BIG - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, good morning, and welcome to the Big Lots Third Quarter Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

On the call today are Bruce Thorn, President and CEO; and Jonathan Ramsden, Executive Vice President, Chief Financial and Administrative Officer.

Before starting today’s call, the company would like to remind you that any forward-looking statements made in the call involve risks and uncertainties and are subject to the company’s safe harbor provisions as stated in company’s press release and SEC filings and the actual results can differ materially from those described in forward-looking statements. in like adjusted out GAAP non-GAAP adjusted are also is commentary to would results on release. focused results, available company to that point today non-GAAP The press today’s reconciliations of would CEO Big and hand Thorn, of call to Lots. over I Bruce now President the Mr. Thorn, please go ahead.

Bruce Thorn

comparable the year. breaking what and has our exceeding good with accomplished I increasing This figure. reported record we sales thus am everyone. you, results EPS year's with last third this representing this was and team quarter another highest Thank our comparable thrilled far quarter far of morning, strong XX.X% morning and earnings adjusted $X.XX ever

outstanding stores, for their and to and I consistently to want headquarters throughout across the attributes our our corporate Once crisis the unwavering in associates distribution again, Our thank exceptional efforts. centers our the the results dedication COVID teamwork entire tireless and organization.

we close to X:XX decision you family As the this this made as of our possible certain make on to year much P.M. year. had in associates probably time many typical as with at stores Thanksgiving know, a our Day

rigorous social priority navigate and opportunity are all stores in a While remain rapidly delivery we and of but our be for typically efforts. our again remain Thanksgiving, and the throughout were making with what possible. new in include see and day to We needs. as standards, The of stores capabilities, window COVID of as as cases distancing, minute key and Along clear workplaces same steadfast stores such last increasing. curbside our have provide part once protocols omni-channel critical customers with our investment in these pickup objective that e-com cleaning to with safe teams uncertain safety their we open happy families, a our used also our shop and offering we workplaces desirable are to to the principles as guiding times

business the and Over the under nesting continued across optimization lock in launch, of that line reflects also we're but seen the key past include Northstar. operation of already our Broyhill out the our COVID momentum quarter, from stores strategies XXX we have introduction the the initiatives induced our pantry These trend, strength rolling reset.

initiatives going successful, file, along e-com forward. these been of strong and customer continued our capabilities, progress growing All as have with expanding for position and

As in of our stay spanning very feel current good I with and last and We thoughtfully offerings living, call, closeouts. needs. and merchandise, our continues strongly our customers products balanced of about everyday home mentioned curated the and way to align essentials assortment at wants never-outs

Big everyday Our customer well store. surprises continues to look throughout as the Lots as for values,

loves needs, Our evolving close customers never-out deals treasure finding She our program expanding amazing to well on the access with and resonates her. our have time and affordable hunt differ that ensures every that visits. everyday outs focus she

Additionally price in of portfolio our quality help market. loyalty brands private the will deliver Broyhill differentiating ourselves while and building and us and

Lots family. capture to both who customers Big and top early all holiday this our positioned new We gain On we confident year's are assortment unique share shopping. to promotional are existing to season, well-positioned during and we holiday market of cadence that, those are selling from have the that

to of and planned weeks to up selling we where So, an give frame the the look we we've you let for as on Christmas. manage you how for me quarter key business the to and update stand balance date including the leading

comps as Our merchandise. low our digits to has with shopping sell are quarter-to-date paid decision off plan holiday strong for seasonal strategic through up double early and

ways than balance moderate fact ever, reflect planned how for where our now expanded shopping the that holiday and strategies to the business in the a for the forward pull demanding Overall, season, they when Given shop sales of more have to elongated quarter. customers and want. and are we

capabilities, accelerate experiences. continue purchase creating and friction, better customer We removing our to omni-channel

curbside as day year delivery delivery day with well PICKUP partner, know, from As biglots.com this their introduced same Instacart. you same July, our In pickup, we with same as launched day delivery we partnership in to and Lots order item to customers store from items mattresses, and and the delivering furniture allowing any same within small available biglots.com, decorative local day. at Big large accessories via snacks all

now our PICKUP over store to ship from and accelerated across significant to customers e-commerce XX% to finally, stores delivery a of we day services ensure contribution growth. identified strategically overall Instacart initial capabilities country. the the delivery XX our have making quarter, rolled And driven to two Our out

capabilities we improvements penetration and our the online every proud integrated order XX% made over top also digital last with continues have to year, QX one over conversion we customers experience nine achievement convenient to our demand cohesive needs. returns, accelerated highlight number in meet Nearly seamless months. expanded omni-channel for a I'm named and to the our new to but have omni-channel pricing, notable skew an close contributing traffic, options, in-store, are retailers total trend validation omni-channel company driven overall offering, times. comp, we This of is report. past visibility. favorably, customer have points have retails that with I'm store evolving in For allow and how delivery KPI and web XXX rates, the still site business acquisition. In XXXX grew quickly rollout and by we in the sales, progress of this on to to to approach and delivery we and have achieved delighted basis total e-com a journey, way adapted long go consistency, We

spend a seeing are Broyhill. the few on trajectory we in now moments me excellent Let

we Broyhill and like track to into to holiday purchase excited As and I dynamic returned we sales spent Big update very include pillows. for customers added as through is customers already extension of can be our dollar last are Big times is as as And decorative of believe visit furniture reaction in-stores driven Broyhill assortments non- customers. Broyhill firmly it entire The Broyhill talent and have biglots.com. make Lots and to third a our remain the to both and brand call, XX basket sheets, remains the customers XXX a brand our size organization XXXX textiles. this on to close first frequency. and new XX% on about non or we of offering much year iconic now One kitchen Broyhill much to generate rugs, mentioned million and by begun in twice to and over Broyhill of have bed products customers favorable. very second housewares to area Broyhill as billion either time. to Lots This continue customer fall and expand

make We also year's rollout Queue on excellent of Lot continue this and the Line. and progress

stores well us We are expectations. provides to presentations, lift have as rolled these in-line The in anchored stores, XXX such out merchandise and novelty Lot performing and appliances, categories to goods, comp outdoor strategies with way also points apparel. which to test and X new theme X approximately for kitchen great a sporting

comp and for store line the apparel drives see in approximately point and in assortments, We space the of Lot, including the appliances frees of small in also strength front toys. Queue configuration the in closeouts. up but other in The continue X to quality

line, the the call, and and stores this will Pantry to launched continue of returns quarter, associated the Queue initiatives the past XXX these rollout of and expect QX another we our near rollout September. last As I in add the optimization the Lot end end the the on prioritizing complete high at given with noted by of XXXX. was term,

involves this close beauty. combining outs, assortment food value and national significant from from a all repositioning reminder, footage consumables, including priced with an brands competition. staples, to cleaning of We're which of entertainment the differentiation and a As health food products expanded and creates competitively

tremendous Our shopping customers items delighted of which increase and the frequency forward. surprised your at visiting more find going values, will on to are list

reads pasta. Coming in quarter, customers of outdoor This from expanded exiting the continued through started food is our updates, categories coffee. well mid-summer we or cooler, optimization stimulus to their earliest prior grow as indicating ending indoor are business, we such partially the from as driven to as sales and the More as and accessories. strongly. entertainment strategy living and third to foods reducing as this offset strength consumables commented lifts mature. productive the home where with for Our This to cans, less are space come our the by related we getting freezer, continue continues in despite of that we improve furniture mid-April pantry as categories and quarter back surge and spaces

Additionally, for continued early as to and strength then seasonal Halloween harvest focus Christmas selling, saw we for October. shopping turn in and

has momentum the mentioned, I continued QX. into As

grew sales representing the driving associated Broyhill comp skews total to quickly planning supplements total reporting The mattresses performance, sales. furniture the of Big brand last assortments XX% in seven QX ready new by category to increased strong team last increases merchant our continued quarter. at with our assemble to shortages, and impact were XX% the double-digit a vendors. Upholstery year Upholstery raw in adding an to our up quarter. face did the of strong driving new around Mattresses Lots office had suppliers XX% with goods, challenges year. least departments XX% and was teams furniture, all XX% department Broyhill on for job material outstanding sales case and Furniture both with to XX% home versus although with particularly all up and all divisions for growth. Turning moved supplied

double categories. within up and with was had XX%, XX% by driven décor, by and led Broyhill were bedding over Décor on curtains of saw XX%, were double-digit Home Pillows Window window driven digit up pads Broyhill up XX% brand over trends incremental strong by Soft art, growth buys. over basic Comforter up national comp and and and Christmas increases sets strength the Broyhill, respectively. opportunity and XX% offerings.

to a quarter business also had in seasonal year assortment, by comp. Christmas terrific a driving overall our selling XX% significantly and early fueled increase comp contributing over prior our Our

and last significant the same Closeouts quarter positive a end quarter with she basis, such of to compared the ware to challenges and the quarter. growth dine-at-home closeout offset appliances, of over near kitchen Food family heritage in toy up Across quarter. paper, Halloween our line in in comparable across dinnerware increase year the quarter off had trend. the and comp part very thanks categories good by with the were reason were early and in positively. on faced cookware, assortments these the Harvest last Key an well quarter, all event. XX% to increase in departments and momentum we in comps as due over mid-XXs were results second where up to a in during with except contributed in in through the summer the of categories quarter, pantry good assortments a sell team around toy XXXX. Consumables year, business X% partially XX% posted to a considering home our toys drink all by through and XX% Our XX% part friends are the third a the stores last approximately transition bake up result Hard all inventory trending by important of patio event, comped up a top and lack Electronics food and assortment part us. as QX the both for over and initiative the the additional shops indexed why accessories ware, departments to driven cook sales drove due XX% consumables as in where XX% for a quarter. good optimization high year the promotion as our areas over was

We are forward. strong growth going continued for planning

continue ongoing significantly as we veterans, first the out Our and heroes and QX others. big Starting active year. customers total historic rewards last with program growth rewards membership members X% month, per drivers have and high teachers practical every Meanwhile, way customers an our results insight spent for we value to discount as customers with of heroes XX% acquisition customers. our I'll of reach medical resonated to reflected military XXXX, and and active quarter. on continue Jonathan commercial turn net the rolled last professionals, more our a high the we call greatly these promoter our in to in scores new now military over financial more our and and veterans support accelerate ability to day. for and versus more in responders, spend over customer The increasing delight than to

Jonathan Ramsden

billion, been over have morning the Thanks, through like the remarkable Bruce efforts everything center new in to the times and remained over in in X.XXX and from the has growth a to my XX% team the were these store year a The for XX% third driven I how comparable and our quarter and good Comps XX.X% knitted and Net resulted billion past team an challenging It of everyone. our the sales do. X.XXX growth see in traffic, increase increase, of up sales to a values of over is truly so increase quarter. channels. relocated base. compared both incredible for comp strong thanks add traffic stores would slight growth not were e-com we across tightly sales together ago. basket how by

in however, pattern selling The the strong adjusting strong effects cadence million, harvest at underlying consistent an quarter provided October. early for selling of million August the above net Net changes through comps with loss $X.XX, end third September, quarter our was QX high-end promotional the was and through seasonal the the different Christmas for guidance September. was to in intensity. range of and of income in by $X XXXX. in the after $X.XX terms compared and EPS quarter, the of In fairly and trend was of Halloween of month running for cadence and beginning mid-September adjusted $XX.X of

year. reported XX QX we $X.XX basis The This at EPS anticipated an reflected a a third markdown third of from and pantry optimization last was up the reminder, tariff last rate lapping quarter quarter overall higher year's we from some beginning margin from mix the year rate. last a for benefit an rate offset impact As than was by points loss better adjusted XX.X%, around lower and costs quarter and freight of rebates the of strategy. our gross slight

some additional expect expense higher into continue $XXX and dollars million, $XXX corporate million and year, quarter, will expense, non-cash a expense overall COVID-related rate adjusted were we due costs bonus be supplies These quarter million QX. QX million of of flex the $X resulting and result a points for in for expenses depreciation drivers compensation the QX of from from sale offset to to of expenses approximately pantry versus of Notwithstanding the last additional growth similar operating of to somewhat store expense expense, cleaning greater Key distribution $XX by dollar flat sales expense freight ongoing increase were well including as margin levered these on year. last up XXX basis leaseback in higher our to million increases, from growth as third the year-over-year income. approximately markdown stock sales. Total drivers costs benefit, and and For gross largely higher and lower last to impact year, excellent centers, $XX flow-through of optimization.

to we of both thoughtful through frugality. call, continuing As to last business, focused and ROI-focused a grow remain continuing approach referenced our to our during in on cost through we ongoing data-driven and efficiency an expenses gain culture

for on will procurement. continue on the $X.X and off costs, focus in and strong line expenditures, prior items. expense, the key adjusted Prior adjusted income non-merchandise marketing year, as into Interest last a compared our was resolution rate XX.X%, income associated XX.X%, $X.X cost to year’s down our efforts this make quarter the result tax of progress year’s supply last being quarter, notional from expense impacted of to items, to the gain was balance interest in was by in sale-leaseback beyond, XXXX of million XX.X%. credit third last those with rate of primarily partially The QX the quarter rate of paying unsecured million, continue rate by office both discrete year’s areas of labor discrete the offset to tax chain, with and compared deferral We reduction, on transactions. general XX.X%,

season. for the from to Year. decline included Moving resulting with sheet. end inventory, and reduction, in hand the the in-transit Chinese to due in to billion, work on year, get significant a some mainly strong balance our performance. on Inventory receipts the inventory selling at $X.XXX a to Inventory $X.XXX sales last chase early we of quarter New very sales Total increase X.X% billion as stock compared the holiday our our down inventory percentage in-transit, is in be to to closer a stores back QX. was likely at acceleration given flat, mid-teen Including by QX QX the in ended

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

stores full-year, the now and to openings For XX XX X,XXX we store ending count our expect store be closings. with

store with analytics our we underperformance site added future been end before closings term, new lease addressing with of have have and assist reducing and in with a to process We successful capabilities evaluation. the the modeling

We fewer store acceleration last investing Queue expect fewer footprint year. store years. conversions growth QX year. quarter last primarily million Depreciation period QX highest of $XXX and for these last in Year-to-date CapEx million beginning same in were in compared million coming year, store of Capital expenditures our the XXXX, lower than million; the new rollouts. partially many offset million, Lot with decline from the $XX of our to marked is a approximately actions $XXX to $XX future $XX including support expense $X.X the the in number and million was by The Line openings, in versus openings

of $XXX capital of equivalents of year. we $XXX For the million to We of million be debt cash of $XXX third million $XXX and million expect $XX and cash cash end and with equivalents This and the $XX quarter and ended last the million at compares to cash between debt. million. quarter expenditures full-year, the third long-term long-term

for on XXXX our our share particular, At XXXX. to $XX.XX average previously authorization. sales $X.XX of actions, or Board the our payable Regarding share dividend million XX, during Share Directors of fourth important million December $XXX XXXX of repurchase quarterly strategy XX, are liquidity. shares third for dividend December an forward part repurchases of not our cost of X.X point, announced of of at we full-year. we EPS share. this excess the record guidance per million cash common under capital a quarter repurchased for on $XXX close an shareholder the is the shareholders given declared significant quarter return going in fiscal and business Also, per on quarter remain allocation This providing

in provide a we when as However, business QX, early have expect did in into greater visibility update will the and outcome to QX quarter. January, we we for the

Bruce turn referenced, now out is we can you. address As fourth solid on quarter our look closing so the over to and to a track forward questions. Thank call back we begin moderator I'll our your year. that to

Operator

Thank coming from first Instructions] today you. question is Research. Greg from [Operator Badishkanian Our Wolfe

line Your live. is now

Spencer Hanus

morning. on Greg. Good Hanus is Spencer This for

low-double up You quarter-to-date. COVID the that any stocking you comps are up country? were just rise seeing And mentioned around digits signs or that cases given underperforming you any shoppers outperforming of Could about your in the categories trend? talk are that then,

Bruce Thorn

Jonathan Bruce. and is add start you to This Wolfe Spencer. I’ll can Hi, for also the off coverage. it and thank recent

remarks, what across all Just and pleased speaking with we the in the opening board, comping. we're as positively say merch we’re divisions QX mentioned about I'd really seeing,

our We've well bedding over the pot here, nearly customer. with a Overall, the I and Home, well. too. well and worked fryer cocooning air mattress comp are closeouts type do from very is and as XX%, year performance, XX% closeouts of all and big closeouts and We've the well as areas did think our with – still of and The tech. that's were and section if really friends in we divisions, that while to actually value of and instant the QX at heard we're are family driven and in lot apparel all cookware, that over that optimization really proud like comped across health Hard Kitchen transition Soft the and strong quite Furniture dinnerware, area, this upholstery standout On of comping of got those and forth. the continues XX% you did alive upholstery of up issues window, all and But pantry our consumers some Home is that, well top when so with of the up and with those sales. that emphasis well got resonating performance up last Broyhill giving will, food and COVID appliances, of areas in year a also products, think Jennifer. the quite you division well. nesting, especially the on again once time well, on overall year-over-year. quite space going beauty doing did about you up all quite area

what So, we're with actually very pleased seeing. we're

starting again, to going peak there's still that's are we're strong in We conditions at seeing that's workplace up on something and and seeing, COVID-XX living purchases the paper products the here, that a home. with been home and improve cleaning buy at but to

Jonathan Ramsden

Yes, couple I or would just couple data of just, a know, points add, points. Spencer, minor data a you

You in we're quarter-to-date all you know, up, categories know, QX. across

we – then, bit on. particular, got bit early sort of we've well business that, also know, a in in a that did up a You we seen on you well spike know, did you November. in done early of seasonal, know, going we stock component there some October, have know, continued And Christmas, consumables, and through that's seasonal you we referencing see

our a that Christmas has year had point inventory strong relatively through we ago. been So at sold of higher certainly than significant and proportion this we a

Spencer Hanus

timing well-positioned it And improvement helpful. then, the how that the you in Can changes sequential holiday sell-through given where the just of are you today of about happy items are Thanks. talk think holiday you really this have you with for in terms standpoint? in on see quarter. are inventory season you that your sales? the to your you And That's from QX, was then, in nice the

Jonathan Ramsden

are. we overall, Yes, I’d say,

would. You far we playing quarter as know, it is planned so the out

off of strong and and a you there on pre-Thanksgiving, Christmas, we again shopping and know, be so start to of would out. early You we've know, business both we things pull-forward for those seen we thought play would, thought

December, – we from to so know, you and that. all where very with into moderate we're comfortable we So, November we plan are business the

You know, through]. [sold pretty Christmas inventory is

get happy, it. happy little And stores of tracking We we're would You where We a inventory know, more how but the bit fine levels. frankly, levels better of end of with the overall, we’re inventory progressively that. levels at, and And kind we with normalized given running. through on we've to quarter we're from be know, more the we planned had do have on-hand we expect of on-hand in certainly, be to bit very inventory. sales you low volume up the a been little

Spencer Hanus

you. thank Great,

Operator

Thank you.

Group. coming question Advisory next Our is Telsey Feldman Joe from today from

live. line Your is now

Joe Feldman

Hey, guys. questions actually. the the quarter on congratulation Thanks and for taking

mentioned talk retaining you from some customers be a they’re if you could bit different was seeing, them. may doing come how job little know, customer, and and back? are just good how more them you share existing you're them You about about getting you're customers retaining little a new I to a new curious the more what and

Bruce Thorn

on, seeing know, a e-commerce definitely work home better, home home coming making shoppers life life easier. one, and strong can you on. We're value that Joe, you. Hi, there's I'll as the of continues, it customers on she's add take new trend first thank We're e-commerce, furnishing, shopping, seeing types Jonathan better COVID in. that home it shopping, focused and the at making the

new of of we've and coming iconic lot is back, know, brand things half the and online. our heard coming from a that is in some us customers seeing she and that's an very across Broyhill customer source coming purchasing the you of acquisition, store. Some and We're time a acquisition loves also is that our that customer quickly of because Broyhill strongest for customer got customer they've other

customers QX membership an shopping But are million is X% this friendliness here value, well, that's seeing up quarter and encroaching time was that a think I for We for looking over rewards in our what on frankly, our very experience, – we're is quite was easy database. on up a and that we've rewards is convenience difficult. and our looking customer during got XX

is more $XX $XX again. responders. to on customers off So, XX% bringing clear and her her off over on a keep military reward else that's a – that veterans we all like the is off what back. back time We've something bounce we're is first was her huge did loud having doing success. a heard those in QX promotions that The purchase, XX% well on impressions over these social million like things year-over-year boding a impressions our from went of our she influencers, somewhere on products million more things level X that with and a she We've engagement through increased so all needs, the over us. of media social and personal enjoys that for and to a is QX through them quarter reaching email the

Joe Feldman

me sales, It question, sales? little would you think that but having about the thinking should and we help seems year you've the it of just, lot as the puts what said about regard to know, a might think that right lot that able and next next for good thanks about there's an a it's some early, be underlying strengths that I you way? a answer of takes great, and to level core That’s and you initiatives we should next are seen, up know you maintain some business how and sustain the in with base place like if to of of year Thanks. of have I this and to you just could lap, follow but seem

Bruce Thorn

Yes.

COVID-XX, I year, go about the going think this through while Jennifer’s Joe, you and a customers. XXXX. million maybe for for time picked in we’re it is, our of new on think, the you of to still know, rewards way know, us lot pandemic, I through Lots up I but first You we to XX discovered know, they said, terrible this Like Big way all was very difficult

that never goes I out of think assortment own on our that value a a an of are goes and way. long of things competitively penetration outs, focus and with never priced consistent, outs few brands, close and here, and style our increased

we've omni-channel either I and to company out worked X all we're going there, a being scores are XXXX, know, that retail getting services in going goes ever into operation the ever omni-channel together our that NPS out lease at our like total according retailer. know, for roll-out online we're got improving; continue stores; And format, discount, we've business continue Convenience, online, comes out in-store. I've adding ease you e-commerce Number to small-box that style easy $X we're you know, strategy get highest Queue. adding shop pick-up – And continues the Northstar and assortment we're more and in the optimization; of the know, neighborhood easily had strengthen over store, letting highest I got complete our to terms. now where some of the think pantry to we're to you on with programs a We're grow billion enabled years]; never going we've fund then, Broyhill total think her to the you and is that our Lot, leverage friendly, her better. to closer to [out with going

this year. the optimistic initiatives going year strategic we've about new next into I'm So, of our and customers gained core set that

Joe Feldman

this that with luck quarter for That’s Bruce and Thanks much great. so guys. good

Bruce Thorn

Appreciate Joe. it

Jonathan Ramsden

Joe. Thanks,

Operator

Thank you.

next Peter Our Piper coming from Jaffray. is Keith from today question

live. now is line Your

Peter Keith

Hi, feel thanks. the go look think about like do how close team and closeouts procure significantly results. place follow-up and to to types Good starting is rather that's looking outs, those months? forward this is out it something XXXX, after there to to you of are ramp that morning, going question, to the we coming everyone business on as Bruce continue the to your nice the does you momentum seem to and just pick-up, maybe last in

Bruce Thorn

hi, closeout that done we've this excited we're progress Yes, Yes, about year. Peter. our

closeouts growing self with our more You we're categories exception seasonal, us in all know, of categories. across see which all grow to but the is continue explanatory,

for apparel, far looking understand we've after a think we're a growth and of We've is runway opportunities you to her, there a these got the targeting in price Home that sense where know at muscle of so we’ll of and greatest the at and intersection heritage, the Home, long makes the and Big Hard get where really into beyond. the art and Soft closeout and years and Lots good going continue I there's with quality merchants seen, XXXX I deal looking for of some penetration good that. think

You got DMMs new category Chief and know, for targets Jack GMMs. he's by our Merchant, Pestello,

We've We practice of deal training. art sources. continue growing we're the this on to our reporting got weekly and

you You what brands a priced needs. along our the know, value great is job is our this give be competitively own her that, creators out marketplace way with and she know, in really we to there and our think never-out’s to

So, we this promising area. in more see growth

Peter Keith

are from Okay, ago on products seasonal exciting. decline around would it of Jonathan, markdowns. your points like second year year-on-year, comments XXX lapping surprising their flat your question A be a because that effectively have margin going basis sounds to seems for gross somewhat and no

You driver, highlighted the one start mix seemed to minor quarter most accretive. margin categories as but the of

you like, XXX meaningful it basis So, know, XXX It kind lands headwind? it of margin quarter. on to basis guess mathematically the becoming a that rather be on is seems points of headwind points I could and freight

Jonathan Ramsden

Yes. Hey, Peter.

you color little freight mean, Yes, know somewhat that, lot the know, volume the meaningful heard fact retailers, on – that know, not that. the are, you've it's I through, I know, other you it's you there you now. reflecting from give know me it's significant. a system right it, and it's headwind think of a is you – you more Let not going

get charges time factor. a but that a you driven in know, transportation We're that consumables general, higher, actual impact comp in You than factor we inventories last our lot also we've has usual, detention we'll by know, rates by we've that’s year, had, that physical know, it know, our we've topline, adverse cycle begin rate a but cycle, gross We'll is know, margin headwind the full think, throughout that just as the inventories – a you know, you year. from with, of new of of inventory longer then, know, so been optimization, next QX strong, you effect. Pantry on you getting, for, negative are year's somewhat are, and in and dealing know, through you getting we're impact physical some know dwell stock-up, January flowing DCs. shrink we've greater little pantry read is that through resulting this had you through know, a, bit And got you you optimization next coming We back in then, the and on rate. it little a where but a bit. does little

a So, adding a individual items sum few of this is up.

we to being markdown get will those promotional offset somewhat less expect items. last and year and know, we benefit, promotional by largely overall a still but it’s You than other be do

Peter Keith

the the That’s rest luck thanks. guys. for of Okay, Good helpful. holiday,

Jonathan Ramsden

Peter. Thank you,

Bruce Thorn

Thank Peter. you,

Operator

you. Thank

Anthony Our today coming question from Markets. line a next of Loop from Capital is Chukumba

Your line now is live.

Anthony Chukumba

and quarter. congrats Good for strong morning. my on taking Thanks the question

just two So, questions. quick

question. talked then guess I could in just about that's You wondering my – you was penetration of first know, I if BOPUS, terms give the and sales And any us e-commerce? color e-commerce you from

Bruce Thorn

Yes. Anthony. morning. Thanks, Good

and alone; win XX% truly XX%. up our the first just proud of growth from XX% we're the say QX playing for her coming majority comp in on our of that as e-commerce, overall off, quarter overall we're over of delivery of know, and growth terms. we're break profitable I'd down, that you so and growth e-commerce to remains pickup with You because basis curbside pleased XX% the about it quarter; the traffic with the in XXX it's They're team. points and pleased BOPUS

to XX, becoming truly enjoys, two-day given across located cards continues delivery is have strategically of grow know, that cost – in December period. out XX, being and day offered this doubling adding compete she curbside customer credit which we year. know, U.S. to the if of Big We're now holiday pass pure offer to are PICKUP, that is a this to lower of come that out also we into XX% two-day a then, because we stores all And to you true pickup. up year-over-year, business the allowed part her at offered and of all are way this it's through with allows do online with us us of that cards because and to the able retailer Lots wants customers, a also to omni-channel to play And shipping things these delivery our all shipping excited then, This delivery profitable weren't something fact Instacart proud that and you significant a of same the and plays we shop the the of Christmas a e-commerce are year, the year, and up last about United here with two-day she things grow meaningful we're store States We as go and the growth. and gift way. skews able truly the being or day deliver and to to

breakdown e-commerce a So, grow. that's are we've of a we room little in bit of where we and the got lot more to think

Anthony Chukumba

overall how but a Got – contributing? in it. give closeouts of, know, you. was what you – percentage if with And they're sales this you of for terribly sense they're know, and I material your us less you you much not XX% about color being Thank I'm any terms then, wondering talked up just could assuming just point, at

Bruce Thorn

Yes. a good Yes, It's no. question.

And the penetration it's tremendous know, the interesting you a – our to grows, is the than up about over and it slightly quarter, of thing these sales what lost and you as products with can with constantly the bit Soft dollar these XX% at there things said apparel our in company. a XX% as a at it, points bring less know, it. categories. know, closeouts is treasure nice know, of all this hunt engine out Home, the these and had is that I and the Like and growth nearly and from in tremendous a like with all excitement area store, starting across connections great and the the we're quality, but the us be, earlier, – still closeout tremendous with we've about getting a for growth penetration value, overall getting along the and year, denominator get good You you – is year-over-year, said get – Hard see margin to but back and really these growing what's base we customers items could especially prices, exciting the us all good able supply are – Home

this we we're a see and So, about long happy runway.

Anthony Chukumba

Thanks, That's work. helpful. guys. Keep up the good

Bruce Thorn

Anthony. thanks, Yes,

Jonathan Ramsden

you. Thank

Operator

you. Thank

today Goldman question Chandni next from is coming from Our Luthra Sachs.

is now Your line live.

Chandni Luthra

question congratulations my on Hi, good strong morning. quarter. a Thank taking you and for

early what a as to an or about for any rolling of there? additional initiative? guys reads think store you. capabilities we You pace stores XX labor the investments rollout? from of requirements savings talked Could How two-day result sort about delivery. talk Thank you about SG&A from the perhaps And a you hold, are margin what out of any does ship that standpoint, implications know this DC should

Bruce Thorn

start I’ll we’re not I adding you we’re yet, numbers of the your or But question. excited What’s seven you will DC. XX five to Yeah, into about with Chandni. tell shipping delivery customer same-day a our sure as details another to this, the I’m our and get from days that other option in stores, going implied service than we to nice this is, give about

we from partners. help the in with able We two-day reach now FedEx that serve to customers XX% are delivery U.S. of a our

be And it’s takes out definitely center in then in we load it our service the once set minimal again, also of situation. distribution that program the Columbus. maybe these stores so, off across we a up And of And their in look at labor e-com costs an somewhat and And you backrooms to as been implied, as increase as lines. – stores, nominal current this lower years it continue associated freight have our expanded the say these may to fleet shipping hasn’t time. I’d

order customer. And for reduce and it – really points management so to management we the customer. is shipments us a other our systems, order win and And distribution, split improve win the our for for this and continue overall down to comes friction a which

It’s she’s we’re where Not go So, we’re into it we excited at going this. with the and of all about early, enjoying want service. the to this numbers sure point.

Chandni Luthra

in longer real XXXX-XXXX, term a How a And should more Thank may plans. with I if with you. on the lot follow-up question Obviously, on market. just estate very going That’s helpful. your opportunity? versus about the future? think you just prospects negotiations much. openings may we think Thank footprint come about, store Any and you that about store closing rent so general your as

Jonathan Ramsden

Yes. Hey, I’ll one. Yes. take Jonathan. that to Chandni, it’s happy be

prepared to store to remarks, count we in significant have the as acceleration we in net are a So, alluded planning growth.

COVID We’re And year a the going very moving crisis. early QX in have on this closings. openings with days into back to of and of then in XXXX. ended number up openings, of year net those the pull We four back early end did decent the a

overall. can from a years our going up, have for a keep a significant for a year exploring. cadence to get many us for than that in or coming priority so. to some We on opportunity other seen pace opening where And and us. been then XXXX from potentially will a off formats much to that But start in years increase for we years. coming then in over think our more going think XXXX we’re good QX average count the we’ve we’re in real and for significant the strongest So, more is growth net that’s significant stores standpoint generally be we’ve us past both XX this store over believe there high And planning going. estate and are conventional we we’re us We that opportunities

up fewer why program significantly of is we’re stores. opening of number getting store closing And confident intervention combination both about but be stores, obviously, enabled store the the we more close. can going of the are more to One stores of to we’ve that performance net count reduce has also our reasons running been a us

the that much significantly So, significantly areas that who in years. of opportunities about and And past, because our the opening in from that’s haven’t is, been then partly where better analytics coming for to the markets our we penetrated count we to us have we export database we over have grow of of opportunity now, we’ve up store piece it. our able customer CRM data feel about good

critical So, for it’s lever us. a

to the opportunity see acceleration an very should in expect are excited there. you certainly We about And XXXX.

Chandni Luthra

Thank you so much.

Operator

you. Thank

from today coming Paul Our from is Trussell next Deutsche question Bank.

line now Your is live.

Gaby Carbone

on for nice This quarter. Paul. Hi. Gaby Good on Congratulations morning. is Carbone the

category a So, your if bigger ask it I I’m of year, can this some get kind around of of just about ahead. to overall kind past question, you mix the had moving wondering how evolution wanted and assortment. see you evolving of the picture kind details Thanks.

Bruce Thorn

of we’re Hi, really you we’ve COVID-XX. in the I’ll roller we’ve pleased world matter had with the Gaby. what is coaster Americans tremendous Bruce. especially for with tell assortment This been all consider you XXXX, through, been through, when that have the

balance we think we have that. refine I for a between the overall high shopping, to nice needs everyday Jennifer a at to and that level essential hope continue everyday

a working-from-home to situated environment, the or cocooning I trips the a I So, we shopping nice of going the more more COVID-XX, past And outdoor year. even be furniture more environment, assortment environment, get improve etcetera. both of well assortment through going more home indoor of And to there’s that’s we home. to well, the people, and prevail think a school-from-home and her very trend have for blend as the we the And think, also have over work-from-home years. nice

we into work, school-at-home convenience live, key. at everyday So, how I essentials think, overall, play is and

is I with closeout think and that our increasing. we’re we going going that – into to categories value like to to value come I’ve before, continue said lean across penetration all

the to can priced great and offer and compete brands, own price on through then the items our value product an into on quality a that of products. lean also to going convenience everyday competitively We’re name where customers, incredible she at consistency expects we

in growth will house we’ll trend, to We’ll to that That will for adjust and our we’ve see are emphasized in that the optimization. the be to prepared The grow. in pantry we think continue that. continue cleaning needs consumables. continue I something

known and for we’ll a Overall, business seasonal will we’re as traffic-driving It’s lean our business think grow It’s well. I a continue It’s strong to business. that us. for. what into in categories more our for double-digit Hard furniture. we’ve in share Home even categories with tremendous taking growth and all normal those times, market Soft growth where been Home, are us, Furniture,

as into So, those well. we’ll areas lean

then about all I be obsessed But think we’re categories. those in testing thing are other is, we creators up the overall, finding situated we for through other space may that the we and far can So, into along opportunities white us would and go value set think it like we’re deals few how and categories I a where with makes key value nicely XXXX beyond. some sense year apparel

Gaby Carbone

you maybe Great. see reduce cost about base, a your opportunities? ask kind of wanted further quick efforts to where And your to just follow-up, and I

Jonathan Ramsden

of progress one. Hey, take two-pronged that to our is excellent Yes. base cost And and again, Yes, structural at that a a standpoint be that. One made target able back think put on year Gaby, point. looking or it’s approach. really in to we’ve how goes from all I’ll our at being the of a original ago this we $XXX sort goal we million more expenses. out approach frugal And then of bottoms-up about savings

continue as but to it. mean, the range has we notch that areas program Whole it’s referenced multiple of still XXXX, got So, we’re to think see, opportunity, we ongoing pushing to of And to prepared on XXXX. in We in both significant frankly, out it we fronts. Journey of continue cost said some areas of And the as opportunities mindset the those beyond on in legs in the an Family a will in prepared that, really take remarks, business, go remarks. but I

Gaby Carbone

Best you. Thank luck. of

Jonathan Ramsden

Thank you.

Operator

Thank you.

Short from from today question next Karen Barclays. coming is Our

is line Your now live.

Renato Basanta

question. actually Renato Good for Karen. on taking morning. This for is Basanta Hi. Thanks the

some So around XXXX. of the wanted discussion first, to just I on follow-up

respect with and manage environment. the Specifically, volatile going obviously how pretty to to what’s P&L a you’re

X% year, be of sales at or drop you any may not basis but you look cost of comp, next consensus down that implies has actually XXXs taking which what may have. into for of points happens, may you at account If type to – levers down before deleverage close

you of can us and the help if could you frame the thinking how scenario, some wondering maybe you’re that pull of levers about in type just So, manage? P&L to

Jonathan Ramsden

by depending to we’re through on up with also that. I’ll as a year, you quarter than Renato, be happy It Hey, story a what And help quarter-by-quarter. the against certainly And complex it’s is Yes. go you’re different right. more story usual.

overall be. out. time obviously So, Bruce rolling thinking the question talking will about to back trends initiatives and earlier spending have what a what start at we’re that, about go lot I with all to was a looking little of want we bit that

And back things this as Optimization all to we through that other you the if but and we support an And XXXX. acceleration and underlying of performance into held that seen, The Pantry to the we which story about like better e-com year, out has will If that beginning going on have comps go nesting you comp Lot our our been masked in and way we and our believe, the year, performance, it year we rolled and gone by Queue Broyhill look get expected talked things capabilities. the through have has at around stimulus, progressively us the true.

and point to degraded That in XXXX get stock up happen. we we’re it our had is XXXX, nesting you to But a we in I continue March, QX, some will a QX then margin to up will lap degree, this of that so margin As the into into there’s that. into reasonable get which it the degree, benefit story. quarter-by-quarter, a at we be when different assume will some would against that the mean, there least likelihood start as year. we’ll further at trend effect

know to points do able been also in inventory have this had is we we we sales. that had what more more the think year there, from at I would certain year

and we’ll bit we last some there’s the any have that all standpoint, this of our margin an as picked as expense So whether think days, business, overall own that’s a an couple up lapping on we’re a round those wildcard stimulus all is of in areas. that. from seems of to bit we through haven’t opportunity obviously, second big working but in of counted XXXX momentum, plan and about of of A still And see little that. we then

most would changer point the we’re about we’ve make significant we I to our critical first is that one through past. But in XXXX of beyond. that we we able all appropriately take that as of gives react out stuck much it not we and XXXX for But potentially conservatively. We’re working XXXX think detail that to and as be say more of and through we game planning quickly plan. comes, can thought that now. similar our impact. point certainly able particular our learned serve the other through to perhaps but we be business sure half be been ability we that my from I were the are trying important I of than locked just or nimble perspective the a be And confidence to us in into XXXX of really is well of think strategies sort other way, a should and us the the in strength any And that stimulus a XXXX underlying regardless move reversal react will

Renato Basanta

then Okay. wanted on to follow-up bit. just helpful. That’s e-commerce a And

expecting assortment I efforts if And was be online we the you going forward? skews. levels and doubling you e-commerce you of your available And speak cycle? could to think You that’s that. and kind with to are expand about the continue in-store to the curious then talked where should But today, the of wondering the what percentage investments about to respect actually investment

Bruce Thorn

with and we creating last off is from in redundant to cost. to or we at pickup every point assortment store, are the have Yes. but this those great basically, I’ll Xx not our skews and mean skew that it’s cover that e-commerce improvement were, incremental be not that. where more that available a sense skews curbside I growth or ship-from-store in we’re and from it’s mean, year, I start ability The the

able being the infrastructure grow is profitable leverage e-com for way which a We’re to our business. that, to

IT XX been of terms great stores, absorbed just this at pickup lot this. on and unbelievably a e-commerce about scrappy year e-commerce, terms this of done has work team job Instacart, we in of In system, but working this with well delivery did the the some in point of in-house as the as our investments our turning an have investment is the team being major

mix systems making them maybe XXXX, this really So, and about now operational bringing into tweaks. a the better, few processes, into refining is the excellence

from So, a major off overhauls got We’ve overhauls. we’re infrastructure still runway and system here. ways any

incremental more step. it’s of investments an So, improvement, than stair rather

Renato Basanta

and then it, I what one if What in was And just quarter? one, wondering great. you’re much you of COVID these missed look on may, but the I Okay. to to like you. Thank in costs of That’s COVID expectations what into as your sorry expect terms quick costs, if then that expecting XQ? we stick look around? next year, into how are And

Bruce Thorn

broke part or costs of on What I’m us. something was kind QX. You sure were first you your the question, of up that? not asking, what in

Renato Basanta

What for much your were XQ? to expectations are the in What COVID next around? of how then year, costs expect XQ? stick the you for cost And

Jonathan Ramsden

that the running through hourly Yes, higher of ongoing Yes, million we’re costs some $X primary costs or on top that, rates. did assume $X million will incremental through Obviously, usual, so that store But cleaning $X Renato. That’s very the and point. the we’re matter of hey, at pay referring supplies. corporate for to. XXXX, we strong and bonuses or two of given this $X that we higher at million million, paid than least performance. XXXX We bonuses quarters first continue

Renato Basanta

the Thanks Great. color. for

Bruce Thorn

Thank you.

Operator

Our of next Bank is from America. coming Haas question from Jason

Your is live. line now

Jason Haas

consistent taking that my question. then a And you’re through XQ, also, so moderation Black rate now for attributable on represents double-digit more Thanks provide that rate that Friday? been if Can you has quarter-to-date? that to? color low the And from seeing far what’s

Bruce Thorn

on a off a decision was closed been Jonathan and QX that We customer We’ve well. in get also Thanksgiving Well, cadence I and in partially and mind QX. had – we’ve our job believe. to continued the I’ll precise, will happy Expectations-wise, nice families associates Monday the good by very their get made that for into We with QX. managing associates in as met we well. the back more we’re Day that start part. promotional our something past expectations mind. And But a Friday open X Thanksgiving. most our did that enjoy Black we start our up with on P.M. Cyber finish noticed home her And shop of also that allowed and we and and most weekend, to us our early in to that Jennifer’s for needs stay

holiday so the back – good for double-digit, continues part, sold through that through the with how essentials, to well. far continued] at about nesting we’re some very good it’s shopping And know way seasonal trend, home Christmas And Jonathan cocooning, started that or so all October, seen [x the earlier, we we’ve double-digit feel play through said we comp, in well. very that board, overall, and do and like most out shopping low in been positioned the buildup quarter. and We the but across the

the other So, categories are contributing.

tough in people do going to place are for that’s quarter out It’s that think moderated many rest and quarter an here, as is at the a going in There’s more of the We are coming at be staying there. the we more. the that have look this to is regulations quarter. fact raging believe COVID-XX folks. the government view and home towards elongated through I impact

it, expect events allow But especially we this decline We’re promotional the our do with built terms. serve to on will and to point. and be on But but start want of expect terms, to her traffic do be highly we’ll form moderation omni-channel shop and we bit, realistically. her a it to from with some do at comping year, in family won’t there to best well a offering we friends to look we moderation, activity at continue have really to going when this her customer that year at discounts we’ll last we go our

Jason Haas

on if provide could on helpful. in has how could the you an And give Thanks. then leasing that performed, be update easy a penetration commentary helpful? any That’s Thanks. offering that follow-up as you where question, just general, stands? would And

Bruce Thorn

did our it It on early with with to save years. enjoys. Yes, year, we’ve that This progressive customer got not on, to big, live great partners a as easy lots. leasing, stimulus prior the package, and she as require service her be continues much allows

came we down high year, first I and increase part. of we as recalled get will numbers penetration for expect the still down think that double-digit-teens most remains past slightly it the half we post-COVID, But in penetration those level the that and again.

Jason Haas

really That’s helpful. you. Thank

Operator

you. Thank

is Thomas from Markets. Our from next coming Capital question KeyBanc Brad

line Your now live. is

Brad Thomas

of to the promotions. Hi. Thanks follow-up on question. Want for of topic my taking some

or online understanding this the I for in year. XX% was are just how past been was off I XX% dialing about general, them up had sort you the just you year with forward, that or offering, for back six is Monday, months the I year. hoping of obviously over think think from a bit so? ticked unique Thanks. that promotions the last thinking guess going you about, versus the to last promotion guys Cyber It

Bruce Thorn

Go ahead, Jonathan.

Jonathan Ramsden

less, day, how there’s and think less us and overall, that And less bit. front. the spread been intense And we and of the into our deploy effective and to but degree on. has been family will promotions quarter to it’s there we the Yes. was tools it and broadly way events. Cyber it’s Hey, changed. out those And then and as We’ve that whole shopping it and been QX. called new working day exception friends take we but that front, it comfortable last a speaking, on we’ve less some remain expect do out quarters, roll on have on with the QX well. that over that QX. appropriate Yes. been certainly unique Brad. a to we working of But couple promotional to in promotions. bit through broadly and Bruce markdowns opportunity we We’ve out of right. Monday speaking, less I’ll been of be some so needed some But the remain house I will patterns weekend, and weren’t as less running this absolutely an to one some to case generally, time on we’re help We yes, top in you’re thought promotional. that we of our be because wants more promo to are promotional has intensity mean, add probably We’ve was generally that a that,

Bruce Thorn

have What work and over hard customers. what get as mean, the with there, Pestello, we’re from company tail high-low better? sets of just of well. I’ll said promos better, we do not just team, all a work normal on get Jack weekends, do hard of we how it’s sometimes at should It’s time, to on And when Yes. the Jonathan in not looking this how out they add in out sales COVID, look part these I like? that you in the

and be happier do better customers more much we the more be and better, way. make the process how So, in buy sell allocate much friction and it less better, productive in

easier well as lean we becomes proposition, an to in As that value own closeouts as brands.

so, XXXX of more promotional We’ll can through in a lot how into XXXX. we’ve we learned effective learnings much And applying be in be those cadence. terms

Brad Thomas

Great. Thank you so much.

Bruce Thorn

Yes.

Operator

question-and-answer session. closing Thank end floor I’d over like turn management of you. any We’ve comments. to to back reached the further or for our

Bruce Thorn

want there, thank stay and happy happy season. very Just for healthy. And time you Be safe a holiday your everyone with today. us out to wish

Operator

Thank does at today. and wonderful you you. for conclude you day. teleconference this We your That today’s participation time your and thank may have disconnect line a

Big Lots (BIGGQ) 4 Dec 202020 Q3 Earnings call transcript