Tim Johnson - Vice President of Strategic Planning and Investor Relations Steve Fishman - Chairman and CEO Joe Cooper - Senior Vice President and Chief Financial Officer Chuck Haubiel - Senior Vice President, Legal & Real Estate and General Council

Mitch Kaiser - Piper Jaffray David Mann – Johnson Rice Jeff Stein – Soleil Securities Charles Grom – JP Morgan Jody Yen – Buckingham Research

Welcome to the Big Lots second quarter 2008 teleconference. (Operator Instructions) At this time I would like to introduce today’s first speaker Vice President of Strategic Planning and Investor Relations, Tim Johnson.

With me here in Columbus are Steve Fishman our Chairman and CEO, Joe Cooper, Senior Vice President and Chief Financial Officer and Chuck Haubiel, Senior Vice President, Legal & Real Estate and General Council. Before we get started I’d like to remind you that any forward looking statements we make on today’s call involve risks and uncertainties and are subject to our safe harbor provisions as stated in our press release and our SEC filings and that actual results can differ materially from those described in our forward looking statements. As discussed in this morning’s press release our results include both continuing as well as discontinued operations. Since we do not view discontinued operations as relevant to the ongoing operations of the business the balance of our prepared comments will be based on results related to continuing operations. With that I’ll now turn it over to Steve.

I want to take just a couple of minutes and talk about the quarter. We’ve known for the last several months that Q2 would be a challenge for our merchants and the entire organization and that the street was intently focused on how we’d perform. We were up against the 5.2% comp from last year which included one of the larger deals in the company’s history. While I’m proud to day that we met the challenge with a 2.8% comp during the second quarter we offered the customer a much improved offering of brand names and better quality goods which I believe was largely responsible for our results. Additionally, the combination of the Jennifer Farrell Collection which was a deal that we created and the drug store liquidation buy out were enough to offset last years very large closeout from a national home furnishings retailer. From a merchandising perspective our consumables business was once again a leading category as comps increased in the low double digits. With the macro environment being challenging right now you’re hearing from more and more retailers that customers are shopping heavily for consumables, and particularly food and dairy products. There were some investors or analysts who thought this would be a negative for our business but that was just absolutely not true. We have a very large big consumable business at roughly 30% of our total company mix and within that a very strong branded food business. Fortunately for us we have deep long standing relationships with some of the strongest brands in the country who have been consistently offering us the level of branded closeout merchandise we need to run our business. Within consumables, whether it was food, HBC, household chemicals, paper, or pet our business was good. This is particularly encouraging when you think about the drug store liquidation deal which probably had some cannibalization effect against our consumables business. The deal is not part of the consumables comp but instead is in a separate category called other in our quarterly filings. We also hear or read from time to time that our business is highly discretionary and the difficulties in the environment will take a toll on Big Lots. Again, in Q2 seasonal and furniture, two of the higher ticket categories in the store that could be considered as discretionary performed extremely well. Seasonal comps were up in the high single digits in Q2 up against a double digit comp from a year ago. The team did an excellent job of delivering an assortment of improved quality and great value. Lawn and garden in particular is a very good example of our raise the ring strategy. Better quality goods and great value. Some of our best performing classifications were patio furniture and gazebos where retails are the highest and where the biggest strides have been made in quality. Furniture comps were up in the mid single digits against a high single digit comp from a year ago. The business was solid across most of the country with one exception being Florida where business was challenging across most merchandise categories. The mattress business remains the strongest part of furniture. Our day in and day out business with Serta was supplemented by promotional events and closeout deals featured in our advertising that performed very well. Also, upholstery and case good business were solid in Q2 continuing the trends experienced in Q1. I can’t overemphasize this enough but we’ll try. Our furniture business and strategy is much different than those of furniture retailers who have struggled or have gone away. We offer lower to moderate price points, extreme value and good quality furniture. This price line of business is very fragmented more often than not regionally based or market by market. With competitors that are not anywhere near the size and scale that we are. We’re in the replenishable furniture business, not in the furniture business that focuses on or tries to sell you the type of furniture you purchase once every 15 to 20 years. We also operate furniture as a department within our store, not a freestanding concept [Operator Interruption] later strategy you make a purchase and walk out with it that day. We also continue to see exciting deals in some of our smaller businesses like apparel, lingerie, books and sporting goods. Again, small in scale but the message reinforces brands and great value. Our hard lines business was essentially flat for Q2 which is better than Q1 with notable trend changes in electronics and small appliances. I commented on our last call that electronics was improving as we were able to source more TVs and digital cameras and we were back in business in our $3 DVD assortment for Q2. We were challenged again in the home business. We continue to make changes in product and people and I think we’ve learned a great deal from the Jennifer Farrell Collection that will hopefully help us think and source goods differently as we move forward. Certainly this collection reinforced for us that great value and better quality are the key to our customer base and needs to be the focus moving forward. The comps were good in Q2 across most categories and most regions of the country, again with Florida being the one notable exception. From a customer standpoint our comps remain very consistent across income demographics. If you’re looking at a store with household income average of $40,000 or less or a store with a household income of $60,000 or more or anywhere in between comps were up essentially 3% for the quarter. This is a very key point to take away, very key, I continue to read the bearish or contrarian point of view that we only have a low end customer or that raise to ring will not appeal to the portion of our customer base that is economically challenged. Our results do not support this thesis at all and to suggest otherwise is not accurate and it’s misinformation. Time and time again when we talk to our customers it’s all about better quality and great value. That’s what they want and that’s what they expected at Big Lots. I know this will be a question in Q&A so I’ll address it now. The deal environment is good, more vibrant in some areas than others but overall remains good. I think our vendor summits have helped in this regard but I also believe that in this challenging environment vendors are looking to quality investment grade companies like Big Lots that they know are going to pay their bills on time and they may be looking to make just one phone call to a company like us who can take the whole deal. In summary, Q2 EPS of $0.32 was a record for this business and represents the seventh consecutive quarter of record EPS results. The team generated record productivity, a 2% increase in sales at record sales per foot, a 3% increase in gross margin dollars at record gross margin dollars per foot. All of that on less than a 1% increase in total expenses. Add it all up and it’s a 30% increase in operating profits, the most important metric to consider when evaluating our performance. The team is executing and the win strategy is right for our business. With that I’ll turn it over to Joe.

Sales for the second quarter were $1.105 billion compared to $1.085 billion for the second quarter last year. Comparable store sales increased 2.8% against a 5.2% comp increase last year driven by an increase in the value of the average basket as a result of our raise the ring strategy. Walking down the P&L the second quarter gross margin rate of 39.3% was 50 basis points higher than last years rate of 38.8%. The improvement was principally due to improve initial markup as we experienced a better buying environment for closeouts than a year ago and our global sourcing efforts have had a positive impact on our imported merchandise as well. From an expense perspective total dollars increased slightly less than 1% and our Q2 rate was 30 basis points lower than last year. Leverage for the quarter was achieved through improved operational efficiencies and store payroll and distribution and transportation. Depreciation expense was $1 million lower than a year ago, with these efficiencies partially offset by higher utilities. Additionally, higher bonus and stock compensation expense this year were essentially offset by the amortization of a gain on the early termination buyout of one of our stores. In total the 2.8% comp improved gross margin rate and SG&A leverage, drove second quarter 2008 operating profit dollars to $43.5 million versus $33.4 million last year, an increase of 30% for the quarter. Our Q2 operating profit rate at 3.9% of sales was up 80 basis points compared to an operating profit rate of 3.1% of sales last year. Net interest expense was $1.1 million for the quarter compared to net interest income of $1.5 million last year. This change is directly related to the repurchase of $750 million of company stock during March 2007 through February 2008. Our tax rate for the second quarter fiscal 2008 was 38.3% compared to 36.6% last year. For the second quarter fiscal 2008 we reported income from continuing operations of $26.1 million or $0.32 per diluted share compared to income from continuing operations of $22.1 million or $0.21 per diluted share a year ago. Our Q2 result of $0.32 per share was above the high end of our guidance which called for earnings of $0.21 to $0.25 per share. If you’re looking at the high end of our communicated guidance the favorability resulted from first, our Q2 sales comp of 2.8% compared to our guidance of 1% to 2% comp accounted for approximately $0.02 of favorability. The next source of favorability came from a 50 basis point improvement in the gross margin rate which exceeded our expectations. Continued improvement in IMU better than forecast freight costs and lower markdowns particularly in seasonal were more than enough to offset some mix pressure. The better than expected gross margin rate resulted in approximately $0.04 of the favorability to our prior guidance. Finally, expense management was again very disciplined during the quarter. We experienced a very low level of flex on expenses associated with our upside sales, this accounted for the other $0.01. Turning to the balance sheet, our total inventory ended the quarter at $698 million that’s down $15 million or 2% compared to last year. Lower inventory resulted from a 1% decline in average store inventory and a 1% decline in overall store count. Cash flow, which we defined as cash provided by operating activities less cash used in investing activities, was $8 million for Q2 compared to $87 million last year. This decrease is due to a combination of the timing of inventory payments and increased CapEx of approximately $23 million during Q2 this year. Stripping out the noise created by inventory timing on a year to year basis cash flow was $48 million this year versus $78 million last year with a difference of $30 million directly related to the year to date increase in capital spending. We ended the second quarter with debt of $148 million and expect to generate sufficient cash this year to be in the net cash position by the end of the fiscal year. Capital expenditures totaled $34.6 million for the second quarter up $22.8 million compared to the second quarter last year primarily related to the investments toward our SAP implementation, the completion of our new PLS register system rollout and the opportunistic purchase of two stores previously leased in California and Arizona. Depreciation expense for the quarter was $20.5 million or $1.4 million lower than last year due to the run off of fully depreciated assets including a portion of the significant store remodeling programs from five years ago which related to the company wide name change to Big Lots. During the second quarter we opened three new stores and closed two stores leaving us with 1,355 store and total selling square footage of 29.0 million. Moving on to guidance, for the third quarter comp sales are forecasted up in the 1% to 2% range. Comps are expected to benefit from our home event sell down and sales related to the drug store liquidation deal that remains in approximately 500 or so stores. We also anticipate continued strength in consumables and furniture will be partially offset by challenges in home and certain back to school classifications. Q3 earnings are estimated to be in the range of $0.15 to $0.19 per diluted share compared to $0.14 per diluted share last year. The gross margin rate is forecasted to be flattish to last year as IMU improvements are expected to be offset by a higher markdown rate tied to certain Labor Day promotions, the final sell down on the Jennifer Farrell Collection and the drug store liquidation deal. From an SG&A perspective the leverage trends experienced in Q2 are forecasted to continue in Q3 and be further supplemented by cost savings from a furniture DC consolidation which was successfully completed in July, partially offset by Q3s expected lower comp. For the fourth quarter comps are planned up in the 1% to 2% range. The gross margin rate is forecasted to be up to last year due to favorable IMU in most categories and lower markdowns particularly in home and toys. SG&A leverage trends are expected to continue but likely at a slightly lower rate due to additional advertising expense in Q4 this year versus last year. The increase in advertising expense was a shift from Q1 to Q4 this year. As you’ll recall we mentioned this advertising shift as a source of leverage in Q1. Given the strength of our Q2 results and reaffirming our EPS view for the back half of the year, we’ve increased our EPS guidance by $0.10 for the full year and now expect income from continuing operations for fiscal 2008 to be in the range of $1.90 to $2.00 per diluted share, compared to our previous guidance of $1.80 to $1.90 per diluted share. This represents a 35% to 42% increase over last year’s income from continuing operations of $1.41 per diluted share on a non-GAAP basis. Further, we estimate gross margin rate improvement and forecast the SG&A rate to be in the range of 34.2% to 34.4% or 30 to 50 basis points below last year. With these improvements the operating profit rate is now expected to be in the range of 5.5% to 5.7%. In terms of CapEx spending we are increasing our estimate for this year to be in the range of $100 to $105 million compared to prior guidance of $90 to $95 million. The increase is attributable to the purchase of two previously leased stores one in California and one in Arizona. Each of these stores is profitable and high population areas and in markets where we have been successful. We saw an opportunity to invest for the long term in each of these landlords was motivated to sell for different reasons. Based on the increase in CapEx guidance we not expect to generate approximately $175 million of cash flow, net of capital expenditures compared to prior guidance of $185 million.

Q2 was a solid quarter for Big Lots and its shareholders and our expectations for the back half of 2008 were essentially the same as we gave you 90 days ago. Our guidance for the full year now suggests that we will meet or exceed our long range plan operating profit goal of 5.5% in two years not the three years as originally anticipated. With that, we’ve already begun the process of looking towards the next three years, 2009, 2010, and 2011. The entire executive team is committed to presenting our Board of Directors a plan that will continue to improve the profitability of this business. As I’ve said on a number of occasions in retail if you aren’t constantly challenging and reinventing yourself you’ll fall behind your competition or lose all together. We’ll be looking very hard over the next six months to put together a plan for the long term fitness of the business. Sitting here today I’d expect that most of the elements that have made us successful to date will likely remain. Merchandising, real estate and the costs structure will be the cornerstones but they’ll be some new initiatives or new strategies to keep the business moving forward. From a merchandising perspective we’ll be looking at categories, plans and in store presentation. We’ll be looking at our options to merchandise a smaller store strategy. We’re looking beyond the store as well and we’ll be testing the waters with an e-commerce strategy later this year. I think that there’s an opportunity to create some excitement online with brands and products that don’t necessarily lend themselves to our store environment. We’ll tell you more as we learn, but from a financial standpoint we see it as not being significant to 2008. This is another area of our business where we will test and learn first so stay tuned. In merchandising there’s not shortage of ideas, we simply need to prioritize the areas we want to focus on. From a real estate perspective we’ve said on a number of occasions that the distribution center infrastructure could support up to 1,800 stores. When and how we get there will depend upon the commercial real estate market. We’re moving somewhat counter to the rest of retail here by looking to grow when most retailers are slowing. I want to emphasize here we’re not in a race to grow the store base, we’re focused on profitable store growth and there’s a big difference. We’ll only open stores where I can say to shareholders that we can make money. While we do think that the commercial real estate market needs to continue to cool we’re also looking how to approach the strategy. I mentioned on the last call that Chuck and I attended the ICSC convention in May and there were some very key take aways or learning’s for me personally and for Chuck in his new and expanded role of responsibility for real estate. Using that information we hosted our first ever real estate summit here in Columbus earlier this past month. We invited landlords, developers and brokers from across the country and took a very similar approach to what’s been very successful for our vendor summits in merchandising. Here’s who Big Lots is and here’s who we’re not. Here’s how we think about real estate but we’re open to any opportunity that will help us open a new store profitably. Here’s where we want to grow but we’re also open to all markets. Here’s the size of the store we have but we’re willing to look at both smaller and larger square footage locations. Here’s the lease term we like but we’ll look at longer terms at the right economics. Here’s the type of space we like but we’re open to new builds or new centers at the right costs. The feedback from the attendees has been terrific and supports our belief this commercial real estate market like many other of our vendors needs to be educated about who we are and how we’re now conducting our business. Last but not least, the cost structure will continue to be an integral part of the win strategy. I know that there remain skeptics out there on how we’re doing this and if it can continue. Inside the four walls here in Columbus we know it can continue and it will continue to be a focus across the organization. What we will not do is make arbitrary cuts but instead will be focused on process and training initiatives as a way to become more efficient, with the goal of any changes or savings being transparent to the customer or the in-store experience. If you take away one thing from this call let it be that we delivered another record quarter but our team at Big Lots does not believe that we’re anywhere near as productive, as efficient or as profitable as we have the capability of being in the future.

We’d like to open up the lines to questions.

(Operator Instructions) Your first question comes from Mitch Kaiser - Piper Jaffray. Mitch Kaiser - Piper Jaffray: In your comments you talked a little bit about some weakness in some back to school categories, could you just clarify what you’re seeing there?

I think you’re hearing a lot of it from retailers today that we’d like to see that people are making a forward statement of stepping up in back to school but I think they’re being very cautious about what they’re doing and particularly when you address back to school for us it’s the stationary part of our business and of course we also include some of the RTA parts of the business which is a classification within the furniture business. Although I will tell you the last week or so has been a lot better than it was earlier. I think we’re seeing the same thing in all of the businesses it doesn’t matter what time of the season it is people are buying later and later and later. The good news from that perspective for us is they happen to be smaller classifications of our total business and it hasn’t stopped the consumer from shopping other areas of our store. Mitch Kaiser - Piper Jaffray: On the Columbus DC did you get any benefit in the second quarter or is all of that coming in the third and fourth then?

You’re talking specifically about the fact that we’ve moved furniture out of the distribution.

The impact to the second quarter was minimal if anything. We’re really in transition for the majority of the quarter with inventory pointing at the new DCs rather than the furniture DCs and then winding down the building here in Columbus and replacing or putting the associates out of the furniture building into other buildings. The impact on second quarter was minimal but we’re ready to go right out of the gate for third quarter and the back half of the year. Mitch Kaiser - Piper Jaffray: You mentioned a smaller store format could you give us a sense for what that might look like from a merchandising perspective?

When we’re ready to talk about it we will. I think the objective of me mentioning that on this call is there are a lot of reasons why we mentioned it now. One of the big take aways that I think Chuck and I got at the ICSC convention and what we’re hearing more and more and more is that when you take a look at stores that are available for lease whether they be secondary tertiary or new builds that there are a number of developers that are developing stores probably closer to the 20,000 square foot range. One of the things that we did last year besides spending some money in retrofitting a number of the California locations if you’ll recall there were 70 locations. One of the reasons that we did it is many of those locations in California are smaller in size than our typical 25,000 to 30,000 square foot store, many of them were in the 20,000 to 22,000 square foot range and what we’re attempting to do is figure out how we could get the major classifications that we like to really go after in a big, big way in those stores and 35 of the 70 stores got furniture departments in there. Basically what we’re tying to understand is what can we do in a smaller size box and still get the furniture business in it whether we’re able to achieve the rest of the classifications of business that we currently carry in a 30,000 square foot store or not will be dependent upon not just the size of the box but how the box looks, is it long and narrow, is it deep, is it wide, and some of them make differences. One of the nice things about our business that we believer very strongly about is when 75% to 80% of your customers or more come in with nothing in mind to buy their classifications that you have to have and there are classification that you just don’t have to have. We want to understand as we move forward if there are opportunities to open more stores in smaller size boxes what are those businesses that we want to be in. They may not be the same in all locations because there may be urban locations and there may be suburban locations and in urban locations maybe we don’t need as much of a full furniture department and maybe in a suburban location we want a full furniture department and visa versa. I think in the process of this long range plan analysis we’re really going to understand what goes in a smaller size box.

Your next question comes from David Mann – Johnson Rice. David Mann – Johnson Rice: On the second half comp out that you gave it seems little bit slower than what you’ve done in the first half even though you’ve got some easier comparisons. Can you talk about the thought process there is it the environment, the macro or are you just feel like it’s more prudent to be conservative at this point.

It’s clear that the guidance is suggesting a decelerating trend and we’ve heard a lot about the compounded comp and some view that the back half should be easy compare and on a two year compounded comp we should have a higher comp. We don’t necessarily subscribe to that theory and as our comps last year were slightly negative so that that theory being so that the back half our comps will accelerate. To do that our build rate would have to accelerate coming out of Q2 at a faster rate than last year and as difficult as the retail environment was last year we feel that the environment is even much more challenging today. Q3 has been challenging across retail for a number of years now. Since we’re not heavy into apparel which is a little more natural category for back to school it may be more of a challenge for us than others. Don’t misunderstand us we’re working very hard on Q3, we believe we look better today than a year ago. We just believe it’s more fiscally responsible to plan our sales and inventory in line with current trends rather than to create this big expectation or hockey stick for the back half just because last year wasn’t very good. Q4 has some additional complexities you know the election, we think the election will likely impact sales early in November and then there’s the shift of Thanksgiving back one week later in the retail calendar that’s going to result in five fewer shopping days between Thanksgiving and Christmas. A little slower start in the fourth quarter and expect a compression at the end of the holiday season. We’re being prudent and I think we’re being wise. David Mann – Johnson Rice: The other question I had related to SG&A leverage. I think on the last call you suggested that Q2 might be the lowest level of leverage or at least the toughest quarter to show leverage. How do you feel about it now that you’ve completed it in terms of what that means about the back half because it looks like your guidance for the back half on leverage does not necessarily suggest that we should see more leverage in Q3 or Q4?

You say that we should not see more leverage in Q3. We are saying that the leverage should continue into Q3 there are a couple things Q3 we will have the benefit of the furniture consolidation that we did not have in the second quarter. We do expect the pressure on utility costs to continue into the third quarter. David Mann – Johnson Rice: My question is it sounded like at the beginning of the second quarter you thought that Q2 would be the toughest now it seems like Q3, Q4 are going to be similar to Q2. What’s changed since you had that view about Q2?

Q2 would have been tough, we were forecasting 1% to 2% comp remember we came in with a 2.8% that certainly benefited our leverage in Q2. As we go into Q3 we’re forecasting a more conservative comp than Q2 so you’re going to have less leverage just based on the top line. That’s going to offset, that’s going to pressure some of that leverage naturally. If you just compare Q2 to Q3, Q3 will have the benefit of the furniture consolidation which we did not have in Q2 but we will also have an offsetting pressure from an expected lower comp. The other benefits related to Q2 as far as DNTS, distribution transportation in stores we’ve said we expect to continue into the third quarter.

Your next question comes from Jeff Stein – Soleil Securities. Jeff Stein – Soleil Securities: Last year in the fourth quarter you had a very difficult toy quarter and I’m just wondering I haven’t heard a lot of discussion in the industry about the concern that we had last year over lead paint and so forth. I’m wondering how you’re planning the toy business this year with regard to the type of toys you’re selling and the level of sales that you’re forecasting that you’re building into your model internally and whether you see that as a plus to the model this year.

I’ll try to respond the question without giving you more than I’m allowed to. First off, we’re in the pure toy business, we’re not in any software business, and we’re not in any game business. We don’t have some of the luxuries that some of the other retailers who are experiencing that part of the business which is probably the only piece that seems to be strong with most of the retailers who were even talking about the toy business or have been talking about it this year. I haven’t even heard much about it. You’d have to ask the toy manufacturers about how the toy business has been. We concentrate on the children’s business, the boys business the girls business, the import part of our business I can tell you our business will be highly branded and probably even slightly more branded than it was a year ago at this time. A large percentage of our business is and continues to be branded so that’s important to us and that’s resonating with our customer number one. Number two, although I would tell you that that business is probably planned relatively conservative and probably based upon its performance in the last 18 months its probably intelligent to plan that business relatively conservative so flattish is probably the best way I can respond to you at this particular point. On the other hand it’s a very profitable business as you well know and I think Joe alluded to and if he didn’t quite honestly one of the margin enhancements for the fourth quarter is the fact that we think we positioned that toy business much more intelligently and hopefully won’t absorb some of the markdowns that we did in the fourth quarter last year. Jeff Stein – Soleil Securities: A couple questions relating to the cost side of your business. Haven’t been a lot of discussion with regard to SAP and the impact that that investment may have as you get further into it and I’m wondering how you’re planning that into your cost structure on a go forward basis. Do you believe, in other words, that you can find ways to offset the dollars that are going to flow through the P&L from SAP in other areas or is that going to put some pressure perhaps on your SG&A in 2009?

We are doing a lot of development this year on SAP, we’ve talked about the cost in the approximately $35 million and an implementation or a rollout over two years next year financial and wholesale systems. All I can really tell you is that we’ve said that we have a commitment to continue to lever SG&A over the longer term we will not start amortizing and depreciating those costs until 2009 as you know and we haven’t been specific when we’ll roll that out in 2009. It’s kind of a stay tuned. You can model out the amortization costs of that $35 million but as far as the initiatives that we would intend to implement to offset those costs that’s kind of a stay tuned. Jeff Stein – Soleil Securities: The amortization period what would you suggest that we use for modeling purposes?

We’re actually discussing that because we have pieces of that coming online at different times. Out there there’s floors of five years it’s more common seven but we have not determined that. Jeff Stein – Soleil Securities: One last question this relates more to cost of goods. Everybody is seeing inflation pressures coming out of China and you guys have obviously done a tremendous job with your global sourcing, continuing to see merchandise margin improvement this year. As you look to next year any thoughts in terms of where you see your, do you see more inflation for example in your spring seasonal programs for next year than you did this year?

The answer is yes to that and when you say when we look to next spring. We looked to next spring last spring to be quite honest with you. That business is committed to so far in advance so we know what the spring of 2009 is going to look like from a quality and value perspective and prices are up. Anybody telling you anything differently is on another planet. We focus on the value equation on what we do, we did it this year and prices were up from last year. We did it last year and prices were up. We had a double digit increase last year and we comped high single digit on top of a good double digit increase and our expectations are that we’re known for the seasonal business and we’ve got a great program put to bed already for the spring of 2009 I’m excited about. I wish we had more seasonal business in the third quarter than we do because quite honestly out of all the quarters of the year it’s the quietest quarter that we have. One of the reasons that you could take a look at or we could speak to the difference between the 1% to 2% versus the 2.8% in the second quarter is the fact that the seasonal business itself is the smallest piece of our business in the third quarter. We hit trim a tree as we get into the fourth quarter and we have very high expectations for that piece of the business. Remember the other thing too, we are in a slightly different business than traditional retailers, although we’re feeling the same pressures everybody else is in cost increases it’s all based upon the valuations that our competitors are retailing inventory for. As long as we continue to show great value based upon what’s out there in the way of retails in the marketplace we’re always doing a good job. Whether I like it or not we may be paying more in certain areas of the business than we did a year ago but so is everybody else. They’re retails are going up also. I think most retailers haven gotten to the point where they’re pretty smart saying its very, very difficult not to pass along price increases to the consumer today because we’re all in business to make money. They’re doing it and we’re doing it at the same time. We’re trying to do it intelligently. Jeff Stein – Soleil Securities: In line with that I’m wondering if you could contrast the Jennifer Farrell deal with the Broyhill deal because that was pretty impressive what you guys accomplished with the Jennifer Farrell deal and I’m wondering what are your key take aways from that deal in terms of what you’ve learned, what you did right, what you did wrong and might that encourage you to do more deals like this between now and year end.

I’ll answer every one of those questions that I can, the best I can. I wouldn’t exactly compare what we did with Jennifer Farrell to the Broyhill deal because the merchandise is not even remotely the same type of merchandise. The Broyhill deal was clearly predominantly accessories and case goods under a great branded name. What we tried to do with the Jennifer Farrell Collection was recreate a home event that encompassed classifications across all parts of the home businesses. Our take aways were the following. Number one, value and quality continue to be the most important issue and not specifically pricing. There is very limited resistance to the home and home accessory pieces of what we have done and what we continue to do. Not only was it a great take away for the event itself but it keeps us encouraged for our day in and day out business and our merchants in our home area to continue to take a look and step up to better brands, better quality, not being afraid of higher price points as long as there’s a value relationship to it. I’m very excited about that piece of it. The take away was the least exciting part of the business that we wish we did better; although it hasn’t been what I’d call disappointing are the furniture and the furniture accessory pieces of it. I would tell you it’s always what we do it’s because the market may or may not want that type of product. We always look at ourselves first. We will take away and have learned an awful lot as we move forward in those types of events. The fourth quarter is and will always continue to be focused on Christmas here in this company. As one of the reasons why the Jennifer Farrell Collection and anything else we do in the way of large liquidation deals are gone by the end of the third quarter because we want the customer to focus and we want to execute nothing but Christmas type gift giving related classifications of merchandise. You’re going to see a lot of changes in our store this fourth quarter hopefully exciting changes on how we’re going to approach our business. On the other hand, we think there is lots of opportunities as you go into 2009 for the same type of event whether it’s under the Jennifer Farrell name or something else for us to continue to create these exciting home type events and it’s more than likely you will see something in the first quarter of next year.

Your next question comes from Charles Grom – JP Morgan. Charles Grom – JP Morgan: Could you clarify your comp guidance of 1% to 2% for the back half? I want to make sure is that consistent with your expectations earlier this year at the end of the first quarter?

Yes, the third and fourth quarter comp expectations are consistent with what would have been included in our guidance for the back half of the year when we last spoke at the end of May. Charles Grom – JP Morgan: Beyond some of the choppiness in the back to school trends I was wondering if there is anything else in August that you wanted to share with us in some of the other categories, seasonal or home or furniture.

No, it’s fairly consistent. Charles Grom – JP Morgan: Turning to your balance sheet we noticed that your accrued expenses were down a little over 40% year over year I know that’s against the 98% increase a year ago, I’m wondering if you could walk us through some of the buckets to quantify that decline.

It’s primarily the repurchase; we had a significant accrual last year for shares acquired but not settled that was about $26 million that’s the biggest piece last year. A little piece in advertising accrual, the rest is just miscellaneous stuff. The KB lease obligation that we released at the end of the year about close to $9 million that’s probably the other biggest piece. Charles Grom – JP Morgan: When did you release that?

Fourth quarter, that’s the other big piece, those two. Charles Grom – JP Morgan: I know you guys are meeting with your Board later today, I’m just wondering what the thought process on instituting another buyback like you said $175 million of free cash very low store growth for the time being I’m just wondering if we could potentially see it over the next six to nine months?

Last year the $600 million program was executed with available cash. The $150 million program that we had approved and executed in the fourth quarter and finished in the first quarter that was funded by borrowings from our credit facility. At the time we felt that was the right move, we had a very opportunistic price. As you recall that program we got about 9.2 million shares at an average price of $16.28. I can tell you at the current time we don’t have a new authorization currently approved but we will continue to monitor our share price and review alternatives with the Board. Charles Grom – JP Morgan: On the gross profit margin increase I think 53 basis points, can you itemize that for us IMU, freight, and markdown and then conversely what the mix drive was.

The majority of it when we look at it is IMU whether its closeout or whether it’s import our IMU is up across most major classifications from a year ago. Our pure markdown rate would actually be slightly up to the prior year because of some of the unique deals that we had going on with Jennifer Farrell and the drug store liquidation. Freight costs year over year were pretty similar although as we finished the second quarter they were a little bit better than we had forecasted which as Joe mentioned was the reason for us doing better on the margin rate than what was included in our guidance. Big picture, IMU is the big driver year over year as to why our margin rate is expanding.

We’ve really focused on the IMU in the last six months in particular. It took a lot of challenges from our investors taking a look at the history of this company and what the IMU used to look like and although we try not to really specifically look at history we’ve been very, very focused and understanding better than ever before what a product should sell for and what the right value is on product today. You combine that with some of the deals that are coming our way at this particular point we want to be smart and we want to take advantage of the opportunity for initial markup. The good news is if you have to take a markdown you can always take a markdown but it’s impossible to take a markup. We’re really consciously trying to understand how we value everything that’s coming in on every single solitary purchase order and at least in the first six months of this year it’s certainly paid off for us. Charles Grom – JP Morgan: With the Columbus DC when that flows through in the third and fourth quarter that will flow through the cog line or will it be a mix cog & SG&A.

The majority of it will flow through SG&A there will be a small piece on the inbound side but very small. The majority of the savings is all centered around outbound transportation from the four regional DCs now instead of the Columbus DC on the furniture side.

Your last question comes from Jody Yen – Buckingham Research. Jody Yen – Buckingham Research: Looking back into the sharp deceleration in sales trends last year what sort of explanation can you provide and what confidence do you have that that same top line slowdown won’t repeat this year?

First I will say that we are guiding to a deceleration in sales this year based on current trends which are not unique to Big Lots. We are acknowledging that we are expecting some deceleration in the back half of the year coming off the second quarter, which we spoke to in the conference call script. Jody Yen – Buckingham Research: Why did you experience a deceleration last year?

You’d really have to go back and look at last year’s explanation and the explanation at that time was that we did see slower sales particularly around the back to school timeframe that unfortunately for us and most of retail continued for the last six months of the year last year. At the time we were talking about the fact that we were up against a drug store deal at the time we did not have the luxury of repeating. Our home business was soft which again is consistent with most of retail. Our seasonal business in particular Halloween and Harvest if you’ll recall it was extremely warm last year and that business happened very late and unfortunately at reduced prices and not so much at full ticket. Also at the time we were talking about the toy business which again not unique to Big Lots there was significant amount of negative media out there around purchasing of toys whether its lead based paint, choking hazards, etc. it was all out there in the media and unfortunately for us we have a very pre-school age toy business and although we did not necessarily have product that was not a big recall issue for us so much as maybe some other normal retailers, the fact of the matter was the negative overhang out there from the media definitely impacted our business, that slightly negative comp last year in both the third and the fourth quarter. That’s all in the history. We’ll go ahead and end the call and we look forward to speaking with everybody at the end of November, first part of December when we release our third quarter earnings.