 1.6 million shares during the quarter for $73 million, at an average cost per share of $46.38, under our previously announced $500 million share repurchase authorization, with $327 million remaining as of the end of the quarter. Share repurchases remain an important part of our capital allocation strategy going forward, in particular given our significant excess liquidity. In total, we returned $219 million to shareholders during 2020.

As announced in a separate release, our Board of Directors declared a quarterly cash dividend for the first quarter of 2021 of $0.30 per common share. This dividend is payable on April 2, 2021 to shareholders of record on the close of business on March 19, 2021.

Turning to 2021, based on currently available information, for the first quarter the Company expects to achieve diluted earnings per share in the range of $1.30 to $1.45, compared to $1.26 per diluted share in 2020. This guidance is based on a low single digit comparable sales increase and a total sales increase approximately 80 bps higher than the lift in comparable sales. This guidance considers our strong start to 2021 but anticipates comp pressure as we lap strong stock-up comps from the first phase of the pandemic in March of last year, and particularly from mid-April when government stimulus significantly accelerated sales in 2020. The guidance does not incorporate any share repurchases we may complete in the first quarter.

We expect gross margin rate for the first quarter to be flat to slightly up to last year, as a year over year markdown benefit early in the quarter is largely offset by continued higher freight costs and the mix impact of Pantry Optimization, which launched in Q3 of last year.

From an SG&A perspective, at our projected sales levels, we expect some deleverage in the quarter. However, excluding approximately $12 million of expense impact from the sale and leaseback in June 2020, expenses would lever slightly.

With regard to the full year, we expect that our financial performance will be significantly affected by the ongoing pandemic, including the continued evolution of consumer shopping behaviors, potential additional stimulus, and other macro-driven factors. As a result, at this point we do not believe we have sufficient visibility to provide full year guidance on sales or EPS.

We do expect to face ongoing pressure from higher freight costs through the year, as well as some adverse mix impact from our Pantry Optimization strategy. This will be partially offset by lower shrink and other mix effects, but with the net result that our gross margin rate is likely to be slightly down.

We expect SG&A expense dollars for the year to be down, with benefits from lower Covid-related expense, normalization of bonus expense, and structural expense savings, offset by incremental expense from the sale/leaseback, higher non-cash equity compensation expense, higher new store expense due to increased openings, higher wage levels, and investments in our new Forward Deployment Centers and other strategic investments. The Forward Deployed
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Center investment for this year will add approximately $10 million in SG&A beginning mid-summer.

Our SG&A expectations for the year incorporate around $30 million of incremental structural expense savings across store labor, our supply chain and general office. By the close of 2021, we will have reduced SG&A by at least $130 million versus the start of 2019 and, supported by our ongoing culture of frugality, we expect to drive this figure higher.

Capital expenditures for 2021 are expected to be in the range of $180 million to $190 million with a focus on strategic investments to strengthen and accelerate the business. These investments include the aforementioned LOT and Queue Line store conversions, omni-channel capabilities, Space Planning technology, and customer analytics capabilities. In addition, we expect to open 50 to 60 stores in 2021, of which around 20 will be relocations.

As we think about inventory levels throughout 2021, it is important to note that we will be up against some very depleted 2020 inventory levels, which we know caused us to miss sales and adversely impact our customer’s in-store experience. In addition, we expect to flow some receipts earlier to mitigate freight costs. As a result, we expect headline inventory levels to be up significantly over 2020, especially at the end of Q2 and Q3. However, on a two-year basis inventory levels will reflect strong turn improvement. For Q1, including in-transit, our ending inventory will be up around 15% as we lap depleted inventories at the end of the first quarter last year, but approximately flat to 2019 against a two-year double-digit sales increase. We expect that inventories will continue to run close to flat on a 2-year basis through the balance of the year.

We expect interest expense for the year to be approximately flat, with lower interest on borrowings offset by notional interest expense related to the sale/leaseback gain deferral.

Overall, 2021 headline numbers will reflect challenging comparisons to 2020, but we believe will reflect strong underlying performance, and excellent growth versus 2019. We have great momentum coming into the year and a strong plan guided by Operation North Star.

I’ll now turn the call back over to our Moderator so that we can begin to address your questions.

Q&A

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star-one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star-two if you'd like to remove your question from the queue.

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For participants using speaker equipment, it may be necessary to pick up your handset before pressing star-one. One moment, please, while we poll for questions.

Our first question today is coming from Greg Badishkanian from Wolfe Research. Your line is now live.

Spencer Hanus
Good morning. This is Spencer Hanus on for Greg. Can you talk about what gets you comfortable with the low single digit comp for the first quarter? And then how are you guys thinking about the benefit from stimulus during 1Q? And then I guess on a two year stack basis, it implies comps up roughly low teens. Is that a good way to think about comps for the full year, a good starting point?

Jonathan Ramsden
Yeah. Hey, Spencer, I'll be happy to take that, and then maybe Bruce will want to add a couple of comments.

So, obviously, Q1 is a very complex quarter, because there are a lot of moving parts and we're up against some significant variability by week as we went through Q1 last year, when February started off fairly soft and then we saw the stock-up benefit in March, then had a little bit of a dip before we saw the first benefit of the stimulus in mid-April, which, you know, drove comps a lot higher.

So, we're modeling gains there and we're looking at each of those weeks. We're factoring in the impact of the timing of tax refunds, which are coming out later this year, the stimulus effect from the December stimulus, which is still having some impact and there's still some dollars to drop on that. We haven't at this point baked in the next stimulus, which appears likely to pass in the near future.

I would say what we've seen over time is a little bit of a diminishing return on those stimulus injections, that the benefit we got from the December stimulus was less than the April stimulus, and we're assuming that will probably go a little--you know, a little further, partly because people are saving more of the stimulus payments than they were at the beginning of the pandemic with the first round.

So, there are a lot of moving parts. We're modeling it out based on all those moving parts. And we're obviously close to five weeks into the quarter, so we've seen where we've been quarter to date. And that gives us some comfort about where we're trending for the quarter as a whole. I think a key point is our underlying business is very strong.

When you sort of a bracket out some of those timing and stimulus, you know, driven differences, we're seeing really strong comps across most of our categories. Not surprisingly, food and consumables is a little light, you know, right now given what we're starting to come
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up against. But we feel good about the trend, and we feel that the guidance we've given on comps make sense given everything we're seeing.

Bruce Thorn
Yeah. And Spencer, I'll just add to what Jonathan said. Q1 definitely is off to a good start. We think the customer is healthy. She's still valuing value, home, e-commerce, and shopping on her terms. I think our Operation North Star initiatives are proving very well to be what she wants in Q1. And we're entering 2021 with more reward customers than ever before, so we feel good about how we're starting the year.

Jonathan Ramsden
And then, Spencer, just to come back to the last, you know, point of your question about two year comps, yeah, agree with your math on Q1. I wouldn't necessarily take that as--you know, as a kind of hard and fast guide to where we're going to be. Every quarter is different this year.

You know, in Q1, we are still getting some benefit from the December stimulus. As we get to the latter part of the year, you know, we're assuming there will be, little or no stimulus or unemployment benefit that we are currently benefiting from. But there are lots of puts and takes in every quarter, including the fact that, when we get to Q4, we--you know, we don't have the--you know, we'll be lapping a seasonal headwind. So, I think you have to look at every quarter differently, but I wouldn't count on the two-year comp being the same for the balance of the year.

Spencer Hanus
That's really helpful. And then, on your inventory, how comfortable are you with what--where inventory levels are today? And are--do you feel a little bit light or are you good today?

Jonathan Ramsden
Yeah, I think we feel, you know, pretty good. We have--our on-hand has remained in negative territory and we are, you know, working to get that back to something that makes us more comfortable because of the flat--little bit higher on-hand, you know, at the end of Q1. You know, we've had some processing challenges, as we've talked about, getting inventory through our DCs, which is--was--which has impacted the on-hand levels.

But we're--we are on track. We are hopeful that we're going to be back in a good position. Obviously, sales is an important dynamic in that, but we feel good about where we're tracking to at the end of Q1.

Spencer Hanus
And then you talked about 50 to 60 new stores in 2021. How are--how should we think about where those new stores will be located? Are they going to be in your core markets? Are they going to be in new markets? And then, how does the store format differ from what your existing store looks like today?

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Jonathan Ramsden
Yeah, these--Spencer, these are mostly, you know, conventional stores, pretty much all, in fact, consistent with our existing store format. Some of--about 20 of them are relos where we are in many cases taking more space, moving from a store where there was limited furniture penetration, for example, to a bigger store where we can have a full furniture assortment. But other than that, they're generally consistent with our existing boxes.

In terms of, you know, the geography, they're pretty diverse in terms of where they are across the country. I wouldn't say there's any particular callout there. But to your point, we are continuing to explore different formats for stores going forward. Our priority this year is to return to healthy store count growth. We were slightly positive the last two years. We want to accelerate, but we do think there are a lot of interesting opportunities going forward.

And that's both with our existing format where there are fill-in opportunities in existing markets where we do well, as well as a lot of white space in markets where we aren't penetrated. And then there is an opportunity for different formats that we are--we're spending a lot of time evaluating right now.

Spencer Hanus
Great. Thank you.

Operator
Thank you. Our next question today is coming from Joe Feldman from TAG. Your line is now live.

Joe Feldman
Great. Thanks, guys. Wanted to ask, on the e-commerce business, can you share a little more color on what's selling? Like, are people are starting to buy more of the furniture and bulky items? Is that kind of, I guess, sparking the--those new two forward distribution centers, or are people still buying smaller ticket maybe? Just any complexion you could share on that would be helpful.

Bruce Thorn
Yeah, Joe, I'll start this one off. Thanks for the question. And we're really pleased with our growth in e-commerce. As we stated before in our opening remarks, you know, it's grown significantly, twice last year's volume in Q4, and Q4 was nearly 5% of sales. And, you know, it wasn't so long ago when we were under $50 million in sales total. That was back in 2018, and now this channel looks like it could grow to $1 billion in a handful of years. So, we're really pleased with that.

The type of items that are selling are anything from an Instacart order that will fit in the back of a trunk all the way up to a Broyhill sectional sofa that can be delivered same day through
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PICKUP or on a two-day ship from store out of one of our 47 stores. So, we're really pleased with that.

We are seeing tremendous interest along with this home nesting trend to buy that furniture online. And so, that's been a nice addition. And we're seeing a tremendous amount of new customers come through this e-comm channel that we didn't have before.

So, conversion rates continue to grow, in fact doubled over last year, very strong traffic, nearly 40% up year-over-year. We've made it easy to shop with Instacart, PICKUP, ship from store, and direct vendor shipments as well, so seeing a lot of home type of products being ordered through the e-comm channel.

Joe Feldman
Got it. That's helpful. Thank you. And then, you know, you mentioned new customers, and that was something else we wanted to ask you about. With--I think you said with the Reward program you saw nine million new customers for the year. And I was just wondering, you know, if what you're seeing--are they behaving the same way as your historical customers, or are they different at all, younger? Are they buying different things, spending more? And maybe if you could tie in the e-commerce new customers you're seeing to that too, that would be helpful. Thanks.

Bruce Thorn
Yeah, the--that's a good question. The--first off, you know, a lot of our--you know, in some months, half of our rewards customer sign-ups come through the e-commerce channel. And so, that's a nice way to pick up new customers.

But you're right. We added nine million rewards customers. Our growth in rewards customers or new to our file has been roughly 10% for the last three years, so net 21 million in total. We're retaining these customers at a better rate than prior years, and these retained customers that we're getting are spending more than 25% more in 2020 than they did in 2019. And the satisfaction scores across our network and stores has never been higher from a Net Promoter Score, so we're happy to see that.

In terms of age, I can't comment on that right now. We'll look into that a little bit more and get back to you. But I do know that there's a lot of the nesting trend going on and that furniture, improving the home space for work, for life, is key. And we technically see a younger customer in that area, so I'm sure there's some aging down, which is a good trend to have in that customer growth and growth file. But this growth to 21 million and growing 10% a year is like a customer annuity pipeline for us and sets us up in a nice way for '21.

Joe Feldman
That's great. No, thanks, guys, and good luck with this quarter.

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Bruce Thorn
Thank you, Joe.

Jonathan Ramsden
Thanks, Joe.

Operator
Thank you. Our next question today is coming from Chandni Luthra from Goldman Sachs. Your line is now live.

Chandni Luthra
Hey, good morning, guys. Thank you for taking the question. I'd like to talk about share repurchase a little bit. So, you guys repurchased 73 million worth of shares at 46 bucks in the quarter. Stock's obviously a bit higher than that right now, you know, has been for the last couple of weeks. As we think about buyback going forward, could you perhaps throw some color as to how you think about it? You know, do you think about repurchase more opportunistically, or is it, you know, based on a forward set plan typically? Thank you.

Jonathan Ramsden
Hey, Chandni, good morning and thanks for the question. I'll be happy to take that one. So, just as a reminder, we had a $500 million share repurchase authorized by the board last August. We've done--or we did $173 million of that through the end of Q4, you know, to the point of your question.

When we authorized that amount, we--yeah, we felt confident that we would have, I would call it, excess liquidity available to fund that. And, you know, clearly since then, we've continued to perform well. So, that picture hasn't changed, and we certainly think we have the liquidity to continue moving through that $500 million authorization.

The specific decision on execution is one we make quarter by quarter. We review with our board and capital allocation planning committee, and we certainly, you know, take into account where the stock is currently trading when we set the grid. Typically, we're doing a 10b5-1 plan we're locking in at the beginning of the quarter. And those plans are structured to become more aggressive at lower stock price levels, but also to lock in a kind of base level of repurchases typically.

So, again, it's a quarter by quarter determination. We certainly don't intend to carry, you know, the excess liquidity we have on the balance sheet on a long-term basis. And we want to deploy that capital in a more productive way, and we expect that share repurchases will remain the key way that we will do that in the near term.

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And obviously, that takes into account the assumption that our capital expenditures in the business, which would be our top priority to invest within the business, are going to be fully funded from operating cash flow, which we certainly expect to be the case.

Chandni Luthra
Great. And if I could get a quick follow-up on gross margins for next year, especially as we think about the promotional environment, you know, that most retailers have talked about as we go beyond the first quarter, how do you think about the promotional backdrop, you know, vis-à-vis freight charges? And how do you think that sort of, you know, flows through the balance of 2021?

Bruce Thorn
You want me to start with that?

Jonathan Ramsden
Well, we have--.

Bruce Thorn
--Yeah, go--

Jonathan Ramsden
--Sure. Go ahead, Bruce, yeah.

Bruce Thorn
Yeah. No, it's a good question, Chandni. We expect that our promotional activity will be lower than 2019. We had a good--lower promotional activity through 2020.

With regard to a freight impact, we're doing things to mitigate that. We're in negotiations. We've got a great ecosystem of vendors and freight carriers that we're working with, smoothing out volumes to lower those rates, and then get the capacity. But overall, you know, just tremendous, tremendous, good work. With less markdowns in 2020, we expect (INAUDIBLE).

Jonathan Ramsden
You cut out a little bit, Bruce.

Bruce Thorn
Go ahead, Jonathan.

Jonathan Ramsden
Sorry, yeah, Chandni, I would just add that I think, you know, to echo really what Bruce said, that we've gotten much more effective at deploying promotions, I think, during 2020. So we used to do a lot of those big whole house friends and family events, which were a fairly blunt instrument. And as our rewards database has grown and we have more data and we learn more
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about what promos work, I think our ability to be much more targeted with our promotions has significantly improved.

And then you look at a month like January this year where we were significantly less promotional, and we still delivered a great comp, and we feel good about that. We made a lot more money in January then we have done in past years.

Chandni Luthra
Great, thank you so much.

Operator
Thank you. Our next question today is coming from Peter Keith from Piper Sandler. Your line is now live.

Peter Keith
Hi. Thanks. Good morning, everyone. Hope you're doing well. Maybe just a follow on that last question regarding gross margin. There's certainly a lot of investor concern around freight headwinds and ocean freight. And I was hoping you could provide maybe the shape of that headwind to your full year. Is that something that you think will run smoothly or equivalent across all quarters? Is it front-end loaded, back-end loaded? And maybe even a full-year quantification of the impact would be helpful.

Jonathan Ramsden
Yeah, I'll be able to--morning, Peter. I'll be able to kick off on that. Yeah, we definitely think it's going to be a full-year headwind. There's no reason at this point to think that it's going to kind of abate in 2021. It will probably be '22 before we start to see year-over-year relief on that, based on everything we're seeing and hearing, and talking to our partners.

I would say in terms of the cadence through the year, probably relatively even at this point based on what we're seeing. And, you know, we haven't really quantified it, and it's continuing to evolve, obviously, but it is—it is a meaningful headwind throughout '21.

Peter Keith
Okay. And I think in the prepared remarks, Jonathan, factoring that in you would still expect gross margin just to be down slightly?

Jonathan Ramsden
Exactly. Yeah, we think we'll make up some ground in other areas that will put us in that range.

Peter Keith
Okay, great. Moving on to a different topic, you did mention this new capability with data-driven space planning capabilities, and I was hoping you could unpack that for us a little bit.

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Maybe give us a sense of the timing of when that started to roll out. And even qualitatively, what might we see at the store in terms of changes as this technology gets implemented?

Bruce Thorn
I'll take that one, Jonathan. Good question, Peter. Space planning is something that under new leadership, Jack Pestello in merchandising, is something that we've already started working on. It's our first tool into better utilizing our space in our store, so it's basically being able to planogram down to the store level and customize to every store--because not all stores are equal--the space, so that we can get better allocation. We can get better planning, better sell through, and getting in and out of sets better.

We can also increase our ability to customize assortments to a store, localization. And because of that, we believe we are going to get improved sales per square foot and margin dollars per square foot in our stores. And so this has already started; there’s progress has been started. And by midyear, we should start seeing some rollout of this, and then extending to our entire fleet.

So it's going to take some time, but we'll see benefit starting in back half of '21 and then going into '22.

Peter Keith
Terrific, sounds good. Thanks so much.

Operator
Thanks. Our next question today is coming from Anthony Chukumba from Loop Capital Markets. Your line is now live.

Anthony Chukumba
Good morning and congratulations on a really strong year. Just wanted to--I had two questions. I guess the first one is on lease-to-own and what you saw there in the fourth quarter, and how much of a contributor that was to your strong furniture sales.

Jonathan Ramsden
Yeah, I'll be able to kick off on that, Anthony. Good morning. Thanks for the congratulations. Yeah, what we've seen all year is that our leasing business has been down. Customers have had more cash available to purchase furniture, so year-over-year the approval rates have been pretty consistent, but the leasing demand has been lower just because we've seen a tender shift to other types of purchases.

Anthony Chukumba
Got it. And then I just wanted a little bit of clarification. Okay, so you said you're going to open 50 to 60 new stores, but 20 of those are going to be relocations, though, in terms of just sort of
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completely new stores, and you're talking 30 to 40. And I guess I was just wondering, what do you anticipate in terms of just, you know, sort of store closings?

Jonathan Ramsden
Yeah, that's a key part of the equation here, Anthony. We're trying to get the closings down, so we're anticipating something in the region of 15 outright closings for the year, to drive a meaningful net store count increase. And that's partly coming from what we refer to as our store performance intervention program, where we've spent a lot of time looking at underperforming stores, particularly those coming up for lease renewal, and really worked hard to improve that performance so we don't need to close them.

And then also we had some--you know, some good productive negotiations with landlords in 2020 that have helped with, from an occupancy standpoint, to make it viable to keep more stores open. So it's a constant process.

I guess the other key point again, just to reiterate, is beyond '21 we do expect to continue to accelerate the openings and we're hopeful that we can keep the closures, the outright closures, at a pretty low level so we can continue to grow that net store count impact to our overall sales growth.

Anthony Chukumba
Got it. Thank you so much. Keep up the good work.

Bruce Thorn
Thanks, Anthony.

Jonathan Ramsden
Thank you.

Operator
Thank you. Our next question today is coming from Jason Haas from Bank of America. Your line is now live.

Jason Haas
Good morning and thanks for taking my questions. Can you talk about what you're seeing with regards to closeout availability? We've heard some commentary from others that there may be some challenges, given how strong sales have been and inventory shortages. So curious to know what you're seeing there.

And then also related to that, can you provide some more color on just what you're doing with regards to that department? Are you adding any sort of new merchants or any other sort of capabilities there? Thanks.
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Bruce Thorn
Yeah, Jason, good morning. Thanks for the question. You know, I'll tell you what, we are really pleased with our focus on closeout and getting back to our roots, our DNA being the deal place. But you know I'll tell you, we grew 50% in terms of closeouts in Q4 across all categories. You know, we continue to grow in these areas. We're trying to find the intersection where quality and price intersect, and availability, and we haven't reached that yet, so it's good news. We still think there's good, strong availability.

It's a bit tougher in food and consumables, and that's where we've lagged a bit because of the pandemic. Things are tighter there. But across all other categories, we're getting back into these things, so it's all growth and it's all north, if you will, on that. We're a deal store. Closeouts, like I said, is our DNA.

We're starting to see great penetration in areas like apparel where we mentioned in the opening remarks having brands like Reebok, Nautica, Ann Taylor, Scott Brothers, and soft home and hard home deals as well. So we're excited about our growth in these areas, and we know our customers are as well. And the vendors that are supplying these closeouts are happy to see us back in the business.

Year-over-year, our closeout growth grew over--grew nearly 40%. So we see this as loads of opportunity as our team continues to reach out to our vendor base and grow. So food and consumables lagging a bit. Everywhere else, it's green and growing.

Jason Haas
That's great, thank you. And then as a follow-up question, how are you thinking about the assortment as the country begins to reopen, vaccinations start to go out? Just what are you expecting in terms of how customer spending habits might shift? And any color on what you're doing to retain a lot of the new customers that you've gained over the past year. Thanks.

Bruce Thorn
Yeah, and a great follow-up question. You know, our customer is all about value and shopping on her terms. So e-commerce, being an omnichannel retailer and all the work we've done there is really playing out, as well as our assortment fits that need very well. And all the Operation North Star strategic work we've done is doing nicely. So we can see--we see even post-COVID the home nesting trend to continue.

We think we're well positioned with our growth in Broyhill and other brands in the home. Home office is going to continue to be a winner in an area for penetrating into that. We do believe that she'll want to travel a bit more, so we're looking into all things that help travel, luggage and things like that.

Our convenience, you know, e-commerce, we're going to continue to get better and better at that, making it safe, easy, convenient. That's going to be a trend that's going to continue. And
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we're going to add a lot more personalization and services this year that remove friction through that channel, making it easy to shop, seeing bestsellers, more types of payments and personalization to really reach her.

Value is going to continue to be huge. It never goes out of style, and so we'll continue to grow our closeout deals, our engineered big buys, name brands like in our pantry optimization initiative that are competitively priced, but deals, deals, deals. So I think we are well positioned for post-COVID-19, and I think the customer is healthy. And those trends on value, home, and e-commerce are going to stay and be strong.

Jason Haas
Great, thank you.

Bruce Thorn
You got it.

Operator
Ladies and gentlemen, in the interest of time, our final question today is coming from Brad Thomas from KeyBanc Capital Markets. Your line is now live.

Brad Thomas
Hi, good morning. Thanks for taking the question, and congrats on a great year. I want to ask two questions about how to think about 2020 at a high level, knowing you haven't given full-year guidance. The first on sales, it seems to me you have a ton of opportunity still to grow on what you did last year with elements like expanding the Lot, things you're doing with merchandising, and quarters where the inventory was lighter where you wanted it.

Is there any ability to maybe quantify what that opportunity is, just from the blocking and tackling and the initiatives being a bit better here this year?

Jonathan Ramsden
Yeah, I'll be able to take a pass at answering that, Brad. Again, there are a lot of moving parts as we think about our comps. There were quarter by quarter many moving parts in 2020. And as we look to 2021, that will remain the case. I think a key point, though, is when we came into 2020, we said we expected our comps to accelerate through the year, and that in Q3, Q4, we would be posting pretty nice comps, reflecting the benefit of all of the initiatives, pantry op, queue, Lot, Broyhill, e-comm growth.

And that's really what we believe happened. You know, it's masked a little bit by the stimulus and the nesting trend, but underneath that our data says that we really did get the benefits and more than we expected from those initiatives, and we expect to continue that into 2021. And then on top of that, you've got the kind of one-time effect of stimulus, and probably nesting will be a one-time effect eventually when things return to a level of normalcy.
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But the important point for us is we believe our underlying strategies are working, and that when we kind of get back to normalcy, they will continue to move us forward.

Brad Thomas
That's helpful. And then regarding SG&A, Jonathan, can you give us any more help of how to think about modeling SG&A for the year? I think you mentioned a $30 million savings with the desire to get that higher for 2021 versus 2020. How should we think about where it might be if sales come on the stronger end of the spectrum, versus if these prove to be tougher comps and you have a little bit more trouble against the really tough comparisons you're up against?

Jonathan Ramsden
Yeah, I think--you know, I'm probably starting to sound a bit like a broken record with this comment, but it's very complicated, again, in terms of expenses because of all the puts and takes year-over-year. I think what we learned in 2020 very clearly was that the expense flex as we delivered higher sales was very modest. So we got tremendous leverage from delivering higher sales. And again, over time our objective is to grow our productivity significantly and harvest that, that leverage benefit.

If you look at some of the other puts and takes in 2021 you've got the--we have significant COVID expenses in 2020, a substantial proportion of which we don't expect to lap, but we will continue to have some of those. We had full stretch bonus payments pretty much in 2020, and that will normalize in '21. And then we've got the benefit of the structural savings you just talked about.

Against that, we've got the full-year impact of sale-leaseback expense. We've also got strategic investments we're making, including with our new stores with the forward distribution centers we talked about. And then there's a little bit of wage pressure we alluded to, and then various other puts and takes, including equity comp.

So that's a fairly long-winded answer to say that there are a lot of moving parts. Our guidance for the year is that SG&A will be down in dollar terms. You know, to the extent that sales are coming in higher, then we are assuming in our internal plan we wouldn't expect to be adding a lot of SG&A dollars. There are some investments we might choose to make at that point.

On the contrary, if sales come below our plan, you know, we certainly have the ability to take expense out, but we do have a lot of fixed expense in there, which also on the downside limits our opportunity somewhat there. But again, we remain highly focused on trying to take structural costs out. We have savings opportunities which we believe are there beyond what we have baked into our internal plan into that guidance, and we'll be working very hard to harvest those in 2021.

Brad Thomas
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That's all really helpful. Thank you so much.

Jonathan Ramsden
Thank you, Brad.

Operator
Thank you. We've reached the end of our question-and-answer session. Ladies and gentlemen, that does conclude today's teleconference and webcast. A replay of this call will be available to you by 12 noon Eastern time this afternoon, December 4-- I'm sorry, excuse me, March 5. The replay will end at 11:59 p.m. Eastern time.

You can access the replay by dialing toll-free 877-660-6853 and enter replay confirmation 13715962, followed by the #. The toll number 1-201-612-7415, and enter replay confirmation 13715962, followed by the #. This does conclude today's teleconference. You may now disconnect and have a great day. We thank you for your participation today.

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Exhibit 99.3
PRESS RELEASE
FOR IMMEDIATE RELEASE Contact: Tom Filandro - ICR. Inc.
Managing Director
tom.filandro@icrinc.com
(646) 277-1235

BIG LOTS ANNOUNCES QUARTERLY DIVIDEND ON COMMON STOCK


Columbus, Ohio – March 5, 2021 – Big Lots, Inc. (NYSE: BIG) today announced that on March 4, 2021 the Board of Directors declared a quarterly cash dividend of $0.30 per common share for the first quarter of fiscal 2021.

The dividend will be paid on April 2, 2021, to shareholders of record as of the close of business on March 19, 2021.


LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors




About Big Lots, Inc.
Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a neighborhood discount retailer operating 1,410 stores in 47 states, as well as a best-in-class ecommerce platform with expanded capabilities via BOPIS, curbside pickup, Instacart and PICKUP with same day delivery. The company’s product assortment is focused on home essentials: Furniture, Seasonal, Soft Home, Food, Consumables, Hard Home, and Electronics, Toys & Accessories. Big Lots’ mission is to help people Live BIG and Save Lots. The company strives to be the BIG difference for a better life by delivering unmatched value to customers through surprise and delight, being a "best place to work" culture for associates, rewarding shareholders with consistent growth and top-tier returns, as well as doing good in local communities. For more information about the company, visit www.biglots.com.

Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “anticipate,” “estimate,” “approximate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook” and similar expressions generally identify forward-looking statements. Similarly, descriptions of objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance and are applicable only as of the dates of such statements. Although the company believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect business, financial condition, results of operations or liquidity.

Forward-looking statements that the company makes herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, developments related to the COVID-19 coronavirus pandemic, current economic and credit conditions, the cost of goods, the inability to successfully execute strategic initiatives, competitive pressures, economic pressures on customers and the company, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of the company’s most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the company makes on related subjects in public announcements and SEC filings.


LOGOQ2191.JPG
Investor Relations Department
Investor_relations@biglots.com
https://www.biglots.com/corporate/investors