BIG - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, welcome to the Big Lots Q4 2018 Earnings Conference Call. This call is being recorded. [Operator Instructions]. At this time, I would like to introduce today's first speaker, Andy Regrut, Vice President of Investor Relations.

Andrew Regrut

Good morning. joining our for call. quarter everyone, you, us fourth for conference Thank Merchandising and me are Chief Bachmann, CEO; Chief Columbus today Administrative Executive Operating Thorn, President, With Financial in and Officer Bruce and here Officer. Vice Johnson, Tim Executive our Chief President Vice and President, Officer; Lisa

our opening call Then questions. and will results review will and described to discuss perspective. our subject to a that the with merchandising a adjusted All as the Before our is T.J. today's from are and This results actual risks over start the Lisa results call GAAP financial can learnings like that release few Bruce today's we on to adjusted non-GAAP differ from safe QX forward-looking our commentary our to allow provisions, comments, call, in early remind materially press our those will are harbor our we Bruce for fiscal XXXX. strategic in QX non-GAAP turn and and After in focused prepared impacts how will of time SEC from sufficient finish the get started, release. available statements outlook our any statements. stated the I'll involve our Reconciliations uncertainties you I'd earnings for filings, results. T.J. discuss forward-looking progress we now And for will on and your press it comments. and Bruce. review to today quarter. and make call morning,

Bruce Thorn

morning, good and Andy, you, Thank everyone.

X.X%. slow all our Jennifers Women's in take the year better in November, good pulled I'd QX world Day, both comps pleased was for strong. very After and finished out a sales accelerated the together there posting X.X% for Before with of after team and moment to how like make resulting a started, Lots. of in beat a were sales recognize Big to up I and quarter a a QX. and start place. December January, a comp trends that International the thank EPS I'm get QX QX

and So breadth encouraged performance QX in team over comp Store her to in was comps the Future rate for sales good the comp high better XXXX. the Jennifer drivers, But with to insights execution for moment. merchandise by good will Both consecutive X and comping a the beat more positive the X% our categories assortment QX. She a and a very stores, marketing, a at first time level, with execution holidays. and online. her in strength for than of I'm and were engaging from of planning and expectations, since of From the margin our and X team quarter. X preparations holiday Lisa quarters our color season. provide job to broad EPS our based merchandising, for this the our very driving did perspective, marketing a our in merchandising Congratulations

Coming, Company's holiday and social we and incremental and drive this approach used decorating to digital on themes: points success. giving. year main impressions focused real gift Our X And touch

And during the QX build we transactions million and record ending members, to In sales rewards we both with all-time an program, for XX.X continued active addition, penetration high. quarter. our experienced

or seen the in directed excellent who levels. and presentations organization season. stores digital Jennifer marketing improvements standards, number months the or to during stores with leverage Mike, to plans our I a from XX% in-stock X.X email, up increase in-store the half our half her members, We year, one-to-one the For Nick with active of have this targeted from at job our be started our merchandise and online sign-ups. coming And she it million an holiday field made consumes media, walked serving channels. teams the where and thanks finally, base and with firsthand membership last of whether many increased few did Jennifer social

of or completed in Future also while Store XXX addition, for In remodels opening XXXX. stores XX relocated the stores we the fiscal new

is our In terms incremental average sales the our to customer are remodels, of of primarily traffic basket increases coming a efforts sales growth a generate and most rate. from bigger which low after in accretive to the in stores. from and markets. remodel up more Soft higher to continues outperform balance transactions, range to The They still our stores. the coming continue new the Furniture, first stores, Seasonal in is comps year trends market, store And to company's of specifically in lifts Sales or Home, in which result margin major double-digit are single the high our the chain haven't second changed. Phoenix

excited particularly about growth also recent and our are We openings opportunities. net new store store

the performing the total, our and Future approximately the we at history. of that in were stores many some or store were opportunities turn the From the year, to You results. closings. marketplace perspective, recent favor, above cases, new volume XXX In format in the Store on competitor the recent the may call last in our particularly are near our highest liked in mentioning the in end beginning recent new marks T.J. the remember openings, with of of our

detail So trends the quarter merchandising results. return all about good finish I'll to our T.J.'s after more with strategic review for now But over to accelerating work. call to XXXX. I'll on QX all, talk planning a QX Lisa of hand in

Lisa Bachmann

Thanks, Bruce, and good morning, everyone.

with our a merchandise growth. of comp posting store very another X divisions highlighted, X good broad-based Bruce from As QX perspective quarter sales and strength was

digits was the were quarter. strength decorative in and home and past positive home added Along performer, high Robert consecutive or QX, deliver the with in X again in the digits high-margin departments positive Martha, all to almost Jennifer upholstery, our the great our with Home Kevin newness the by of from was space ready-to-assemble. with and for growth our and responds comp all assortments and quality, comping newness the through Congratulations the in across Progressive double also up quarters top to the immediately team, brand, digits departments: all for and this this assortments team, for products Soft business and quarter of bath. of organization single up Furniture. another lease-to-purchase quarter, comp was the and to mattresses, who in results continued team casegoods business. stores improved entire the the XX continued single efforts have impressive up our high the value, textile, to quarter. with and decor, our disciplines Furniture comp nearly We fashion and QBFV, led consistent

So multiple Furniture in positive levers our growth business. driving sustained ownable

comp which driven and Consumables, by in in and our for digits, digits, housekeeping to also appreciate Congratulations comp and business been holiday years. and QX is by representing we sales, Excellent job team. good their beauty events best momentum quarter perception, years. this category. The the tirelessly the low last and up our persistence. along value single low his This has all Stephen Next single working Bob grow best quarterly in customer the health Hard and to with Michelle, five recording team sales in and gifting Home was the X was up strength team. was

but one Arguably, in goal slightly three has up also the Big with are and and of positive offset December event-driven For opportunity years. the ownable the competitive low our Higher and trim years, which in Debbie one California very reduced capitalized were November, was forecasted remained Jennifer. comp for But this productivity. as donated here in lived with first quarter, Overall, as share slow categories. that the team to A sales promotions, After business other Lots our team by the Food the and incremental trim the summer, and comps category has holiday garden quarter, to the a sets ever, Christmas business footage, winnable the resonated by market, donated accelerated and or food responded consistently & less was positive happy also I'm year, on has assortments. in industry Toys to singles. Electronics, team, finally, on this was intense space And the which categories up representing start to part well for generating to Accessories philosophy: partially to gift strategy. January. space win pressures in in was an sales as And slower higher positive for in other impacted Seasonal adversely differentiated QX. as trim particularly lawn start down a last Christmas weather. the was that

online. Moving to

throughout XXXX were through traffic, Our After a particularly quarters. a sales and Erica number lower a the year, the and combination e-com another slow on increased start strong multiple comp plan of basket. and throughout better in fourth very with sales, business of operating at loss to Steve, year-over-year. orders, quarter or the and challenges team good successful we second, pleased driving year the in had the store site with growth all third a are resulting average higher with

minimize teams work potential to impact associated disruption minimize in financial our effort way, the Additionally, the the an the and with tackled along our significant customer tariff and incremental challenges potential exposure.

financial are over Jennifer. are for for results quarter. the of a their to now call proud teams we turn T.J. commitment engaged, the passion the of Our and I'll and review from

Timothy Johnson

months sales and to increased for Comparable versus for the the fourth lower of an flat in with count extra fiscal last billion offset of the sales guidance XX year's Thanks, a operations by resulting billion X.X% least $X.XXX Lisa. sales store QX, X%. we e-commerce in reported our quarter plus to decrease week year, of plus $X.XXX compared XXXX from were positive results. comp stores last at our open year-over-year Net store

terms call the of the last month our In earnings was we throughout quarter, flattish. of noted November cadence on

up meaningfully with and mid-single However, the comfortably in sales each these in months accelerated December of digits. January,

one-to-one was have driven fourth continued million broad-based and results the communicated our across in you of categories, loyalty $X.XX share, and EPS heard $X.XX. merchandise the of Future was As for by Store enhanced $X.XX most guidance Income our acceleration quarter and strength program were marketing efforts our in growth previously remodels. or growth QX in to diluted per $XXX.X the which above already,

last Our million was year's attributable in compares behaved favorably our embedded gross than diluted sales at share. $X.XX margin beat of per to was EPS of as guidance higher largely or anticipated. adjusted as rate $XXX.X higher $X.XX income directly a expenses to

the As fiscal week guidance, XX.X%, year, our based physical fourth Relative cost better but better costs, early to results rate. benefit costs. The rate quarter was IMU XXXX. in than noted Relative lower to and basis a a and our acceleration we results to by of XXXX which for margin on QX rate margin January. XX a guidance year's offset a and inventory estimated gross tariff-related last included last represented extra reminder, decline gross $X.XX related for sales our lower operations QX from point shrink decline was based and incremental markdown lower the markdowns shrink higher rate to December principally was on outperformance partially

receipts resulted import decision than and Specifically, the to bring risk-mitigate. our earlier costs year certain incremental than in to planned tariff strategic from last earlier

You touch inventory in on see were at corresponding moment. in a at well, essentially million will impact higher I which expense as XX%. $XXX dollars a rate levels of on expense an forecast Total

finally, distribution yet are higher open increases predominantly basis deleverage timing receipts from carrier Our the in resulting landlord balance of byproduct the higher stepped-up of net balance just for carried average transportation management larger rates Interest from by offset rates rent average $X.X quarter. incremental year-over-year. for is The expenses, and and a our and expense operations; year's import inventory team mentioned during was mainly we compared levels of increased debt and $X.X X expense. depreciation receiving the Toys"R"Us charges of income larger lower for investments XX Store last was with not the increases adjusted points CapEx, year-over-year million expense rate in were items: the and, and in have higher These last lower function year higher rate, bonus of expense million early. debt the escalating investment I Future, partially a XX% which lower advertising purchases than quarter from to of and locations as a

the assortment, store forecast. earlier is is The merchandise planned count increase of and Moving which larger-than-normal tariff up levels year. ahead scheduled Inventory sheet. result fiscal year-over-year. import increases on a the year, at last primarily improved partially on by lower in-stocks of our receipts last our offset store per overall $XXX to the of compared line to with internal in million ended NVO XXXX to $XXX Inventory essentially balance were XX% million

XX.X QX, opened selling square of XX, total closed million. and we XX with and During footage stores us stores leaving X,XXX

to stores, same For majority the support bulkier Seasonal. categories into the to Furniture of with XX be continuing allowing in a we bigger, year, the relocations ownable large our us and larger opened within market, boxes new assortments

reinvested increase less We as fiscal XXXX a we stores X%. million was XXXX $XX.X and the year as higher activities also store million of with to we provided was or and The $X.X quarter QX DC above Capital reduction maintain in Store openings million our $X expense CapEx planned communicated all the Future, Store closed and operating business higher approximately XX $XXX approximately approximately of were approximately activity new year. form to of of for million, locations our million new and define the or the cash expenditures which the assets of to in year. for for number strategic XX generated which during CapEx is higher net CapEx, by Depreciation of in the from than new year-over-year. was DC our in Future, last the flow, last forecast support of invested into our company. $XXX Cash the the cash our operating fiscal California investments aligns California a was line in

cash the decision remember at was activity strategic was ahead Additionally, time. impacted flow that please merchandise early by import that to negatively our forecasted deliver tariff of

on benefit ended and cash We guidance, XXXX borrowings fiscal and compared credit will of to equivalents under create equivalents As facility in $XXX cash touch and $XX with our I'll borrowings cash last which million in of facility. you $XXX cash would plan shortly. expect, cash and credit and under XXXX million our this million of a $XX This year. million our

shareholders, primarily flat result the little investment with purchase and for in our was Bruce brand elaborate reasons of property intellectual which cash a allocation a on return to further flow along our essentially was commitment a mentioned, to strategic debt capital increase Given the year-over-year cash Broyhill, name to will later.

the our in For share cash of to and $XX year of the dividend $XXX form of returned XXXX, payments million. fiscal we shareholders of quarterly of million full million repurchases $XXX

per payment on payable separate a million XX, of record our earlier share. close provide the common a in I approximately of X, This release today, strategic of before $XX XXXX, announced March As press quarterly business I'll declared call of on XXXX, of dividend Board his XXXX. Directors X, Bruce cash to March of now dividend over review is turn shareholders $X.XX guidance. in the the on for as to XXXX thoughts on April

Bruce Thorn

T.J. Thanks,

Essentially, consultants map stated, three the the hard best for augmented working team, identify, launch a been Over in retail the strategy cost sales enhancing an have playbook our working months, bend accelerate curve. our the and closely position a three and some win in competitively last year to road are current on together strengths ever-changing to to transformational initiatives by our leadership been retail we've to environment. of how Simply and new of success. develop to prioritize industry, developing long-term business we

verified in us a an better very customer while a which and the The answer better to reason gain play used do Furniture, is psychographic lens process we and strong credit. price, the opportunity working three and X,XXX ourselves consumer us have for mind extensive are Home to quality emotionally North with to we how Survey insights get a their we At in for functionally we level, participated, for months. win. consumers first and has association treasure and Over the shop We these on We where right Seasonal. where value exist, that great prices believe, over where There us learned is defining consumers matters. it we get value understand last call for, we high in clarified and what to hunt. what put been we our customers' not step credit where research conducted and To have unique known to to perspective. this play Star. our to questions, our to

has and with We the drivers. and we our customer exciting others with as retailer. clear traffic value for than us to new do the stores mission, we experience actionable what for and association strong The key create we're have The elevate accessibility better and also friendly insights experience learned value adjust an information. are for deeper while learnings of for was us need vision, to perspective, in-store critical credit for more also associates, Store we the From of or proposition These consumer in elements Food categories our to very greater balancing as also own are and stronger assortment. statements, opportunity known with association well rich lens, Jennifer a research is the much we a current present getting shopping an Consumables Future. our where omnichannel these critical provide But go CVP. through as developing opportunity a

increase accessibility will years life's three require the mission, While our yet, to and growth proposition. the to authority customer first, and of need occasions. the anchor delight; for industry emerged and the price ready are focus interesting value on quite the and grow prime value; about on the three visions significant strategy: I time the have choices. as next act values we're the some over There that think for critical be proposition Growing you'd how surprise customer do and elements find in value thinking not is second, finally, new it home retail big and

well by growth Jennifer growth category the for platforms accessibility as is and looking We have identified addressing several as for. key traffic

association strong home recent a as further destination Furniture, Seasonal on build and home. our strengthen and decor our furnishing and a First, all successes here, destination product position as grow to in for things home leveraging

we're also iconic our increases in T.J. strategy the Furniture, in about into our value quality to IP and licensing Broyhill, As and factor industry. It offering mentioned, enhances grow long-standing, surprise our furniture stores. our The of brand elevates just and delight nicely home. strategic and acquisition specs, in our and and a the includes Seasonal proposition, our perception design positions exclusive tech excited recent acquisition

drive further XXXX. from build to where space shifting parts We stores. products in QX with on of is play expect categories. or mean levers will our to to lower-performing to begin offer This platform out right our productivity, we're the traffic next to likely new focused of to merchandise Broyhill-branded The to higher our categories increased we introducing have potentially assortment

of build The or and categories, new the delivering newness occasions approach changes tuned. the for involves placement expanded time. store, or three above. and the third in test-to-measure This through platform or out events periods XXXX. could presentation involve different focus a or concept cadence hunt are on Stay of excitement merchandise to advertising a all part life's of by an marketing for These treasure or distinct category aggressive strategies in agenda

easier density believe In it our marketing which make relocations. pick intelligently. new we customer are to and Big well we opportunity store see growth studies for terms as and encompasses customers to grow new current on for ready an conditions, to new Jennifers Based markets of accessibility, as expanded we Lots,

becoming and more available. and see see this XXXX footage You locations the we in view,

an satisfaction. of We how their indicating BOPIS access the of is gives more increase not customer the Big unlock to buy customers on and summer get our stores excited is they about back customers to accessible launch that Future extent to website across Next, believe for yet ties a format BOPIS, The store, our of on to Lots easy will and I'm in hunt store customers. experience. fun, the our introduction big online, because share to the additional But to SKUs in-store the present, list. data increase access us used Store will accessibility grow busiest chain the exciting of back pickup shopping treasure shopped with the or new shopping want, us Future thousands or of experience. our we this Store have

last structure. expanding or lapsed our convenient Finally, online her shop her is on goal. terms helping based data are have In to and point sense order is These ideas value thinking and to just opportunity our some unlock access opportunities Reengaging our fund early P&L gives in business. snippets engage the how insights when on strategic sights, we the evolving. our customers, our aisles growth by to and we cost you but of hopefully growth on lowering our need is overall

cost call resale, goods been goods size holistic, but and GNFR, assessment exercise sold; with not select store structure; top-down internal may and cost or benchmarking not opportunity looking and sizing every just Our a is spend. element, single at chain; This some bottom-up of deep labor; and including what for organization a has triangulation-based that supply dives. external has been indirect

we the our of which will years. over XXXX. cadence result our in-depth a have detail of when a As million, the more will and discuss cost out base established come provide $XXX we T.J. next studies, target of three

excited As I'm for opportunity forward, I our look growth. about

lot value now critical of deliver and the the We growth, and we in right and know transformation not a put our strategy look us, the in back ahead XXXX we and turn this Getting to shareholders. step cost journey our be plan curve is have our over in great the associates bend call to guidance. this T.J. to easy. for invest as first customers, I'll place all work of will

Timothy Johnson

Bruce. Thanks,

three per For to items touch diluted decrease full a to fiscal unique of moment. $X.XX to share on our be to $X.XX share XXXX. This a range X% adjusted in cost income I'll structure, which in XXXX, compared the predominantly due adjusted diluted per the we in estimate of year XX% to in represents $X.XX income

sales the comparable in based a Our digits sales increase and the on single a increase in is low fiscal XXXX total single store low guidance digits.

and From The some rate the IMU, low assumption and expansion shrink a of gross news is Soft with by to good assuming We our function to perspective, growth. expense expect the single-digit in on Furniture, grow costs in low deleverage The mid-single selling expect will deleverage product margin sales Home along expense lower to resulting estimated XXXX. margin Seasonal better is an we continue expansion. margin driven gross the digits favorable merchandise in on new based unique gross transition with rising an in adoption sales this items: continue X dollars to and incentive growth increase rent outperform. costs rate lease bonus of offsetting associated with our costs DC accounting new of California expense, the will of trends standard. throughout associated categories mid-single Partially dollars increase the mix, largely is our digits, year-over-year,

old The building in working supplies year these productivity our to expense includes In the every distribution in in our growth, sales Apple such are and expense the growth and for our stores stay versus items, with with building. team California team up be rate single line digits would in annual low majority items and go year-over-year. mentioned freight bonus three year move cost flat hard transition other and costs an of terms as relatively producing Valley, from associated the centers. ramp new items our planned Absent in target of start-up inventory growth training costs, the day to unique I the desired for to represents below-plan new incremental and and levels, bonuses relocation Columbus of bonus bonus last to expense, DC payout and here a payout payout no team the for last

review reduction to fund journey $XXX Columbus. X we're over in with office the now taking As from cost XXXX years: actions DCs, Bruce to the million the has XXXX, This highlighted, been and XXXX. next wide-ranging: a stores here to cost

surprise goods want of exercise the a we cutting review you sold: about an to increase will traffic price/value Bruce and markdowns, operate on opportunities in to be cost greater looking cost to sold. addition customer is This supply business the forward just differently organization stores. enhanced and order shrink. believe to in and our In improve also payroll, expenses, areas: product, key everything. costs, going includes fund in and proposition, damages we're Hopefully, goods indirect focused this. not to we're cost our in chain the expenses, size factor delight of reductions get expense We structure, to thinking from store these our and just of sense cost drivers our at how touched

will first important launched have work or investment our in a before take longer year already these efficiencies. areas, areas to seeing have is growth is plan X-year the this three of tail development. certain program under emphasize other It We supporting and still a

in in fiscal fund-the-growth XXXX. areas. balance the The for year fiscal our is expected in the fiscal million in guidance will included in and XXXX, million million $XX program of confident 'XX, $XX cost expense, occur our approximately deliver a increases be to predominantly $XX $XXX are We expect reduction year and will year in activity and fiscal plan will following approximately necessary XXXX in to million occur fund

investment Future Store year, 'XX. XXX accelerating in the this remodeling and we're the up fiscal First, from anticipate of XXX stores strategic in stores

opening. up bold an in the Bruce which grand and earlier supply and, or mentioned costs notable accessibility, these openings a to remodels from in impact or the effort payroll cost and new open as is stores 'XX and from to call-out remodel occupancy-related years. depreciation, rent store fiscal We intend new most our in a XX number investments prepare store We XX lesser with new more be insights. a in year, also relocated new to stores for plan to to of highest stores several The expand strategic our in to this extent, key of customer

wage Also, June rates until not we in anniversary overall this Next, that to started as transportation the And early of of pressures, to store the higher we in distribution year least, tax and have fuel it carrier a environment reinvestment rates higher reform and predominantly last expect costs escalate hiring will we with expenses, expect wage but also last QX QX, certainly of associated competitive. in started and we XXXX. remain year.

mandated state wage the increases also growth. some We and inflationary also level expect at general

like fall or lower throughout as more be season a and the the QX to comp fund-the-growth a SG&A on year. in point leverage mid-single-digit the the single-digit low move QX in expect spring initiatives grow season We to and comp our

of operations, we're net to range of and $X million. net $XX fiscal sales in to sales XXXX. million net operating $XX approximately of $XX approximately estimating to e-commerce a of favorably in This million $X our million compares operating net the million For loss and loss $X million a approximately

Investments in year, of the are million. approximately market-based be of For XXXX. the to Store in to expenditures capital rollout million Future $XXX $XXX million approximately expected $XXX represent

to for is be capital stores, relocations. opening will majority store XX approximately million to which of $XX new $XX be New estimated million the

will model also and XXXX. investments fiscal and million initiatives picking to Filling approximately we CapEx which Depreciation We our is million in will approximately million out be finally, rate level result expense many centers. at you, approved to of this to $XX anticipate $XX be compared Also, stores in return support stocking shareholders, to tax repurchase our repurchase capital Apple We approximately close approximately in for open of other In as $XXX $XX about the today of Maintenance $XX could $XXX covers XX%. We million million up we represent will to to in conveyor, needed and expense performance shares. forecast DC $XX a is to XXXX. our million, of share to XX range cash Valley in systems financial shareholder the million $XX And racking income expected million during of the capital XX% million $XX of estimated P&L. this our and program, of Interest summer. stores. Directors distribution be project returning to million providing $XX as the in is of million XXXX. to for approximately the of during Board our expected initiatives, XXXX rest estimate to believe of announced early common to new fiscal flow our approximately strategic million. million, $XX the effective is $XXX represent $XXX

of record April share the quarterly as payments approximately in Board of the to shareholders. in X, XXXX, XXXX of to release XX to press of of result return per completion fiscal count average Directors will share on March be shares. in approximately cash dividend We dividend XXXX, XXXX. to today, $XX a XX, Assuming common declared XX payable million we shareholders estimate on quarterly Also business during close announced diluted estimate million earlier $X.XX the million the

in So million of in share $XX for million dividend repurchases approximately equals plus X% market XXXX fiscal our $XX or cap. current $XXX payments million

$X.XX per estimate $X.XX the share. In range to first in we be $X.XX income per adjusted terms compared income of quarter share diluted of diluted year's last to of to adjusted guidance,

guidance better mix margin based and a total line margin the digits. is the expense, turn increase to in expected gross Andy of over mid rate grow function expected approximately with single high structure in the to mid-single specific costs. and expected higher a these reform our million to initiatives. unique savings sales of to call sales of and QX, $X higher digits digits headquarters. our to we rate. of with expense digits three rent low items, shrink realize IMU, to in gross the favorable The from are merchandise core Expenses is Columbus to dollars With sales fund-the-growth that, in comp in final lower reinvestment annual single assumes three on digits the increase expense single expect Our expected increase due the associated and the new growth. Absent our low the items: margin million higher increase in $XX or assumes sales tax bonus store Specific back gross It quarter I'll low single a

Andrew Regrut

Operator, T.J. now open lines the questions. would to for like we Thanks,

Operator

Keith And we'll question Jaffray. our Piper Instructions]. with from Peter take [Operator first

Peter Keith

a into part just the that comment for me Wondering give that to of one guess I us you merchandise to out preview a little right heard -- stood for treasure a can bit a just in was Is customers on comment haven't a a mix? years your bit have or now. I mean. more of taking closeouts fluid this if jump couple in the little I'll view hunt. just what that could trying pushback

Bruce Thorn

Peter. and A on off I'll here want T.J. maybe to question, to it. it great and add start Lisa

occupy shopping. and in surprise one really them were savvy Many did delight good we a thing extensive Over between engaged hunt and that. that that X,XXX is found customers. we You're study. consumers of out we right, space were an And that treasure research

us customers hunt. treasure more the really Specifically, what customers that our than told enjoy potential future lot is and the they a

bring we part about the when interesting of priced in added like the and we've Future -- had So Store that for navigation, right easy get they is enjoy structure value, they we really good the products. the and that an disruption that

way. in that we lean So we can into nice think something a

Lisa Bachmann

Yes, Bruce. I'll just that, on to add

we that continuation that So newness perspective that's to along Bruce these heard of is bring urgency some treasure also feel strategic occasions and life in the really and what delight and very and bringing sense -- but because to a through life from urgency merchandising, we that categories occasions, resonating of opportunity clearly part a is life this shopping surprise as about you really also can will introduce to our we brings her basis delight on mention a regular product her our And that direction. through -- and really trip. think surprise new of

little So for that treasure assortments viewed as in-and-out a to her nice, will of shops. lot much a be as we opportunities very see she also

Bruce Thorn

that. Yes. And more add one to on to thing

and As her give types market those events we better that. to give and to and it a her know Lisa life, us to Jennifer to to -- in brings products team of come and it's going reasons as platform

brings. we're it so the about pretty And excited platform whole

Operator

from take with our question next Merrill Jason we'll Bank America And Lynch. Haas of

Jason Haas

was quarter-to-date that refund curious if trends. factored delayed give I'm I wanted could into been guidance. a if has that if headwind on any ask on the the tax was and to commentary something you

Timothy Johnson

is question, Good This T.J. Jason.

by fourth our that on actually and were The those quarter December forward January the I trends had entire moved think January we just from up and very the we is very, in right but before December step back mid-single being comps a digits. mentioning move where if in perspective, not encouraged taking X%, over importance were into and momentum we early at comp February.

impact weeks encouraged two by our month did tax as Unfortunately, Home. first the February trends. of were an categories of purchasing in key very in the you does our and Soft business business were Furniture we mentioned, big-ticket for And very of the as have Presidents' we anticipated, and good on impact of So February. Day, refund those delay later the part

went March. those we into a early happening place part business Our significantly as to from different place again started refunds of moved overnight one when

our that how factored not back versus a April We're income is been missed into sure tax that in of us So have refund delay trip. much comes XXX% and guidance. March to might

us trends April to not business So Marpril the we're back assuming and to our of could come it. in large to we we speak and revert just to like kind does or part that that delay as March

for another been expectation said more view could low So been a anyway our had refunds robust have way, tax if our time. on quarter, that first little single-digit comp in

Our to very sensitive customer cycle. is the refund

feel position the very But is customer March month and those timing sensitive, was key some big-ticket that credits or new categories. activity April of for We of all to very in to available very February. Our her. we challenging the about believe, new our or in him good of

she we'll want February, does she actually in be refund So tax ready get her. to shop where her if it did and for

Jason Haas

follow-up, Great. of that the how for a first XQ. the much the XXXX expectation contributed ask then to And the overall And then what's quarter should and I Store of then XXXX? full wanted of Future year in in for much contribute to for comp how

Timothy Johnson

and not question. more. encouraged was at of point slightly quarter X have Future quarter again, year the most slightly full Phoenix fourth double-digit move the fourth Very markets a in we were particularly would expect less the for up Store results, that as of comp. a point than the up digits And remodeled by X, and the remain quarter, now Phoenix we comp recently as a comped the to impact Good those just comp. results, X, into QX, mid-single fourth encouraged ago. was alone in in full of least be comp, by if they in against

that reason Store believe every our year into Future So of trends two. the we early the have to market can continue for

Operator

from comes question JPMorgan. Boss with And our next Matthew

Matthew Boss

it the EPS given my on mid-singles SG&A of the questions in And right? singles guess X% Up for within Tim, to So EPS higher do to it, for end would low-single the X the comps, build? be, to you X% expense a so range, a couple I mid digit the high the that year? then Did hit comp, dollars, I to things. and need up then XQ hit hear

Timothy Johnson

way. and to ways it, there's different I Matt, lot think one certainly a at of look that's

is way as well. fund-the-growth initiatives opportunity on Another in there side the is margin the

year, weather prepared strengths higher-margin Seasonal that in We believe the much, the back our the much in to opportunity Spring from friend and -- some was also get not from if more. of business and we're categories, a you'll namely perspective, IMU so recall last that

We you've this been expense here. as play heart I into Matt, consistent think, your going full other we has were by, on year, a of bonus encouraged of to California. transitioning could and back million we we're going benefit been levels, part we to lease And be $X going or in what mix million and and centers too, for merchandise distribution leverage fund that comes the or highlighted knew $X a have to for in think incremental from. target standard I the accounting But point coming about were real also along, fun, calls, costs just plan that's question, the in the between team. no another that So asking

So to items that's what costs, come ways up our unique offset the all with and those fund-the-growth is team and fund had about. to

expense. where the year recognize we majority in as is in encouraging to spring, also through is bonus move is in the you what low talked growth our And comments, single-digit fall think expense our in about we mid-single-digit prepared I remember, of moving fall.

to growth nicely go with expense get quarter, sets we in XXXX that pretty us payout is initiatives in good we our low a potential up to as come fall single-digit So work bonus think, online. fund-the-growth into and more and highest

Jennifer. plan So appear I a quite is to does not getting think did a frugal very, so in team good the yet very job that to

that. by encouraged So I'm

Matthew Boss

your you on in how versus categories largest the then thinking the assess? comment closeouts And And low-hanging In maybe, time as level. to store? day hunt, Bruce, great. treasure higher That's the see are what never-out you've do had every then about fruit amplifying you

Bruce Thorn

value of and home Matt. that in us growing good strength customers. our going destination against take our completely into player first offering great I'll growing for opportunity, Furniture strengthening regional the that, just a tremendous still part got business, national We've players, We're for a good business.

going that's grow to So for be us. a emphasis home destination continue to

the mentioned I early like areas, in other play for a good drivers. can us. remarks Some be We on, that traffic think are

primarily Consumables well we of drivers in that we of Some have availability, really an to But working the focusing on staples. as some food and look traffic on mind always tick Consumables and of some closeout, of We business to good, their to closeouts, of times than our the line lower for still product respect, at the from we important with of research our when our closeout closeout they're in want many a Food still dated like business. that's you XX% Food when to is have in about on have We of list those as respect for XX% we buy us. X/X consumer looks especially and from terms price we're credit From competitors'. closeout our that. upside isn't a and still closeouts, us vendors' top Jennifer lot coming us, get

there in pipeline's continuing do to in in that we our strong is but have assortment that. focus our a that, our And So manner. quality believe

hunt that areas new that really could excited. space play in identified could to And right about won't we've see pretty include the they emotionally it's newness. customers you us, what to future about they And of of much now, that can accelerating have will but So terms about And we of focus or really says it's Future. in with today finally, and -- the space It and a maybe we online, us there, like brings I'd that how Areas relevant we slow fast treasure things. our curate go Jennifers to on research of Jennifers get overall, are occasion, see We're got our when that what to building current in too us our put and space. customers. like. Lisa consumers telling omnichannel occasions, Store in strengthen mentioned. been that but little detail structured be we're really in exciting future T.J. that those carry we that think through that and to I talking and life's things you we don't exciting proud us a then And functionally that we've that there was and in message that it's a wow our earlier And right bringing in for life's us area the say on this world. in

her summertime. And year so the to from categories her still those going ticket. Food with well Consumable in our can coming the moved store her and allowing adding are we've up the together categories, be in SKUs, of later bring and SKUs and it acceleration thousands grow of to on that We're year, the terms as to all that into shop where this as we BOPIS Furniture,

Broyhill. that think XXXX I'd have providing in a quality, again, with line. we're all, product opportunities, to add once perfect Furniture lot of in in we and Broyhill about fun there may and beyond. to excited better Where a have And positioning fits add customers perception quality of is -- great and our all we're Broyhill we So that our then pretty in best that. a our told some and us going

Operator

from Vincent Sinisi our Stanley. next And with Morgan question we'll take

Vincent Sinisi

kind stay X -- the to the parts just on of Future. Store question. let's to of Basically the wanted I

stay ones of of a nice first a that high to hear tight very any we'll kind the ones very of as for lapping meaningful the little of tuned, 'XX. relate format? the year Is are to have performing changes that, then single, of And low be have would part done, what's color for of second kind been of a changes us digits? within consumer So what kind Store be your that meaningful pretty your any seeing kind variance far earlier But you're you still the With post -- research. that like the some that guidance there of been those? of would maybe would categories so to well. already And to of just are give course, kind Future that, band? changes to just trying it Just to double on the to the any of

Timothy Johnson

is Yes, Vinnie. I'll start, This T.J.

mid-teens that certain bands, and that are On in you markets up to are up some We mid-single teens situations, know the digits. have have we markets high what?

on be markets taken Those to markets to digits. tested be we've what's maybe Some being out. might mid-single need aggressive low where more seeing only

the to significant used to of through the the a is, it's little we we'll even our a gone what to closer actually have rate we've take future different So and Future, part try change away change in Store I and got to smarter perspective, it seeing. his comes to and team to currently she's stores sales apply the actually think a the Jennifer of together, get of to and learnings down important that that correlate that scoring band Nick seeing lifts testing from we're some ideas XXXX are in right? hopefully bring our to think within stores. that to I process

you for been and further all Future has on. Bruce lift -- strategy of for the almost home, the So are support going when but heard going of reinforced which amount Seasonal. in majority, focusing and coming talk from tremendous the is knew already us, all, there's on learnings again, a the that the forward, Furniture, even is What, of Store Soft Lisa we think I about Home

say Store So Bruce of Store Future. impact of category to that Lisa I'll the the forward. going how point data definitely might and that defer changes on to and the supports another Future strategy the

Lisa Bachmann

in I'll that one, T.J. Yes, on jump

our enhancement Furniture, you as that really home about categories Furniture talking the into destination and with think assortment strategy home store and that Seasonal. the to important the is we're showcased I lean to current will it's really to front note as in clearly the an those to of we And walk are and the into and know, those the and left. us right center Future, as for Seasonal you Store of

a that in we've order footprint destination really categories. feel we those got to amplify again, So great

we that those stop. strategies that be the Future, And the embark testing well. I testing with continually as though, clearly, that think of noting, we'll also many it's won't within are the looking to on, worth Store and of we're

ACCs, But So feel the wonderful within really products, includes that amplify footprint go-forward communication work includes to us that store. we strategy from includes that the we our have to a strategies. for and

Bruce Thorn

just about Store back Lisa category in has the of food testing our just to of spoke in think been front store store, into and in team T.J. a what the working on items, impulse complement and Future, the Just in I -- the offerings QX in the items store. of the constantly what updating testing impulse what's

of that's And rapid the her refinement QX, Future, have items So store. more that'll as Lisa impulse of a Store a of food result, the and will in happen in team at the pace. more and a front the

Operator

our from Telsey we'll next question And with Joseph Feldman take Group.

Joseph Feldman

down? was the debt I bit you XXXX. thinking of Or in wanted about the called going just come it the buyback how is to cash I to that I and -- towards you're wanted some pay you know some be it free guys higher, dividend? ask -- more to Are out. flow as to a of to levels going did use for

Timothy Johnson

This Yes. T.J. is question, Good Joe.

is our cash returns guidance free the embedded again to XXXX. in what's think shareholders I flow in essentially

be over there good in fully invest invest years, the new the lower. repurchase was to in and bit would last will the we've stores, likely and provide strategy opportunities return, had what those start start over -- remodels Store we and Future, the as in and would see As today. that a in time comments: cross the to and here We're like that relocations. once of mentioned That's return, business period opportunities little results more projects really we in lines articulated I there. X that move to you're a understood more to to would a X the seeing prepared provide good really We share the the number financial find continuing where particular a

is we as another the towards small additionally, how to try capital a it better in other buy mentioned that, store, perspective, Bruce think as current stay well return, online, of capital and in just when think items good just compared I to to to but deploy which, pickup a about example from continuing systems.

to end that, our expect, XXXX I from to as debt Joe, would looking ways going put So we're XXXX. cash more -- said relatively expected generate on levels and remain good for use. we the and always based are consistent Having to it guidance, to

for that's it So thinking about 'XX. we're how

Joseph Feldman

you how the to a managing you garden. are inventory just Got the flexible a is it. up concerned I I'm of Seasonal how if you I on through wondering asked with and kind but you had earlier, But it off to about quarter. follow if category can comment, start especially that -- And it guys period, then and I'm off thinking know I could the got in a about the start to -- slower lawn was made that slower start. And be think, more

Timothy Johnson

not year, Seasonal that. clean. we room We'll should continue our Yes, enough need from financial week financial In address season of perspective, following as to us of need to know sensitive sell we Lisa we kick categories the than view we we believe our at we glide margin merchandise started from of good to. category past performance. and a the paths last have think each guidance from point view, point that then if throughout more do on a we when of from exit have it's store, how in from to of look order in a quarter. a was and view, I'll point every Seasonal to really start the key saw But you that year a it I the first certainly over seasonally in weather much But the to

or of most think latter part the of that to we mild for and suggest March more forecasts ready get part once I of business. be spring, the the have start towards middle we'll March, we'll

Lisa Bachmann

-- to and I where districts Southern T.J. -- you we the -- also and the occur. saw that, early implications basis California regional agree on performance look absolutely January. to at on I got of weather can And at every tell see we add would I we've February, a into look there. we in the did I that have day just we we some margin mean, that on that weather some call And Florida out end capability in this as especially as headed the opportunity has towards the been But of tail strong. I'll

we to And towards positioned very for about the pointed and that we've so feel got believe path, is resonating called we have out, as assortment the well, the reason T.J. quarter. business the glide and strongly where

Operator

Markets. take our question Anthony from next we'll with And Capital Chukumba Loop

Anthony Chukumba

there's term. I'm leverage comp point to I bit understand you've point. know a rent. -- wanted a of this and in talked the is fair I I long Future with of the a parts to about think about Store what moving be going trying or little higher this just to amount you terms leverage your understand of comp lot

when talked low to flat You comp. the remember about at much days SG&A halcyon single-digit costs. But could leverage distribution you pretty I higher a

wondering, long So I'm comp think get once term? you we just sort that, be the of point all past do where will leverage

Timothy Johnson

think or or get an addressing expenses, we in large us Matt's evident best low I a is season, because become as think growth a I XXXX you when into opportunity. hesitate see the the gives that space, to momentum comp good part, some think, to positive I through on we slightly namely great and Anthony. it's that see having we I fall are to future low line We're will around year-over-year new where into as in as -- late comp bonus, around about in costs expense season, And the back thinking I XXXX opportunities at remodels fall in we for think XXXX place single-digit of date opportunity questions line where in is and a I'm store model invest that XXXX heading move the Yes, that we is, growth throughout flat investing of get top to And see like do was or opportunities top particularly in XXXX. out, way some to single-digit have future as full sure incremental start suggest XXXX. move we force, Anthony, and store this categories. not the would understanding more more to growth. -- well fund-the-growth to significant later may the still some starting and come far that about start, that which it, to

address model it really next to also Anthony, as want think this years, thinking stores address the about I we opportunity in about perspective years. next an remodel or way in -- -- So just in many all a X almost to we really we're that we think in the or X just the the have stores the from chain

So obviously, the something investment to we'll associated as the and will required be overcome costs, will be have well. that capital

low with in long we easiest digits. expenses about how a the since year the growth low think We XXXX the exit we're are think to way year. is in we exit comps, single-digit on year and or the single and we perspective So XXXX yet not exiting term

Anthony Chukumba

one follow-up. Okay, that's helpful. And quick just then

consecutive X of So you mentioned comps. X-plus-percent quarters

out you just of consumers. do are to of I This kind guess to? attribute was XXXX. that clearly I there mean, still we're all period cylinders. that the time very and shows just wondering, I First with a on sort it execution? slightly trying -- since suddenly comps, comps had overall that a relevant Because is you what rocky hitting better we what just row. Store I'm a in mean, is I I merchandising the went suddenly up sort is of That's down Future? figure of to mean, flat why X quarters -- the changes? consumer? the better it store Or to from to that X% comps

Timothy Johnson

future have feel but is done XXXX, start and I continuing year was excuse very And job start. Well -- an weather of growth in think merchandising. teams promotional excellent of irrational and we the It's in an nonetheless I'll her in ownable but different around not Anthony. We push number articulated and the to head a Lisa push push activity. categories, fairness, on opportunities. those challenges shaking strategy kind the for of to confident

think XXXX, XXXX. get force the we grew in and Future of supplemented Store full as then moved we and Store in were business into way grow impact And the of QX obviously, through better saw to and along continued with those the QX, Future. I strategies QX. our its she then moved in as

fall spring you to really we got see by So too. want season. just touch the of of good that think the then some sure for better I I'm merchandising teams Lisa a the opportunity on But a work season the lot will and done pieces, to

Lisa Bachmann

a absolutely. to -- to points I right, treasure. mean, we've that great trend has have as absolutely basis, newness job I talked continuation We and efforts hunt with the past Also, in we've has newness that. marketing to of out really about all And their perspective treasure -- heard, this for of to the really transaction It call in merchandising team want on haven't in. Well, from we very for have certainly honestly we some touch the a traffic a with want resonating done brought either. the then out a seen and as the fantastic job continuous past the different team perspective Jennifer. result, quarter media delivering is our team and well a saw as a of done and from we the changes marketing that on I'd call

wind So about the very helped really it has us we that throughout big have that really sails. in confident the we feel and fall, our collaborative effort was a

Bruce Thorn

stock. the really And -- you tell supply comments the to job I stores out it what chain round The got here. I'll brought just us a life. to in nice did getting

XX said, our in just much is in outstanding. the look marketplace. just marketing we're QX, I and started we're frankly, to that million Lisa in to see effective. the so. customers what frequency, get or think to before. seen into now. We've into reach a a more you from And the perspective accelerated to really to against our we And store in merchandising, from fair loyalty we our QX tag makes hadn't got store it up QX, that That good think our a XX.X and our as branding rise leaned share to we database QX million to of Quite starting ability traffic If I our on way national averages

it QX. a So momentum effort, year it's team takes and and a got we've the ending into good --

Operator

our we'll And Bank. Paul question from Trussell take next with Deutsche

Paul Trussell

great on comps. the Congratulations wanted to touch I base on...

Bruce Thorn

Paul. Thanks,

Paul Trussell

on margins. the year. ended which fourth understand below original still And of Margins. have apologize was Even to we the tough wanted And I XXXX for pressures with of a us and noise, but then an subsided as better-than-expected confidence this from the pressures that we the continue? extent little touch background reinvested? plan. I margin truly which for look Help dollars X forward, plan year. out we around the next of kind standpoint to the thinking or versus gross be about bit more over what being help us SG&A should maybe reallocated years, get And a quarter, margin ultimately,

Timothy Johnson

and seasonally to stores. so those and we sensitive we sometimes the most time there window mentioned, a a a the factors then to a gross that where we've gave Seasonal, job team the sell was spring shrink be of those Seasonal in rate, guidance it is seen that of we of of into while And than still we was January. we and you at of and trends we the or news the roll different a I profile And lower softer last down maintaining garden we December in Sure, with in at better plan. November summer, and we where support we risk-reward our than in it's of margin good the down guidance IMU, guess December, of can that costs, has we've example look relevant where The into good good factors or correct, margin year rate, to thought, as more fourth to very and done provided. the Paul. have slightly and are really -- quarter, growing original look are from it as season most number heading year our margin standpoint, on you margin from and lawn the season. in the the that's had And I product, the rest start new think business move and great look aggressive

as profile part at to XXXX, generating maybe we be to different the really thing and that, progress is I from So of support our make to think, for business that of on healthy measured question, your way, period, might takeout understand business test initiative I a year expense concepts come Paul. into around in to good smart across a around increases. latter three some way a test the pure I different in opportunity announce about done the 'XX traffic year and And and an three feel think margin million move second growth $XXX for how very part going of we standpoint, the an can a a

started at in the already million the we the expense we've year gotten those. which reductions So next $XX this essentially million of $XX in and comments mentioned each two years, prepared on

from we solid we place XXXX. on the way operating think margin a to all profile, in profit, to good, plan have the good I a through a So have deliver start and year,

Operator

Instructions]. [Operator

Barclays. is with from question next Our Sean Kras

Sean Kras

I Food. believe you'll impulse the you things destination mentioned And give mentioned that you some testing Bruce, you of Can items Lisa, amplifying in examples us testing? be some of categories. additional some

Lisa Bachmann

category certain the store the we'll see consumable-type total halo items traffic-driving with concepts I as we're at we as testing drivers, only around resonate looking continually on from Jennifer. mean, traffic testing perspective but be product testing the product Sure. example. first that an from a does would I that for of for a But are -- what for is what overall and the and What all, to not said, business. then itself larger also impact

product, both involves marketing. that involves So that

sales but entire also very dollars think drive evaluate -- cross-functional halo block. example I the to lift in do tests would that So great to on gross it have implication margin of a would that's that the the we

Bruce Thorn

density in on But as areas could an the be got test. but on Lisa way things They adding an and call. navigating great excited on that that can a said, she to where of really what still just Excited areas about look see a to way. put add it's current the don't on the to category. And of things stores. of we'll And and things a expansion disruptive those aisles go get that, of the Yes. A new we're too our many And be will Consumables the we public but in business, we've going. but say maybe we work lot hard we positive the categories at it a in certain so opportunity, into or some through new to extension testing can have be love that very be that we could broadcast here, we'd stores, I'd curate. want detail have to structure

really So today, create here. I store, good adding life's the moments in and that both good events, we events around so and the more events got adding that surprise all hey, events, didn't to a but a that curate coming what together calendar get could before with than delight, around traditional I can plan, know store we've and messaging

it just it's You're that right, bundled easy. fun need And type that. I and makes way in of a

details, without immediately. agenda starting we're in getting too So testing many that

Sean Kras

I can that's would maybe it Future why than store going percent be Okay, of T.J., you I And some given things the a I that mix. as color you believe building I see be guess just maybe for mentioned that larger guess more that am. a on? thought I get some sense. to stores will somewhat I as have Store to to be the provide X% year. going to that's tailwind to not in maybe the larger goes of of the be a about number year these the makes

Timothy Johnson

have of think to started we I speak. not Sean. Well, class a so things, yet, couple this year's Candidly,

stores start work end really going into their March, early those April. So doing of

move to good our you as going likely the quarter, to we outperform, well that's the are our a we into stores $XXX,XXX year second get And we will teams our lift or $XXX,XXX is XXX-or-so the depending of to type. on financial as store And Future. through roughly the stores are Also, exit do articulate trying return, be to then it. this Those expectations and what generate We're and group have stores X% point, for good completed into than know, we They all the first a a what little X quarter. excited need. are, to until kind our won't think we store discussions were year the opportunity be we If bend everybody's started. should of better bit of us. the aligned So expectations about XXXX. a to first we'll that going we But investing think XX% for rounding and for Store we're you received, have, I To the the extent what store per and have happy. opportunity.

Andrew Regrut

the with you Okay. everyone. call you, instructions? Thank close Leanne, please would replay

Operator

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Big Lots (BIGGQ) 8 Mar 192018 Q4 Earnings call transcript