BIG LOTS INC (Form: 8-K, Received: 03/10/2009 16:45:00)

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 4, 2009

BIG LOTS, INC.

(Exact name of registrant as specified in its charter)

Ohio	1-8897	06-1119097
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

300 Phillipi Road, Columbus, Ohio 43228

(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:

£	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 communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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

Item 2.02 Results of Operations and Financial Condition.

On March 4, 2009, Big Lots, Inc. (“we,” “us” or “our”) issued a press release and conducted a conference call, both of which reported our fourth quarter and fiscal 2008 unaudited results and provided guidance for fiscal 2009. The 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 selling and administrative expenses; (ii) adjusted operating profit; (iii) adjusted income from continuing operations before income taxes; (iv) adjusted income tax expense; (v) adjusted income from continuing operations; (vi) adjusted net income; and (vii) adjusted earnings per common share – basic and diluted – for continuing operations and net income.

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”): (i) net income of $3.1 million, or $0.04 per diluted common share, recognized in the fourth quarter of fiscal 2007 related to proceeds from the bankruptcy trust settlement of KB Toys’ 2004 bankruptcy; and (ii) net income of $6.1 million, or $0.06 per diluted common share, recognized during fiscal 2007 related to proceeds from insurance claims filed as a result of hurricanes occurring in 2005 and proceeds from the bankruptcy trust settlement of KB Toys’ 2004 bankruptcy. The press release, which was posted in the Investor Relations section of our website and referred to during the conference call, contained a presentation of the most directly comparable financial measures calculated and presented in accordance GAAP and a reconciliation of the differences between the non-GAAP financial measures and the most directly comparable financial measures calculated and presented in accordance with GAAP.

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 our management believes is more indicative of our ongoing 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.

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 our March 4, 2009 press release (Exhibit 99.1) and the transcript of our March 4, 2009 conference call (Exhibit 99.2), including information concerning forward-looking statements and factors that may affect our future results. The information in the exhibits 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 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.

(e) On March 4, 2009, upon the recommendation of the Compensation Committee (“Committee”) of our Board of Directors, the independent, non-management members of our Board of Directors (“outside directors”) took the following actions with respect to the compensation for our principal executive officer, principal financial officer and the other executive officers included as named executive officers in our 2008 proxy statement (collectively, the “named executive officers”): (i) maintained the named executive officers’ salaries for fiscal 2009 at their fiscal 2008 levels; (ii) approved fiscal 2009 bonus opportunities under the Big Lots 2006 Bonus Plan (“2006 Bonus Plan”); and (iii) approved non-qualified stock option awards and restricted stock awards under the Big Lots 2005 Long-Term Incentive Plan (“2005 Incentive Plan”).

The outside directors approved the financial measure and corporate performance amounts that dictate whether a bonus is earned for fiscal 2009 under the 2006 Bonus Plan. The financial measure adopted for fiscal 2009 bonus determinations is our operating profit, as adjusted to remove the effect of equitable adjustments set forth in, and subject to the other terms of, the 2006 Bonus Plan. The corporate performance amounts were derived from the fiscal 2009 corporate operating plan established by our Board of Directors. As recommended by the Committee, the outside directors maintained at their fiscal 2008 levels the named executive officers’ bonus payout percentages for fiscal 2009. The 2006 Bonus Plan is incorporated herein by reference as Exhibit 10.1.

In addition, the outside directors approved the form and size of equity awards to be granted to each named executive officer on March 6, 2009 pursuant to the 2005 Incentive Plan. The outside directors established the grant date in order to allow the market to absorb and react to our release of material non-public information on March 4, 2009, and to avoid any suggestion that the Board of Directors, the Committee or any employee manipulated the terms of the equity awards. The following table sets forth the equity awards granted to the named executive officers on March 6, 2009.

Name	Common Shares Underlying Stock Option Award		Common Shares Underlying Restricted Stock Award
Mr. Fishman		330,000		200,000
Mr. Cooper		48,750		20,000
Mr. Waite		37,500		15,000
Mr. Martin		37,500		15,000
Ms. Bachmann		48,750		20,000

The 2005 Incentive Plan is incorporated herein by reference as Exhibit 10.2. The non-qualified stock option awards are evidenced by the Big Lots 2005 Long-Term Incentive Plan Non-Qualified Stock Option Award Agreement, the form of which is filed herewith as Exhibit 10.3. The restricted stock awards are evidenced by the Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement, the form of which is filed herewith as Exhibit 10.4.

Item 9.01 Financial Statements and Exhibits.

(c)

Exhibits

Exhibits marked with an asterisk (*) are filed herewith.

Exhibit No.		Description

10.1		Big Lots 2006 Bonus Plan, as amended and restated effective December 5, 2008 (incorporated herein by reference to Exhibit 10.10 to our Form 10-Q for the quarter ended November 1, 2008).

10.2		Big Lots 2005 Long-Term Incentive Plan, as amended and restated effective May 29, 2008 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated May 29, 2008).

10.3*		Form of Big Lots 2005 Long-Term Incentive Plan Non-Qualified Stock Option Award Agreement.

10.4*		Form of Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement.

99.1*		Big Lots, Inc. press release dated March 4, 2009.

99.2*		Big Lots, Inc. conference call transcript dated March 4, 2009.

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.


Dated: March 10, 2009	By:	/s/ Charles W. Haubiel II
		Charles W. Haubiel II
		Senior Vice President, Legal and Real Estate,
		General Counsel and Corporate Secretary

Exhibit 10.3

BIG LOTS 2005 LONG-TERM INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

Optionee:				Number of Shares:

Grant Date:				Option Price:

In accordance with the terms of the Big Lots 2005 Long-Term Incentive Plan, as may be amended (“Plan”), this Non-Qualified Stock Option Award Agreement (“Agreement”) is entered into as of the Grant Date by and between you, the Optionee, and Big Lots, Inc., an Ohio corporation (“Company”), in connection with the Company’s grant of the right to purchase (“Option”), at the option of the Optionee, an aggregate of the number of shares of common stock (“Number of Shares”), par value $0.01 per share, of the Company. The Option is subject to the terms and conditions of this Agreement and the Plan. To ensure that you fully understand these terms and conditions, you should carefully read the Plan and this Agreement. 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.

Nature of Grant

The Option is a Non-Qualified Stock Option (“NQSO”) and, as such, is not an Incentive Stock Option (“ ISO ”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

Exercisability of Option

The Option will become vested in increments according to the vesting schedule . However, if an Acceleration Event occurs before the latest date in the vesting schedule, the then-remaining unvested portion of the Option will vest and become exercisable on the day on which the Acceleration Event occurred, but only if the Acceleration Event occurred at least six (6) months following the Grant Date (and such vesting shall be deemed to have occurred immediately prior to the Optionee’s Termination of Employment) . “Acceleration Event” means the earlier of the Optionee’s death or Disability (as defined by the Plan) . Except as provided in the Plan, the Option, to the extent that it is vested, can be exercised any time from the date it vests through the date that it expires. Vesting is always subject to all other Plan requirements being satisfied.

Shares	Vesting Date	Expiration Date

Acceptance

By accepting the Option, Optionee agrees to all of the terms and provisions of the Plan and this Agreement, and Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee (as defined by the Plan) upon any questions arising under the Plan. Optionee hereby accepts the Option and acknowledges receipt of a copy of the Plan, as in effect on the Grant Date.

Accepted as of		, 20 ___	BIG LOTS, INC.
“Optionee,”

By:

Exhibit 10.4

BIG LOTS 2005 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

Grantee:

Grant Date:

Restricted Stock 1 :

In accordance with the terms of the Big Lots 2005 Long-Term Incentive Plan, as may be amended (“Plan”), this Restricted Stock 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 the Restricted Stock to you. The Restricted Stock is subject to the terms and conditions of this Agreement and the Plan.

This Agreement describes the Restricted Stock you have been granted and the conditions that must be met before you may receive the Restricted Stock. To ensure that you fully understand these terms and conditions, you should carefully read the Plan and this Agreement.

Description of the Restricted Stock

The Restricted Stock is the Company’s common shares that you will own after the Restricted Stock vests (i.e., all restrictions lapse) and you comply with the terms of this Agreement and the Plan. However, you will forfeit any rights to the Restricted Stock (i.e., they will not be transferred to you) to the extent you do not comply with the terms of this Agreement and the Plan.

No portion of the Restricted Stock that has not vested 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 Restricted Stock

If (i) you are continuously employed by the Company from the Grant Date, (ii) the First Trigger, as defined in Exhibit A, is met during your continuous employment, and (iii) one of the events described below occurs after the First Trigger is met and during your continuous employment, then your Restricted Stock will vest and will be transferred to you without restriction to the extent and upon the earlier occurrence of the following:

If the Second Trigger, as defined in Exhibit A, is met, all of your Restricted Stock will vest on the first trading day 2 after the Company files its Annual Report on Form 10-K (“Form 10-K”) with the United States Securities and Exchange Commission for the fiscal year in which the Second Trigger was met. Note that the First Trigger and Second Trigger may be met in the same fiscal year.

If you die or become disabled, a fraction of your Restricted Stock will vest for each consecutive year of employment that you have completed with the Company, with such service period beginning with the Grant Date. Such fraction shall be the reciprocal of the Outside Date, as defined in Exhibit A (i.e., 1/(Outside Date)). Note that if a portion of your Restricted Stock vests upon your death or disability, the later occurrence of any of other event will not cause the vesting of the remaining Restricted Stock.

_______________________________

1	Denotes the number of Big Lots, Inc. common shares, par value $0.01 per share, underlying the Restricted Stock Award.

2	As determined by the New York Stock Exchange or other national securities exchange or market that regulates Big Lots, Inc. common shares.

If events A or B above do not occur before the Outside Date, all of your Restricted Stock will vest on the first day of the Company’s first trading window following the Outside Date.

Subject to the terms of the Plan, if the First Trigger is not met before the Outside Date occurs, this Agreement will expire and all of your rights in the Restricted Stock will be forfeited.

Notwithstanding anything to the contrary, your Restricted Stock shall not vest before the first anniversary of the Grant Date. If the First Trigger is met and either event A or B above is also met before the first anniversary of the Grant Date, your Restricted Stock will vest on the first day of the Company’s trading window first following the first anniversary of the Grant Date.

Your Rights in the Restricted Stock

Until the restrictions and conditions described in this Agreement have been met or this Agreement expires, whichever occurs earlier, your Restricted Stock will be held in escrow. The Company will defer distribution of any dividends that are declared on your Restricted Stock until the Restricted Stock vests. These dividends will be distributed at the same time your Restricted Stock vests or will be forfeited if your Restricted Stock does not vest.

You may vote your Restricted Stock before all the terms and conditions described in this Agreement are met or until this Agreement expires, whichever occurs earlier. This is the case even though your Restricted Stock will not be distributed to you until the Restricted Stock vests.

Subject to the Company’s trading policies and applicable laws and regulations, after you become vested in any portion of your Restricted Stock, you shall be free to deal with and dispose of the vested Restricted Stock, and you may request the Company’s transfer agent to issue a certificate for such vested Restricted Stock in your name and free of any restrictions.

Tax Treatment of the Restricted Stock

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

This brief discussion of the federal tax rules that affect your Restricted Stock 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. Section 13.4 of the Plan further describes the manner in which withholding may occur.

You are not required to pay income taxes on your Restricted Stock 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 Restricted Stock vests. The amount of ordinary income you will recognize is the value of your Restricted Stock when it vests. Also, the Company is required to withhold taxes on this same amount. You may elect to allow the Company to withhold, upon the vesting of your Restricted Stock, from the common shares to be issued pursuant to your vested Restricted Stock a number of common shares that would satisfy the required statutory minimum (but no more than such required minimum) with respect to the Company’s tax withholding obligation. If you are at the Grant Date, or subsequently become, subject to the Company’s trading windows, you may only make this election during an open trading window. 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.

Any appreciation of your Restricted Stock after it vests could be eligible to be taxed at capital gains rates when you sell the common shares. If your Restricted Stock does not vest, your Restricted Stock will expire and no taxes will be due.

Section 83(b) Election

Subject to Section 13.17 of the Plan, you shall have the right to make an election under Section 83(b) of the Internal Revenue Code with respect to your Restricted Stock.

General Terms and Conditions

Nothing contained in this Agreement obligates the Company or a subsidiary to continue to employ you in any capacity whatsoever or prohibits or restricts the Company or a subsidiary 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 effect 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 Restricted Stock, you agree that your Restricted Stock is granted under and is subject to the terms and conditions described in this Agreement and in the Plan, and you agree to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions arising under this Agreement or the Plan. Grantee hereby accepts the Restricted Stock and acknowledges receipt of a copy of the Plan, as in effect on the Grant Date.

Accepted as of		, 20 ___	BIG LOTS, INC.
“Grantee,”

By:

EXHIBIT A

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

Applicable Performance Criteria shall mean the greater of Performance Criteria Item (A) or (B) below; provided, however, that if none of performance criteria (A) or (B) appear on the consolidated statements of operations included in the Form 10-K for the applicable fiscal year, then the greater of Performance Criteria Item (C) or (D), as its appears in the Form 10-K for the applicable fiscal year, shall be the Applicable Performance Criteria.

First Trigger shall mean the Company has earned at least $____ under the Applicable Performance Criteria for any fiscal year during the Restriction Period.

Performance Criteria Item shall mean the greater of performance criteria (A), or (B), or under circumstances described above, the greater of (C) or (D) below, with each of (A) through (D) (as the case may be) adjusted to remove the effect of any Unusual or Non-recurring Event, Transaction, or Accrual Items:

(A)

Earnings per Common Share – diluted from continuing operations.

(B)

Earnings per Common Share – diluted from continuing operations before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be).

If neither (A) nor (B) appear:

(C)

Earnings per Common Share – diluted.

(D)

Earnings per Common Share – diluted before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be).

Outside Date shall mean the ____ anniversary of the date upon which the Restricted Stock Award was granted to the Participant.

Restriction Period shall mean the period commencing on Grant Date and continuing until the Outside Date.

Second Trigger shall mean the Company has earned at least $____ under the Applicable Performance Criteria for any fiscal year during the Restriction Period.

Unusual or Non-recurring Event, Transaction or Accrual Items shall mean any gain or loss as a result of litigation or lawsuit settlement (including class action lawsuits). For the avoidance of doubt: (i) the immediately preceding sentence shall be applicable only to litigation and lawsuit settlements that are specifically reported, appearing or disclosed in the Company’s periodic filings with the Securities and Exchange Commission or in the Company’s annual report to shareholders; and (ii) gains and losses that result from litigation or lawsuit settlements include, but are not limited to, judgments, interest on judgments, settlement amounts, attorneys’ fees and costs, filing fees, experts’ fees, and damages sustained as a result of the imposition of injunctive relief.

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE

Contact: Timothy A. Johnson

Vice President, Strategic

Planning and Investor Relations

614-278-6622

BIG LOTS REPORTS RECORD RESULTS

RECORD Q4 INCOME FROM CONTINUING OPERATIONS OF $1.00 PER DILUTED SHARE

RECORD FY 2008 INCOME FROM CONTINUING OPERATIONS OF $1.89 PER DILUTED SHARE

COMPANY PROVIDES INITIAL GUIDANCE FOR FISCAL 2009

Columbus, Ohio – March 4, 2009 – Big Lots, Inc. (NYSE: BIG) today reported net income of $78.8 million, or $0.96 per diluted share, for fourth quarter of fiscal 2008. This compares to net income of $92.0 million, or $1.04 per diluted share for the fourth quarter of fiscal 2007. For fiscal year 2008 ended January 31, 2009, net income was $151.5 million, or $1.85 per diluted share, compared to net income of $158.5 million, or $1.55 per diluted share, for fiscal 2007. Results include both the continuing operations of the business and discontinued operations. Discontinued operations, which are discussed later in this release, for the fourth quarter and fiscal year 2008 totaled a loss of $3.0 million and a loss of $3.3 million, respectively, compared to income from discontinued operations of $6.4 million and $7.3 million for the fourth quarter and full year of fiscal 2007, respectively.

Continuing Operations

For the fourth quarter of fiscal 2008, income from continuing operations was $81.8 million, or $1.00 per diluted share, compared to income from continuing operations of $85.6 million, or $0.97 per diluted share, for the same period of fiscal 2007. For fiscal 2008, income from continuing operations was $154.8 million, or $1.89 per diluted share, compared to income from continuing operations of $151.2 million, or $1.47 per diluted share, for fiscal 2007.

As a reminder, for the fourth quarter and fiscal 2007, results from continuing operations include items that we believe are not directly related to our ongoing operations. Therefore, we have provided supplemental non-GAAP fiscal 2007 fourth quarter and full year results and the complementary schedules entitled “Unaudited Adjusted Results and Reconciliation” that exclude these items. We believe that these non-GAAP financial measures should facilitate analysis by investors and others who follow our financial performance. In the supplemental non-GAAP disclosures, the items excluded from continuing operations represent net income of $3.1 million, or $0.04 per diluted share, for the fourth quarter of fiscal 2007, and $6.1 million, or $0.06 per diluted share, for fiscal 2007. The items are comprised of: (1) net income of $3.1 million recognized in the fourth quarter of fiscal 2007 related to the bankruptcy trust settlement of the 2004 KB Toys bankruptcy and (2) net income of $3.0 million recognized during fiscal 2007 related to insurance proceeds recovered from claims filed as a result of hurricanes occurring during fiscal 2005. Excluding the 2004 bankruptcy trust settlement of KB Toys, the fourth quarter fiscal 2007 income from continuing operations was $82.5 million, or $0.93 per diluted share. Excluding the 2004 bankruptcy trust settlement of KB Toys and insurance proceeds recovered from the hurricane-related claims filed during fiscal 2005, the fiscal 2007 income from continuing operations was $145.1 million, or $1.41 per diluted share.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

FISCAL 2008 HIGHLIGHTS

·	Record income from continuing operations of $155 million

·	Record income from continuing operations of $1.89 per diluted share versus income from continuing operations (on a non-GAAP basis) of $1.41 per diluted share last year

·	Record operating profit dollars of $255 million

·	Cash Flow (defined as operating activities less investing activities) of $123 million

·	Record inventory turnover of 3.6

Commenting on fiscal year 2008 results, Steve Fishman, Chairman and Chief Executive Officer stated, “Amidst a very challenging economic climate, we stayed focused on our strategy and what was within our control. We offered our customers better quality merchandise, new brands, and tremendous value at a time when they needed it the most. Our merchants managed inventories tightly and generated record inventory turnover. We controlled costs very diligently and recorded the lowest expense rate in the Company’s history while investing for the future in IT systems and opening 21 new stores. Bottom line: 2008 was a record year for EPS and income from continuing operations.”

FOURTH QUARTER HIGHLIGHTS

·	Record income from continuing operations of $1.00 per diluted share versus income from continuing operations (on a non-GAAP basis) of $0.93 per diluted share last year

·	Operating profit rate expansion of 30 basis points to 9.7% from 9.4% last year (on a non-GAAP basis)

Fourth Quarter Results

Net sales for the fourth quarter of fiscal 2008 were $1,366.9 million, compared to $1,412.4 million for the fourth quarter of fiscal 2007. Comparable store sales for stores open at least two years at the beginning of the fiscal year decreased 3.2% for the quarter.

Our operating profit rate for the fourth quarter of fiscal 2008 was 9.7% of sales compared to last year’s operating profit rate of 9.4% of sales. The improvement in operating profit rate resulted from gross margin rate improvement, partially offset by slight expense de-leverage for the quarter. Our gross margin rate increased 70 basis points compared to last year due to higher initial markup and lower freight expenses. This favorability was only partially offset by the merchandise mix pressure created by the sales out-performance of certain lower margin categories. As expected, expenses as a percent of sales increased slightly due to the de-leveraging impact of a comp store sales decline partially offset by efficiencies in supply chain and stores, and lower depreciation compared to the prior year.

For the fourth quarter of fiscal 2008, we recorded net interest expense of $1.1 million compared to net interest expense of $2.0 million last year and the income tax rate for the fourth quarter of fiscal 2008 was 38.1% compared to 36.8% last year.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

Inventory and Cash Management

Inventory ended the fourth quarter at $737 million, down 2% or $11 million compared to last year. Lower inventory value resulted from a decline in store count as average store inventory levels were relatively flat compared to the prior year. For fiscal 2008, we achieved record inventory turnover results driven by improving inventory management, timely flow of merchandise, and continually taking markdowns to generate sell-through of merchandise. Inventory turnover performance combined with improving operating results yielded Cash Flow for fiscal 2008 of $123 million. We ended the fourth quarter of fiscal 2008 with $62 million in debt, or $102 million lower than last year.

Discontinued Operations

As discussed in our Form 10-K filed with the SEC on April 1, 2008, we classify as discontinued operations the operating results and costs associated with 130 stores closed in fiscal 2005 and activity related to KB Toys. For the fourth quarter and fiscal 2008, we recorded a loss from discontinued operations of $3.0 million and $3.3 million, respectively. For the fourth quarter and fiscal 2007, we recorded income from discontinued operations of $6.4 million and $7.3 million, respectively.

We sold KB Toys in December 2000, but we have continuing indemnification and guarantee obligations with respect to certain KB Toys store leases. KB Toys filed for bankruptcy protection in 2004, emerged from bankruptcy in 2005, and again filed for bankruptcy protection in December 2008 with the stated intention of liquidating its stores. In connection with KB Toys’ latest bankruptcy filing, we believe we may have an indemnification or guarantee obligation with respect to 31 rejected store leases. As a result, we recorded a $3.0 million loss from discontinued operations for the fourth quarter of fiscal 2008.

Income from discontinued operations for the fourth quarter of fiscal 2007 was principally comprised of $5.3 million related to the release of a portion of our reserves relating to KB Toys’ 2004 bankruptcy and $1.1 million related to the receipt of a bankruptcy trust settlement related to KB Toys’ 2004 bankruptcy, partially offset by $0.1 million of expense related to the 130 stores we closed in fiscal 2005.

2009 OUTLOOK

·	Initial Fiscal 2009 annual guidance for income from continuing operations of $1.75 to $1.90 per diluted share versus income from continuing operations of $1.89 per diluted share in Fiscal 2008

·	Comparable store sales expected to be in a range of Flat to a 2% decrease

·	Initial annual Cash Flow guidance of approximately $145 million

·	Initial Q1 2009 guidance for income from continuing operations of $0.34 to $0.40 per diluted share versus income from continuing operations of $0.42 per diluted share in Q1 2008

Commenting on the outlook, Mr. Fishman stated, “We have built a foundation and business model that has a very low comp leverage point, generates significant amounts of cash, and provides our customers with quality merchandise at a great value. Our team firmly believes that the repositioning efforts of the last three years have left us in the enviable position of taking advantage of deals, both merchandise and real estate, and being able to withstand what is shaping up to be a very challenging economic backdrop for fiscal 2009. We will continue to invest in IT systems and real estate, both new and existing stores, with an eye on the longer-term to ensure we are well-positioned to benefit when the economy and overall retail environment improves.”

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

We estimate fiscal 2009 income from continuing operations will be in the range of $1.75 to $1.90 per diluted share compared to income from continuing operations of $1.89 per diluted share for fiscal 2008. This guidance for EPS is based on comparable store sales in the range of flat to down 2%. We estimate that the operating profit rate will be in a range of 5.2% to 5.5% of sales. The gross margin rate for fiscal 2009 is expected to be similar to fiscal 2008 and we are estimating that flat comparable store sales are needed to leverage the expense structure of the business.

We estimate net interest expense of approximately $2 million and an income tax rate in the range of 38.0% to 39.0% for fiscal 2009. Capital expenditures are expected to be approximately $80 to $85 million with depreciation expense estimated to be in the range of $70 to $75 million. We estimate this financial performance should result in Cash Flow of approximately $145 million. The average diluted share count is estimated to be in the range of 82 to 83 million for fiscal 2009.

For the first quarter of fiscal 2009, we estimate a comparable store sales decrease of 1% to 3% which is consistent with quarter to date trends experienced through yesterday, March 3 rd . Based on this level of sales performance, our income from continuing operations is estimated to be in the range of $0.34 to $0.40 per diluted share, compared to income from continuing operations $0.42 per diluted share for the first quarter of fiscal 2008.

C onference Call/Webcast

We will host a conference call today at 8:00 a.m. Eastern Time to discuss our fourth quarter and fiscal 2008 financial results, and provide commentary on our fiscal 2009 financial guidance. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website ( www.biglots.com ).

If you are unable to join the live webcast, an archive of the call will be available through the Investor Relations section of our website (www.biglots.com) beginning two hours after the call ends and will remain available through midnight on Wednesday, March 18. A replay of the call will also be available beginning March 4 at 12:00 noon Eastern Time through March 18 at midnight by dialing: 1.800.207.7077 (United States and Canada) or 1.913.383.5767 (International or metro-Seattle). The PIN is 6852.

Big Lots is the nation’s largest broadline closeout retailer. As of the end of the fourth quarter of fiscal 2008 (January 31, 2009), we operated 1,339 BIG LOTS stores in 47 states. We also sell merchandise via the internet at www.biglots.com. Wholesale operations are conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY and with online sales at www.biglotswholesale.com.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@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,” “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 our 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 we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

Forward-looking statements that we make 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, the current economic and credit crisis, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in our 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. We undertake 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 we make on related subjects in our public announcements and SEC filings.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	JANUARY 31,		FEBRUARY 2,
	2009		2008
	(Unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$	34,773	$	37,131
Inventories		736,616		747,942
Deferred income taxes		45,275		53,178
Other current assets		54,207		52,859
Total current assets		870,871		891,110

Property and equipment - net		490,041		481,366

Deferred income taxes		53,763		51,524
Other assets		17,783		19,815

	$	1,432,458	$	1,443,815


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Current maturities under bank credit facilities	$	61,700	$	0
Accounts payable		235,973		260,272
Property, payroll and other taxes		66,525		65,260
Accrued operating and other current liabilities		45,693		62,978
Insurance reserves		38,303		37,762
KB bankruptcy lease obligation		5,043		0
Accrued salaries and wages		40,460		37,531
Income taxes payable		21,398		36,541
Total current liabilities		515,095		500,344

Long-term bank debt		0		163,700

Deferred rent		29,192		35,955
Insurance reserves		45,197		45,092
Unrecognized tax benefits		28,852		25,353
Other liabilities		39,277		34,885

Shareholders' equity		774,845		638,486
	$	1,432,458	$	1,443,815

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

	13 WEEKS ENDED						13 WEEKS ENDED
	JANUARY 31, 2009						FEBRUARY 2, 2008
				%						%
	(Unaudited)						(Unaudited)


Net sales	$	1,366,925			100.0		$	1,412,374			100.0

Gross margin		552,572			40.4			560,550			39.7

Selling and administrative expenses		399,636			29.2			399,064			28.3

Depreciation expense		19,756			1.4			23,624			1.7

Operating profit		133,180			9.7			137,862			9.8

Interest expense		(1,129	)		(0.1	)		(2,081	)		(0.1	)

Interest and investment income		29			0.0			56			0.0

Income from continuing operations before income taxes		132,080			9.7			135,837			9.6

Income tax expense		50,273			3.7			50,189			3.6

Income from continuing operations		81,807			6.0			85,648			6.1

Income (loss) from discontinued operations, net of tax (benefit) expense of ($1,993) and $4,145, respectively		(3,042	)		(0.2	)		6,367			0.5

Net income	$	78,765			5.8		$	92,015			6.5


Earnings per common share - basic (a)
Continuing operations	$	1.01					$	0.97
Discontinued operations		(0.04	)					0.07
Net income	$	0.97					$	1.05


Earnings per common share - diluted (a)
Continuing operations	$	1.00					$	0.97
Discontinued operations		(0.04	)					0.07
Net income	$	0.96					$	1.04


Weighted average common shares outstanding
Basic		81,314						87,974
Dilutive effect of share-based awards		689						507
Diluted		82,003						88,481

(a)

The earnings per share for Continuing Operations, Discontinued Operations and Net Income are separately calculated in accordance with SFAS No. 128; therefore, the sum of earnings per share for Continuing Operations and Discontinued Operations may differ, due to rounding, from the calculated earnings per share of Net Income.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

UNAUDITED ADJUSTED RESULTS
Schedule Provided for Informational Purposes Only


BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 KB BANKRUPTCY PROCEEDS
(In thousands, except per share data)

	13 WEEKS ENDED						13 WEEKS ENDED
	JANUARY 31, 2009						FEBRUARY 2, 2008
				%						%
	(Unaudited)						(Unaudited)
	As Reported						Adjusted Results Excluding KB Bankruptcy Proceeds
							(non-GAAP)

Net sales	$	1,366,925			100.0		$	1,412,374			100.0

Gross margin		552,572			40.4			560,550			39.7

Selling and administrative expenses		399,636			29.2			404,236			28.6

Depreciation expense		19,756			1.4			23,624			1.7

Operating profit		133,180			9.7			132,690			9.4

Interest expense		(1,129	)		(0.1	)		(2,081	)		(0.1	)

Interest and investment income		29			0.0			56			0.0

Income from continuing operations before income taxes		132,080			9.7			130,665			9.3

Income tax expense		50,273			3.7			48,144			3.4

Income from continuing operations		81,807			6.0			82,521			5.8

Income (loss) from discontinued operations, net of tax (benefit) expense of ($1,993) and $4,145, respectively		(3,042	)		(0.2	)		6,367			0.5

Net income	$	78,765			5.8		$	88,888			6.3


Earnings per common share - basic (a)
Continuing operations	$	1.01					$	0.94
Discontinued operations		(0.04	)					0.07
Net income	$	0.97					$	1.01


Earnings per common share - diluted (a)
Continuing operations	$	1.00					$	0.93
Discontinued operations		(0.04	)					0.07
Net income	$	0.96					$	1.00


Weighted average common shares outstanding
Basic		81,314						87,974
Dilutive effect of share-based awards		689						507
Diluted		82,003						88,481

(a)

The earning per share for Continuing Operations, Discontinued Operations, and Net Income are separately calculated in accordance with SFAS No. 128; therefore, the sum of earnings per share for Continuing Operations and Discontinued Operations may differ, due to rounding, from the calculated earnings per share of Net Income.

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

UNAUDITED ADJUSTED RESULTS AND RECONCILIATION
Schedule Provided for Informational Purposes Only


BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 KB BANKRUPTCY PROCEEDS
(In thousands, except per share data)

	13 WEEKS ENDED			13 WEEKS ENDED
	JANUARY 31, 2009			FEBRUARY 2, 2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

	As Reported			As Reported			KB Bankruptcy Proceeds (a)			Adjusted Results Excluding KB Bankruptcy Proceeds
										(non-GAAP)

Net sales	$	1,366,925		$	1,412,374					$	1,412,374

Gross margin		552,572			560,550						560,550

Selling and administrative expenses		399,636			399,064			5,172			404,236

Depreciation expense		19,756			23,624						23,624

Operating profit		133,180			137,862			(5,172	)		132,690

Interest expense		(1,129	)		(2,081	)					(2,081	)

Interest and investment income		29			56						56

Income from continuing operations before income taxes		132,080			135,837			(5,172	)		130,665

Income tax expense		50,273			50,189			(2,045	)		48,144

Income from continuing operations		81,807			85,648			(3,127	)		82,521

Income (loss) from discontinued operations, net of tax (benefit) expense of ($1,993) and $4,145, respectively		(3,042	)		6,367						6,367

Net income	$	78,765		$	92,015		$	(3,127	)	$	88,888


Earnings per common share - basic (b)
Continuing operations	$	1.01		$	0.97		$	(0.04	)	$	0.94
Discontinued operations		(0.04	)		0.07			0.00			0.07
Net income	$	0.97		$	1.05		$	(0.04	)	$	1.01


Earnings per common share - diluted (b)
Continuing operations	$	1.00		$	0.97		$	(0.04	)	$	0.93
Discontinued operations		(0.04	)		0.07			0.00			0.07
Net income	$	0.96		$	1.04		$	(0.04	)	$	1.00


Weighted average common shares outstanding
Basic		81,314			87,974			87,974			87,974
Dilutive effect of share-based awards		689			507			507			507
Diluted		82,003			88,481			88,481			88,481

(a)

The $5,172 reflected above is proceeds from the KB Toys bankruptcy trust recognized as a reduction of cost in selling and administrative expenses for our partial recovery of prior charges incurred against the Havens Corners Corporation Note ("HCC Note"). We sold the KB toy business in December 2000. As partial consideration for the sale of the KB toy business, we received the HCC Note. In January 2004, KB Toys filed for bankruptcy and in separate charges included in selling and administrative expenses in fiscal 2003 and 2005, we reduced our balance receivable on the HCC note.

(b)

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

	52 WEEKS ENDED						52 WEEKS ENDED
	JANUARY 31, 2009						FEBRUARY 2, 2008
				%						%
	(Unaudited)


Net sales	$	4,645,283			100.0		$	4,656,302			100.0

Gross margin		1,857,429			40.0			1,840,343			39.5

Selling and administrative expenses		1,523,882			32.8			1,515,379			32.5

Depreciation expense		78,624			1.7			88,484			1.9

Operating profit		254,923			5.5			236,480			5.1

Interest expense		(5,282	)		(0.1	)		(2,513	)		(0.1	)

Interest and investment income		65			0.0			5,236			0.1

Income from continuing operations before income taxes		249,706			5.4			239,203			5.1

Income tax expense		94,908			2.0			88,023			1.9

Income from continuing operations		154,798			3.3			151,180			3.2

Income (loss) from discontinued operations, net of tax (benefit) expense of ($2,116) and $4,726, respectively		(3,251	)		(0.1	)		7,281			0.2

Net income	$	151,547			3.3		$	158,461			3.4


Earnings per common share - basic (a)
Continuing operations	$	1.91					$	1.49
Discontinued operations		(0.04	)					0.07
Net income	$	1.87					$	1.56


Earnings per common share - diluted (a)
Continuing operations	$	1.89					$	1.47
Discontinued operations		(0.04	)					0.07
Net income	$	1.85					$	1.55


Weighted average common shares outstanding
Basic		81,111						101,393
Dilutive effect of share-based awards		965						1,149
Diluted		82,076						102,542

(a)

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

UNAUDITED ADJUSTED RESULTS
Schedule Provided for Informational Purposes Only


BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 KB BANKRUPTCY AND INSURANCE PROCEEDS
(In thousands, except per share data)

	52 WEEKS ENDED						52 WEEKS ENDED
	JANUARY 31, 2009						FEBRUARY 2, 2008
				%						%
	(Unaudited)						(Unaudited)
	As Reported						Adjusted Results Excluding KB Bankruptcy and Insurance Proceeds
							(non-GAAP)

Net sales	$	4,645,283			100.0		$	4,656,302			100.0

Gross margin		1,857,429			40.0			1,840,343			39.5

Selling and administrative expenses		1,523,882			32.8			1,525,471			32.8

Depreciation expense		78,624			1.7			88,484			1.9

Operating profit		254,923			5.5			226,388			4.9

Interest expense		(5,282	)		(0.1	)		(2,513	)		(0.1	)

Interest and investment income		65			0.0			5,236			0.1

Income from continuing operations before income taxes		249,706			5.4			229,111			4.9

Income tax expense		94,908			2.0			84,032			1.8

Income from continuing operations		154,798			3.3			145,079			3.1

Income (loss) from discontinued operations, net of tax (benefit) expense of ($2,116) and $4,726, respectively		(3,251	)		(0.1	)		7,281			0.2

Net income	$	151,547			3.3		$	152,360			3.3


Earnings per common share - basic (a)
Continuing operations	$	1.91					$	1.43
Discontinued operations		(0.04	)					0.07
Net income	$	1.87					$	1.50


Earnings per common share - diluted (a)
Continuing operations	$	1.89					$	1.41
Discontinued operations		(0.04	)					0.07
Net income	$	1.85					$	1.49


Weighted average common shares outstanding
Basic		81,111						101,393
Dilutive effect of share-based awards		965						1,149
Diluted		82,076						102,542

(a)

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

UNAUDITED ADJUSTED RESULTS AND RECONCILIATION
Schedule Provided for Informational Purposes Only


BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 KB BANKRUPTCY AND INSURANCE PROCEEDS
(In thousands, except per share data)

	52 WEEKS ENDED			52 WEEKS ENDED
	JANUARY 31, 2009			FEBRUARY 2, 2008
	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)

	As Reported			As Reported			KB Bankruptcy Proceeds (a)			Insurance Proceeds (b)			Adjusted Results Excluding KB Bankruptcy and Insurance Proceeds
													(non-GAAP)

Net sales	$	4,645,283		$	4,656,302								$	4,656,302

Gross margin		1,857,429			1,840,343									1,840,343

Selling and administrative expenses		1,523,882			1,515,379			5,172			4,920			1,525,471

Depreciation expense		78,624			88,484									88,484

Operating profit		254,923			236,480			(5,172	)		(4,920	)		226,388

Interest expense		(5,282	)		(2,513	)								(2,513	)

Interest and investment income		65			5,236									5,236

Income from continuing operations before income taxes		249,706			239,203			(5,172	)		(4,920	)		229,111

Income tax expense		94,908			88,023			(2,045	)		(1,946	)		84,032

Income from continuing operations		154,798			151,180			(3,127	)		(2,974	)		145,079

Income (loss) from discontinued operations, net of tax (benefit) expense of ($2,116) and $4,726, respectively		(3,251	)		7,281									7,281

Net income	$	151,547		$	158,461		$	(3,127	)	$	(2,974	)	$	152,360


Earnings per common share - basic (c)
Continuing operations	$	1.91		$	1.49		$	(0.03	)	$	(0.03	)	$	1.43
Discontinued operations		(0.04	)		0.07			0.00			0.00			0.07
Net income	$	1.87		$	1.56		$	(0.03	)	$	(0.03	)	$	1.50


Earnings per common share - diluted (c)
Continuing operations	$	1.89		$	1.47		$	(0.03	)	$	(0.03	)	$	1.41
Discontinued operations		(0.04	)		0.07			0.00			0.00			0.07
Net income	$	1.85		$	1.55		$	(0.03	)	$	(0.03	)	$	1.49


Weighted average common shares outstanding
Basic		81,111			101,393			101,393			101,393			101,393
Dilutive effect of share-based awards		965			1,149			1,149			1,149			1,149
Diluted		82,076			102,542			102,542			102,542			102,542

(a)

The $5,172 reflected above is proceeds from the KB Toys bankruptcy trust recognized as a reduction of cost in selling and administrative expenses for our partial recovery of prior charges incurred against the Havens Corners Corporation Note ("HCC Note"). We sold the KB toy business in December 2000. As partial consideration of the sale of the KB toy business, we received the HCC Note. In January 2004, KB Toys filed for bankruptcy and in separate charges included in selling and administrative expenses in fiscal 2003 and 2005, we reduced our balance receivable on the HCC note.

(b)	During fiscal 2007, we received $4,920 of insurance proceeds as recovery for damages related to hurricanes occurring in 2005.

(c)

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	13 WEEKS ENDED			13 WEEKS ENDED
	January 31, 2009			February 2, 2008
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	216,584		$	262,892
Net cash used in investing activities		(13,091	)		(20,646	)
Net cash used in financing activities		(207,956	)		(246,891	)

Decrease in cash and cash equivalents		(4,463	)		(4,645	)
Cash and cash equivalents:
Beginning of period		39,236			41,776
End of period	$	34,773		$	37,131

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	52 WEEKS ENDED			52 WEEKS ENDED
	January 31, 2009			February 2, 2008
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	211,063		$	307,932
Net cash used in investing activities		(88,192	)		(58,764	)
Net cash used in financing activities		(125,229	)		(493,694	)

Decrease in cash and cash equivalents		(2,358	)		(244,526	)
Cash and cash equivalents:
Beginning of period		37,131			281,657
End of period	$	34,773		$	37,131

Shareholder Relations Department

300 Phillipi Road

Columbus, Ohio 43228-5311

Phone: (614) 278-6622 Fax: (614) 278-6666

E-mail: aschmidt@biglots.com

Exhibit 99.2

Final Transcript
Thomson StreetEvents sm
Conference Call Transcript BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call Event Date/Time: Mar. 04. 2009 / 8:00AM ET

Thomson StreetEvents

www.streetevents.com

Final Transcript

Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

CORPORATE PARTICIPANTS

Tim Johnson

Big Lots, Inc. - VP, Strategic Planning & IR

Steve Fishman

Big Lots, Inc. - Chairman, CEO

Joe Cooper

Big Lots, Inc. - CFO

Chuck Haubiel

Big Lots, Inc. - SVP, Real Estate, Legal, General Counsel

CONFERENCE CALL PARTICIPANTS

Jeff Stein

Soleil Securities, Stein Research - Analyst

David Mann

Johnson Rice & Co. - Analyst

Peter Keith

Piper Jaffray - Analyst

John Zolidis

Buckingham Research Group - Analyst

Patrick McKeever

MKM Partners - Analyst

Ronald Bookbinder

Global Hunter Securities - Analyst

Stacy Widlitz

Pali Capital - Analyst

Ivy Jack

Analyst

Paul Trussell

JPMorgan Chase & Co. - Analyst

Joe Feldman

Telsey Advisory Group - Analyst

PRESENTATION

Operator

Ladies and gentlemen, welcome to the Big Lots fourth quarter 2008 teleconference. During this session, all lines will be muted until the question and answer portion of the call. (Operator Instructions). At this time, I would like to introduce today's first speaker, Vice President of Strategic Planning & Investor Relations, Tim Johnson.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Thanks Lashonda. And thank you everyone for joining us for our fourth quarter conference call. With me here in Columbus today are Steve Fishman, our Chairman and CEO, Joe Cooper, Senior Vice President and Chief Financial Officer, and Chuck Haubiel, Senior Vice President, Real Estate, Legal, and General Counsel.

Thomson StreetEvents

www.streetevents.com

Final Transcript

Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Before we get started, I would like to remind you that any forward-looking statements that we make on today's call involve risks and uncertainties, and are subject to our Safe Harbor Provisions, as stated in our press release and our SEC filings, and that actual results can differ materially from those described in the forward-looking statements.

As discussed in detail in this morning's press release, our 2008 results include discontinued operations. Our 2007 results include discontinued operations, as well as items included in continuing operations that are not directly related to the Company's ongoing operations. Therefore we have provided supplemental non-GAAP Q4 and full year financial statements for fiscal 2007 that exclude these items. A presentation of the most directly comparable financial measures calculated in accordance with GAAP, and a reconciliation between the GAAP financial measures and the non-GAAP financial measures are also included in our press release from this morning, which is posted on our website at www.biglots.com. We believe that these non-GAAP financial measures should facilitate analysis by investors and others who follow our financial performance.

The discontinued operations activity in the Q4 and full year fiscal 2008 results, reflect lease indemnification obligations related to KB Toys, a former division of the company. In Q4 fiscal 2008 we reported a loss from discontinued operations of $3.0 million, compared to income from discontinued operations of $6.4 million in Q4 of fiscal year 2007. The loss from discontinued operations for Q4 of 2008 of $3.0 million, net of tax, relates to 31 KB store leases, where we believe we may have liability as a result of KB again filing for bankruptcy protection in December 2008. The income from discontinued operations for Q4 of fiscal 2007, was principally comprised of $5.3 million net of tax, due to the release of KB bankruptcy-related indemnification reserves, and a KB bankruptcy trust settlement of $1.1 million net of tax, each of which were related to the KB's 2004 bankruptcy filing.

The items excluded from continuing operations in the supplemental non-GAAP disclosures represent net income of $3.1 million, or $0.04 per diluted share for the Q4 fiscal 2007, and net income of $6.1 million, or $0.06 per diluted share for the full year fiscal 2007. The nature of these nonrecurring items are detailed in the press release.

So since we do not view discontinued operations or non-recurring KB and hurricane proceeds, as relevant to on going operations of the business, the balance of our prepared comments this morning willing be based on results of continuing operations for 2008, and related to continuing operations on a non-GAAP basis, as adjusted in the supplemental schedules, when we refer to or compare to 2007 results.

With that, I would like to turn it over to Steve.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thanks TJ. Good morning everyone. Since launching our WIN strategy in late 2005, we have accomplished what we set out to achieve and more. We have taken a business that was marginally profitable to new heights, with record income, and record EPS performance. We executed improved merchandise offerings, better brands and values, a leaner and more productive real estate portfolio, and today we are a more efficient operator with a lower overall cost structure, both in dollars and as a percent of sales. I couldn't be more proud of this organization, and all that has been accomplished to position our business alongside some of the more successful retailers in the market place.

Like most businesses, the global economic crisis over the last several months kept us from performing as well as we could have in 2008. However, we have always believed that if we improved our merchandise offerings, made good real estate decisions, and relentlessly attacked our cost structure, good things could happen for our business. Pure and simple, we remain focused on strategy, and what was within our control. We offered the customer tremendous value, new brands, and better quality. We managed our inventory wisely, and generated record turnover. We controlled our costs to the lowest expense rate in our history. We opened 21 new stores. We invested for the future of the business by completing our Point Of Sale register system rollout, and we began the process of designing and installing a new core IT infrastructure through SAP. Bottom line 2008 was a record year for operating profit dollars and EPS.

Speaking briefly to Q4, our sales comps were down in the 3% range, which was right in the middle of our guidance. This was a continuation of the trends we first experienced in the latter part of September and October. Consistently across discount retail you are hearing that the customer is focused on need based product right now, and is holding off until the last possible moment on bigger discretionary purchases. We are experiencing that in our business as well. For Q4, consumables and hardlines, particularly electronics were the best performers. Consumables which is roughly 30% of our business, has been our most steady category, and comped up mid-single digits in Q4 and for the year...need- based product, great branded closeouts, and unbelievable value. Electronics is not necessarily need-based, but is an area where customers are still spending money. The environment for deals in electronics is better than I have seen in my time here at Big Lots, and we see these opportunities continuing, as we head into the new year. On the flip side, in the more discretionary categories, like seasonal, home, toys, and even furniture in Q4, business was much more challenged.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

When I evaluate our merchant performance, I look at category level performance. Did we execute against the strategy? Are we offering better quality and value than last year, or last quarter? How are we performing relative to the competition? My assessment on Q4 is that our merchants did execute fairly well...better in some areas than others, but overall we offered better quality and better value than this time a year ago. In fact, when you look at comps by merchandise category, you will find that our results were every bit as good, if not better, than our competitive set. If you look only at total comps, and do not understand the categories, you are missing this very key element. This is important to understand for comparative purposes because to look at other retailers who have anywhere between 45% to 65% of their mix in consumables, and then compare their total comp to ours, is like apples and oranges in this environment.

Our merchants managed inventory effectively by shifting receipts from slower moving categories to winning categories, or to fund special deals. I feel good about our inventory levels and content as we begin the spring season.

Now Joe will give you some of the financial details, and I will be back to talk about '09, and provide some commentary on longer term opportunities.

Joe Cooper - Big Lots, Inc. - CFO

Thanks, Steve. Good morning everyone. Sales for the Q4 were $1.367 billion, compared to $1.412 billion for Q4 of last year. Comparable store sales decreased 3.2%, as strength in electronics and consumables was offset by softness in more discretionary categories, as Steve just mentioned. Q4 sales comps remained very consistent across the income demographics of our store base and were also fairly consistent on a regional basis, with the exception of the Southeastern region, which trailed the company average.

Our Q4 operating profit dollars increased slightly over last year even though total sales were off about 3%. Growth in operating profit dollars was possible due to expansion in the operating profit rate which finished at 9.7% of sales, or 30 basis points higher than last year. This expansion in the operating profit rate was driven by an increase in the gross margin rate, partially offset by slight SG&A deleverage.

The Q4 gross margin rate of 40.4% was 70 basis points above last year's rate of 39.7%. The increase to last year was due to a higher receipt IMU, lower freight costs, and a lower Q4 shrink rate year-over-year, partially offset by an unfavorable mix impact, as a result of higher sales and lower margin consumables and electronics categories.

Total SG&A dollars were $419.4 million, or down 2% compared to last year. The Q4 SG&A rate of 30.7% was 40 basis points above last year. This increase in the SG&A rate was expected and consistent with our guidance from early December, as the de-leveraging impact of a comp store sales decline was partially offset by efficiencies in stores, distribution and transportation, and depreciation.

Net interest expense was $1.1 million for the quarter, compared to $2.0 million last year, with the improvement a result of this year's cash flow.

Our tax rate for the Q4 of fiscal 2008 was 38.1%, compared to 36.8% last year. The variance to last year is primarily related to a valuation allowance for the capital loss in our top hat investments, along with no tax exempt interest income in '08 compared to '07, given we were in a net debt position throughout 2008.

For the Q4 fiscal 2008, we reported income from continuing operations of $81.8 million, or $1.00 per diluted share, compared to income from continuing operations of $82.5 million, or $0.93 per diluted share a year ago.

Our Q4 results of $1.00 per share was better than our guidance which called for earnings of $0.90 to $0.99. The majority of the favorability was in gross margin with maybe $0.01 or so coming in the tax rate as our 38.1% rate was at the low end of our guided range, principally due to tax benefits realized from statute of limitation lapses and settlements. Gross margin favorability was largely due to better sell-through in seasonal goods at lower markdowns, lower overall freight costs, and favorable early shrink results. IMU remained healthy which has been the case for most of the year.

Our Company remains in a strong financial position. Inventory ended Q4 fiscal 2008 at $737 million compared to $748 million last year. Average store inventory was relatively flat year-over-year, and for the year we achieved record inventory turnover of 3.6 times compared to 3.5 times last year.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Cash flow which we define as cash provided by operating activities less cash used in investing activities, was $123 million for fiscal 2008 which was approximately $22 million below our last forecast. The variance was attributable to an $8 million pension plan contribution which was not included in our original guidance, as well as lower than expected AP leverage. The lower AP leverage was a direct result of reallocating open to buy and receipt dollars towards categories like consumables and other closeout opportunities where terms are shorter and cash discounts are offered. We ended the year with debt of $62 million, down $102 million to last year, but more importantly, as we sit here today, we have now paid down our credit facility to 0 and are in a net cash position.

For Q4, capital expenditures totaled $13.2 million, down $7.8 million compared to the fourth quarter of last year, primarily related to the new POS rollout, which was completed in Q2 of this year. Depreciation expense for the quarter was $19.8 million, or $3.9 million lower than last year. For the year capital expenditures totaled $88.7 million and depreciation expense was $78.6 million. During Q4 we opened one new store and closed 28 stores, leaving us with 1,339 stores and total selling square footage of 28.7 million at the end of the year. For the year, we opened 21 new stores, and we closed 35 stores.

Moving on to 2009 and guidance. Overall we are planning 2009 EPS to be in the range of $1.75 to $1.90 per diluted share, compared to 2008's income from continuing operations of $1.89 per diluted share. Our 2009 plan calls for comparable store sales to be flat to down 2% with total sales dollars up 1% to down 1% compared to fiscal 2008. At this level of sales, we expect the operating profit rate to be in the range of 5.2% to 5.5%.

The gross margin rate for 2009 is expected to be similar to 2008, and essentially flat comps is the point where the SG&A rate would be flat to 2008. At flat comps, we expect to deliver an operating profit rate similar to last year. Leverage in distribution and transportation and depreciation expenses is planned to be offset by occupancy and insurance increases. Distribution and transportation as a percent of sales is expected to be down to 2008 due to consolidating our Columbus furniture DC into our regional DCs mid-year 2008, lower fuel costs, and new transportation initiatives. Overall, depreciation expense is expected to decline in 2009, and merit increases in store payroll are expected to be offset by new initiatives to improve labor efficiency.

Filling out the rest of the P&L for 2009, net interest expense is estimated at approximately $2 million, and the effective income tax rate is planned in the neighborhood of 38.0% to 39.0%.

For the year, capital expenditures are expected to be in the $80 million to $85 million range. Maintenance capital is estimated at about $40 million. From a real estate perspective, new store capital is estimated at approximately $20 million. During 2009, we anticipate opening 45 new stores and closing approximately 40 stores resulting in a net increase in our store base for the first time since 2004. Strategic initiatives will represent approximately $20 million to $25 million of CapEx in 2009, and we will be focused on our continued SAP implementation, retrofitting and refreshing a portion of our store base, continuing to invest in energy management systems to save on utility costs, and other smaller projects.

Based on these capital assumptions, depreciation expense is estimated to be $70 million to $75 million. This level of performance is estimated to generate $145 million of cash flow, and we are estimating our diluted share count to be in range of 82 million to 83 million shares for fiscal 2009.

Moving to Q1, comp sales are planned to be in the range of negative 1% to negative 3%, based on our assumption that this challenging retail environment will continue throughout the quarter. Quarter-to-date through the first 4.5 weeks our comps are within this range. We expect our Q1 gross margin rate to be slightly down to LY, as shift in mix towards lower margin consumables and electronics, will only be partially offset by an estimated decline in overall freight costs. We also expect slight SG&A de-leverage as a negative low-single digit comp will be partially offset by supply chain savings and expected lower bonus expense. Based on these assumptions, Q1 earnings are estimated to be in the range of $0.34 to $0.40 per diluted share, compared to $0.42 per diluted share last year.

Steve.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thanks, Joe. You can see from our guidance that we are planning Q1 down 1% to 3%, which acknowledges that there will be challenges. I know that there are some very bearish views about our potential given the difficult comparisons of the last couple of years. Although we are still early in the quarter, we have been encouraged to-date with changes in the sales trends of certain of our larger categories, particularly in our home and furniture areas. There seems to be a pretty consistent theme developing, in that most retailers, analysts, investors, and economists as well, anticipate the first half of 2009 will be a difficult environment for retail, but as we move into the second half of the year, we should see some stabilization. We are planning our business in a similar way with comps down 1% to 3% in Q1 and flat to down 2% for the year. We realize 2009 will be a challenge and nothing will come easy, but hopefully we have demonstrated to you over the last three years, a very solid credible track record of delivering on what we set out to accomplish.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

We have built a solid foundation and business model for the Company and are well-positioned to weather the storm in fiscal 2009, and with the strategies and initiatives we will be focused on, over the long-term, we will be better positioned to benefit when the economy does start to see some improvement.

I have mentioned on previous calls that we were working on our next long range plan, and I think it is important to spend a few moments talking about it before we take your questions. The key elements of our WIN strategy...merchandising, real estate, and cost structure...will remain the same, although some of the strategies and initiatives will be different.

From a merchandising perspective, our goal will continue to be to provide unmatched value, better quality, and better brands. That is what our customers are asking for, and what we need to do to deliver. Our major merchandise categories will remain the same...we are not planning any big shifts. From an availability of merchandise standpoint, because of the deep long-standing relationships we have with our vendor partners and the continued struggles of other retailers, we anticipate more deals will be available to us at savings that we can then in turn pass onto our customers to create excitement in our stores. So our merchants have their road maps and marching orders, and I am confident they will execute.

There are two other areas that can also impact merchandising and sales, and those are marketing and stores. From a marketing perspective, you will start to see a heightened focus on value and savings, which is very top of mind right now with consumers. Our in-store signage has been overhauled, our print advertising already has a different message, and the message of our new television commercials, will be focused on real savings, real value, Big Lots, the real deal. The marketing efforts and in-store presentation will be more focused on categories that our customers are interested in...categories like consumables and electronics...or categories where we are clearly differentiating and have great value in the store, like furniture and seasonal.

I am also very encouraged about the path we are taking from a store operations perspective. We have taken some heat over the years about our stores and what they look like. I have been very open and honest that our focus has been on improving the merchandise assortments, and lowering the overall cost structure, because I firmly believe that if we don't get those two objectives accomplished, that ultimately it wouldn't matter if our stores were pretty or not. Our approach has worked, as evidenced by our record performance over the last two years, and our record EPS in the last nine consecutive quarters. But now is the time to address stores. With new leadership in store operations, our team is focused on a program we are calling 'Ready for Business.' It is aimed at improving the consistency and timeliness of our in-store execution, and raising customer service standards in our stores. We see this as a big opportunity for Big Lots, but please remember this will take time, it won't happen overnight. I am sure I could go visit stores for the balance of this week and find some I like, and some I don't. But the team knows over the next few months that I expect to see fewer and fewer stores I don't like. The level of accountability will be very high on these initiatives. So we will continue to be relentless on merchandising and changes are coming in marketing and stores. All with the goal of moving the needle on the top line.

Now Chuck is going to give you an update on our real estate progress, and plans for the future. Chuck?

Chuck Haubiel - Big Lots, Inc. - SVP, Real Estate, Legal, General Counsel

Thanks, Steve. Perhaps the best way to describe our real estate strategy is that we seem to have moved counter to the rest of retail. Over the last two to three years, property owners, real estate developers, and most of retail were chasing rooftops to build out space and grow selling square footage. During that timeframe, we didn't believe real estate was valued appropriately. Rents were just simply too high for us. Instead of growing for growth's stake, we pared down our fleet and focused on improving our productivity and operating profit performance. All with the belief that some day, lease rates would subside, and space would become available for us to grow again profitability which is where we are today.

Joe mentioned earlier that we expect to open 45 new stores this year which is more than we have opened in the last three years combined. Openings will be throughout the country, but the largest concentration of new stores will be focused in more coastal areas in the Northeast, Carolinas, Florida, and in the west primarily in California, Oregon, and Washington. I mentioned these markets specifically because historically these have been some of the more difficult areas to find store leases in our price range. This just further emphasizes for you how the real estate market has changed in the past 6 to 12 months.

As we have mentioned on prior calls, during 2009 we will also be testing a smaller-sized store, to better understand different store layouts, and the impact on sales productivity and ultimately profits, of carrying an edited assortment of merchandise. We will test the smaller store concept for the better part of 2009, before making a determination. The importance of the test centers on the fact that there is a large amount of real estate available, that we were not previously considering in the 20,000 square foot range. If successful, a small store concept could go a long way to accelerating our footage growth if we can figure out how to make it work profitably, and still provide our customers with a great shopping experience.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

We also expect to close some stores again this year which we believe is a healthy practice. We have roughly 260 stores that will be up for lease renewal in 2009, and our best estimate at this point suggests we could close up to 40 locations. Some of the closings are likely to be stores that are not performing, and quite frankly, with some of the locations we are out of options, and the landlord may have plans that don't include Big Lots. The bigger opportunity, and believe me, we do see this as an opportunity, is to close stores where we think we can reposition a store into a better center or location, that allows us to grow share or profitability in a given market.

We have spent considerable time reviewing available space and bumping those sites up against existing stores with leases expiring over the next three years. As you may expect, this not only allows us to make strategic decisions about our locations, but also provides us with another bargaining tool while discussing our renewal options with the landlords of our existing locations. Simply stated, our patience along with the softness in the overall real estate market, could allow us to relocate, and we think upgrade our positioning in some key markets during 2009 and beyond.

On the topic of renewals or renegotiations, there has been a great deal written about cost reductions and what the opportunities may be for retailers. We attempt to renegotiate every lease that is up for renewal. Our point of view is that just because we have a unilateral renewal option built into our lease that included a rent step increase with each new option, that doesn't necessarily mean that the rent step is appropriate, now five, ten, or sometimes 15 years later. Centers, neighborhoods and traffic patterns change over time, and the space may not be worthy of the same rent or more rent. In 2008 alone in the majority of stores up for renewal, we ended up agreeing on an occupancy cost that was lower than the lease option would dictate. In fact, in roughly one-third of the locations that were renegotiated, we will be paying the same amount or less in the new lease term than we paid in the old lease term.

Looking past 2009, we should be able to open more than 45 stores a year in 2010, and for the foreseeable future. Our patience and frugal approach to real estate is beginning to pay dividends as we have seen more closings of big box retail than at any time in recent history. In 2008 alone, over 2,500 stores in our size range were closed, which is over 2.5 more times than in 2001 which was the largest amount in the last ten years or so. It is important to recognize the large majority of those 2,500-plus stores will not work for us because of size, location, or excessive occupancy costs, but even if 5% of those vacancies work for us, it would be a tailwind for growth over the next couple of years. It has to work financially, just because now there is space, does not mean we are going to compromise our model and over commit. We will stick with our new store approval disciplines.

We believe now is our time and new store openings and repositioning should help to strengthen our market position. We also will be investing more time, energy, and capital in our existing fleet of stores than we have in the last three or four years. First, as Steve mentioned earlier, there is a new direction in our stores organization, and a much higher level of expectations going forward in regards to store standards, cleanliness, recovery, and overall merchandise presentation. We would expect to see a noticeable difference in stores by the first half of the year.

Second, as most of you know consumables and food in particular is very top of mind now for consumers. Our food business is one of the largest departments in our store at about 10% of the mix. Based on feedback from our customer base, we believe there is still room to grow this category and potentially even increase the frequency of visits from our customers. We will be embarking on a program we are calling 'Food Refresh.' The food department should be the cleanest, best presented section of the store, with the best fixturing available to service the customer and give them confidence in the quality and freshness of the offering. We will be launching new marketing, both signing and shelf labeling. We will be assigning ownership to associates for this section of the store, and in approximately half of the chain, we will be delivering, either new fixtures or refinished fixturing that has been restored from the stores that were previously closed. In the past, many of our fixtures were refreshed by simply handpainting them. Our new process uses a third-party to recondition the shelves and truly make them look like new.

And last but certainly not least, we will be testing a new store layout in the Columbus market, and then in a group of approximately 60 stores in 2009. The layout is a project that has evolved over the past several months, but at its core is designed to improve the shopability of the store. It builds on the elevated standards that we are instilling in the business, it features consumables more prominently in the store, and improved sight lines, front to back and side to side. The overall cost is not significant, at less than $25,000 per store, and we are aiming to learn what the overall impact to sales could be in a given store. The initial customer reaction to the one store we have been experimenting with has been that the store feels better organized, is cleaner and well-lit with wider aisles and better presentation of value and name brand product. The Columbus market should be relayed by by the end of Q1. All-in, between the food refresh initiatives and testing store retrofits, our capital outlay is approximately $5 million of the capital plan for the year that Joe covered moments ago.

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Final Transcript

Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

With that, I will turn it back to Steve.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

So hopefully you have a feel for our merchandising strategies and how some of our marketing efforts and concentration on improving store execution, should ultimately help sales. Chuck gave you some good information on real estate and our expectations for growth, along with how we will reinvest in our existing fleet of stores.

The final key element of our strategy has been our relentless focus on the cost structure, and our never-ending goal to become more efficient in everything we do. We are proud of those efforts and our expense rate is the lowest it has ever been. But we are not satisfied...our SG&A is still just too high.

The good news is that we have opportunities to become more efficient in our store operations, supply chain, advertising, and with the overall investment of our capital to ensure returns are appropriate and we are holding the stakeholders accountable. In store operations, I am excited about the direction the team is headed, and the energy with which they are attacking costs. Scheduling at the store level, beefing up our training programs, recruiting talent, and raising the bar on consistency of in-store execution and presentation.

Our supply chain costs have declined and will continue to do so for the foreseeable future through transportation initiatives, lower fuel costs in the near term, closing our Columbus furniture operation, and the natural benefits of continued focus on inventory management and flow of goods.

Our advertising spend has remained relatively stable, while investing in our website and building our Buzz Club membership to now nearly 4 million customers. The overall dynamics of how customers wish to receive their information, continues to move from newspapers to the internet. We will continue to move more of our circulation distribution to the internet via the Buzz Club and create leverage of our online investment.

Capital deployment has been very diligent and business leaders have been held to a very high standard to ensure return requirements are achieved and leverages created.

Lowering costs is engrained in our culture. Our past successes have given us the confidence that anything is possible.

We have given you a tremendous amount of information this morning around 2008, 2009, and the future. Hopefully you have a better idea of our key business drivers and how we intend to execute over the coming quarters.

As CEO of this Company, I am accountable for the execution of our strategy and results, and it is a responsibility I take very seriously. Our team firmly believes that the repositioning improvements over the last three years, have left us in the enviable position of being able to take advantage of deals, whether merchandise or real estate, like never before. We can assure you our shareholders, we are ready to execute in whatever economic climate lay ahead, whether that means weathering challenging times, or chasing upside opportunities.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Thanks, Steve. Lashonda, we would like to go ahead and open up the lines now for questions at this time.

QUESTION AND ANSWER

Operator

Ladies and gentlemen, (Operator Instructions).

Our first question comes from Jeff Stein , Jeff go ahead, your

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Jeff Stein - Soleil Securities, Stein Research - Analyst

Sure, thank you. Good morning, Steve. First just a couple of questions, first, given the pressures in the vendor community, do you guys have any interest in purchasing any brands, that you would basically own and have on an exclusive basis?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

We take a look at that Jeff all of the time. We have done it before in the past, and clearly whenever there is a brand available we look at it, the question is, is there value in that to us? We are constantly looking and chasing that because that is our strategy, brand strategies, and if there are good brands available we absolutely will look at them.

Jeff Stein - Soleil Securities, Stein Research - Analyst

Okay. Just a couple of cash flow questions, wondering have you started negotiating your new credit line yet which expires I guess in October, and secondly if you can comment on perhaps an expected pension fund contribution for 2009?

Joe Cooper - Big Lots, Inc. - CFO

I will speak to the pension fund contribution first, we did fund about $11 million in 2008. We do not have a required contribution in '09, based on that funding, however we look at that annually. Right now in our cash flow we do not have a funding, but as the year goes on, we will look at the return performance in the fund, as well as the tax deductibility of a contribution, and then we will make that decision later in the year, Jeff.

Regarding the bank facility, we have been in constant dialogue with our banks through last year, so that is an ongoing process at this point. We have had very good support from our lead banks. Of course the merging of some of the banks has dropped some of our capacity so we are in dialogue with some new banks. Consistent with what we talked about on our last call, we are still confident in being able to execute a new bank facility. Our facility expires at the end of October.

We are looking for a goal of completing this somewhere in Q2. We don't anticipate moving it into Q3. We currently have an unsecured line of $500 million, we might pare that down somewhat, part of that is capacity in the marketplace, but part of it is our debt is about $100 million down than a year ago. We can operate very effectively on a lower line.

Of course the cost of that debt and the tenure of that, it will be shorter tenure, probably a three year deal instead of five, it might have a 365 component in it, and the spread will be higher than our current spread.

Jeff Stein - Soleil Securities, Stein Research - Analyst

Okay. Thanks a lot.

Operator

Our next question comes from David Mann, please go ahead your line is open.

David Mann - Johnson Rice & Co. - Analyst

Yes, thank you. Congratulations on a great year.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thanks David.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

David Mann - Johnson Rice & Co. - Analyst

In this environment. I guess my first question, Steve, can you clarify on the merchandise strategy. A lot of your competitors are going more aggressively towards what is working and consumables, so can you just talk about in little more depth your thoughts about pushing more in to consumables, food, and the faster moving categories even if it was at the expense of giving up margin.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I've always said that we are concerned about gross margin dollar contribution not a margin percent. Clearly we wouldn't be afraid to push the consumables business at a higher level. There are just great deals out there in consumables. If you walk through the stores even today we profess and worked hard to show value to our customers, both in health aids, beauty aids, paper goods, plastics, chemicals. I'm sure one of my buyers is going to be offended by the fact I didn't mention them and the food part is 10% of our business, that being the consumables part and food part of the business.

We like that business, and we haven't held back. We have more free open to buy dollars currently in that area than we do in any other one of the areas in the company. We wouldn't be afraid to grow that business as I indicated already. As Chuck indicated we are in investing in the infrastructure of our business to make sure that we think we still have an upside. A lot of our customers tell us they love what we offer, but they would be encouraged to buy more if we freshened up our stores. We are investing capital to optimize that volume.

Saying that, there is a lot of other businesses that are very very important to us. I think it's important to understand we have a model of six separate businesses. Although discretionary purchases are challenged right now, it is engrained in our culture and a part of our business that we want to continue to be successful and run each and everyone of those businesses.

Those are just a couple of things and I'm probably giving you more than you asked for. The home business has been a very important part of this company's business from a gross profit dollar standpoint for a number of years and frankly has lagged the overall top line sales performance of the rest of the company. Saying that, we are starting to see some life in that business into Q1 right now.

The other parts of our business in seasonal and toys, recognize our seasonal has done well until the Q4 of this year, and I think I indicated we will be challenged into the first half of this year. I think our offerings are second to none if you walk our stores. Also talking about that the toy business, it has been very very challenged the last couple of years. Frankly into January and February the toy business is running better than it has run in two years. That's a mix of our continued focus of our relationships of branded closeouts with manufactures who we do business with, and the fact that because of the disruption in the market of some of the bankruptcies, some of the guys are doing small amounts of business want to do more business for us.

Between the trip overseas and the toy fair that we just came out of, we are really growing our business with some people and getting great closeouts we never got before and first line goods at great values that we never have gotten before. It's not just about the consumable business it's about all of our businesses.

David Mann - Johnson Rice & Co. - Analyst

In terms of the imu comments you are making going forward, how much of that is the global sourcing and lowering some of the import costs or how much of it is coming out of lower deal pricing in the market place?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

As far as that our performance has been better than expected? Or that we talked about being challenged into the first quarter?

David Mann - Johnson Rice & Co. - Analyst

Both, if you could.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Steve Fishman - Big Lots, Inc. - Chairman, CEO

That's fair. I mean, clearly Q1 is going to be mix, and that's just the fact that our lower margin businesses are performing better and at a faster rate, we are not turning away deals that are really good for us although they may be better than the overall markup of the average department which we believe they are not consistent as with the markup of the company, I think the margins were better last year and grow because of the reasons you picked out.

Second year in to the third year of the global sourcing initiative dedicated office in Shanghai of over 60 people and India, although it's very very small, but they are starting to understand our business and merchants are executing at a much better level than ever before. A piece is that costs are coming down. More importantly we have consistency of quality of what we are buying and offering, so more than anything, our markdowns are coming down in those areas, margins are going up. That's a piece there.

Secondly, from a deel environment, clearly we do make more money on closeouts than we do on a traditional in and out deal or basic never out deal and we are and have focused on concentrating not only on negotiating harder than before but getting more value out of it compared to competition so our margins increased because of that too.

David Mann - Johnson Rice & Co. - Analyst

Thank you.

Operator

Next question comes from Charles Grom.

Paul Trussell - JPMorgan Chase & Co. - Analyst

Good morning. This is actually Paul Trussell on for Chuck. Question on expenses, SG&A dollars were flat year-over-year in Q4, could you just talk about how you feel about your ability to maintain that trend? Or do better through 2009? Also in regards to the hurdle rate, help us think about the hurdle rate of 0 in '09, which I believe would be lower year-over-year despite more stores? Thank you.

Joe Cooper - Big Lots, Inc. - CFO

Sure. SG&A dollars are down in '08 versus '07 on a slightly positive comp, so we were very pleased with that performance. Along with 20 basis points of SG&A leverage. Moving to 2009, we are forecasting, our guidance is for slightly negative comps, so the leverage point is about a flat, what we talked about as a flat comp, so anything positive we would expect to be leveraging SG&A, the initiatives that we talked about, continued efficiencies and distribution transportation costs, principally transportation and also the consolidation of our Columbus furniture distribution center into our regional DC's, we will anniversary that the middle of 2009, we are getting some leverage off of depreciation, and then of course we talked about our store payroll initiative that we expect to add benefit in 2009.

You want to, did I answer your question, Paul, or go ahead and follow up if I did not.

Paul Trussell - JPMorgan Chase & Co. - Analyst

No. Those categories are helpful. Just in regards to do you expect SG&A dollars to be down in '09 as well, just to be clear?

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Paul this is TJ. Couple of things to think about, overall SG&A dollars, as Joe mentioned we have got some initiatives that were starting to anniversary mid-year, and some new ones that will come on, so on a quarterly basis, the up or down of it can vary, clearly here in the first half of the year with the furniture initiative, we have got a better opportunity for dollars to be down here in Q1, that we would have as we move through the year, it is important to keep in mind that there are two or three things that will be occurring as the year goes on, that really should focus you back on the SG&A leverage point, rather than overall dollars. For instance, adding 45 new stores this year, clearly that is going to add SG&A dollars to the occupancy cost, payroll lines, really every line of operating a store, SG&A dollars would go up there.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Additionally, when we open a new store, we spend about $100,000 of preopening expense per store, so 45 new stores versus 21 last year, there is a couple of million dollars there of SG&A growth. So if you are just focused on that line item, you are going to notice. When we evaluate performance, and really set targets to operate the business for the coming year, we are very focused on SG&A as a percent of sales, and always come back to the flat comp to start to leverage SG&A at better than a flat comp. I think you are going to find it is a very powerful model, and compares us very favorably to whoever you want to compare us to out there in the discount sector.

Paul Trussell - JPMorgan Chase & Co. - Analyst

I appreciate the color. One other question, moving to the top line, did you provide more color on your expectations for how the comp could trend by quarter this year? Thanks.

Joe Cooper - Big Lots, Inc. - CFO

What we are providing is the answer is I guess no, not on a quarterly basis. We are providing guidance for Q1 and for the year, so you can see that when in the first quarter we are talking negative 1 to negative 3, and for the year flat to negative 2, there is an implied improving trend from Q2 through the balance of the year, at this point, we don't calendarize that out for you.

Operator

Next question comes from the line of Peter Keith.

Peter Keith - Piper Jaffray - Analyst

It is Peter calling in for Mitch. I would like to pass on congratulations for solid execution in a tough environment. I wanted to ask about gross margin, it sounds like it will be flat for the year but slightly down in Q1. How should we think about the drivers through the rest of the year, because it sounds like in certain quarters you will probably have gross margins up? What might be driving that?

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Peter, it is TJ. I will start and ask Joe and Steve will chime in. Q1 you will recall last year, we had pretty favorable gross margin results in Q1 last year. As Steve mentioned, consumables and particularly electronics, I know you and Mitch watch very closely our ads, you know that our electronics presence has been pretty strong here to start the new year. Each of those categories while they are good margin, if you want to compare it to others, with consumables margins, or electronics margins, you are going to find that ours are higher, it is still going to be below our Company average of roughly 40%. So that mix pressure in categories that we really expect to drive the comp, is something that will present a challenge in first quarter.

Additionally you will recall from last year we did have a little bit of favorability in Q1 on the shrink side. That is not assumed at this point. Partially offsetting those challenges, as Steve mentioned, our IMU continues to be very strong. Freight savings, year-over-year is something that us, along with every other retailer out there, should benefit from, and should be talking abut. The price of diesel is down close to $1.50 a gallon or so year-over-year, so that is a big savings here in Q1.

As we move on throughout the year, the IMU and freight savings we would expect to continue, some of the mix pressure we don't know at this point. As Steve mentioned, some of our more discretionary categories we are starting to see a little bit more life out of, particularly in home and toys. Those do come at a little better margins, we would expect as the year goes on that some of the first quarter hurdles might come down a little bit, and we might see a little bit of improvement on a rate basis, if you are just focused on rate.

Peter Keith - Piper Jaffray - Analyst

Okay. Thanks for the color, that is helpful. I guess just one quick housekeeping question, do you guys have the total advertising expense, as well as the distribution and outbound transportation costs for the quarter?

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Yes, I do. Distribution and Transportation $46.3 million, that is 3.4% of sales, down 50 basis points to last year. Advertising for the quarter was $38.8 million, that is actually 2.9% of sales, that is actually slightly up to last year.

As you recall we talked about on previous calls beefing up our television spend a little bit here in Q4, and additionally we did run one additional ad circular in that week of Christmas, because of the way Christmas fell on Thursday, that really gave us almost a full week of shopping to run an ad circular. That is why both the dollars and the rate of sales for were up a little bit year-over-year in advertising in Q4.

Peter Keith - Piper Jaffray - Analyst

Thanks a lot. Good luck in 2009.

Operator

Our next question comes from Joe Feldman, go ahead, the line is open.

Joe Feldman - Telsey Advisory Group - Analyst

Thanks guys. Congratulations on a strong quarter and year. To the real estate, thank you for the pretty detailed analysis. I guess the couple of questions I had, if you were to find some more favorable locations this year, incremental to the 45 new stores you have already talked about, should we expect more of those to be relocations at this point, or is there an opportunity to have incremental new stores, beyond the five net new stores that you are already planning?

Chuck Haubiel - Big Lots, Inc. - SVP, Real Estate, Legal, General Counsel

I think it is likely they would be net new stores rather than relocations. Really what we are trying to do is focus not just on '09, but for the next couple of years, looking at markets, and see if we would anticipate finding a better location in an existing market. But if there will be incremental store count above the 45, I would think probably at this point, all of them would be new.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I would jump in Joe too, so you are inside my head, 45 stores in one year is more than double what we opened last year, and more than what we opened in 3.5 years, and I want to make sure that I have an organization that is ready to handle that many more stores.

Joe Feldman - Telsey Advisory Group - Analyst

Okay. That makes sense. And then you also mentioned you guys you are in the process of renegotiating every lease that is possible to renegotiate at this point, I am curious, how are you finding the reception to that? I would imagine in this environment, you guys are definitely in the upper hand position, as are most other retailers, and is that the case, are you getting concessions, or are you getting we will reduce the CAM charge, or other types of charges, as opposed to actually lowering the rent?

Chuck Haubiel - Big Lots, Inc. - SVP, Real Estate, Legal, General Counsel

I guess in two different situations, the reception is all of a sudden we have gotten more attractive, if you will, because we are one of the few retailers that are going to conferences, and sitting down with portfolio reviews with real estate professionals, that have investment grade credit and cash in the bank. So all of those things are favorable, and people want to sit down with us.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

A lot of the renegotiations, quite frankly, haven't been around CAM charges, and so forth, more about just the base rent. It depends on the developer too, because unfortunately a lot of developers are strapped for cash. So on new sites when we are negotiating, it is having the ability to take the site as-is, if you will, and build it out on our own dime, versus expecting the construction expenses to come, or come from the landlord.

Joe Feldman - Telsey Advisory Group - Analyst

Got it. That is helpful thanks. If I could sneak in one more quick one, the test you are expanding in Columbus, relaying the stores, I know it was just one store that you tested initially, but did you see like a measurable impact in terms of comps, relative to the control stores in the area, or any other comment you could give on it? Just trying to sneak that in.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I mean it is so early on it's performance, and I think we are all kind of internally questioning was it the relay, was it the execution at store level, was it the fact that we have new management in the store. There are a lot of different issues, clearly we wouldn't be moving ahead with testing the entire marketplace in upwards of 60 locations, if we weren't encouraged by the performance. But we have been reserved, in trying to quantify what we are doing from a testing base, until we really have good information to give you.

We would invite you into the Columbus market by the end of Q1 if you want to see the entire market, or clearly you can come any time you want to, we would love to have you, to see the Sawmill store, a number of people have already seen the Sawmill store. It is not breakthrough thinking here, it is just continuing to allow the consumers to be be able to shop the store front to front, back to back, side to side, and give them the kind of merchandise they are looking for day in and day out from us, which is basically the consumable parts of the business, front and forward.

Joe Feldman - Telsey Advisory Group - Analyst

Helpful, thanks, good luck with the quarter.

Operator

Next question comes from the line of John Zolidis, go ahead, your line is open.

John Zolidis - Buckingham Research Group - Analyst

Hi, good morning, can you hear me?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Good morning, John.

John Zolidis - Buckingham Research Group - Analyst

Good morning, just wanted to ask about in an improving economy if that were to occur at some point, do you think the Company can retain the improvements in IMU, how do you think comps would fare, assuming a less robust environment for closeouts in the event that things get better at some point? Thank you.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

I will start and ask Steve to chime in, from our perspective John, quite frankly, I know a lot of people focus on consumables as a percent to total in our store, relative to other discounters, and right now, yes that does present challenges for us.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

And in particular we are trying to address those through marketing and some of the store level initiatives that we talked about. I guess in reverse which is what your question centers around, then 30% mix, 70% discretionary, that becomes very much an asset for us we think, because the discretionary nature of a lot of our product in an improving economy, we think could be very good for our business, because some of those are some of our better margin categories, I think the answer to your question is yes, we would see that as a mix enhancer so to speak, going forward, should the economy start to improve, we start to sell more of our better margin categories.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I will add to that too, John, one of the things that I mentioned on a number of occasions and the question has been asked of me many, many times, a better environment actually produces better closeouts for us, the better environment, the better the economy, the better the capital spend of the people who we do business with, which really translates to change, and we still find even today, even in the difficult environment, the best deals we are getting are from the companies whose business is the best. Because they are constantly investing in their company and the future of change, and capital investments and differentiating and making things happen.

So when they do that, there is a lot of inventory available to us. Boy I would love the economy to get better, the consumer to spend a little bit more on a discretionary basis, and I think the deals would get better for us, in some of the other areas that are a little bit more challenged right now.

Operator

Okay. Our next question comes from the line of Patrick McKeever, your line is open.

Patrick McKeever - MKM Partners - Analyst

Good morning everyone.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Morning.

Patrick McKeever - MKM Partners - Analyst

Steve, do you think the all the liquidation sales that are taking place right new in retail do you think that is having an an impact on your business, thinking Linens and Things, Circuit, some of the others, do you look at stores that are Big Lot stores that are close to some of those stores that are closing, and see an impact, or is it not a huge --?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Well first and foremost, we are not as close to most of those locations in our real estate portfolio, although we like to think that we will be moving forward into the future, in fact, some of the locations we are opening this year are ex-Linens and Things locations, so we are going to be upgrading our locations in some spots. I would tell you though, we don't really see a big difference in those liquidations affecting our business either from a negative standpoint, and frankly, I indicated one the electronics business is one of the better businesses, and we believe will continue to be.

And the home business as challenged as it has been, not only for us but for everyone, probably outside of furniture for most of the industry, the worst single business is that most retailers have talked about. We have seen some signs of life in the last 30 to 45 days for the first time, not only a reduction in comp store decreases, but in a couple of businesses that are comping up.

So I am not sure that I equate that to the liquidations that are going on right now, other than maybe there will be fewer and fewer options out there. There have been other retailers that indicated on conference calls, that their growth in the home is going to be stymied and stifled, in fact intentionally, at the expense of some other businesses. We don't look at it that way, we look at it as a great opportunity still to grow the business.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Patrick McKeever - MKM Partners - Analyst

Okay. Sounds good. Second question, similar question in a way. You have done over the past couple years some sizable closeout buys, made some sizable closeout buys in the furniture space, and so forth. I am guessing those are still out there, because I know you have got another furniture buy from the same, one of the manufacturers that you have bought from before in the stores right now. Just given the environment and the fact that your core customer, and just consumers in general are shying away from higher price points, does that limit, does that reduce your appetite for doing some of these bigger deals that you have done in the past, which had meaningful impact on both the top and bottom line in any given quarter?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

No. We have an appetite for small deals and we have an appetite for big deals, and we would like to continue to find those big deals, we haven't lost our appetite for anything whatsoever. Remember we don't view it maybe the same way that you were discussing at about higher price points, we view it as great value, those price points are 40% and 50% below, what the consumer could find similar merchandise in similar locations, and/or upscale locations across the United States.

As long as we continue to offer unparalleled value as a comparison to everyone else out there, we have a huge appetite for deals. Whether they are higher ends tickets or lower end tickets, and in between. That deal is doing just fine this year, by the way.

Patrick McKeever - MKM Partners - Analyst

Good to hear. It is certainly great merchandise, it looks like maybe a bit better on the quality side. Last year's was great quality too, but this looks like a notch higher.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

We think that the offering this year is even better than last year I would agree with you. Our customer seems to be reacting that way too.

Patrick McKeever - MKM Partners - Analyst

Okay. Thank you, Steve.

Operator

Next question comes from the line of Ronald Bookbinder, go ahead your line is open.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Good morning Ron.

Ronald Bookbinder - Global Hunter Securities - Analyst

Good morning, and congratulations also.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Thank you.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Ronald Bookbinder - Global Hunter Securities - Analyst

You talked about how you are getting the IMU, but how do you balance that with your comments about the customer wanting value? When do you pass the savings on to the consumer?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Well we think we do it every day, we think it is immediate, and it depends on merchandise category, and it depends upon where we are at. We don't go in to any deal without understanding where the lowest price is, and has been run in a similar type competitor out there. We start from that point, so we believe everything in our store is of great value, we have no problem, you or anybody else doing a market basket with our merchandise, compared to anybody else out there who operates similar type retail.

Operator

Next question comes from the line of Stacy Widlitz, go ahead, your line is open.

Stacy Widlitz - Pali Capital - Analyst

Thanks. Just a quick question, you mentioned the execution, can you give us an idea of the percentage of your stores that you think need to be touched, and also just talking about the general retail environment, are you seeing enough retailers that are in your real estate locations closing around you, that is affecting your traffic as a destination? Thanks.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

No to the second question. Traditionally we are in strip malls, with similar type retailers and/or dollar stores, now there has been some level of closing and bankruptcy of other closeout retailers, that whether you are referring to that or not, but that absolutely hasn't negatively affected our business, it is predominantly on the East Coast at this particular point, and that just offers us more of an opportunity. We really think we are getting market share right now, and it is very difficult to see that, and believe me, it is tough to say that on a comp store drop. We think that we are actually going to be the strong survivor in what is going on here.

As far as the stores being that need to be touched, we have a complete program that we are taking a look at at this particular point, that we have asked for every element of every single solitary store, and it wouldn't be number of stores that I would even give you a number on, it would be pieces that need to be refreshed on an individual basis. There are some stores that we would like refreshed and painted, there are some the stores that the floors don't look as good as we would like, there are some stores that the lighting isn't as good as we would like it to be, there are some stores that the bathrooms aren't as clean as we would like them to be and don't look as presentable, which is a really important issue that I take on a personal nature, and the stores know I have a thing about bathrooms, for every reason that you might think when our customers come in and shop, and take their kids in there.

We are reviewing that piece of it right now, and we are more than willing to spend the right amount of capital this year, in fact, and the overall capital from a store standpoint investment, is really probably up about $10 million this year, and $10 million higher than what we had in our plan for the last three years.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

If I can add a couple of things, one of the things we are doing with respect to making sure we understand what the stores need is we have a new program where we used to ask the stores what do you need to look the way we want you to look, frankly you can imagine it is pretty subjective.

With our new stores team we have got a method in place now, where when we ask and survey what the stores need to make sure they look the way we want them to, they are backed up, quite frankly, with pictures, that sounds kind of childish, but it really helps us get a better understanding, to make sure that the stores are in the condition that we want, and look the way we want.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

We are not really in a lot of centers where we tend to be losing tenants, but I will tell you that we as we go forward, we are spending a lot of time looking at centers, and making sure we like the tenant mix, and making sure that at least we believe these tenants are going to be there going forward, for repositioning and opening stores in new centers that we haven't been historically opening in.

Chuck Haubiel - Big Lots, Inc. - SVP, Real Estate, Legal, General Counsel

I just want to add one more thing when you talk about what do stores needs I know you focused, and we are answering from a capital basis, but we have initiatives going on in the stores our ready for business initiative, is dealing with recovery and proper execution and consistent execution, and that is not related to capital needs. So there are a lot of initiatives going on in the stores this year with our new head of stores, that will really improve the look, as well as the operation of the store.

Operator

Our next question comes from the line of [Ivy Jack] your line is open.

Ivy Jack Analyst

Thank you for taking my question, great quarter. Three years ago or so you exited the frozen food business. Now that the environment has become more challenging, and there is focus on consumables Do you think that was the right decision?

Steve Fishman - Big Lots, Inc. - Chairman, CEO

For us it was absolutely the right decision.

Joe Cooper - Big Lots, Inc. - CFO

I will add on that.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

I don't know what needs to be added to it.

Joe Cooper - Big Lots, Inc. - CFO

We do a lot of analysis on the long-term cost of the frozen food business, and it gave us a pop initially, but long-term the distribution costs and maintenance costs outweighed the return, and the space could be used better, we decided to exit it, and we have never regretted that.

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Never looked back. One of the key decisions too, was expanding the PET category, which as you know from following other retailers, is a very hot category, and a very good category for us.

Joe Cooper - Big Lots, Inc. - CFO

Double digit every year.

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Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

Steve Fishman - Big Lots, Inc. - Chairman, CEO

Exiting frozen gave us the opportunity to expand that category, I think too it is important to keep in mind the way the customer shops our store, oftentimes we are first shop and then they go fill the basket elsewhere where they may not have the opportunity to find in our stores. So to be the first shop, ask them to but frozen to leave in their car to go shop elsewhere, didn't feel right and didn't work very well either. So given all of that and the thinness of the margins to start with, we are very confident that was a good decision for our business. It might work for others, but not a good business for us to be in.

Operator

Last question comes from the line of David Mann.

David Mann - Johnson Rice & Co. - Analyst

Thank you. Now that you are in a net growth mode, and especially with the number of stores you are opening, can you give us a sense on what a store level pro forma might look like, in terms of sales relative to the company on average, and what kind of contribution margin might be reasonable?

Joe Cooper - Big Lots, Inc. - CFO

Well David our required contribution hasn't changed, the reason we haven't grown to the level we would have liked, really had to do with the cost structure the occupancy costs, so we still require a five year IRR to hurdle above our whack, which we have estimated about 12%, that hasn't changed.

Going in to newer markets or higher demographic markets, what that requires is a higher year one sales, and higher top line expectation, because that needs to hurdle the higher occupancy costs. We are still opening a diverse portfolio of stores each year, higher occupancy, higher sales, lower occupancy, lower sales, but what this gives us opportunity to do, is just open more stores and hit some of the markets that were just priced out of our range, and that was the coasts, as Chuck talked about, the coastal markets, the West Coast and up in the Northeast.

Operator

That concludes our Q&A session.

Tim Johnson - Big Lots, Inc. - VP, Strategic Planning & IR

Thank you everyone for joining us. We look forward to talking to you after the first quarter.

Operator

Ladies and gentlemen, a replay of this call will be available to you within the hour. You can access the replay by dialing 1-800-207-7077, and entering the pin 6852. Again that phone number is 1-800-207-7077, pin number 6852.

Ladies and gentlemen, this concludes today's presentation. Thank you for your participation. You may now disconnect.

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Final Transcript

Mar. 04. 2009 / 8:00AM ET, BIG - Q4 2008 Big Lots, Inc. Earnings Conference Call

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