8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported):March 3, 2010

BIG LOTS, INC.

(Exact name of registrant as specified in its charter)

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

300 Phillipi Road, Columbus, Ohio 43228

(Address of principal executive offices) (Zip Code)

(614) 278-6800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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

Item 2.02 Results of Operations and Financial Condition.

On March 3, 2010, Big Lots, Inc. (“we,” “us” or “our”) issued a press release and conducted a conference call, both of which reported our fourth quarter and full fiscal 2009 unaudited results, announced that our Board of Directors (“Board”) authorized the increase of our previously announced share repurchase program from $150.0 million to $400.0 million, provided initial guidance for fiscal 2010, and discussed an estimated outlook through fiscal 2012.

The press release and conference call both included “non-GAAP financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229).  Specifically, the following non-GAAP financial measures were included: (i) adjusted selling and administrative expense; (ii) adjusted selling and administrative expense rate; (iii) adjusted operating profit; (iv) adjusted operating profit rate; (v) adjusted income tax expense; (vi) adjusted effective income tax rate; (vii) adjusted income from continuing operations; (viii) adjusted net income; (ix) adjusted diluted earnings per common share from continuing operations; and (x) adjusted diluted earnings per common share.

These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”): (i) net income of $8.2 million, or $0.10 per diluted common share, recognized during the third quarter of fiscal 2009 related to the net gain on the sale of real estate; and (ii) net loss of $2.4 million, or $0.03 per diluted common share, recognized during the fourth quarter of fiscal 2009 related to the settlement of a civil collective action.  As required by Rule 100 of Regulation G and Item 10 of Regulation S-K, the press release, which was posted in the Investor Relations section of our website and referred to during the conference call, contained a presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of the differences between the non-GAAP financial measures and the most directly comparable financial measures calculated and presented in accordance with GAAP.

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

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

Attached as exhibits to this Form 8-K are copies of our March 3, 2010 press release (Exhibit 99.1) and the transcript of our March 3, 2010 conference call (Exhibit 99.2), including information concerning forward-looking statements and factors that may affect our future results.  The information in Exhibits 99.1 and 99.2 is being furnished, not filed, pursuant to Item 2.02 of this Form 8-K.  By furnishing the information in this Form 8-K and the attached exhibits, we are making no admission as to the materiality of any information in this Form 8-K or the exhibits.

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

(e)           On March 3, 2010, the Compensation Committee (“Committee”) of our Board recommended, and the independent, non-management members of our Board (“outside directors”) approved, the following fiscal 2010 salaries, payout percentages for the target bonus level (with floor being one-half of the target payout percentage and stretch being double the target payout percentage) and equity awards for Steven S. Fishman, Joe R. Cooper, John C. Martin and Lisa M. Bachmann, our executive officers whose compensation information was included in our 2009 proxy statement (collectively, the “named executive officers”).  Brad A. Waite, whose compensation information was also included in our 2009 proxy statement, informed us of his intention to ret ire during fiscal 2010; accordingly, the Committee did not increase Mr. Waite’s salary or award him any equity compensation.

Name	Fiscal 2010 Salary ($)		Fiscal 2010 Target Bonus Payout Percentage (%)		Common Shares Underlying Stock Option Award (#)		Common Shares Underlying Restricted Stock Award (#)
Steven S. Fishman		1,400,000		120		0		250,000
Chairman, Chief Executive Officer and President
Joe R. Cooper		500,000		60		50,000		25,000
Senior Vice President and Chief Financial Officer
John C. Martin		550,000		60		40,000		15,000
Executive Vice President, Merchandising
Lisa M. Bachmann		500,000		60		50,000		25,000
Senior Vice President, Merchandise Planning/Allocation and Chief Information Officer

In connection with the award of fiscal 2010 executive compensation, upon the recommendation of the Committee and the approval of the other outside directors, the Company and Mr. Fishman entered into a Retention Agreement on March 5, 2010.  Under the Retention Agreement, Mr. Fishman is entitled to receive performance-based restricted stock awards in fiscal 2010, as reflected above, and in fiscal 2011 and fiscal 2012 if he is employed by us on the grant date in each such year.  The number of common shares underlying the restricted stock awards to be made in fiscal 2011 and fiscal 2012 is dependent on our performance relative to the prior fiscal year’s operating profit, subject to col lars established in the Retention Agreement.  Each annual restricted stock award will vest only if we achieve a corporate financial goal established at the beginning of the fiscal year in which the restricted stock award is granted and Mr. Fishman remains employed by us until the first anniversary of the award.  The Committee and other outside directors determined that Mr. Fishman’s continued leadership is important to our future performance, and they believed it was in our best interests and the best interests of our shareholders to enter into the Retention Agreement to better assure the continuing undivided loyalty and dedication of Mr. Fishman.  This summary is qualified in its entirety by reference to the full text of the Retention Agreement with Mr. Fishman which is attached to this Form 8-K as Exhibit 10.1.

The named executive officers’ bonuses are subject to the terms of the Big Lots 2006 Bonus Plan (“2006 Bonus Plan”), each executive’s employment agreement, and the attainment of certain corporate performance amounts under a specified financial measure that was recommended by the Committee and approved by the outside directors on March 3, 2010.  The financial measure adopted for fiscal 2010 bonus determinations is our operating profit, as adjusted to remove the effect of equitable adjustments set forth in, and subject to the other terms of, the 2006 Bonus Plan.  The corporate performance amounts were derived from the fiscal 2010 corporate operating plan established by our Board.  The 2006 Bonus Plan is incorporated herein by reference as Exhibit 10.2.

The named executive officers’ non-qualified stock option awards and restricted stock awards, all of which have a grant date of March 5, 2010, are subject to the terms of the Big Lots 2005 Long-Term Incentive Plan (“2005 Incentive Plan”).  The Committee and the outside directors established the grant date in order to allow the market to absorb and react to our release of material non-public information on March 3, 2010, and to avoid any suggestion that our Board, the Committee or any employee manipulated the terms of the equity awards.  The 2005 Incentive Plan is incorporated herein by reference as Exhibit 10.3.  The non-qualified stock option awards are also subject to the terms of the Big Lots 2005 Long-Term Incentive Plan Non-Qualified Stock Option Award Agreement, the form of which is inc orporated herein by reference to Exhibit 10.4.  The restricted stock award granted to Mr. Fishman is also subject to the terms of the Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement for CEO, the form of which is filed herewith as Exhibit 10.5.  The restricted stock awards granted to Mr. Cooper, Mr. Martin and Ms. Bachmann are also subject to the terms of the Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement, the form of which is incorporated herein by reference to Exhibit 10.6.

Item 8.01 Other Events.

As discussed above, on March 3, 2010, we announced that our Board authorized the repurchase of up to $400.0 million of our common shares, an increase from the repurchase program previously announced on December 4, 2009.  The increased authorization is effective immediately and the repurchase program will continue until exhausted.  We expect the purchases to be made pursuant to a $150.0 million accelerated share repurchase transaction and may be made in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors.  As part of the accelerated share repurchase transaction, an estimated number of our common shares will be reduced from our outstanding common shares near the start of the transaction.  The exact total number of shares repurch ased under the accelerated share repurchase transaction will be based upon the volume-weighted average price of our common shares over a predetermined period and will not be known until that period ends.  Common shares acquired through the repurchase program will be available to meet obligations under equity compensation plans and for general corporate purposes.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibits marked with an asterisk (*) are filed herewith.  Exhibits 10.1 through 10.6 are management contracts or compensatory plans or arrangements.

Exhibit No. Description

10.1* Retention Agreement with Steven S. Fishman.

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

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

10.4 Form of Big Lots 2005 Long-Term Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.3 to our Form 8-K dated March 4, 2009).

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

10.6 Form of Big Lots 2005 Long-Term Incentive Plan Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.4 to our Form 8-K dated March 4, 2009).

99.1* Big Lots, Inc. press release dated March 3, 2010.

99.2* Big Lots, Inc. conference call transcript dated March 3, 2010.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BIG LOTS, INC.
Date:  March 9, 2010	By:	/s/ Charles W. Haubiel II
		Charles W. Haubiel II
		Senior Vice President, Legal and Real Estate,
		General Counsel and Corporate Secretary

EX-10.1

Exhibit 10.1

RETENTION AGREEMENT

RETENTION AGREEMENT (“Agreement”) between Big Lots, Inc. (“BLI”) and its affiliates, predecessor, successor, subsidiaries and other related companies (collectively the “Company”) and Steven S. Fishman (“Executive”), collectively, the “Parties,” effective as of March 5, 2010 (“Effective Date”).

BLI’s Board of Directors has determined that it is in the best interests of the Company and its shareholders to assure that the Company shall have the continued services of the Executive as its Chief Executive Officer.  Therefore, with the approval of BLI’s Board of Directors, the Parties have entered into this Agreement as of the Effective Date. This Agreement is in addition to and does not supersede, replace or modify, in any respect, any other agreement or arrangement between the Executive and the Company in effect as of the Effective Date.

ARTICLE I

SECTION 1.01.  Annual Restricted Share Grants.  Subject to the terms of this Article I, the Company shall make the restricted share grants to the Executive described herein in order to retain the Executive in the Company’s employ, motivate him to achieve the Company’s performance goals and further align his interests with those of the Company’s shareholders.  During each of Fiscal Years 2010, 2011 and 2012 (as defined below), provided that the Executive remains continuously employed by the Company and subject to approval by the Compensation Committee of BLI’s Board of Directors or such other committee of the Board that administers the Company’s equity-based compensation programs (such committee, the “Commi ttee”), the Executive shall be entitled to an annual grant of 250,000 performance-based restricted shares (“Restricted Shares”) of BLI’s common stock, par value $0.01 per share (each, a “Common Share”), subject to the terms and conditions set forth in this Article I.  The term “fiscal year” shall mean the period beginning on the first Sunday after the Saturday closest to January 31st of each calendar year and ending on the Saturday closest to January 31st of the following calendar year.  For example, Fiscal Year 2010 begins on January 31, 2010 and ends on January 29, 2011.

SECTION 1.02.  Performance-Based Adjustment.  Notwithstanding any provision of this Article I to the contrary, in the event that the level of achievement of the Final Applicable Performance Criteria (as defined below) for Fiscal Year 2010 or 2011 is less than the Floor Level (determined as set forth below) for such fiscal year, the Committee shall reduce the size of the annual grant to be made during Fiscal Year 2011 (in the case of achievement below the Floor Level in Fiscal Year 2010) or Fiscal Year 2012 (in the case of achievement below the Floor Level in Fiscal Year 2011)  by 5000 Restricted Shares for each 1 percent by which the level of achievement is less than the Floor Level, and in the event that the level of achievement of the Fina l Applicable Performance Criteria for Fiscal Year 2010 or 2011 is greater than the Full Stretch Level (determined as set forth below) for such fiscal year, the Committee shall increase the size of the annual grant to be made during Fiscal Year 2011 (in the case of achievement above the Full Stretch Level in Fiscal Year 2010) or Fiscal Year 2012 (in the case of achievement above the Full Stretch Level in Fiscal Year 2011) by 5000 Restricted Shares for each 1 percent by which the level of achievement exceeds the Full Stretch Level, provided that, so long as the Executive is entitled to an annual grant hereunder, the number of Restricted Shares to be granted during each of Fiscal Years 2011 and 2012 shall not be less than 225,000 and shall not be greater than 275,000.  The term “Final Applicable Performance Criteria” for any fiscal year means the applicable performance criteria established in writing by the Committee in the first quarter of such fiscal year and certified as actually attain ed (including the effect of permitted adjustments) by the Committee in the first quarter of the immediately subsequent fiscal year in accordance with the Big Lots 2006 Bonus Plan, as amended (or any successor to such Plan, hereinafter, the “Bonus Plan”).  Floor Level and Full Stretch Level for any fiscal year shall be determined by the Committee in accordance with the terms of the Company’s Bonus Program.

SECTION 1.03.  Timing of Grants; Vesting Criteria.Each grant of Restricted Shares required to be made hereunder shall be made by March 31 of the relevant fiscal year.  Except as otherwise set forth in Section 1.04 or 1.05 below, in order for the Restricted Shares to become fully vested and non-forfeitable, (a) the Executive must remain continuously employed by the Company until the one-year anniversary of the grant date or, in the case of the Fiscal Year 2012 grant, until March 31, 2013, and (b) the dollar amount of the Final Applicable Performance Criteria attained by the Company for the fiscal year during which the grant is made must be at least 90 percent of the dollar amount of the Fina l Applicable Performance Criteria attained by the Company for the immediately preceding fiscal year; provided, however, that in the event that the Committee selects applicable performance criteria for a fiscal year that are either (x) based on different performance metrics or (y) calculated using a different methodology, in either case, than was used for the immediately preceding fiscal year, then for purposes of determining 90 percent attainment pursuant to this Section 1.03, performance for the immediately preceding fiscal year shall be calculated based on the same performance metrics and using the same methodology that are applied for the fiscal year during which the relevant grant is made.

SECTION 1.04.  Qualifying Termination of Employment.  In the event that the Executive’s employment is terminated by the Company involuntarily without Cause (as defined in Section 1.09) or the Executive resigns pursuant to a Constructive Termination (as defined in Section 1.10), subject to the terms of this Section 1.04, (a) any Restricted Shares that are outstanding at the time of such termination shall remain outstanding and, subject to achievement of the Final Applicable Performance Criteria for the fiscal year then in effect as provided in Section 1.03 above, shall become vested and nonforfeitable as if the Executive had remained employed by the Company until the one-year anniversary of the grant date or, in the case of the Fiscal Year 2012 g rant, until March 31, 2013, and (b) if  such termination occurs prior to the Executive’s receipt of each of the three grants of Restricted Shares provided for in this Article I, then, in lieu of the required grants of Restricted Shares that have not been made, the Executive shall be eligible to receive one or more cash payments (each, an “Equity Value Payment”) at the time(s) and in the amount(s) set forth in this Section 1.04.  The Executive’s rights to each such Equity Value Payment shall be determined based on the Company’s achievement of the Final Applicable Performance Criteria in accordance with Sections 1.02 and 1.03 above in the same manner that would have determined the grant and vesting of the Restricted Shares if the Executive had remained employed by the Company until March 31, 2013.  Any such Equity Value Payment that the Executive becomes entitled to receive pursuant to this Section 1.04 shall be paid to the Executive within 10 busines s days following March 31 of the fiscal year following the fiscal year in which the relevant grant of Restricted Shares would otherwise have been made.  The amount of each such Equity Value Payment shall be equal to the product of (x) the Fair Market Value (as defined in the Company’s 2005 Long-Term Incentive Plan, as amended and restated effective May 29, 2008 (the “2005 LTIP”)) per Common Share on the March 31 immediately preceding the payment date set forth in this Section 1.04 multiplied by (y) the number of Restricted Shares that would have been granted to the Executive, determined in accordance with Section 1.02, in the event that the Executive had remained employed until the relevant grant date.  Notwithstanding any provision of this Section 1.04 to the contrary, in order for the Executive to be entitled to the payments and benefits set forth in this Section 1.04, within 55 days following termination of the Executive’s employment, the Executive must sign a c omprehensive release of claims against the Company and its affiliates, in the form determined by the Company in its sole reasonable discretion but consistent with its general practices for such releases from terminated senior executives, and must not revoke such release of claims during the revocation period specified therein.

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SECTION 1.05.  Change in Control.  In the event of a Change in Control (as defined in the 2005 LTIP), all outstanding Restricted Shares shall become fully vested and non-forfeitable as of the date of such Change in Control.  In the event that a Change in Control occurs prior to the Executive’s receipt of each of the three grants provided for in this Article I and provided that the Executive remains continuously employed by the Company until the date of the Change in Control, in lieu of any of such three grants that have not yet been made, the Executive shall be entitled to receive from the Company or its successor, within 10 business days following the date of the Change in Control, an amount in cash equal to the product of (a) the Fai r Market Value per Common Share on the date of the Change in Control multiplied by (b) 250,000 multiplied by (c) the number of fiscal years during which the Executive is entitled to receive an annual grant of Restricted Shares pursuant to this Article I but had not yet received the annual grant as of the date of the Change in Control.  In the event of a Change in Control that occurs following termination of the Executive’s employment pursuant to Section 1.04 above, within 10 business days following the date of the Change in Control, the Executive shall be entitled to receive from the Company or its successor any unpaid Equity Value Payments.  The amount of any such Equity Value Payment(s) shall be determined in accordance with Section 1.04 above, provided that (x) in the case of any Restricted Share grant that has become subject to adjustment pursuant to Section 1.02 above prior to the date of the Change in Control, the Equity Value Payment shall be equal to the product of (i) the F air Market Value per Common Share on the date of the Change in Control multiplied by (ii) the number of Restricted Shares that would have been granted to the Executive, determined in accordance with Section 1.02, and (y) in the case of any Equity Value Payment that has not become subject to adjustment pursuant to Section 1.02 prior to the date of the Change in Control, the Equity Value Payment shall be equal to the product of (i) the Fair Market Value per Common Share on the date of the Change in Control multiplied by (ii) 250,000.  Following a Change in Control, the Executive shall not have any rights pursuant to this Agreement to receive any further grants of Restricted Shares or other equity-based awards of the Company.

SECTION 1.06.  Adjustments for Changes in Capitalization.  In the event of a change in the Company’s capital structure of the nature described in Section 4.7 of the 2005 LTIP, in the case of any Restricted Share grants that have not yet been made pursuant to this Article I as of the date of such change, the number of Restricted Shares set forth in this Article I (including the numbers that relate to annual grants, reductions, increases, minimums and maximums) shall be adjusted in such a manner as the Committee deems necessary or appropriate to reflect equitably the effects of such changes in the Company’s capital structure.

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SECTION 1.07.  Award Agreements.  Each grant of Restricted Shares shall be reflected in an award agreement that sets forth the terms and conditions of such grant, which award agreements shall be consistent with the terms of this Article I.

SECTION 1.08.  Restricted Stock Units.  In lieu of granting Restricted Shares pursuant to this Article I, the Committee shall be permitted to grant restricted stock units with respect to Common Shares (which restricted stock units may be settled in cash, Common Shares or a combination thereof, as determined by the Committee).

SECTION 1.09.  Definition of Cause.  For purposes of this Agreement, “Cause” means the Executive’s (a) failure to comply with the Company’s policies and procedures which the Board of Directors of BLI reasonably determines has had or is likely to have a material adverse effect on the Company or any entities that become related entities after the date hereof (collectively, the “Group” and separately, “Group Member”); (b) willful or illegal misconduct or grossly negligent conduct that is materially injurious to the Group, the Company or any other Group Member, monetarily or otherwise; (c) violation of laws or regulations governing the Group, the Company or any other Group Member (including the Sarbanes-Oxle y Act of 2002) or violation of the Company’s code of ethics; (d) breach of any fiduciary duty owed to the Group, the Company or any other Group Member; (e) misrepresentation or dishonesty which the Board of Directors of BLI reasonably determines has had or is likely to have a material adverse effect on the Group, the Company or any other Group Member; (f) material breach of any of the Executive’s material obligations or duties to the Group, the Company or any other Group Member; (g) involvement in any act of moral turpitude that in the reasonable opinion of the Board of Directors of BLI has a materially injurious effect on the Group, the Company or any other Group Member or their reputation; or (h) breach of the terms of any non-solicitation or confidentiality clauses contained in an employment agreement(s) with a former employer.  A termination for Cause shall only be effective after (x) the Company has delivered a written notice to the Executive stating that, in the reasonable opinion of BLI’s Board, the Executive may be terminated for Cause, specifying the details and (y) if the failure or action is one that can be cured, the Executive does not cure the matter giving rise to the Cause determination within 30 days after receiving notice.

SECTION 1.10.  Definition of Constructive Termination.  For purposes of this Agreement, “Constructive Termination” means that the Company materially adversely changes or causes a diminution in the Executive’s reporting relationship, job description, duties, responsibilities, compensation, perquisites, office or location of employment (as reasonably determined by the Executive in his good faith discretion), in each case as in effect immediately prior to such change or diminution.  The Executive shall notify the Company in writing at least 45 days in advance of any election by the Executive to terminate his employment as a result of a Constructive Termination, specifying the nature of the alleged adverse change or diminution, and the Company shall have a period of 10 business days after the receipt of such notice to cure such alleged adverse change or diminution before the Executive shall be entitled to exercise any right to terminate his employment as a result of a Constructive Termination.

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ARTICLE II

SECTION 2.01.  Acknowledgement of Arbitration.The Parties agree that arbitration is the sole and exclusive remedy for each of them to resolve and redress any dispute, claim or controversy involving the interpretation or application of this Agreement.

SECTION 2.02.  Effect of Arbitration.  The Parties intend that any arbitration award relating to any matter described in Section 2.01 above shall be final and binding on them,  that a judgment on the award may be entered in any court of competent jurisdiction and that enforcement may be had according to the terms of that award.  This Section 2.02 shall survive the termination of this Agreement.

SECTION 2.03.  Location and Conduct of Arbitration.  Arbitration shall be held in Columbus, Ohio, and shall be conducted by a retired federal judge or other qualified arbitrator.  The arbitrator shall be mutually agreed upon by the Parties, and the arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association.  The Parties shall have the right to conduct discovery pursuant to the Federal Rules of Civil Procedure; provided, however, that the arbitrator shall have the authority to establish an expedited discovery sched ule and cutoff and to resolve any discovery disputes.  The arbitrator shall have no jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms of this Agreement.  The arbitrator’s sole authority shall be to interpret or apply any provision(s) of this Agreement or any public law alleged to have been violated.  The arbitrator has the authority to award damages and other relief expressly provided by law.

SECTION 2.04.  Time for Initiating Arbitration.  Any claim or controversy relating to any matter described in Section 2.01 above not sought to be submitted to arbitration, in writing, within 90 days after the date the Party asserting the claim knew, or through reasonable diligence should have known, of the facts giving rise to that Party’s claim, shall be deemed waived; and the Party asserting the claim shall have no further right to seek arbitration or recovery with respect to that claim or controversy.  Both Parties agree to strictly comply with the time limitation specified in this Section 2.04.  For purposes of this Section 2.04, a claim or controversy is sought to be submitted to arbitration on the date the complaining P arty gives written notice to the other party that (a) an issue has arisen or is likely to arise that, unless resolved otherwise, may be resolved through arbitration under this Article II and (b) unless the issue is resolved otherwise, the complaining Party intends to submit the matter to arbitration under the terms of this Article II.

SECTION 2.05.  Costs of Arbitration and Attorney’s Fees.  The Company shall bear the arbitrator’s fee and other costs associated with any arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(d)(1), elects to award these fees to the Company.  Attorney’s feesmay be awarded to the prevailing party if expressly authorized by statute, or otherwise each party shall bear its own attorney’s fees and costs.  Notwithstanding the foregoing: < /font>(a) any costs being reimbursed must relate to a claim brought during the lifetime of the Executive with respect to an alleged breach of any obligation of the Company under this Agreement; (b) the amount eligible for reimbursement during any taxable year of the Executive may not affect the amount eligible for reimbursement in any other taxable year; (c) any reimbursement must be made on or before the last day of the Executive’s taxable year following the taxable year in which the cost was incurred; and (d) the right to reimbursement for such costs is not subject to liquidation or exchange for another benefit.

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SECTION 2.06.  Arbitration Exclusive Remedy.  The Parties acknowledge that, because arbitration is the exclusive remedy for resolving the issues described in Section 2.01 above, neither Party may resort to any federal, state or local court or administrative agency concerning those issues and that the decision of the arbitrator shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative agency with respect to any arbitrable claim or controversy.

SECTION 2.07.  Waiver of Jury.  The Executive (personally and on behalf of all the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and assigns) and the Company (on its own behalf and on behalf of its successors) each waive the right to have a claim or dispute with one another decided in a judicial forum or by a jury, except as otherwise provided in this Agreement.

ARTICLE III

SECTION 3.01.  Modification or Waiver; Entire Agreement.  Except as set forth in Section 2.04 above, no provision of this Agreement may be modified or waived except in a document signed by the Executive and the Company’s Chief Executive Officer (other than the Executive) or other person designated by BLI’s Board of Directors.  This Agreement constitutes the entire agreement between the Parties regarding the retention arrangement described herein, and, except as otherwise specifically provided in this Agreement,  no other agreements or representations, oral or otherwise, with respect to such retention arrangement have been made or relied upon by either Party.

SECTION 3.02.  Governing Law; Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations.  If any provision of this Agreement, or the application of any provision of this Agreement to any person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining provisions of this Agreement or its application to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law; and the Parties agree that any invalid or unenforceable provision may and shall be reformed and applied (a) as provided in Section 2.04 above, with respect to the matters specifically contemplated in Article II and (b)with respect to other matters, (i)to the extent needed to avoid that invalidity or unenforceability and (ii) in a manner that is as similar as possible to the Parties’ intent (as described in this Agreement) and preserves the essential economic substance and effect of this Agreement.  The validity, construction and interpretation of this Agreement and the rights and duties of the Parties shall be governed by and construed in accordance with the laws of the State of Ohio, without reference to the Ohio choice of law rules.

SECTION 3.03.  No Waiver.  Except as otherwise provided in Section 2.04, failure to insist upon strict compliance with any term of this Agreement shall not be considered a waiver of any such term or any other term of this Agreement.

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SECTION 3.04.  Withholding.  All payments made to or on behalf of the Executive under this Agreement shall be reduced by any amount:

(a)That the Company is required by law to withhold in advance payment of the Executive’s federal, state and local income, wage and employment tax liability; and

(b) To the extent determined in accordance with Article II, that the Executive owes to the Group, the Company or any other Group Member.

Application of Section 3.04(b) shall not extinguish the Company’s right to seek additional amounts from the Executive (or to pursue other appropriate remedies) to the extent that the amount recovered by application of Section 3.04(b) does not fully discharge the amount that the Executive owes to the Group, the Company or any other Group Member and shall not preclude the Company from proceeding directly against the Executive without first exhausting its right of recovery under Section 3.04(b).

SECTION 3.05.  Miscellaneous.

(a) The Executive may not assign any right or interest to, or in, any payments payable under this Agreement until they have become due from the Company; provided, however, that this prohibition shall not preclude the Executive from designating in writing one or more beneficiaries to receive any amount that may be payable after the Executive’s death and shall not preclude the legal representative of the Executive’s estate from assigning any right under this Agreement to the person or persons entitled to it.

(b) This Agreement shall be binding upon and shall inure to the benefit of the Executive, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and assigns  and the Company and its successors and, to the extent applicable, the Group and all Group Members.

(c)The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision of the Agreement.

SECTION 3.06.  Section 409A of the Internal Revenue Code.All payments contemplated under this Agreement are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); provided, however, that to the extent applicable, this Agreement is intended to comply with Section 409A of the Code and the Treasury Regulations promulgated thereunder, and this Agreement shall be interpreted, administered and operated accordingly.  Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treat ment to the Executive, and neither the Company nor the Boards of Directors of BLI shall be liable to the Executive for failure to comply with the requirements of Section 409A of the Code.  Furthermore, the Company may accelerate the time or schedule of a payment to the Executive if at any time this Agreement fails to meet the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder.  Such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder.

7

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which includes an arbitration provision, and consists of 8 pages.

BIG LOTS, INC.

By: /s/ Dennis B. Tishkoff

Signed:  March 5, 2010

Steven S. Fishman

/s/ Steven S. Fishman

Signed:  March 5, 2010

8

EX-10.5

Exhibit 10.5

BIG LOTS 2005 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT FOR CEO

Grantee: _____________________________

Grant Date: _____________________________

Restricted Stock1: _____________________________

In accordance with the terms of the Big Lots 2005 Long-Term Incentive Plan, as may be amended (“Plan”), this Restricted Stock Award Agreement (“Agreement”) is entered into as of the Grant Date by and between you, the Grantee, and Big Lots, Inc., an Ohio corporation (“Company”), in connection with the Company’s grant of the Restricted Stock to you.  The Restricted Stock is subject to the terms and conditions of this Agreement and the Plan.

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

Description of the Restricted Stock

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

No portion of the Restricted Stock that has not vested may be sold, transferred, assigned, pledged, encumbered or otherwise disposed of by you in any way (including a transfer by operation of law); and any attempt by you to make any such sale, transfer, assignment, pledge, encumbrance or other disposition shall be null and void and of no effect.

Vesting of the Restricted Stock

If (i) you are continuously employed by the Company for one year from the Grant Date and (ii) the fiscal 20__ Final Applicable Performance Criteria (as defined below) is equal to or greater than $_____, then the Restricted Stock will vest and will be transferred to you without restriction on the first trading day2 after the Company files its Annual Report on Form 10-K with the United States Securities and Exchange Commission for the fiscal year in which the Grant Date occurred.  If all of the conditions described in the immediately preceding sentence are not fully satisfied, this Agreement will expire and all of your rights in the Restricted Stock will be forfeited.

For purposes of this Agreement, the “Final Applicable Performance Criteria” for any fiscal year means the applicable performance criteria established in writing by the Compensation Committee (“Committee”) of the Company’s Board of Directors in the first quarter of such fiscal year and certified as actually attained (including the effect of permitted adjustments) by the Committee in the first quarter of the immediately subsequent fiscal year in accordance with the Big Lots 2006 Bonus Plan, as amended (or any successor to such Plan, hereinafter, the “Bonus Plan”).  For the sake of clarity, the fiscal 20__ Final Applicable Performance Criteria shall equal the Company’s fiscal 20__ operating profit, adjusted to remove the effect of unusual or non-recurring events, transactions and a ccruals, established in writing by the Committee in _____ 20__ and certified by the Committee in the first quarter of fiscal 20__ in connection with bonuses payable under the Bonus Plan for fiscal 20__ performance.

_____________________________

 

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

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

Your Rights in the Restricted Stock

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

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

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

Tax Treatment of the Restricted Stock

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

This brief discussion of the federal tax rules that affect the Restricted Stock is provided as general information (not as personal tax advice) and is based on the Company’s understanding of federal tax laws and regulations in effect as of the Grant Date.  Section 13.4 of the Plan further describes the manner in which withholding may occur.

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

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

Section 83(b) Election

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

2

General Terms and Conditions

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

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

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

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

Acceptance

By accepting the Restricted Stock, you agree that the Restricted Stock is granted under and is subject to the terms and conditions described in this Agreement and in the Plan, and you agree to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions arising under this Agreement or the Plan.  Grantee hereby accepts the Restricted Stock and acknowledges receipt of a copy of the Plan, as in effect on the Grant Date.

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

3

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE	Contact:  Timothy A. Johnson
	Vice President, Strategic
	Planning and Investor Relations
	614-278-6622

BIG LOTS REPORTS RECORD RESULTS

RECORD FOURTH QUARTER ADJUSTED EPS OF $1.31 PER DILUTED SHARE, AND

RECORD FISCAL 2009 ADJUSTED EPS OF $2.37 PER DILUTED SHARE

COMPANY INCREASES SIZE OF REPURCHASE PROGRAM TO $400 MILLION

COMPANY PROVIDES 2010 SALES AND EPS GUIDANCE

COMPANY PROVIDES 3 YEAR VIEW

Columbus, Ohio – March 3, 2010 – Big Lots, Inc. (NYSE: BIG) is reporting fourth quarter fiscal 2009 income from continuing operations of $106.2 million, or $1.28 per diluted share.  Excluding the effect of a litigation settlement charge of $2.4 million (net of tax), or $0.03 per diluted share, discussed later in this release, adjusted (non-GAAP) income from continuing operations totaled $108.6 million, or $1.31 per diluted share, for the fourth quarter of fiscal 2009, compared to $81.8 million, or $1.00 per diluted share, in the fourth quarter of fiscal 2008.  Including the impact of discontinued operations, fourth quarter fiscal 2009 net income totaled $105.4 million, or $1.27 per diluted share, compared to $78.8 million, or $0.96 per diluted share, in the prior year.

For the fiscal 2009 year ended January 30, 2010, income from continuing operations totaled $201.4 million, or $2.44 per diluted share.  Excluding the effect of the net gain on a real estate sale and a litigation settlement charge discussed later in this release, adjusted (non-GAAP) income from continuing operations totaled $195.6 million, or $2.37 per diluted share, for fiscal 2009, compared to $154.8 million, or $1.89 per diluted share, for fiscal 2008.    Including the impact of discontinued operations, fiscal 2009 net income totaled $200.4 million, or $2.42 per diluted share, compared to $151.5 million, or $1.85 per diluted share.

FISCAL 2009 HIGHLIGHTS

· Record adjusted (non-GAAP) income from continuing operations of $2.37 per diluted share, a 25% increase over last year’s record income from continuing operations of $1.89 per diluted share

· Comparable store sales increase of 0.7% and total sales increase of 1.8%

· Record adjusted (non-GAAP) operating profit dollars of $316 million as operating profit rate improved to 6.7%, or 120 basis points above last year

· Cash Flow (defined as operating activities less investing activities) of $314 million

· Record inventory turnover of 3.7

· Opened 52 new stores which reflects more new stores opened than in the last 3 years combined

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

Commenting on fiscal year 2009 results, Steve Fishman, Chairman, Chief Executive Officer and President stated, “We were very pleased to deliver our third consecutive year of record operating profit and EPS results and to do so in an economic environment that still has a somewhat challenged consumer.  We improved our merchandise assortments and remained disciplined on inventory management.  We expanded our gross margin while recording the lowest expense rate in the Company’s history, and we were encouraged by the accelerating comp sales trends exhibited in the second half of 2009.  While generating these results, we continued to focus on the long-term fitness of our business by investing in our stores, our IT systems, and our people by recruiting talent across the organization with a particular emphasis in our store operations team.”

FOURTH QUARTER HIGHLIGHTS

· Record adjusted (non-GAAP) income from continuing operations of $1.31 per diluted share versus income from continuing operations of $1.00 per diluted share last year

· Record EPS from continuing operations for the 13th consecutive quarter

· Comparable store sales increased 5.1% and total sales increased 7.0%

· Adjusted (non-GAAP) operating profit increased $40 million, which represents 30% growth compared to last year

· Adjusted (non-GAAP) operating profit rate of 11.9%, which represents a 220 basis point increase above last year

Fourth Quarter Results

Net sales for the fourth quarter of fiscal 2009 increased 7.0% to $1,463.3 million, compared to $1,366.9 million for the same period in fiscal 2008.  Comparable store sales for stores open at least two years at the beginning of the fiscal year increased 5.1% representing our largest fourth quarter comparable store sales increase in the last 10 years.

Operating profit on an adjusted (non-GAAP) basis for the fourth quarter of fiscal 2009 was $173.5 million, or 11.9% of sales, compared to last year’s operating profit of $133.2 million, or 9.7% of sales.  The 30% improvement in operating profit dollars was the result of strong sales performance, improvement in our gross margin rate and lower expenses as a percentage of sales.  Our gross margin rate increased 90 basis points compared to last year due to improved initial markup, lower import freight expense, and lower shrink costs.  As expected, expenses as a percent of sales were down to last year due to certain efficiencies in distribution and transportation, lower advertising expenses, lower utilities and depreciation expense, and the leveraging impact of our 5.1% comparable store sales increase ove r certain relatively fixed expenses.

For the fourth quarter of fiscal 2009, net interest expense was $0.4 million compared to net interest expense of $1.1 million last year with the improvement directly attributed to the overall cash flow of the business in the last 12 months.  The effective income tax rate for the fourth quarter of fiscal 2009 was 37.3% compared to 38.1% last year, with the decrease related to valuation adjustment activity.

Inventory and Cash Management

Inventory ended the fourth quarter of fiscal 2009 at $731 million compared to $737 million last year.  The 1% decline in overall inventory reflected a 2% decrease in average store inventory, partially offset by a slightly higher store count at the end of the fourth quarter of fiscal 2009 compared to the same period last year.

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

We ended the fourth quarter of fiscal 2009 with total cash and cash equivalents of $284 million, compared to cash and cash equivalents of $35 million at the same time last year.  We ended the fourth quarter of fiscal 2009 with no borrowings under our credit facility compared to $62 million of borrowings under our credit facility as of the end of the fourth quarter of fiscal 2008.  The increase in cash and cash equivalents of $249 million and the $62 million debt reduction compared to last year are both directly attributable to cash generated by our business over the last 12 months.

Share Repurchase Program Update

As a reminder, in December 2009, our Board of Directors authorized a share repurchase program providing for the repurchase of up to $150 million of our common shares. There was no activity on this program through close of business yesterday, March 2, 2010.

Based upon the strength of our operating performance and cash flow generation during the fourth quarter of fiscal 2009 and our estimated cash flow for fiscal 2010, our Board of Directors has increased the size of our share repurchase program by $250 million bringing the total authorization to $400 million.  We intend to utilize $150 million of the authorization to execute an Accelerated Share Repurchase (“ASR”) transaction, which is expected to commence during the first quarter of fiscal 2010.  As part of the ASR, an estimated number of shares will be reduced from our outstanding common stock near the start of the transaction.  The exact total number of shares repurchased under the ASR will be based upon the volume weighted average price of our stock over a predetermined period and will not be known until that period ends.  The remaining $250 million will be utilized to repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors.  Common shares acquired through the repurchase program will be available to meet obligations under equity compensation plans and for general corporate purposes.  The repurchase program will continue until exhausted and will be funded with cash and cash equivalents, cash generated during fiscal 2010 or, if needed, by drawing on our $500 million unsecured credit facility.

Unusual Excluded Items

In November 2004, a civil collective action was filed against us alleging that we violated the Fair Labor Standards Act by misclassifying assistant store managers as exempt employees.  As a result of this case, we sent a notice of the lawsuit to all then-current and former assistant store managers who worked for us since November 23, 2001.  Approximately 1,100 individuals opted to join in the collective action.  Ultimately, it was determined that this matter should not be brought as a collective action requiring, instead, each claimant to bring an individual action.  Approximately 172 of the opt-in plaintiffs participated in individual actions.  After defending this matter for 5 years, we decided to enter into a settlement agreement requiring the payment of approximately $4.0 million ($ 2.4 million net of tax, or $0.03 per diluted share), during the fourth quarter of fiscal 2009.

In September 2006, to avoid litigation and under threat of eminent domain, we sold a company-owned and operated store in California for a gain.  As part of the sale, we entered into a lease which permitted us to continue to occupy and operate the store through January 2009 in exchange for rent of $1 per year plus the taxes, insurance, and common area maintenance.  Subsequently, this lease was modified to allow us to occupy this space through September 2009 under substantially the same terms.  Because of the favorable lease terms, we deferred recognition of the gain until we no longer held a continuing involvement with this property.  In September 2009, after attempts to further extend the lease term were unsuccessful, we closed the store, ending our continuing involvement with this property, and recognized the pretax gain on sale of real estate of $13.0 million ($8.2 million net of tax, or $0.10 per diluted share), during the third quarter of fiscal 2009.

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

We believe each of these items is not directly related to our ongoing operations.  Therefore, we have provided a complementary schedule entitled “Big Lots, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures” that excludes these items.  We believe that these non-GAAP financial measures should facilitate analysis by investors and others who follow our financial performance.

Discontinued Operations

As discussed in our Form 10-K filed with the SEC on April 1, 2009, activity related to KB Toys, our former division, as well as the operating results and costs associated with 130 stores closed in January 2006 are classified as discontinued operations.  Results from discontinued operations for the fourth quarter of fiscal 2009 totaled a net loss of $0.8 million compared to a net loss from discontinued operations of $3.0 million for the fourth quarter of fiscal 2008.   For fiscal 2009, results from discontinued operations totaled a net loss of $1.0 million compared to a net loss from discontinued operations of $3.3 million for fiscal 2008.

2010 OUTLOOK

· Initial Fiscal 2010 guidance for income from continuing operations of $2.65 to $2.75 per diluted share versus adjusted (non-GAAP) income from continuing operations of $2.37 per diluted share in Fiscal 2009

· Initial Fiscal 2010 guidance calls for comparable store sales increase of 3% to 4%

· Initial Fiscal 2010 Cash Flow guidance of approximately $200 million

· Initial Fiscal 2010 guidance of 80 new store openings

· Initial Q1 2010 guidance for income from continuing operations of $0.60 to $0.65 per diluted share versus income from continuing operations of $0.44 per diluted share in Q1 2009

Commenting on guidance, Mr. Fishman stated, “Heading into 2010, we are confident in our plans for continued operating margin expansion, EPS growth, and strong cash flow to drive shareholder value.  We see opportunities for robust top line performance through more consistent comp sales and increasing our store growth plans.  We believe our merchandising strategies are positioned to benefit from improved discretionary spending trends and our extreme value proposition continues to be well-received by consumers.  Additionally, our efforts to improve the shopability of our stores, the encouraging early results of our new Buzz Club Rewards loyalty card program, and approximately 80 new store openings support our goals to grow our loyal customer base.”

We estimate fiscal 2010 income from continuing operations will be in the range of $2.65 to $2.75 per diluted share compared to income from continuing operations of $2.37 per diluted share for fiscal 2009 (on an adjusted non-GAAP basis).  This guidance for EPS is based on projected comparable store sales increase in the range of 3% to 4%.  We estimate that the operating profit rate will be in a range of 7.0% to 7.2% of sales with the expansion expected to come from an improving expense rate.  The gross margin rate for fiscal 2010 is expected to be similar to fiscal 2009 and we are estimating that flattish comparable store sales are needed to leverage the expense structure of the business.

We estimate net interest income will be essentially flat and an income tax rate in the range of 38.0% to 39.0% for fiscal 2010.  Capital expenditures are expected to be approximately $115 million with depreciation expense estimated to be in the range of $80 to $85 million.  We estimate this financial performance would result in Cash Flow of approximately $200 million.  The average diluted common share count is estimated to be approximately 81 million for fiscal 2010 which includes our best estimate of the common share count reduction related to the $150 million ASR mentioned earlier in this release.

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

From a real estate perspective, we expect to open 80 new stores during fiscal 2010 and close up to 40 locations for net store growth of 40 stores, or approximately 3%, which is included in our capital expenditures and depreciation guidance noted above.

For the first quarter of fiscal 2010, we estimate a comparable store sales increase of 4% to 6%.  Based on this level of sales performance, our income from continuing operations is estimated to be in the range of $0.60 to $0.65 per diluted share, compared to income from continuing operations $0.44 per diluted share for the first quarter of fiscal 2009.

3-YEAR VIEW (FISCAL 2010 through FISCAL 2012)

· Target compounded EPS growth rate of 12% to 16%

· Target operating profit rate of approximately 8% by fiscal 2012

· Target EBITDA of $525 to $550 million by fiscal 2012

· Cumulative Cash Flow of approximately $650 to $700 million

· Estimate total of 1,500 stores by end of fiscal 2012

Commenting on the next three years, Mr. Fishman stated, “Our ability to embrace change and to reinvent this business has been critical to our success over the last four years.  Given the stability of sales trends over the last six months and the opportunity for our model to perform, we have better visibility into the future and we feel it’s important for our associates and shareholders, both current and potential additions, to understand that we as an executive team feel our Company has meaningful opportunities for continued profitable growth.  Accordingly, today we are breaking from our normal practice and are providing a view of what we see as the potential of this business over the next three years.”

Our three-year financial view is based on the following estimated assumptions:  1) annual total sales growth of 5% to 7%, annual comparable store sales increase in the range of 2% to 3%, and sales approaching $175 per selling square foot;  2) a gross margin rate that is essentially flat to actual fiscal 2009 results; and 3) expense leverage in the areas of stores, distribution and transportation, insurance costs, advertising, and utilities along with the leveraging impact of a 2% to 3% comparable store sales increase over certain fixed expenses.  Based on these assumptions, the Company has estimated that the operating profit rate could be approximately 8.0% by fiscal 2012.  This level of operating profit rate expansion coupled with the execution of our current $400 million share repurchase prog ram would translate to earnings per share of approximately $3.50 by fiscal 2012, or 14% annual compounded growth over the three year period.

Cash Flow for the next three years is anticipated to be approximately $650 million to $700 million.  Included in this estimated range of Cash Flow is approximately $300 million to $325 million of capital expenditures focused on store expansion, store and distribution center maintenance, and continued investment in the IT systems of our business.  We anticipate net store growth will accelerate further in 2011 and 2012, and we are targeting a fleet of approximately 1,500 stores by the end of fiscal 2012.

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the fourth quarter, and provide commentary on our guidance for fiscal 2010 as well as our view of the next three years.  We invite you to listen to the webcast of the conference call through the Investor Relations section of our website (www.biglots.com).

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

An archive of the call will be available through the Investor Relations section of our website (www.biglots.com) beginning two hours after the call ends and will remain available through midnight on Wednesday, March 17.  A replay of the call will be available beginning today at noon through March 17 at midnight by dialing: 1.888.203.1112 (United States and Canada) or 1.719.457.0820 (International). All times are Eastern Time.  The PIN number is 9844750.

Big Lots is the nation’s largest broadline closeout retailer.  As of the end of fiscal 2009 (January 30, 2010), we operated 1,361 BIG LOTS stores in 47 states.We also sell merchandise via our wholesale operations which are conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY.  Our website is located at www.biglots.com.

Cautionary Statement Concerning Forward-Looking Statements

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

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

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

	Shareholder Relations Department
	300 Phillipi Road
	Columbus, Ohio 43228-5311
	Phone: (614) 278-6622      Fax: (614) 278-6666
	E-mail: aschmidt@biglots.com

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	JANUARY 30		JANUARY 31
	2010		2009
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	283,733	$	34,773
Inventories		731,337		736,616
Deferred income taxes		51,012		45,275
Other current assets		56,884		54,207
Total current assets		1,122,966		870,871
Property and equipment - net		491,256		490,041
Deferred income taxes		28,136		53,763
Other assets		27,135		17,783
Total assets	$	1,669,493	$	1,432,458
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities under bank credit facilities	$	-	$	61,700
Accounts payable		309,862		235,973
Property, payroll and other taxes		69,388		66,525
Accrued operating expenses		52,519		45,693
Insurance reserves		39,570		38,303
KB bankruptcy lease obligation		4,786		5,043
Accrued salaries and wages		47,402		40,460
Income taxes payable		18,993		21,398
Total current liabilities		542,520		515,095
Deferred rent		31,490		29,192
Insurance reserves		44,695		45,197
Unrecognized tax benefits		28,577		28,852
Other liabilities		20,799		39,277
Shareholders' equity		1,001,412		774,845
Total liabilities and shareholders' equity	$	1,669,493	$	1,432,458

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	13 WEEKS ENDED						13 WEEKS ENDED
	JANUARY 30, 2010						JANUARY 31, 2009
				%						%
	(Unaudited)						(Unaudited)
Net sales	$	1,463,280			100.0		$	1,366,925			100.0
Gross margin		604,752			41.3			552,572			40.4
Selling and administrative expenses		416,699			28.5			399,636			29.2
Depreciation expense		18,556			1.3			19,756			1.4
Gain on sale of real estate		-			0.0			-			0.0
Operating profit		169,497			11.6			133,180			9.7
Interest expense		(506	)		(0.0	)		(1,129	)		(0.1	)
Interest and investment income		136			0.0			29			0.0
Income from continuing operations before income taxes		169,127			11.6			132,080			9.7
Income tax expense		62,939			4.3			50,273			3.7
Income from continuing operations		106,188			7.3			81,807			6.0
Loss from discontinued operations, net of tax benefit of $541 and $1,993, respectively		(822	)		(0.1	)		(3,042	)		(0.2	)
Net income	$	105,366			7.2		$	78,765			5.8
Earnings per common share - basic (a)
Continuing operations	$	1.30					$	1.01
Discontinued operations		(0.01	)					(0.04	)
Net income	$	1.29					$	0.97
Earnings per common share - diluted (a)
Continuing operations	$	1.28					$	1.00
Discontinued operations		(0.01	)					(0.04	)
Net income	$	1.27					$	0.96
Weighted average common shares outstanding
Basic		81,771						81,314
Dilutive effect of share-based awards		1,376						689
Diluted		83,147						82,003

(a) The earnings per share for Continuing Operations, Discontinued Operations and Net Income are separately calculated in accordance with accounting pronouncements; therefore, the sum of earnings per share for Continuing Operations and Discontinued Operations may differ, due to rounding, from the calculated earnings per share of Net Income.

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	52 WEEKS ENDED						52 WEEKS ENDED
	JANUARY 30, 2010						JANUARY 31, 2009
				%						%
	(Unaudited)
Net sales	$	4,726,772			100.0		$	4,645,283			100.0
Gross margin		1,919,306			40.6			1,857,429			40.0
Selling and administrative expenses		1,532,356			32.4			1,523,882			32.8
Depreciation expense		74,904			1.6			78,624			1.7
Gain on sale of real estate		(12,964	)		(0.3	)		-			0.0
Operating profit		325,010			6.9			254,923			5.5
Interest expense		(1,840	)		(0.0	)		(5,282	)		(0.1	)
Interest and investment income		175			0.0			65			0.0
Income from continuing operations before income taxes		323,345			6.8			249,706			5.4
Income tax expense		121,975			2.6			94,908			2.0
Income from continuing operations		201,370			4.3			154,798			3.3
Loss from discontinued operations, net of tax benefit of $656 and $2,116, respectively		(1,001	)		(0.0	)		(3,251	)		(0.1	)
Net income	$	200,369			4.2		$	151,547			3.3
Earnings per common share - basic (a)
Continuing operations	$	2.47					$	1.91
Discontinued operations		(0.01	)					(0.04	)
Net income	$	2.45					$	1.87
Earnings per common share - diluted (a)
Continuing operations	$	2.44					$	1.89
Discontinued operations		(0.01	)					(0.04	)
Net income	$	2.42					$	1.85
Weighted average common shares outstanding
Basic		81,619						81,111
Dilutive effect of share-based awards		1,062						965
Diluted		82,681						82,076

(a) The earnings per share for Continuing Operations, Discontinued Operations and Net Income are separately calculated in accordance with accounting pronouncements; therefore, the sum of earnings per share for Continuing Operations and Discontinued Operations may differ, due to rounding, from the calculated earnings per share of Net Income.

BIG LOTS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)

The following table reconciles selling and administrative expenses, selling and administrative expense rate, operating profit, operating profit rate, income tax expense, effective income tax rate, income from continuing operations, net income, diluted earnings per share from continuing operations, and diluted earnings per share for the fourth quarter of 2009 and year-to-date 2009 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share (non-GAAP financial measures).

Fourth quarter of 2009 - Thirteen weeks ended January 30, 2010

	As reported			Adjustment to exclude legal settlement			As Adjusted (non-GAAP)
Selling and administrative expenses	$	416,699		$	(4,000	)	$	412,699
Selling and administrative expense rate		28.5	%		(0.3	%)		28.2	%
Operating profit		169,497			4,000			173,497
Operating profit rate		11.6	%		0.3	%		11.9	%
Income tax expense		62,939			1,580			64,519
Effective income tax rate		37.2	%		0.1	%		37.3	%
Income from continuing operations		106,188			2,420			108,608
Net income		105,366			2,420			107,786
Diluted earnings per share from continuing operations	$	1.28		$	0.03		$	1.31
Diluted earnings per share	$	1.27		$	0.03		$	1.30

Year-to-Date 2009 - Fifty-two weeks ended January 30, 2010

	As reported			Adjustment to exclude gain on sale of real estate			Adjustment to exclude legal settlement			As Adjusted (non-GAAP)
Selling and administrative expenses	$	1,532,356					$	(4,000	)	$	1,528,356
Selling and administrative expense rate		32.4	%					(0.1	%)		32.3	%
Operating profit		325,010		$	(12,964	)		4,000			316,046
Operating profit rate		6.9	%		(0.3	%)		0.1	%		6.7	%
Income tax expense		121,975			(4,801	)		1,580			118,754
Effective income tax rate		37.7	%		0.1	%		-			37.8	%
Income from continuing operations		201,370			(8,163	)		2,420			195,627
Net income		200,369			(8,163	)		2,420			194,626
Diluted earnings per share from continuing operations	$	2.44		$	(0.10	)	$	0.03		$	2.37
Diluted earnings per share	$	2.42		$	(0.10	)	$	0.03		$	2.35

The adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share are “non-GAAP financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) a pretax gain on the sale of real estate of $12,964 ($8, 163, net of tax) and a pretax expense for a legal settlement  agreement of $4,000 ($2,420, net of tax).

Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and appropriate method for measuring our operating performance, excluding certain items included in the most directly comparable GAAP financial measures.  Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	13 WEEKS ENDED			13 WEEKS ENDED
	January 30, 2010			January 31, 2009
	(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	252,089		$	216,584
Net cash used in investing activities		(16,797	)		(13,091	)
Net cash provided by (used in) financing activities		2,534			(207,956	)
Increase (decrease) in cash and cash equivalents		237,826			(4,463	)
Cash and cash equivalents:
Beginning of period		45,907			39,236
End of period	$	283,733		$	34,773

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	52 WEEKS ENDED			52 WEEKS ENDED
	January 30, 2010			January 31, 2009
	(Unaudited)
Net cash provided by operating activities	$	392,027		$	211,063
Net cash used in investing activities		(77,937	)		(88,192	)
Net cash used in financing activities		(65,130	)		(125,229	)
Increase (decrease) in cash and cash equivalents		248,960			(2,358	)
Cash and cash equivalents:
Beginning of period		34,773			37,131
End of period	$	283,733		$	34,773

EX-99.2

Exhibit 99.2

Final Transcript

Conference Call Transcript

BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

Event Date/Time: Mar. 03. 2010 / 8:00AM ET

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

CORPORATE PARTICIPANTS

 Tim Johnson

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

 Steve Fishman

 Big Lots, Inc. - Chairman, CEO

 Joe Cooper

 Big Lots, Inc. - SVP, CFO

 Chuck Haubiel

 Big Lots, Inc. - SVP, General Counsel

CONFERENCE CALL PARTICIPANTS

 David Mann

 Johnson Rice - Analyst

 Dan Wewer

 Raymond James - Analyst

 Charles Grom

 JPMorgan - Analyst

 Jeff Stein

 Soleil Securities - Analyst

 Meredith Adler

 Barclays Capital - Analyst

 Patrick McKeever

 MKM Partners - Analyst

 Laura Champine

 Cowen & Co. - Analyst

 Ronald Bookbinder

 Global Hunter Securities - Analyst

 Anthony Lebiedzinski

 Sidoti & Co. - Analyst

 PRESENTATION

Operator

 Ladies and gentlemen, welcome to the Big Lots fourth quarter 2009 teleconference. This call is being recorded. During the session all lines will be muted until the question-and-answer portion of the call. (Operator Instructions) At this time I would like to introduce today's first speaker Vice President of Strategic Planning and Investor Relations, Tim Johnson.

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

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

Before we get started I would like to remind you that any forward-looking statements we make on today's call involve risks and uncertainties and are subject to a our Safe Harbor provisions as stated in our press release and in our SEC filings and that actual results can differ materially from those described in our forward-looking statements. As discussed in this morning's press release, our Q4 results contain one item and fiscal 2009 results contain two items in continuing operations that we believe are not directly related to the Company's ongoing operations. Accordingly we have provided a non-GAAP reconciliation for both the fourth quarter and the full year of fiscal 2009 and those schedules are attached to today's press release. We prefer to focus on the ongoing operations of the business, so the balance of our prepared comments wi ll be based on non-GAAP results from continuing operations. With that I will turn it over to Steve.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

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

 Thanks T.J. and good morning everyone.

From the merchants, to the stores, to the marketing programs, to the distribution centers that deliver the goods, Q4 was a wonderful example of solid execution of a plan that was months in the making. From a sales perspective, two observations were very clear to us. First, the customer returned and was in the mood to shop this Christmas season and second, if you provide great value and newness in your merchandise offering, the customer will absolutely respond and reward you at the register. This was very clear in Q4 as our comps increased 5% with all major merchandise divisions in all regions of the country performing well and exceeding their plans.

In terms of merchandising, the strength was broad-based with Furniture, Home and Hardlines leading the way with comps up in the high single digits, followed by Seasonal, Toys, and Consumables comping up in the low to mid-singles.

We were very encouraged by the accelerating trends in Furniture in Q4 as new items and new styles in Upholstery and Case goods were well received by the customer. Additionally, our Mattress business got healthy in Q4 and comped up in line with the rest of the division.

For the second consecutive quarter, Home was a leading category in the store. Newness and better quality goods were again a successful formula. Real good closeout deals from new vendors and better brands resonated with the consumer.

In Hardlines it was all about our Electronics business which comped up in the 20s in Q4. The chainwide rollout of our video game software program exceeded our expectations and the availability of DVDs, digital cameras, MP3 players and accessories helped drive results. Electronics vendors in particular are getting more and more comfortable selling to us and are repeatedly surprised by how much volume we bring to them as a new customer.

Seasonal and Toys each performed well and were important to our Q4 success. Combined, these areas can be upwards of 25% to 30% of our business in any given week in November and December.In Seasonal, the customer responded to the extreme value we offered in Lighting and Trees. Interesting to note here that items with higher average item retail and higher perceived value did very well, which is an encouraging sign when we look forward to Spring and our opportunities in Lawn and Garden. The shift towards a more branded assortment in Toys also helped drive positive Q4 comps. More branded goods, new vendors and deeper relationships with existing vendors are all trends we anticipate continuing into 2010.

Our Consumables business comped up in the low single digits. Our vendor relationships are stronger and deeper and the availability of excess merchandise continues to be more than enough for us to successfully manage this business.

So broad based performance across most areas of the stores and our buying teams managed their businesses really well in Q4 as inventories finished the quarter down 2% per store last year.

From a Stores perspective, it was the best executed holiday season I have seen from this business. The talent we have added to the team along with our Ready for Business initiatives have improved the shopability of our stores and hopefully left a more favorable impression of Big Lots to encourage more frequent future visits from our customers.

In terms of Marketing, the Buzz Club Rewards program exceeded our expectations and as of last week, we have over 1.4 million members. There were trends at the store level that suggest Rewards can be a basket driver as Rewards customers spend nearly double what the average customer spends. But also we are learning that Rewards can be a transaction driver which I'll touch on later.

In summary, Q4 surpassed even our highest expectations as operating profit dollars increased 30% compared to last year. We generated record EPS that were up 31% to last year's record performance, and we managed our business very prudently and ended the year with over $280 million of cash and no debt.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

Now Joe is going to give you some details on the quarter and our expectations for 2010. Joe?

Joe Cooper - Big Lots, Inc. - SVP, CFO

 Thanks Steve and good morning everyone. Sales for the fourth quarter were $1.463 billion a 7.0% increase compared to $1.367 billion for the fourth quarter of last year. The increase was driven by a comparable store sales increase of 5.1%, strong sales from our non-comp or newer stores along with a slight increase in our average store count in Q4. We estimate that our comps for Q4 benefited by approximately 1% from one additional shopping day between Thanksgiving and Christmas. Our Q4 comps of 5.1% exceeded our most recent guidance which called for comps of 3.5% to 4.5% thanks to a better than expected performance in January.

For the fourth quarter, our operating profit dollars increased $40.3 million or 30% to last year. This increase was driven by the 7% increase in total sales along with an expansion of our operating profit rate by 220 basis points to 11.9% of sales.

Our Q4 gross margin rate was 41.3% or 90 basis points above last year. The increase to last year was due to favorable initial markup on goods sold, lower import freight costs, and a lower shrink accrual rate partially offset by an increase in domestic freight costs resulting from the higher price of diesel fuel compared to last year.

Total SG&A dollars including depreciation were $431.3 million. The fourth quarter SG&A rate of 29.5% was 120 basis points below last year. We generated leverage in store payroll through better hours allocation and our initiatives in transportation drove dollar reductions that were only partially offset by higher fuel costs.

Advertising expenses were below last year benefiting from lower costs in the marketplace, and we were able to lower our ad circular costs by reducing some of our print distribution. Utilities and Depreciation were again below last year levels, and we benefited from the leveraging impact that a 5.1% comp has on Occupancy costs and Insurance. All of this leverage was partially offset by the accelerated vesting of restricted stock grants based on our performance for fiscal 2009.

Net interest expense was $0.4 million for the quarter compared to $1.1 million last year with the improvement a result of the cash generated by the business over the last 12 months, partially offset by higher amortization expense related to our new bank facility issuance costs.

Our tax rate for the fourth quarter of fiscal 2009 was 37.3% compared to last year's rate of 38.1%. The tax rate difference is principally attributable to a valuation adjustment in the fourth quarter of fiscal 2009 related to assets held for our non-qualified deferred compensation plan.

In total for the fourth quarter of fiscal 2009, we reported income from continuing operations of $108.6 million or $1.31 per diluted share, compared to income from continuing operations of $81.8 million or $1.00 per diluted share a year ago.

Our earnings of $1.31 per diluted share were better than our previously communicated guidance which called for earnings of $1.19 to $1.24 per diluted share. Comparing to the high end of of our guidance, approximately $0.02 of the beat came from better than expected January sales, $0.02 came from a better than expected gross margin rate, $0.02 came from lower SG&A as we did not incur a pension settlement charge that was contemplated in our guidance and also there was only minimal flex on the upside sales to our comp guidance. Finally, approximately $0.01 came from a lower than anticipated tax rate.

Turning to the balance sheet, Inventory ended the fourth quarter of fiscal 2009 at $731 million compared to $737 million last year. This represents a 2% decrease per store. For the year, we achieved record inventory turnover of 3.7 times compared to 3.6 times last year.

Cash flow, which we define as cash provided from operating activities less cash used in investing activities, increased by $32 million for the fourth quarter of fiscal 2009 compared to last year. Cash flow for the full year was $314 million which was above our guidance of $215 million due to higher net income, lower inventory levels and better AP leverage, with the largest portion of the increase coming from AP leverage. We ended the quarter with cash and cash equivalents of $284 million and no borrowings under our credit facility compared to cash and cash equivalents of $35 million and borrowings under our credit facility of $62 million last year.

During the fourth quarter, there was no opportunistic share repurchase activity conducted under the $150 million share repurchase program which was approved by our Board of Directors in December.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

For the fourth quarter, capital expenditures totaled $16.8 million, compared to $13.2 million last year. The increase to the prior year is primarily attributable to more new store construction activity than last year and higher SAP spending year-over-year. Our fourth quarter investment in SAP related to the finance/wholesale systems that went live last month and the continued development work on the merchandising module. Depreciation expense for the quarter was $18.6 million, or $1.2 million lower than last year.

Moving on to 2010 and guidance, overall, we are planning 2010 EPS to be in the range of $2.65 to $2.75 per diluted share, compared to 2009's income from continuing operations of $2.37 per diluted share. Our 2010 plan calls for a comparable store sales increase of 3% to 4% and a total sales dollar increase in the range of 5% to 6% compared to fiscal 2009.

At this level of sales, we are estimating a 10% to 14% increase in operating profit dollars. We anticipate our operating profit rate to be in the range of 7.0% to 7.2%, or 30 to 50 basis points higher than fiscal 2009 with the expansion coming from a lower expense rate. Our gross margin rate for 2010 is expected to be similar to 2009 as solid initial markup, favorable shrink experience, and disciplined inventory management resulting in a slightly lower markdown rate are expected to be offset by higher freight costs, both domestic and import.

As many of you know, there's been a tremendous amount of progress on the cost structure of the last several years. The important takeaway from today's call should be that we are not finished. Our improved business processes combined with 2010 initiatives, give us the confidence in this year's plan which begins to leverage expenses at approximately a flat comp. Additionally, for many of these same reasons we believe SG&A leverage is possible for the next couple of years as Steve will touch on shortly. Our forecasted 2010 expense leverage of 30 to 50 basis points is expected to come from several different sources.

We have initiatives to lower cost in Advertising, Utilities and Insurance. In terms of Advertising, you willrecall we have tested and executed reductions in the distribution of print advertising and these changes began back in the fall of 2009. We believe more opportunities exist to reduce the amount of print distribution per circular, and we'll continue to test in 2010. Additionally we anticipate that the print advertising cost will be very competitive and rate decreases are possible.

Next in terms of utilities, we've decided to make a sizable investment in energy management systems or EMS in 2010. This is another example of an initiative that we've tested over time and have determined it's a good use of capital. Stores with EMS have been averaging in the neighborhood of a 15% reduction in utility costs. Today, we have approximately 450 stores with EMS and throughout 2010 we'll be investing a little over $10 million to reach an additional 700 stores.

Another area where we anticipate better cost control is the area of Insurance. You willrecall that in fiscal 2007 we changed healthcare administrators while improving our plan for associates and lowering our overall costs. Towards the end of 2009 with the help of outside expertise, we completed a dependent eligibility audit and review of our healthcare plan with the goal of making sure we are delivering competitive benefits while also controlling costs. All indications are that our new program is very competitive in the marketplace and remains a good recruiting tool to attract new talent to the organization.

When we look at Stores, along with Distribution and Transportation costs, we also expected to generate leverage as dollar growth in these areas is forecasted to be at a slower rate than our anticipated sales growth. In terms of stores, we'll continue to pay for performance and merit increases will occur this year like they have every other year. We continue to see opportunities to improve productivity as inventory per store is expected to remain relatively flat or down slightly year-over-year. Our labor scheduling efficiency is getting better and our investment in talent should begin to pay dividends in 2010.

Distribution and transportation costs are forecasted to leverage in 2010 as well. You will recall that in Q3 of 2009 we closed our West Coast furniture facility and mid-year 2009 we entered into new dedicated fleet contracts which lowered our costs and will benefit the first half of 2010. Additionally, higher DC productivity and better inventory flow continues to help partially offset the normal wage and merit pressures we incur each year.

So clearly there are a number of different sources of expense leverage being executed in 2010. However, there will be areas of the business where costs will increase and deleverage ... areas like Occupancy and new store preopening costs, Depreciation, and equity related expenses.

In terms of Occupancy, we expect only slight deleverage as we open more new stores and stores in better demographic locations which require a higher rent. New stores are the best investment we can make with our cash and over the initial lease term, which is typically between five and seven years. We are satisfied with the expected return and believe it exceeds our cost of capital. However, our new stores tend to open at below market productivity which can initially cause deleverage. This is included in the model we are providing.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

Depreciation expense is forecasted to grow in 2010 primarily as a result of the increasing amount of net store growth and the successful "go live" last month of our SAP implementation of new finance and wholesale systems.

Finally, equity related expenses will deleverage given our current share price which is up significantly to last year and the completion of the accelerated vesting of restricted stock grants based on our 2009 profit performance.

Filling out the rest of the P&L for 2010, net interest income is estimated to be essentially flat, and the effective income tax rate is planned to be in the neighborhood of 38.0% to 39.0%.

For the year, capital expenditures are expected to be approximately $115 million. Maintenance capital is estimated about $35 million to $40 million which covers our stores, DCs, and the general office. From a real estate perspective, new store capital is estimated at approximately $35 million to $40 million to cover opening 80 new stores. Investments in certain other strategic initiatives will represent approximately $40 million of CapEx in 2010. These dollars will be focused on our SAP implementation, retrofitting and refreshing a portion of our store base, and our move forward to increase our investment in energy management systems to save on utility costs.

The CapEx increase of approximately $36 million compared to 2009 is focused in three key areas. First, new store growth in a larger number of stores in our refresh program. Next is SAP, specifically the capital needed for the development of the merchandising module and third, the notable increase in the incremental investment in EMS which I mentioned earlier. Each of these increases demonstrates an investment focused on the long term view of our business.

Based on these capital assumptions, 2010 depreciation expense is estimated to be in the range of $80 million to $85 million. This level of performance in 2010 is estimated to result in approximately $200 million of cash flow.

As mentioned in our press release this morning, based on the better than expected cash flow for 2009 and our estimated cash flow for fiscal 2010, our Board of Directors has increased our share repurchase authorization by $250 million bringing the total authorization to $400 million. We intend to utilize $150 million of the authorization to execute an accelerated share repurchase or ASR which is expected to commence during the first quarter of fiscal 2010. An estimated number of shares will be reduced from our outstanding common stock near the start of the program. The exact total number of shares repurchased under the ASR will be based on the volume weighted average price of our stock over a predetermined period and will not be known until the period ends. This level of ASR ensures a base level of cash is returned to shareholders at a discount to a straight dollar cost average approach. This level will also offset estimated dilution since our last repurchase program.

We are estimating our diluted share count to be approximately 81 million shares for fiscal 2010 which includes the ASR activity I just mentioned. The remaining $250 million will be available to opportunistically repurchase shares in the open market and/or in privately negotiated transactions at our discretion subject to market conditions and other factors. The program will be funded with current cash and cash equivalents, cash flow generated during fiscal 2010, or if needed, by drawing on our $500 million unsecured credit facility.

Turning to the first quarter, we are estimating earnings to be in the range of $0.60 to $0.65 per diluted share, a 36% to 48% increase compared to $0.44 per diluted share last year. This level of EPS is based on total sales in the range of $1.215 billion to $1.235 billion and a comp sales increase in the range of 4% to 6%. In the month of February, comps were above the high end of this guidance due to two key factors. First, a highly productive President's day ad circular and second, the significant outperformance of our one day semi-annual Friends and Family event in the last week of February. These two events and the strength of certain deals and our core business were only partially offset by the weather issues experienced during the month.

We expect our Q1 gross margin rate to be essentially flat to last year. Lower import costs, lower shrink, and a slightly lower mark downrate are expected to offset higher overall fuel costs for domestic freight this year and also remember, we did benefit last year from a favorable shrink adjustment related to the completion of physical inventories. We also expect significant SG&A leverage driven by lower advertising expense, lower insurance related costs, lower distribution transportation expense, and lower bonus expense compared to last year. Additionally, we expect store expenses will leverage at this level of comp, partially offset by higher equity expense and the increase expected in depreciation.

Additional assumptions for our Q1 guidance include minimal interest income, a tax rate similar to last year's rate of 39.5% and diluted share count in the range of 81.5 million to 82 million which includes an estimate for the ASR I mentioned earlier.

Now, for an update on our progress in real estate, I'd like to turn it over to Chuck.

 Chuck Haubiel - Big Lots, Inc. - SVP, General Counsel

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

 Thanks Joe. During the fourth quarter we opened nine new stores and closed 16 stores leaving us with 1,361 stores and total selling square footage of 29.2 million at the end of the year.

For the year, we opened 52 stores and closed 30 stores. Of the 52 new stores that were opened in 2009, 41 stores are what we refer to as traditional Big Lots stores, meaning in secondary or tertiary locations and primarily in strip centers. Eight of the new stores opened are what we've been referring to as "A" locations which are locations with either better co-tenant mix, better demographics or both. And three stores opened in 2009 are part of our small store test. Generally speaking, new stores openings performed very well in 2009 with "A" locations exceeding our expectations, traditional stores overall meeting our expectations and our small store test is producing mixed results. Looking towards 2010, we expect to open 80 new stores and close approximately 40 locations for net store growth of 40 stores or approximately 3%.

Looking at the breakout of what types of stores we plan to open, the availability of space for our traditional locations remains good. Rents are reasonable and we are certainly an attractive tenant as our overall business model gets stronger. We are an investment grade retailer with a rock solid balance sheet, who to my knowledge has never missed a rent payment. As you would expect all these characteristics are very appealing to landlords today. Right now, I would estimate that we would open approximately 50 traditional locations in 2010. However, we have the capacity and the cash to ramp-up this number if opportunities and rents are right for us and model out.

In terms of "A" locations, we see a meaningful opportunity for growth in 2010 and are estimating that we will open approximately 30 new "A" locations this year. This is a major step forward for our Company and has been made possible by the softening in the commercial real estate market and the strength of our improving performance over the last several years. Additionally, a higher quality and more branded merchandise assortment along with improvements in store standards and customer service have given us the confidence that we can be successful in these better locations with the new customer base that has a somewhat higher level of expectations in terms of the in-store shopping experience.

As we mentioned on our last call, results from the eight "A" locations that were in test mode in 2009 have been very encouraging. These locations, on average, have exceeded our initial sales goals by 10% to 15% and are trending to sales of a little over $4 million per store or approximately $190 per foot for their first full year. Clearly occupancy costs are higher in these locations. However, this is a potentially very profitable endeavor when modeling out a store at $190 a foot in its first year and nowhere near maturity despite low double digit rents. Putting this in perspective, when we sign a new deal, we look at the initial lease term and what level of sales and annual growth are needed to generate a financial return that exceeds our cost of capital. Based on results to date, we are well ahead of the pace needed to hit our return targets which has given us confidence to increase our CapEx budget for "A" locations in 2010.

In terms of the smaller store test, we learned a great deal about the operational aspects relating to running a smaller store and the merchandising changes or edits that are critical in this size of box. We will continue to make modifications to these three stores and monitor their progress and along the way in 2010, we may also add a couple of stores to that test.

Hopefully this is a helpful summary of our 2010 store growth targets. Also in 2010, we are moving forward with a more aggressive approach to our store refresh program. We identified 120 stores with some of the biggest upside sales opportunities and we'll be investing approximately $5 million of capital in 2010. In approximately 105 of these stores, we will be making certain layout modifications while also investing in the overall physical plant. For the other 15 stores, the layouts are fine as is but some level of capital investment is needed and is justified given the sales opportunity.You will recall that we tested this idea in approximately 20 or so stores in 2009 primarily here in Columbus. Again, we learned a great deal and now have the processes and people in place to move forward with this initiative in a more meaningful way in 2010.

We feel very good about our real estate plans for 2010 and continue to believe new store growth is the best investment available to us at this time. We believe the level of new store openings should grow in 2011 and 2012 and could reach 90 or 100 stores in those years making us a potentially 1,500 plus store chain by 2012. We see availability of space. The buyers have more than enough inventory sources to merchandise the stores, and our level of talent in the stores organization continues to grow and will be ready to run a larger chain.

We are confident in the progress and growth we can achieve in this three year view, but we believe that we are only beginning to scratch the surface. Population density studies suggest that we can grow to 2,100 to 2,200 stores someday assuming locations become available at the level of rents we can afford.

Now I'll turn it back to Steve for some closing remarks.

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

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

 Over the last 4 plus years we've reinvented this Company. We've taken it from a buying organization to a selling organization. We've significantly improved the merchandise content and quality, increased inventory turnover and expanded our vendor base, both in numbers and in quality. In fact, in the last two years alone we have added over a thousand new merchandise vendors. Our cost structure has never been leaner. We've made good intelligent decisions in real estate and now have a very productive portfolio. More than 98% of our stores are profitable on a four wall basis and over 99% of our stores generate positive cash flow. We've generated nearly $1.2 billion of cash, much of which we've returned to shareholders through a repurchase programs and EPS has grown to $2.37 per share compared to only $0.14 back in 2005 when we first s tarted repositioning the business.

I've been with Big Lots coming up on five years this summer, and I firmly believe heading into 2010 we are better positioned than at any other time in my tenure with the company. Our merchandise content and the value message continues to grow stronger and stronger. Our stores have never looked better, inventories are flowing and well under control, and we continue to find smart ways to leverage our cost structure without impacting the customer.

But today I want to talk about the future and what my vision is for the Company. We are entering into a growth mode which is the next phase of our evolution. With the potential of over 2,000 stores, I see this is as a $9 billion or $10 billion business. We tend to focus our strategies and goals into three year increments which is what we are providing to you today.

Over the next three years, we see sales growth potentially in the range of 5% to 7% annually through square footage growth of 3% to 4% per year, supplemented by comp growth of 2 to 3% per year which is a similar model to what Joe just walked you through for 2010. In terms of comp growth, we are looking at a target sales productivity of $175 per foot by 2012 so the next question is how do we get there?

Our strategies today have been focused on getting a greater wallet share from our existing loyal customer base. Based on my over 30 years of retail, it's been my experience this is the quickest way to increase sales and profits, to go after the customer who shops you and knows you best. We see continued opportunity with our core customer to improve the basket in terms of AUR and units sold and frequency of visit. Looking forward, we have several strategies to build transactions both from our core customers, as well as, our infrequent customers.

First, the most important piece is merchandising content. I don't anticipate any major category adds or edits. The customer has consistently told us that they like the businesses we trade in, they want more excitement, new and different closeouts, but most of all they want extreme value.

Our marketing efforts will be more focused on driving transactions. First, is the Rewards program. As of last week, we have over 1.4 million members and the list is growing pretty rapidly each week. Today, stores with the highest amount of Rewards sign up or penetration are seeing transaction lifts in the low single digits. Later this year, we will be implementing the technology to offer our members targeted messages or promotions based on their specific buying patterns.

Next, using our ad circulars and promotional pricing to create more buzzbuilders could help us increase transactions. I believe we are seeing some validation of this strategy in the last couple of ads that we have run, both President's Day and the mid January ad. Additionally, as many of you may be aware of, we began accepting the American Express card which was effective in all stores in the last several days. It's another vehicle to market to our customers and small businesses and a program that is consistent with our real estate strategy to move forward into more "A" locations.

Maybe one of the largest opportunities to improve transactions is our stores and store operations. Specifically when you survey the infrequent customer, convenience and store appearance are the two biggest barriers to more frequent visits. Convenience speaks more to location of store and number of stores in a market which by the way we think we are addressing with store growth and potentially the "A" store strategy. But in terms of store appearance, it's shoppability, cleanliness and I might add to it customer service as well. Last week we held our semi-annual Leaders meeting and the theme of the meeting was "2010 The Year of the Store. This is a multi-year initiative and focuses on three key aspects. Ready for Business standards where we are making progress each day. Store cleanliness, recovery standards, and good merchandise presenta tion to make the store easy to shop. It's also customer service, meet, greet and smile which I'd be the first to admit we have not always been the best at. Talent will also play a big role as we raise the level of accountability on standards in our stores. We have recruited new talent in a number of situations at the store, district, and regional levels.

Finally, we have some capital needs in our stores as well. Chris, Chuck and Joe's team have a detailed understanding and a plan when and where we will need to invest capital over the next several years. Now, don't misinterpret this statement. We invest in capital in our stores every year to maintain our buildings. I'm talking about improvement capital, or dollars that we believe will make a difference and grow sales profitability. It's not a shocking number and clearly based on our guidance will not slow us down when talking about operating profit growth.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

So there are many different levers in terms of merchandising, basket, and transactions to potentially drive comps for the foreseeable future.

At this level of comp and sales growth, we believe that the continued SG&A leverage for the next three years could occur at a very similar rate to what we have guided for 2010. Many of the same key drivers of SG&A leverage in fiscal 2010 are expected to continue into 2011 and 2012.

The overall dollar reductions in advertising are expected to continue. We believe there are opportunities to test and further reduce our print circulation. Additionally, we anticipate leverage related to the investments we are making in our Rewards programs

In terms of utilities, the investments being made in EMS should provide leverage opportunities well into the future as a result of an increasing level of electricity savings and potentially lower overall repair and maintenance costs.

The changes in our Insurance program promote wellness that could have a longer term benefit as do the improved controls that we have established as a result of the eligibility audits. We expect insurance costs to grow at a slower rate than our expected sales growth.

Similarly, we expect future Distribution and Transportation costs and store expenses to grow but at a slower rate than our forecasted sales growth for many of the same reasons that Joe articulated in our 2010 guidance.

At a high level, we see the potential for an operating profit of 8% by fiscal 2012 driven by accelerating operating profit dollar growth in the range of 8% to 12% annually over the next three year period.

Operating profit growth coupled with the successful execution of our currently authorized $400 million share repurchase program could translate into a compounded EPS growth rate of 12% to 16% or the potential of $3.50 in EPS by fiscal 2012. As you can see, it's a pretty powerful model now that comps are moving in the right direction.

Along the way, we'll continue to invest in this business for the long term and anticipate spending in the neighborhood of $300 million to $325 million of capital over the next three years concentrated in maintenance, new store capital, store refresh capital, and continued evaluations of all of our systems and the next steps in terms of SAP. However, as I think we have demonstrated in the past, should there be additional opportunities to enhance the efficiency in our supply chain or other initiatives to drive leverage or incremental profits, we will do what is right for the business and the shareholder in the long term. Clearly our model and our excess liquidity affords us the opportunity to be flexible wherever needed.

At this level of performance and with continued investment into the business, we would estimate cash flow in the range of $650 million to $700 million over the next three years. Assuming the successful execution of our currently authorized $400 million share repurchase program, combined with the $284 million of cash we currently have on our balance sheet, we would have approximately $550 million of cash on hand and available at the end of fiscal 2012. This cash could be used for further investments in the business, or to return to shareholders or look at other investment opportunities, whatever they may be.

We are very proud of what we have accomplished as an organization over the last four plus years not only for our shareholders but our loyal associates and their families as well. Over the next three years alone we expect to add a net of approximately 140 stores or so which creates hundreds of opportunities for promotions for our best performers and potentially creates in the neighborhood of 4,000 to 5,000 jobs to do our part to help the economy grow and improve the overall employment picture. With that, I'll turn it back over to T.J.

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

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

QUESTION AND ANSWER

Operator

 Thank you. (Operator Instructions) We'll go first to David Mann, Johnson Rice.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

 David Mann - Johnson Rice - Analyst

 Thank you. Congratulations and appreciate all the data and detail. I'm curious, Steve, can you talk a little bit more about the success in the Buzz Club in terms of the kind of information that you are getting on your customer? Particularly the trade down or better customer that you might be seeing and how that might bode in the future where the economy might be better.

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

 I think I'll reiterate what I shared with the market already. The average Buzz Club customer and the reason why we are continuing to be excited about the potential and spending is double what the average -- you really mean the loyalty card?

 David Mann - Johnson Rice - Analyst

 I did.

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

 The Buzz Club member continues to grow also too. We communicate with the Buzz Club member but the loyalty Card member is the one we are concentrated on. We have 1.4 million members today that we understand are spending about double, a little over $40 per the average customer. We are very excited about that because that is almost double what our average transaction is, and the other issue is they are coming back frequently and when they come back after their ten visits and get their one time coupon they're spending almost $100 on an average transaction at that particular point. Those things bode well and I think we have indicated where we have been able to track in some cases where we have a higher concentration of Buzz Club loyalty card members and some of the stores the early performances, the number of transactions and comp sal es in those stores are up about 1% higher than the overall trend of the Company right now. So that's very, very encouraging. Now how big can loyalty be? We are going to work on it as hard as we can and as fast as we can. We have about 6.5 million Buzz Club members and I think I had mentioned before about 20% or 25% of the Loyalty Card members are Buzz Club members and three quarters of them are not. So we think we have a lot of runway in front of us there and we think that that's just a huge opportunity coupled along with the fact of going into the third quarter and adding a technology that all along was planned into the second and into the early third quarter. We are now going to be capable in the back half of the year to start communicating directly with these customers and offering them opportunities where they shop us specifically in classifications of businesses in the stores. So the question is how smart are we and how smart is our customer and what can we offer them and encourage them to shop more fre quently. It's a pretty compelling opportunity.

Operator

 We'll take our next question from Dan Wewer of Raymond James.

 Dan Wewer - Raymond James - Analyst

 Thanks. Steve I was wondering if either you or Chuck can provide a little more information about the "A" stores. I appreciate the help on the first year sales volumes. I know that you have limited history with the format but can you give us a sense as to how those stores might ramp over the following three years compared to the traditional stores and then also recognize the returns are better than you had expected. Can you talk about targeted operating margins at least relative to the traditional stores given their rent expense is going to be higher?

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 Hey, Dan. This is Joe. I'll take it. First, we don't have a number of years experience on the "A" stores. I can tell you in the pro forma, we certainly would expect those to ramp-up consistent with the other stores, but they are starting out at a higher volume. From a comp perspective, we don't have more aggressive comp assumptions around those but the volume expectations initially are higher because of the demographics. From an operating margin perspective, we certainly have internal models, but we don't put various models out on the Street. So I can't answer that for you.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

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

 If you shop the store, Dan, though, and it's early, clearly we made some conscious decisions of businesses that we think are important for us to grow and I have been consistent to talk about it with new Seasonal in the front of the store, the margins associated with that are better than our overall average model and interestingly enough, the Furniture business tends to be doing well and the Home business. Those three businesses have been the major call outs in all of the businesses although from a pure volume standpoint, every single business is doing more business than the average store is doing. So certainly we are encouraged but we need a little bit more time. But I say we need more time, and on the other hand, we are going to try to open 30 of 80 stores in those locations, so we are not afraid of them.

Operator

 Charles Grom of JPMorgan has our next question.

 Charles Grom - JPMorgan - Analyst

 Good morning. The question on the month to date trends you said were better than the 4% to 6% which on a two year basis is a nice tick up. I am wondering if you can flush out which categories are accelerating relative to the fourth quarter and then, Steve, you said something that peaked my interest in terms of I'm not going to say this right, but something about the higher AUR doing a little bit better, better higher price points and that's different than what we've heard in the past. I was wondering if you could flush out both of those issues for us. Thanks.

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

 Yes. It's interesting actually the acceleration in February is the businesses that we came out of in January in the fourth quarter that we talked about. There's no real change other than Furniture business continues to be really good. So that's very exciting and is good and better in February than it was in January, and I think I alluded to that from the Friends and Family event which is a one day event which clearly impacted the month of February, but it was strong throughout the entire month as things went on and again it's across the board like I talked about. Case goods is decent. Upholstery is really good, so those are all very exciting issues to us, and then of course I won't get into the details. Dining is good, and chairs and things like that. People are spending money where there's great value. Seasonal is decent and whe re there's great value it's the same thing there. The bigger items are doing quite well particularly patio sets, gazebos, it's like I'm just repeating myself season to season but those are the things that are really resonating.

We had weather in February too in a number of markets and I'm not using this as an excuse. No one say that Big Lots used weather as an excuse. We didn't talk about it. It is what it is, but clearly in the warmer weather climate areas where we said earlier about 400, 450 stores you take California, Florida, Arizona, Las Vegas, those kinds of things, business was good in Seasonal. So we feel particularly strong there. Home continued good. It was really a repeat of what I said in the fourth quarter only at even higher comp levels. The AUR I alluded to really I feel kind of bad that you took that as something that was special. We were talking about higher average unit retails and better values consistently. It's all about the Raise the Ring program. I just have not said that term in about a year or a year and a half. We have constantly bee n selling better quality merchandise at higher active average unit retails and our business is not about price. It's about value. I'll continue to say it as long as the Board lets me continue to be here and I can scream it. The average unit retails on our floor today are better values than they've ever been before but they are probably slightly higher than they were before or at least what we are selling is slightly higher than what it was before in Furniture, in Seasonal, in Home, in Hard goods. It's across the board.

Operator

 Moving on we'll take our next question from Jeff Stein of Soleil Securities.

 Jeff Stein - Soleil Securities - Analyst

 Just a follow-up on that. Looking at your accelerated comp trend coming out of the fourth quarter, you are talking about AUR going up but average dollar transaction and traffic are you beginning to see traffic accelerate and do you think that customer is going to stay with you coming out of as the economy begins to strengthen?

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

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

 Jeff, it's TJ. A couple things. In the prepared comments we believe going forward we have strategies in place really to try to address both basket through the Raise the Ring strategy that Steve mentioned but, as well as, transactions. We'll stay consistent and not break that out or report those numbers on a quarterly basis, but clearly I think we articulated a number of different things that we think can impact both in a positive manner. On the trend comment I would just add on to what Steve said and you and I have talked about this on a number of occasions in the past that discretionary item or discretionary purchases is really starting to resonate with the customer where they took roughly a year off and didn't really look at discretionary purchases particularly in Home and in some of the Furniture businesses, now they are looki ng at it and clearly we have been highly leveraged to benefit from that. And that's probably some of the benefit we are seeing today.

 Jeff Stein - Soleil Securities - Analyst

 Got it. And housekeeping really quickly AP leverage and number of circulars. Is the AP leverage a one-time event, a timing issue and number of circulars year on year?

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

 AP leverage improvement in 2009 was a one-time event as we worked with our vendors on vendor terms. Going to that 42% was great progress, but we are, in our guidance is a flat AP leverage ratio for 2010.

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

 That circular year-over-year is similar currently.

Operator

 We'll take our next question from Meredith Adler of Barclays Capital.

 Meredith Adler - Barclays Capital - Analyst

 Hey, thanks very much. I was wondering if we could just dive a little bit more into the gross margin? It seems to me that you will have an easier comparison on mix in the first half, and I was also wondering if you have already contracted for your import transportation and freight or is there any potential for that to not be as perhaps as high as you are forecasting?

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 Meredith are you talking about ocean or domestic import freight when you say contract?

 Meredith Adler - Barclays Capital - Analyst

 Ocean.

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

 Meredith, any one of us can answer that question. I mean you are probably, I assume you are kind of getting to what you are hearing in the marketplace. There's challenges for everybody in the United States on import container freights. The Orient and the shipping companies have decided that -- they haven't made the kind of money they wanted to make over the last year whether they have contracts with you or they don't have contracts with you. The simple answer is yes, we have contracts and we have rates that are higher than they were last year as probably everybody does, and it's an important part of our business, but there's a cost associated with it and that's baked into the margin and that will put pressure on margin because of the elevated cost. There's no one who is not going to be importing at a higher cost this year. The co st associated with the shipping from the Orient, from Asia is just going up and that is all there is to it and they put a tremendous amount of pressure on the retailers here, but I think we have some pretty good partners over there that understand how we do business here and Chuck has been specifically involved with our Global Sourcing people and in fact was probably over in Asia two weeks ago because of it and we are back on track with everybody. But that is going to put pressure on initial markup. The overall maintenance of margins and the mix of business, hopefully will be somewhat favorable but it will be offset by distribution freight fuel costs whether they are domestic or import to be quite honest with you. Is that probably a pretty good answer?

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 It's fair. Steve, pretty well summed it up. We have had some longstanding business partners and our Global Sourcing department has been able to hold things together but you'll hear from other retailers where it's a year probably unlike any other year.

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

 Meredith, to tack on your question about easy compares the first half of the year on gross margin, we are guiding to flat and offsetting that as Steve mentioned we have higher domestic freight really driven by fuel and then also we reminded you in our prepared comments about last year's shrink adjustment, favorable shrink adjustment in the first quarter so we are lapping that.

Operator

 Our next question comes from Patrick McKeever of MKM Partners.

 Patrick McKeever - MKM Partners - Analyst

 Thanks. Good morning, everyone.

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

 Good morning.

 Patrick McKeever - MKM Partners - Analyst

 I was wondering if you could talk about the big furniture closeout deal that is in the stores right now and what kind of impact you think that might have on the first quarter and what you are seeing from a sales standpoint in that deal and what you see kind of coming down the pipe just in general for the year, for 2010, in some of the bigger closeout opportunities that might be there? Not the stuff, not the smaller deals across the store that you certainly seem to have plenty of but perhaps some of the bigger deals. Where might those come from as the year progresses.

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

 Well, Patrick, clearly our business model wouldn't allow us to give you that information from a competitive standpoint. I can only say to you and reiterate what I said before. The deal environment is good and it's vibrant. You noticed that we had again a national branded closeout deal that is in our stores right now. It's way too early since it's the latest piece that has come in and set since we weren't, we were under the guise and we may or may not get and we don't know it from year to year. We put together what we are calling personally inside our Company, a road show. A great value of Upholstery, Case goods, a Mattress, one particular mattress and it's absolutely resonating with the consumer a great value and doing quite well. The national branded closeout deal that you are seeing in the stores is at the highest retails we've ever had before and is a higher unit retail than last year's program was and as we sell down in some of the other inventory, we'll probably be capable of understanding how well it's doing in the next quarter conference call.

There are big deals coming. There are big deals that you don't see in the stores, there are big deals that are on the way right now and there are big deals that are planned for the second and into the early third quarter, quite honestly, but I won't share them with you or anybody else. We'll let our competition see them in the stores when they hit. But they are big and they are good and they will resonate with the consumer. We've got actually slightly more visibility further out than I think we've had for a while. So it's one of the reasons why we feel good, and I will answer that before that question is asked the same way I've responded all along. As things get better and business gets better, the deals tend to get better as people spend more money on capital, they feel more comfortable at making changes. So although it's not anywhere near where we'd like it to be, it never will be, it's good.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

Operator

 Our next question comes from Laura Champine Cowen & Company.

 Laura Champine - Cowen & Co. - Analyst

 Good morning and congratulations and thanks for laying out the plan, and I think you did a good job of addressing where you get the SG&A leverage this year but the past from 7.2% to 8% how do you keep controlling and reducing your SG&A expense as a percentage of sales over the next two years beyond this year?

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 I'll tell you, Laura, we give you a little bit and you just want a little bit more, don't you? Laura, I know you haven't had a chance to digest the transcript because we just went through those comments but Steve has some thoughts in the back that talks about the areas of advertising, utilities, distribution transportation, and stores. There are initiatives in place that we believe will carry through past 2010, but specifics again we think we provide a lot of detail for the current year and we give a broad roadmap in the future but that's all we'll provide at this point.

Operator

 Looks like we have a follow-up question from Jeff Stein, Soleil Securities.

 Jeff Stein - Soleil Securities - Analyst

 Guys, question, I was wondering if you can perhaps talk a little bit about your point of view on insider selling? I noticed the filings in recent days.

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

 I'll take that one. Jeff, I find it interesting. I've been reading more and more about the up ticks in stocks and the fact that insider selling has increased pretty significantly over the past few months. I have a pretty simple view that's been very very consistent as it relates to our Company. This particular team has taken the stock from $11 to where it's at today, and I think that they deserve to be compensated for all their hard work. Associates are going to sell stock from time to time, and I am also. As the CEO of the Company I've been able to accumulate a pretty significant ownership position and as I have last year, the year before and I will do again, enter into a systematic plan to monetize some of my holdings over the next several quarters and years quite honestly. My view of the potential of this Company has probably never been more optimistic, but I feel I have got an obligation to prudently execute financial planning for the security of me and my family as probably everybody out there feels the same.

Operator

 Moving on our next question comes from Ronald Bookbinder of Global Hunter Securities.

 Ronald Bookbinder - Global Hunter Securities - Analyst

 Good morning and congratulations.

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

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

 Thank you.

 Ronald Bookbinder - Global Hunter Securities - Analyst

 On the "A" stores, the first year volumes are really nice. What is driving that? Is is that average unit retail? Is it units per transaction? Is it traffic? Are you merchandising those stores any different going more after discretionary items than consumables?

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 The content of the inventory, Ron, is basically the same. I hear this from friends and family and everybody all the time. I only shop one store not another store because it's got more, it's got less. The actual content is really the same. The location is different, how we present it and we market it and the store is slightly different and clearly we spend a little bit more capital up front to address the marketing strategy. I've said for a long time that maybe one of the most important investments we make is the marketing inside of our stores because our customer shops us and shops us for deals and excitement and things that they don't expect to see. So from that perspective, it's basically the same. Although because we are selling more Furniture, because we are selling more Home and because we are selling more Seasonal, the aver age unit retail is higher in those locations.

 Ronald Bookbinder - Global Hunter Securities - Analyst

 And seasonal is set up front.

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 Right. And another outfit is not. So the mix, the mix is the same but the presentation as Steve said is a little different to cater to that expected customer and to answer your question about just overall volume, we don't have transaction comparisons year-over-year, but they are placed, these "A" locations should be in power strips, should have other traffic driving retailers around you and also higher population density and demographics to drive that, the number of footsteps into the store and drive transactions.

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

 If I can just add to that, Ron, it's interesting because everyone that we talked to that is in one of our "A" stores will give you a different impression. All of the stores we opened have new floors. All the stores we opened have new lights. It's interesting because they will walk in and they just feel the store is different. It's a different shopping experience without really focusing on what the merchandise is. It just feels different and we think a lot of that is in the neighborhood that it is in versus more of a destination and kind of a strip center.

Operator

 Moving on our final question today will come from Anthony Lebiedzinski of Sidoti & Company.

 Anthony Lebiedzinski - Sidoti & Co. - Analyst

 Yes. Good morning. Thanks for taking the questions. Just wondering when you look at your loyalty card customer, how often does that customer shop in your store versus all other customers? And just also as far as store openings what areas of the country are you targeting? Thanks.

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

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Final Transcript

Mar. 03. 2010 / 8:00AM ET, BIG - Q4 2009 Big Lots, Inc. Earnings Conference Call

 Well, the Rewards information is too fresh and too new. It wouldn't even be worthwhile sharing but it's a fair question to ask and maybe next quarter after we have six months worth of history we'll share that transaction information for you. That is a good question. We know they shop more frequently. Let me give you specifics when we have some level of a trend. You want something that you can sink your teeth in. As far as stores go and the level of the country they are all over.

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 Right. And as you might expect, East Coast, West Coast primarily. Obviously given our history where we have a higher density of stores, we are moving into new areas, but primarily just like the last couple of years, almost a U shape around the US from the West Coast down in the Southeast and West and back up.

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

 Fair amount of East Coast. We would love more penetration in the East Coast and more in the Northeast and a few more in Florida too. But it is the U shape that we've talked about before.

 Joe Cooper - Big Lots, Inc. - SVP, CFO

 Joseph if we are seeing no further questions in the queue. We would like to end the call. We look forward to talking with you in May.

Operator

 Thank you very much. Ladies and gentlemen, thank for your participation in today's conference call. A replay of the call can be accessed from 11;00 a.m. Eastern time today until March 17, at 12;59 p.m. Eastern time. It can be accessed by dialing 1(888)203-1112. Again the replay for today's conference can be accessed from today 11;00 a.m. Eastern time until March 17, at 12;59 Eastern time at (888)203-1112. Again thank you for your participation and this does conclude today's event.

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