Ladies and gentlemen, welcome to the Big Lots' Second Quarter 2014 Teleconference. This call is being recorded. [Operator Instructions] At this time, I would like to introduce today's first speaker, Andy Regrut, Director of Investor Relations.

Thanks, Lori, and thank you, everyone, for joining us for our second quarter conference call. With me here today in Columbus are David Campisi, our CEO and President; and Tim Johnson, Executive Vice President and Chief Financial Officer. Before we get started, I'd like to remind you that any forward-looking statements we make on today's call involve risk 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. All commentary today is focused on adjusted non-GAAP results from continuing operations. Reconciliations of GAAP to non-GAAP adjusted earnings are available on today's press release. This morning, David will start the call with a few opening comments, T.J. will review the financial highlights for the quarter and update the outlook for 2014 and David will complete our prepared remarks before taking your questions. With that, I'll now turn it over to David.

Thanks, Andy, and good morning, everyone. I'm very pleased with the results we have reported this morning. For the second quarter or the second consecutive quarter, our comps were positive and well within the guidance range we provided, and our earnings were above the high end of our range. From a merchandising perspective, 5 of our 7 merchandise categories comped positive in the quarter. Only 2 categories were down to last year, both of them were edit-to-amplify categories, where we have downsized or exited classifications of the business. Trends in our Food business remained very strong, comping high single-digits. Trey and his team have done a great job improving the consistency and breadth of our offerings. We've improved our in-store signage to make it easier for Jennifer to find all the items on her list, while also providing an easy way for her to determine which of our favorite brands are never out and will always be in our stores. We are also pleased with the progress of rolling out our coolers and freezers. We're on pace to complete this year's rollout to approximately 600 stores. This will have us somewhere in the neighborhood of 725 stores with coolers and freezers by the all-important holiday and fourth quarter selling season. Next is Consumables. The team did a great job and the category was up mid single-digits with consistent growth in HBC, home organization, chemicals, paper, pet and housekeeping, actually very similar to Q1 results. And we love consistency at Big. Another solid performance both in never out and closeout products. Soft Home comps were up high single digits, driven by broad-based strength across bedding, textiles, flooring and bath. Martha and her team have done a tremendous job improving our fashion sense and executing a discipline of quality, brand, fashion and value or QBFV. We're still very early in the evolution of this category, which is why I'm so excited about the prospects. For the second quarter, Soft Home was a leading performer for us and back-to-school, which delivered in late July, has provided quality with a pop of color that Jennifer has responded to very, very positively. Furniture was also up high single digits with strength across most department, including upholstery, face goods, ready-to-assemble and mattresses. The business benefited from the rollout of Furniture financing, which was completed in 1,300 stores at the end of June. Second was Seasonal was up low single-digits. It's not a surprise. We're not the first to say it. But weather certainly wasn't our friend in the spring. And yet despite these challenges, the team put up a positive comp and we exited Q2 with spring Seasonal inventory level down nearly double digits. And finally, Electronics and Hard Home, as we expand -- expected, both of these were down mid- to high-teens. Remember, these categories had a majority of the edit-to-amplify clearance activity we began back in Q4 of last year. Even though we didn't love the product in these categories a year ago, we still had to offset or replace the sales from these edits and exits. So with that, I'm now going to turn the call over to T.J. for more insight and detail on the quarter.

Thanks, David, and good morning, everyone. Net sales for continuing operations for the second quarter of fiscal 2014 were $1.915 billion, an increase of 1.2% over the $1.181 billion we reported last year. Comparable store sales for the stores open at least 15 months increased 1.7%, which compares to our guidance range of plus 1% to plus 3%. Income from continuing operations was $17.2 million or $0.31 per diluted share, which was slightly above the high end of our guidance, which called for $0.24 to $0.30 per diluted share. This result compares to last year's adjusted income from continuing U.S. operations of $21.5 million or $0.37 per diluted share. For Q2, the operating profit rate for continuing operations was 2.3% compared to last year's adjusted rate for continuing U.S. operations of 3%. The decline in rate was in line to slightly better than our expectations and resulted from a flat gross margin rate and expense de-leverage. Our gross margin rate for the quarter was 39.3%, which equaled last year's Q2 rate. Total expense dollars were $442 million and the expense rate of 36.9% was up 60 basis points to last year. Expense de-leverage came from our investment in people, higher depreciation expense and higher bonus expense as the business outperformed our internal plans in the second quarter. Interest expense was slightly less than last year and the second quarter tax rate was 37.3% compared to last year's adjusted rate of 38.7%. During the second quarter, we opened 4 new stores and closed 7, leaving us with 1,493 stores and total selling square footage of $32.8 million. Income from discontinued operations for the second quarter of fiscal 2014 was $2.7 million or $0.05 per diluted share compared to our guidance, which called for an immaterial net loss. The income was a result of tax benefits that were generated with the wind-down of our Canadian operations. Moving on to the balance sheet. Inventory ended the second quarter of fiscal 2014 at $799 million compared to $914 million last year. The reduction in inventory was driven by a 6% decrease in inventory per store in our U.S. stores, a lower U.S. store count and a strategic decisions to close our business in Canada and liquidate our wholesale operation. We ended the second quarter with $62 million of cash and cash equivalents and $57 million of borrowings under our credit facility. This compared to $64 million of cash and cash equivalents and $142 million of borrowings under our credit facility last year. Our use of cash generated by our U.S. operations in the last 12 months was focused on returning cash to shareholders through both repurchase and dividends, lowering our overall debt levels and funding closing activity of our former Canadian operations. As we announced at our investor conference in June, our Board of Directors initiated a cash dividend program on June 25. Yesterday, as part of the program, the board declared a quarterly dividend of $0.17 per common share payable on September 26 to shareholders of record as of the close of business on September 12. Additionally, during Q2, you may remember we completed our March 2014 share repurchase program. For that program in total, we invested $125 million to repurchase 3.3 million shares at an average price of $38.12 or nearly 20% below yesterday's closing price of approximately $47 or $48 per share. Also as noted in today's press release, our Board of Directors approved a new share repurchase program providing for the repurchase of up to $125 million of our common stock. Now turning to guidance. As many of you know, Q3 is somewhat of a transitional quarter for Big Lots and many retailers as we incur costs and set up for holiday ahead of a spike in sales in Q4 for the November, December timeframe. For Q3, we're forecasting results from continuing U.S. operations to be in the range of a loss of $0.04 to $0.10 per diluted share compared to an adjusted loss from continuing operations of $0.07 per share in the third quarter of fiscal 2013. It's important to note this guidance reflects sequential EPS improvement to last year from Q2. In fact, Q1 was down $0.20 below LY, Q2 $0.06 below LY. And now what we're saying with our Q3 guidance, we're forecast to be only slightly below or potentially even beat LY. This trajectory is consistent with our internal plans and our communicated expectations since the beginning of the year. This estimate is based on comparable store sales in the low single digit range, a slightly lower gross margin rate and SG&A expense as a percent of sales slightly lower than last year. The slight reduction in the gross margin rate is a function of merchandise mix, particularly given our expectations of a double-digit comp in Food and the planned negative comps in Seasonal or one of our higher-margin categories. We plan Fall Seasonal in Q3 below LY, particularly in Halloween and early Christmas based on the last several years of a later selling season. The potential for slight expense leverage in the model demonstrates the solidifying of the model and a low leverage point taking hold. For Q4, we're forecasting income from continuing operations to be in the range of $1.70 to $1.76 per diluted share compared to adjusted income from continuing U.S. operations of $1.45 per diluted share in the fourth quarter of fiscal 2013. This forecast assumes comps in the low single digit range, a significantly higher gross margin rate and expenses as a percent of sales slightly higher than last year. The improvement in the gross margin rate anticipates fewer markdowns this year as we anniversary the impact of the edits and exits in last year's Q4 results. Expenses as a percent of sales are expected to increase slightly in this model, driven by potential bonus payouts this year compared to virtually no payouts in the prior year. Our updated outlook for the full year of fiscal 2014 calls for income from continuing operations to be in the range of $2.40 to $2.50 per diluted share. This compares to our previous guidance of $2.35 to $2.50 per diluted share and to fiscal 2013 adjusted income from continuing operations of $2.45 per diluted share. Our updated guidance is based on a total sales increase of 1% to 2% and comparable store sales up 1% to 2%. Based on what we know today, we expect CapEx in the range of $100 million to $105 million and have lowered our depreciation estimates to be in the range of $118 million to $120 million. We now estimate opening 24 new stores in fiscal '14 and closing in the range of 60 to 65 stores. This compares to prior guidance of 30 new and 50 closings. We expect this level of financial performance will generate approximately $250 million of cash flow from our U.S. continuing operations or $80 million above our prior estimate. This increase is principally due to lower inventory and lower cash tax payments due to the recognition of certain U.S. tax implications related to the wind-down of our Canadian operations. The merchant and planning teams, or BPOM teams as we call them, have managed inventory very well and made progress sooner than we would have planned. Correspondingly, we now expect inventory turns of approximately 3.5x and to end fiscal '14 with inventory levels well below LY. So with that, I'll turn the call back over to David.

Thanks, T.J. Before we take your questions this morning, I want to share a few closing thoughts. In Q2, we continued to make transformative changes to our company. And in the quarter, we had a number of significant accomplishments that are worth highlighting. First, we successfully completed the sell-through of the edits and exits that were part of our edit-to-amplify merchandising strategy. The sell-through was completed as planned in both terms of the timing and the financial impact. With this activity behind us, we're now focusing intensely on our assortment planning for the amplification of our categories. We continue to roll out coolers and freezers. We now have them in approximately 650 stores and remaining on track to be SNAP and EBT eligible for approximately 725 stores by October 1. We completed the rollout of Furniture financing ahead of schedule to 1,300 stores across the country. The program continues to deliver incremental sales of 9% to 10% in Furniture and has been expanded beyond just the Furniture category to higher-ticket items in Seasonal and Hard Home. And with the completed rollout, we are now able to use broader, more national channels of advertising to raise customer awareness. We delivered excess cash to shareholders by completing the March 2014 share repurchase authorization and announcing a quarterly dividend program, the first in our company's history, and paid our Q2 dividend near the end of July. We hosted our first investor conference in over a decade. It was here in Columbus and it included an opportunity for you to meet and interact with many members of the Big Lot team. We also walked our Polaris store, which has a merchandise layout that is more representative of where we want to be in the future. In short, we did what we said we were going to do and more and delivered results. Based on this list, and I assure you there are many more accomplishments that I did not mention, it is clearly not business as usual here at Big Lots. None of this could have happened and been achieved without a complete team effort and a working cross-functional team. I could not be any more proud of this team and their commitment to Jennifer. We are 1 team with 1 goal. And Mike and his team in Human Resources have done a wonderful job making sure we are focused on our single biggest asset, our people. I want to thank all of our associates in the field and in the distribution centers and in our corporate office for their hard work, dedication, willingness to change and uncompromising drive for improvement. As I look forward to Q3 and beyond, we continue to focus on Jennifer and what is most important to her when shopping at Big Lots. The improvements in our product assortments that you can see today in our stores for back-to-school and our recent Food expansion are real-time examples of how we are staying relevant and top of mind with her. And I believe she will notice a difference in our holiday offerings, in Christmas trim, Soft Home and giftable products across the store. I have been working along with Rich and the merchant teams on our holiday plans. And I think the preparations this year are better than ever. The components of quality, brand, fashion and value are evident across the store. From a marketing perspective, Andy and his team have done -- have new holiday strategies for a 360 consumer engagement, ranging from print to digital and TV to our relatively new entry into social media. And I believe our advertising plans have never been better. So what lies ahead of us? Store execution. Lisa described it at our conference in June as revolutionary for the stores. We have a new focus on Jennifer shopping experience and the team is early in the process of implementing our standards that will help us deliver on our vision of providing an outstanding shopping experience for Jennifer. The Christmas holiday is critical to our success and we know we have teams in our stores and the distribution centers that we can count on to deliver a great holiday. My final closing thought for the day is in regards to our strategic planning process, and specifically, this cross-functional team involvement that was described in the investor conference. Our KRA teams involve well over 100 people, who in addition to their day jobs, remain laser-focused on the longer-term strategies and process improvements embedded in the plan. We know where we want to be this quarter, next quarter, next year and the year after that. And these teams are ensuring we stay on pace towards reaching our goals. We have covered a lot of ground over the last 16 months, but we are truly at the beginning of the beginning.

Lori, we would now like to open the lines for questions at this time.

[Operator Instructions] And we'll go to Brad Thomas with KeyBanc Capital Markets.

My question would be around the gross margin. I was encouraged to see the results this quarter. I was hoping you could talk a little bit more about the puts and the takes in the quarter, and as we look forward beyond mix, what some of the opportunities might be for you.

Yes, this is T.J. I'll start, and certainly ask David to chime in. What we were encouraged by in the quarter, Brad, was continued strength, particularly in our Soft Home business, which as you know, is a higher-margin business. We were favorable or very encouraged in the way we were also able to sell through on the Seasonal side of our business, lawn & garden and summer, in particular. Coming off of a little bit of tough external and weather in the first quarter, we were cautious coming into the second quarter, how we would be able to move through that product. But I think the team did an excellent job of monitoring pricing and sell-through and the store teams did a great job of making sure it was front and center so that we could get credit for some of the pricing action we were taking. So I would suggest to you that if there was any bit of positive good news in the second quarter allowing us to deliver a flat rate, it would be predominantly in those 2 areas. Looking forward in the third quarter, again we had just finished what we think is a very impactful reset in the Food area. This is the end result of what began back in the fourth quarter, where we began the edit-to-amplify process and exited certain businesses. So we've now been able to consolidate and offer up space, additional space to the Food department. And we're very encouraged at the way that, that has started off here in the third quarter. So as I mentioned in the prepared comments, we expect double-digit comps in Food in the third quarter. Clearly, that has some level of mix impact on our business. Particularly here in the third quarter, Brad, as you know, from following us from a long, long time, third quarter is a bit of a unique quarter for our business in that Food and Consumables, in particular, are at their peak in terms of penetration for the business. So that's really what's having a little bit of an impact on the mix here in third quarter. Additionally, third quarter is also a low point in the year for penetration of business in our Seasonal category or our higher-margin category. So really when you put those 2 things together and you understand that we're trying to learn from the past and not put too much pressure on the short fall selling seasons in Seasonal, that's really what's contributing to the rate coming up a little bit short to LY in the third quarter. Again this is consistent with what our merchants have planned all along. The cadence of this activity is consistent with what we have forecasted from a financial standpoint. We're right on track and doing what we said we were going to do from a transition standpoint and changing out the store.

And if I could just follow up, in the first quarter, there was a pretty big drag from markdowns associated with exiting products as part of the edit-to-amplify strategy. Could you quantify the magnitude drag in 2Q and what you think will happen in 3Q?

From the edit-to-amplify, the markdown impact in the second quarter was nowhere near what it was in the first quarter, again which allowed us to have a little bit more level playing field to last year looking at the margin. The edit-to-amplify or the exit category impact on markdowns that we started in fourth quarter is behind us in the spring season, consistent with what we said we would do. So there is really no lingering impact from those markdowns that started in fourth quarter.

And we'll go next to Peter Keith with Piper Jaffray.

I just want to follow up on the edit-to-amplify, more on the sales impact. Is there a way you could characterize how those 2 categories maybe had a negative impact on comp for Q2?

Yes. Peter, if you look at, I'll say, the sum total of those businesses, if in round numbers, if they're in the range of 15% to 20% of the business and calm down mid-teens, I mean, that's the simple math. So there is a couple of point drag in the quarter on the edited categories that began back in fourth quarter. Again we're still up against that volume, some volume in third quarter. We're up against volume in fourth quarter. We're up against clearance volume in fourth quarter in each of those categories, all of which was contemplated in our plans, in our guidance since the beginning of the year. So there really have been no surprises in that perspective. I don't know if, David, you...

Yes. No, I would just add to that, Peter, that we were, as I said earlier, very pleased with the sell-through of the exit categories. And really when I talk about we're now in the amplification stage of that, even in second quarter to a lesser degree more so in third and fourth quarter, the go-forward businesses we will continue to challenge our assortments and edit as well as we move forward. But honestly, I can't tell you, very, very, very pleased with the sell-throughs. And again in the second quarter, we all know in retail, June was a difficult month for all of us. And we came out of June with some very strong momentum in July. And so I would just tell you that the sell-throughs in July versus June were significantly improved and they continue to move in that direction.

Yes. And that's a pretty important note. So we'll get ahead of the question that's probably coming somewhere in the queue on the cadence during the quarter. I'd characterize it this way. We put up a 1.7% comp in the quarter, which we're very pleased with, second consecutive quarter of comping after 2 years of not. So we're very happy with where the second quarter ended, and we're pleased with where the third quarter has started. During the second quarter, May, as a month, actually comped above the quarter at 1.7%. So May was above. June was a relatively flat month for us. I would tell you though, we have, we think, pretty good competitive information available to us. And we actually think from a trend standpoint, we probably fared a little bit better in the month of June than maybe some of our competitive set. And then July, for the month, comped above the quarter as well. So that was kind of the cadence during the quarter. And to David's point, June being the more difficult month of the quarter was relatively flat. So we're very pleased with the second quarter. We're very pleased with coming out of July into August, particularly some of the good sell-through that we've seen in back-to-school, not necessarily the stationary side of the business but looking at really the quality, brand, fashion, value categories, particularly in Furniture and in Soft Home. It's really clear to us when we walk the stores that Jennifer is giving us credit for some of the early changes that have been made in assortment by the merchant teams.

That's very helpful. I do want to ask just one quick follow-up for modeling purposes on that edit-to-amplify. So if that's 15% down on 15% of sales, so it's about maybe a 2% comp headwind in the second quarter. Does that dynamic continue in Q3, Q4? Does it maybe get even worse because those categories do mix up a little bit in the back half of the year?

It probably gives us a little more headwind in the back half of the year, Peter. That's a really good question. Maybe not so much in third quarter as fourth quarter. If you think about particularly some of the classifications that we've downsized or exited in Electronics, you followed us for a while, so you'll remember a couple of years back, we had a bang-up holiday in Electronics and tablets in particular. We did, I'll say, okay in that business to slightly down last year. But there's still real dollars there that we have to comp either within those categories or more likely in the amplified parts of our business. So to your question, I'd suggest the headwind is probably a little bit bigger in the fourth, particularly in Electronics. And remember, we came out last December and told you guys that we were going to take some pretty significant markdowns in December and January to start. And obviously, we did some volume and we did some good work liquidating that merchandise and driving some volume in the fourth quarter of last year.

I would just add to that, Peter, that T.J. is right about what he just said as far as the headwind. But I would also tell you that there's a different approach to how we buy, as we said at the investors' conference in June. And in the past, we would have either had a big closeout that we didn't comp or we had a big clearance activity that we didn't comp. The new approach to how the BPOM teams act and how the GMMs and Rich and his team plan with Lisa's planning team is very, very different than the prior, let's say, 10 years or so. And I'm very, very confident in both third and fourth quarter, especially the fourth quarter in the product offerings and the assortments. And we have our store-within-a-store here in our headquarters and bringing in all the Regional Vice Presidents from across the country a month ago, walking those sets and showing what the power of the product offerings and the power of the marketing strategy. I'm more than confident we can offset more than the headwind that we're talking about.

Okay. Well, those categories do look much better, so it sounds like it's just sort of a short-term headwind that goes away by 2015.

You bet.

And we'll go next to Paul Trussell with Deutsche Bank.

Just a question. You've given a lot of good color on the top line. Just wanted to inquire about the spread between the stores that have the coolers and the EBT program versus those that don't. If you can just remind us of the difference in the Consumables business kind of before and after. And the same with the Furniture financing, obviously you have the 1,300 stores now all complete with that rollout. But what's kind of the ramp-up curve there? How long does it take for that customer to kind of recognize it and utilizing the Furniture comps begin to turn up? And then just moving forward, now that you have a lot more penetration of these initiatives if you can just highlight for us, David, the messaging and the marketing strategy going forward.

Paul, let me start on the first 2 pieces, then I'll turn it over to David on marketing. The first question you asked on coolers and freezers, I would tell you the rollout, particularly in some of our larger markets in California and Florida, has gone as expected, if not a little bit better in those 2 major markets. Particularly given the population density, et cetera, around those stores, those have trended very, very well. We've also expanded it to Ohio, Texas and a handful of other states. I would suggest to you that our initial go-in for this year based on our test results last year had us comping up 1% to 2% in those stores incrementally, particularly in the Food categories and to a lesser extent, Consumables in the balance of store. In the aggregate, we're still pleased with what has happened this year in coolers and freezers. It was the right decision for our business. We have that validated in the spring season. We'll do a handful more stores here in the next few weeks, and then we take a break in the middle part of October, and the stores then focus on delivering holiday and the ramp in volume in November and December. And then we'll start back up with the balance of chain that's eligible to be completed in the January, February timeframe. So we're moving ahead as communicated at the beginning of the year and as planned. From a Furniture financing standpoint, the second part of your question, the recognition on behalf of the customer is almost immediate. So as soon as the training was completed in stores, the customer recognized the opportunity and we started funding -- or our partner, Progressive, started funding lease-to-purchase sales. So the recognition is almost immediate. That initiative has again performed exactly as we planned it. There's a surprisingly tight range of performance, meaning -- or the inverse of that is there's very little disparity. Clearly, there are some store managers who really gone after it in a very, very aggressive way because they understand the impact on their business. But the performance has been very, very consistent across stores and markets. So we're very confident that, that business will continue to perform very well in the back half of the year. Additionally, what's interesting there and it's a little clearer to us in Furniture is as stores come up on their anniversary, so to speak, so we had stores in test mode beginning in the summer of last year, as they start to anniversary that test beginning last year, the business continues to perform very well. So this suggests to us again, this is not a one-hit wonder. This is something that we can build on going into '15 and beyond. And that's really where some of the opportunities come from or some of the marketing that we can now talk about in a bigger way.

So Paul, on the marketing, can you tell me -- repeat the question you had on the marketing strategy?

Yes, there was just 1 or 2 -- I just was interested in understanding better the go-forward marketing strategy now that you have a national Furniture financing program, now that you have coolers in -- of a higher penetration of coolers, right, you have the increased assortment of branded products. So just interested in how we might see changes in the circular. I recently saw a commercial, just if you can just reiterate what that go-forward marketing strategy is.

Sure, Paul. So a couple of things. The circular obviously is a piece of the marketing strategy. And I think 2 weeks ago, we came out with a front cover, it was all Food and Consumables product, really launching the new expanded assortment in Food. So that's one attempt. The other thing that you may be referring to is we launched in August, Andy's team along with our marketing, OKRP, we launched 4 viral videos on the secret top brand alert. And that those 4 viral videos, if you haven't seen them, you guys should watch them, they're pretty funny. But the impact they have on the business is pretty significant. And as we continue to play in that social space, we're seeing a real movement out there, and it's meaningful. And then secondly, obviously you mentioned the television piece of it. We'll continue into the back half of the year with some really fantastic, exciting TV spots. This OKRP and Andy's team have been able to hit on something that very seldom works, and that's adding a little bit of humor to your marketing approach. And it's working very well. And what you're going to see as we move into the back half, October, November, is incredible marketing from a signing point of view and a Christmas campaign that I can't let the cat out of the bag, guys, but it's best of class. And along with that, what's happened is the merchants have done such a great job of being able to do 5 for $5, in pet, 3 for $10. So it's allowed the marketing team to build a holiday campaign that really, really plays off of the compelling value we have out there on our products. So again marketing is also the in-store execution piece of it, too.

And we'll go next to Matthew Boss of JPMorgan.

So as we think about the inflection that you're seeing on the top line, are you seeing a new customer in the store, increased conversion or little bit of both? And then any changes by category that you're seeing as it relates to it?

Yes. Matt, this is T.J. I think it's difficult for us to really answer that question fully. I think from our perspective anyway, we have customers shopping our store every day. We have traffic coming across the threshold every day. And our job is to convert them. And I think that's where candidly some of the new initiatives with Furniture financing and coolers and freezers, while I think there's probably an opportunity there and we are attracting some level of new customer, I think probably the predominant amount of the impact is just us taking down barriers and converting customers, who probably have wanted to shop our stores and just we haven't been able to either take their form of tender when it comes to SNAP and EBT or haven't offered financing that was either affordable to them or something that they could qualify for. So I think in each of those respects, while there is a new customer element, more than likely, we're converting customers who might have been shopping elsewhere, so taking a little bit of share back after years of not being able to do that. I think this is the finance guy talking here from a marketing perspective, I think the work that Andy and his team are doing from a social standpoint and really kind of some edgy TV, et cetera, is the opportunity to maybe introduce some people or reintroduce or reenergize them about coming back into Big Lots. Additionally, David has been very vocal with the leaders' group about really getting the word out on our own in word-of-mouth, not just here in Columbus but across the country from our stores' team is pretty important, too.

And I would just add to that, Matt, that again, as I said, we're still at the beginning of the beginning. I mean, if you think about 15, 16 months ago and where we were and where we are today, it's pretty powerful. We've got momentum. But I would just tell you that as far as knowing new customers, you kind of look at what we're selling in the box and the improvement in the quality and the fashion side of it. I said many, many quarters, stop buying ugly, and we've done a pretty darn good job of stopping that and the taste levels improved significantly. And so it is my hope that we are attracting new customers. But again we're so early in this turnaround that it's going to take time. As T.J. said, word-of-mouth is the most powerful form of marketing. We discovered that we need to get those viral videos out to our 38,000 associates out in the field so that they can share those with her friends and family. And I think it's just one of those things where it's going to take time. But I believe that we can take share. We can take a higher level of customer. We can also get that SNAP, EBT customer who is not allowed to shop in our Food departments for all these years. So on both ends of the scale, it is our belief that we will attract new incremental customers in our stores.

Great. And then can you just talk about the opportunity from a vendor perspective, any recent new brand introductions and categories with the opportunity ahead?

Well, it's a great question, Matt. And I would tell you that we are very focused, and that's a big one for Rich and his team. We obviously buy from way, way too many vendors. And when you look at the number of vendors and then the top 100 driving significantly a high penetration of your total sales, we are razor-focused on the big guys and having talked the talks with them. In some cases, I'm involved, some not. But with the big guys, I definitely am involved and we're building bigger and better relationships. And exciting part of that and what's happening on the vendor side is they're hearing good things. They're seeing significant improvements in our stores, albeit we're not satisfied. We know we can do better, but it is improving. And with that being said, they're coming to us wanting to do more business than they used to. And some of that candidly is they didn't want their product in our stores because of the way we used to present it and merchandise it and just throw stuff on a shelf. Today, our stores are much more edited and they're able to really put the product out because of our focus on the QBFV side. So again I would just tell you it's very, very encouraging to see the big guys in here. Hostess' CEO was here last week and wanting to build the business to higher levels. And those are meaningful conversations. And it's not just in the Food area, it's in the Furniture business. We have a solid, solid relationship with Serta. And our belief is we can take that business to a much, much higher level than it is at today and they want to partner with us. So yes, it's a new time for our company with the big guys, and they're no longer embarrassed to see their product in our stores, which is a great thing.

We'll go next to Patrick McKeever with MKM Partners.

Just a couple quick ones. The first is have you -- are you seeing any pressure on your shipping costs from some of the trucker shortages that have been mentioned by some other retailers? And then the other quick one was do you have any -- your inventories are pretty lean here. Do you have any concerns about possible disruptions at the port of Los Angeles? And are you doing anything to just to, I don't know, mitigate any potential disruptions? Dollar General mentioned that they've brought some inventory, holiday inventory in early. And I know it's not like in prior years, where that's been a bigger threat. But nonetheless, it sounds like there have been some issues and it sounds like there could be some more as we move closer to the holiday.

Patrick, it's David. I'll take the question and then turn it over to T.J. if he's got more to add. But the shipping costs for us, they're not significant. We haven't really felt anything that, that would cause us for any alarm in that area. I would tell you that we have in that group, under Carlos' leadership, a very solid group of guys that understand how to get product not only from Asia through the Port of L.A. and then to our distribution centers, but how to get product to our stores at a very efficient and costly way. So we monitor that obviously on a daily basis and his team does a fantastic job. No issue there. And as far as the inventory piece, I would tell you that forever, I mean, from probably day 1, Lisa and T.J. were always telling me that we need to spin our inventory faster. And I think, Patrick from covering our company for many years, as you have that from a sales per square foot point of view and in inventory turn, we're not best of class. So we certainly believe that we have much upside. We're not concerned at all with those inventory levels because where they are are where they need to be, a lot of those are in the exit categories. And obviously, in that inventory number is a little bit of Canada and a few changes in how we manage some of our vendors as well. But we will continue to drive that inventory down over time. Because our goal is to be the best of class in inventory turn. And that's what happens too, guys, is that when you clean up your inventories and just stop buying stuff and you start buying real product and with the thought process behind it, you spin your inventory faster. Our sell-throughs in some of the Home categories for back-to-school are phenomenal. They were double digits every week, and that's what we need to have. That's the expectation. So no concern there. And lastly, we really haven't -- I mean, we're all over the L.A. thing and monitoring very closely, and Carlos updates us weekly. But we feel like we weathered the storm there quite well and are not feeling anything at this point in time and we do have a backup plan. So I think we're in good shape. T.J., you got anything to add to that?

No, well said.

All right. Patrick, thank you.

And then just a little different question on e-commerce. And I realize e-commerce is very much in the development phase for you right now. The question is really though on as we look into the holiday, I mean, it just sounds like it's going to be just -- I don't know what the right word is, but just pretty darn intense in terms of free shipping and you've got the big guys that are really, really making a very aggressive omni-channel push around the holiday. So the question is, as you're developing your own e-commerce platform, it's not going to be -- obviously, not going to be done by Christmas, so what do you do this holiday to mitigate some of those pressures?

Well, I would tell you right. We're in the very early stages. And I think before when we had our investor conference, I don't think Oscar was here yet, I think he just joined us like a month ago, so we have a new VP over e-commerce and this guy really, really is talented, knows what he's doing. But along with Andy and his team, from a social point of view, we have a website. Obviously, you can't buy on that website, but we use it in a big way from a marketing point of view. And I didn't tell that to -- I think, it was Paul who was asking about that. But that piece is very powerful and it does attract a ton of consumers who are looking at our website for product and so on. And we have lots of offers that go off via the e-mail. And so we will continue to use it, to hit hard with offers and showing product and value during the fourth quarter. Obviously, we understand that there's pressure there on all those guys in that space, but it's something that we deal with and have dealt with for a long time. We know that that's a significant opportunity that's why we're knee-deep into the beginning of building out an e-commerce omni-channel strategy. But our plan is just to go into the quarter and hit the social piece hard and then hit the e-mail hard on a very frequent cadence as we build through the quarter. And candidly, I don't know, Patrick, if you've looked at some of those e-mails and if you see the quality of the execution versus the past. I mean, they're very, very different. And Andy would tell you that the number of Jennifers that go on that and look at it and open those e-mails is pretty significant. And a lot of the research that he's done as well tells us that she is certainly using shopping online and wants us to have that offering, and that's why we're going down that path.

Yes, and Patrick, I'd just add to that. Certainly it's going to be competitive in the holiday season. We all recognize that. Certainly, there are more and more retailers flexing in e-com and omni-channel. We realize that. But what we also realize is we really need to stay focused on our Big Lots strategy and doing what we do best and that's a product -- and when you see the Seasonal product and the Home product in particular for holiday, you will recognize a difference to last year and the years gone by. So I think to my earlier point, we have a number of customers that come across our threshold each and every day. And really, product is king in our business. And what the team has put together for holiday, along with all the marketing efforts and the new energy -- the significant new energy coming out of my Big Lots meeting last week from a store's perspective, we think we are absolutely driving as hard as we possibly can towards the holiday selling season. So there's a new energy behind the holiday in what we're trying to execute than maybe we've ever done before.

[Operator Instructions] We'll go next to Meredith Adler with Barclays.

I have 2 questions. The first is just to talk a little bit about store closures. And you do seem to have closed more stores than you've anticipated. Could you just talk a little bit about sort of how you're thinking about that?

Sure, Meredith. We are anticipating more store closings to the tune of 10 or 15 more stores than when we started the year. The reality of the situation is we're looking at our store performance. We're looking at our position in the marketplace. We're understanding better our landlord relationships and putting that all together and evaluating each store that comes up on renewal. The first point I would make is the incremental amount of store closings. The stores that we're looking at, the 10 to 15 extra, does not necessarily mean those stores that are losing money are not generating cash. In fact, I think of the incremental stores that we're closing, there might be 1 store that is cash negative. So this is not representative of a chain that we have a lot of money-losing stores or a lot of cash-negative stores. The reality is we don't. But what we're looking at is really coming across renewals in this environment today. And this may surprise some people, but the occupancy level out there in retail, in boxes our size is very high right now, so the inverse is there's very few open locations for us to move to. And additionally, given the occupancy levels so high in our sized box, the landlords are much more firm on rent steps and pricing than maybe they have been in the last few years. So when we look at a store on renewal and if it's a store that still is generating cash that might be comping down, we're looking at the market in total and saying, "Where do we have opportunities in the market? Can we replace this -- some portion of this volume and move it to a nearby comp store or nearby new store that's going to be opening to make the overall market profitability stronger?" That's really the focus. And what's come from that is an incremental 10 or 15 more store closings than we originally anticipated at the beginning of the year. We feel very good about the opportunity through merchandising and marketing in the stores team across functional effort to try to make sure that as we close stores in the fourth quarter, we move as much volume as possible to nearby comp stores, again, increasing the overall market productivity. So we are not of the mindset to manage to a certain number of new stores in a year or a certain number of closings at the expense of making a bad decision or short-term decision that we might regret later. So we're very comfortable with where we are from a real estate standpoint as we end this year.

That's sounds great. And then just switching gears, a question about -- talk about third quarter seasonal. And I think, Halloween might have been a good holiday for you in the past, maybe that's not true. Would you maybe talk about -- sounds like you're really deemphasizing it, maybe talk about why that is. Is the volume shifting elsewhere? Are people not shopping?

Okay. Well, I'll take this one and then maybe T.J. can pile on a little bit since he's been here for 16 years or whatever it is. I would tell you both of those Halloween and harvest categories have been down-trending in the industry for quite some time, and for us, it's a business, okay? It's not that it's not there. It's just one of those categories that's down-trended in the last few years. We've had to take significant markdowns to clear that inventory. It's a short, short season and you go in with a high margin, but you don't necessarily come out with one at the endgame. So what we made a conscious decision to do this year is to plan both of those categories down and shift those dollars to fund businesses that are working for us like the Home, like the Food area, like Furniture. If you look at those 3 businesses, Food, Furniture & Home. Those are the 3 targets as we move into the back half. Not that the other categories aren't important, but those are significant. And we've made that decision to get in and get out so to speak so we can set holiday right after the end of September basically. I mean, we've got a little bit of early stuff out there in a very, very, very small way. But it's just not an important category that we -- and again, when I talked earlier about editing in those categories, even what's on the floor today, we will continue to edit pieces of it what, what I call the arts and crafty side of it that we don't need to be in. And again, as I said before, very thoughtful planning by the BPOM teams, Rich and Lisa's teams, to ensure that we plan that down but we have an offset strategy and we do.

Yes, Meredith, it has been a tough business for a number of years, particularly in Halloween and particularly in -- I'll call it early Christmas selling. The customers are waiting later and later each year. We've -- we're trying to reflect the learnings from last year in our plans and guidance for this year. I do want to clarify one thing though, and David may want to chime in here. When we're talking about Halloween, we are talking about things like costumes, outdoor decorations, things like that, the more discretionary piece of our business. One area of the business that is not reported in Halloween that we do feel very good about going into the back half of the year is candy and seasonal candy. So under Trey and Mike Morales' leadership, we've brought in new buying resources there and we're already seeing improvements in that business with new deliveries. So we feel very good about that piece heading into the back half of the year. But what we're really talking about from a Halloween perspective is down-trending more of the discretionary or outdoor or costumes side of the business.

And how does the margin on all the Halloween candy compare to the margin in food more generally?

I'm sorry, could you repeat that?

Sorry, I lost my voice. How does the margin on Halloween candy or candy generally compare to the rest of food?

Compared to the rest of food, it's probably pretty similar. I guess, to the extent we're buying it on close-out, there might be a little bit of opportunity there. But that's all factored into our forecast and guidance. And as you know, food, in particular, is going to be a little bit below the company average in margin rate to start with.

We'll go next to Joe Feldman with Telsey Advisory Group.

I wanted to ask about the store execution initiatives. I recall from the Analyst Day, and you touched on a little here, a lot, I recall, was around training and maybe just getting some store standards more consistent across the board. I was hoping, Dave, maybe you could talk a little more detail about it and what we should expect over the next 6 to 12 months. I assume it's more of a 2015 initiative that we'll really see changes.

Thanks, Joe. Good question. And it's actually, we just spent 2 days with the board. And Lisa and Nick presented a pretty powerful strategy on stores roles and responsibilities and where we're at and where we're going and so on and how much time our store managers focus on tasks versus customer service and so on. And you're right. We're at the beginning of the beginning here, and this one is big. But I would tell you, and I'm excited to share a couple of things with you because we are really razor focused on the stores. And we know that what we've created here in the corporate office is powerful with a lot of energy and momentum. And we believe that we're on the path to do the same thing in our stores. We just announced last week at Big -- My Big Lots meeting, where all the district managers were here for 3 days, that the -- we're getting rid of that word manager. And that manager is now the store team leader and it goes all the way to the top where it's not just a store team leader, but it's the district team leader. So we're focused on a different approach to how you lead in the field versus managing. And then from a process point of view, it's so big that I would have to spend a few hours with you just to explain to you what Lisa and Nick and his team are off to the races doing. But developing everything from guidelines, on national guideline for store leadership schedules, we'll be implementing it right in '15. More automation to that, but it's -- it really is a big project. Rolling out an online application system versus -- I kind of laughed when I say some of these things because it's an amazing, amazing thing that we do, the volume we do with some of the lack of processes and disciplines in our stores. And so the thing that's great is it was so well received last week by the DMs and the regional vice presidents. But everything from labor scheduling will become automated. We're doing a test in a few stores to ensure that it's done right. But we've looked at it so deeply and the ahas and what we found out about how we operate the stores, we have huge upside there in developing the labor scheduling. So we will do a pilot this fall in 25 stores with a full rollout in '15. What we call Dock to Stock, we're engineering at the backroom so that when the stores receive freight that -- they're going to do it efficiently, let's put it that way. We're redesigning the backroom flow as needed to maximize that efficiency because we want our folks on the floor taking care of customers and we're adding new equipment. And I think T.J., were spending $1.6 million on replacing some of the handling equipment in our backrooms to make it easier on our stores. Again, as you go through the whole metrics we've put together, productivity goals for the stores and measurements that they have, big signs in the backroom, similar to what we do in our distribution centers that measures how much is unloaded by day versus last week, 2 weeks ago, 3 weeks, what that does is it creates competitiveness, excitement. And we talk a lot about people, pride and passion in our stores, and giving them, just like we gave the merchants, QBFV, ECRS, all those things to help them do their jobs better. We're doing the same thing in our stores. So a lot of automation, a lot more to that. And I'm sure I'll get the opportunity to get in front of you and give you a little bit more on that.

And we'll take our next question from David Mann with Johnson Rice.

A question about the -- a couple of categories that are the edited categories. I'm just curious were those categories on plan in terms of the remaining subcategories that you're emphasizing? And is there possibly an opportunity to edit those even further to take advantage of the strength in the other areas that you're amplifying?

Well, I would tell you that, yes, there's 2 things. One is what we call the exit categories, right, where we're not carrying plumbing and tools and toilet seats. And it's a pretty long list of stuff, right? That product is gone and will never be in our stores again. And then the edit categories, let's take electronics as an example. We exited TVs, and for the most part, the tablet business. Unless there's some significant opportunity that gets put in front of us, and then we said we're going to go after it. And we are in the accessories business in electronics. And if you look at the new reset in our stores, we're pretty proud of the way that looks. A new packaging, new signing, but there's significant editing that is going to continue in there. And then we did edit, not only just the SKU count, but the vendor structure in there as well, and we're starting to see the payback. And as you navigate, David, through the store and you start looking at the Home as an example, and even in Furniture, in some cases, we feel like we can continue to edit and amplify categories that are really working, and along with that, do some testing and have some courage to step up some of the price point offerings as well. But where we're at with the stage we're at today is we're done with the exits. We're now looking at all the go-forward categories whether that was Food or Consumables, Furniture, Home, Hard Home as well, which is an important part of the business that we really haven't talked about. When you talk about tabletop and appliances and so on, and that area is actually performing nicely. And we will continue to edit in there. Bob's team is doing a great job. He's got a much bigger challenge in front of him just because of all the exit categories. But the real key takeaway for you guys is our belief is now that we've edited and exited, we're going to go back there and do what we call SKU rationalization, right? So even in like a great business that we have in Seasonal in the spring with lawn and garden, we're going to continue to edit as an example and that we don't need to have 18 SKUs of grill brushes, right? And so what we'll do is take that down significantly and amplify it. And that's what that edit to amplify means, edit your offering but own it in a big enough way where the customer goes, "Okay. I get it, right." So that's really where we're at. I don't know, T.J., if you had...

Yes, I think, too, David, in fairness, and particularly, in Hard Home and Electronics & Accessories, as David mentioned, the elements within those categories that are go forward, so the non-exit parts, the teams have done just as good of job as the balance of the store in terms of doing exactly what we said we were going to do. So to David's point, tabletop and food prep, those businesses are up to last year. Those business are driving incremental volume. The QBFV is alive and well there and doing very well. So similarly in parts of Electronics & Accessories, the go-forward parts of those categories, the teams are executing. They're delivering on what we're asking them to do and they're delivering the volume that we anticipate. So even though the total category on the face is down, there are good parts of the business within those categories that are executing all the different merchandising principles that Rich and Lisa are asking them to and delivering on their plans as well. So those teams are performing also.

That's very helpful. As my follow-up, just a couple of quick things. On the Cooler roll-out, in terms of the halo effect to other categories, I think you made some comment. But could you elaborate a little bit more in that on whether you're seeing an increasing attachment rate to other categories? And then one housekeeping question. On the increased free cash flow for this year, does that change your longer-term 3-year target of $550 million to $600 million or is that just a timing issue of getting it a little sooner?

I'll take the second part of the question first. The cash flow is more focused on items that are unique to this year. So first things first, the inventory piece, we clearly articulated it at the investor conference. We felt there's opportunity to spin our inventory faster. I would think about this, David, as us getting results quicker than anticipated. And if it ends up being incremental to the $550 million to $600 million, good for us. But right now we're thinking of it as we're getting it sooner than anticipated. Again, that's all due to the performance of the BPOM teams. And additionally, the tax favorability or the lower tax payments this year, again, we felt those would occur during the year period. It just wasn't clear to us at the beginning of the year when we would be comfortable with it. We're comfortable with it now. So again, I would think of us -- I would of that as pulling forward or recognizing earlier than anticipated some of the cash flow opportunities in the business. The second -- the first part of your question as it relates to coolers and freezers. I would suggest to you that the attachment rate or the filling up the basket has been more focused in food because that is where SNAP and EBT are most utilized or can be utilized; to a lesser extent, in consumables; and then to a lesser extent, in the balance of the store. I still think, to David's point earlier, the opportunity to shout a little louder that we now offer this type of product, the opportunity to shout a little louder that we now take those forms of tender is still ahead of us. And we'll see if we can expand the reach to the balance of the store a little bit more from a merchandising standpoint. But again, in such a competitive environment, taking down those barriers was really the upfront goal, and we think we've been successful there.

We'll go next to Jeff Stein with Northcoast Research.

Two quick questions. First of all, T.J., on the buyback authorization. Historically, Big Lots hasn't been bashful about executing the buyback after they authorize. So I'm wondering, is the plan to do the buyback over the balance of this year and have you factor that into your updated guidance?

Second part first, it is not included in our guidance. First part of the question, we'll work with Phil Mallott, our Nonexecutive Chair, and David and I, along with Jared, our Treasurer. And we'll set what we believe are reasonable ranges in terms of value and valuation of where we're performing and price and we'll make good decisions. We're not on a timeline, Jeff. This does not have to be executed this quarter or this year. But really after spending 2, almost 2 full days with the board and then spending time with the entire management team walking stores, seeing products and understanding where we were in the strategic planning process, they walked away as confident as we are that we can deliver the balance of this year and that putting extra authorization out there in the event that something happened in the market or we didn't feel the stock was appropriately valued, we could be there to support it. This is extremely consistent with the message we gave back in June at the investor conference and is absolutely part of -- and consistent with our strategic plan. I do think that it is important to understand even though -- let's assume for a minute the authorization is executed here this year, we would still end the year with about, I'll call it, minimal amounts of debt on our balance sheet in that, call it, $50 million range plus or minus. So we absolutely believe that the cash that we're generating this year, our commitment is to return it. We're living up to it.

And David, quick one for you. On Furniture financing, I'm curious how you're communicating to customers that they can use it to buy other categories, other items for the store. Do you have signage up? And is it enough, I guess, to be a needle mover on a go-forward basis?

Jeff, this is T.J. David's got a little bit of a cough right at the moment. Let me try to start there. And what I would suggest to you is we're doing a much better job getting out in front it. So for instance, we've we already identified parts of Seasonal with our partners at Progressive that would be eligible for financing going into the holiday selling season. We are signing it, have signed it in categories that we've added to, something as quick to respond as air conditioners in the July-August timeframe, we added the furniture financing. So we are signing it in store. We are trying to plan ahead and have those opportunities ready going into holiday. The benefit we have candidly in Furniture that we don't have in the balance of the store where we offer financing is we do have dedicated associates in the furniture area that are knowledgeable of the program. They've been trained on the program and are there to answer questions and help with sign-up in the balance of the store. As you know, we don't have a selling payroll model. So it is beholden on signing, but we're trying to do our best to really shout out that opportunity. Going forward, I guess, we have the opportunity. We can potentially even do it in print if we choose to do so upon certain categories. But it was helpful in spring. I would say we reacted to it, and we're much more plan-ful going into holiday identifying those items upfront. So hopefully, it'll be even a bigger part of our business.

And again to add that, I apologize for the coughing.

Will it be available for the fireplaces? I know you guys have done a big job historically in fireplaces in the -- over to the holiday selling season. So will you offer financing for that item?

Absolutely. And again, to add to what T.J. just said too, e-mail blast is a big part of how we'll communicate that financing on items like fireplaces as well. So we plan to offer it in other categories too Jeff, like Christmas trees, higher-end Christmas trees as well.

We'll go next to Dan Wewer with Raymond James.

I want to follow-up on the reduced store opening plans and the increased number of store closings. In answering Meredith's question, you talked about the possibility of transferring some of the revenues to an adjacent location. Is it your thinking that the number of Big Lots stores in the U.S. is now the appropriate level? And rather than looking at growth in the future, all of the focus now is just shifting towards higher sales per foot -- higher operating margins but there really is not any net store growth opportunities left.

Yes, Dan, this is T.J. I guess sales per square foot and more importantly comps and growing comp store sales is absolutely the focus of the SPP. And consistent with what we communicated in June, our plans do assume that store count actually does go down in each of the next 3 years. That's based on what we know today, that's based on the availability we see out there today and that's based on the fact that there's to date anyway coming out of '08, '09, there's been very little in the way of new store construction, therefore, less opportunity in terms of other retailers moving and us coming in behind the space. Having said that, if something were to change, we clearly have the liquidity to do more than what we're anticipating in our plans. We would absolutely welcome the opportunity of growing the store base at a little faster rate. If the opportunities are there from a real estate standpoint, what we're acknowledging is the opportunities in our sized box aren't as prevalent today as they might have been 3 or 4 years ago. Again, it doesn't mean we wouldn't step on the gas if the opportunity became available. They're just -- they're not there today. This is, again, very consistent with our conversation back in June at the investor conference. The first part of your question, Dan, in terms of 24 new stores versus 30 in our original plan. We haven't talked a lot about this, but David has been very helpful in providing direction to the team and to the real estate team and particular about the type of box we want to open go forward. And I know we might be getting into a little bit of detail here, but I'll give you an example. Two or 3 of the stores that we have thought we are going to open this year when we actually get inside the box and look at them and look at how the store would have to lay out and what would be asked to the store operations team, we weren't happy with it. So we're not going to open the store. We didn't sign the lease. We don't have any liability. But again, down in the details if we want to be able to come in the middle of the store and turn right. We want our associates to have good experience in the backroom unloading trucks. We want to have docks. We want to have certain things are nonnegotiable today that have not been in the past. That's probably 2 or 3 of the stores, Dan, that we ended up not signing and not opening this year. They were available to us. They weren't going to work for us. Another 2 or 3 of the stores will slide into '15, because we weren't confident we'd be able to deliver by the end of third quarter. And it's our strong preference not to open stores in the fourth quarter. There's too much else going on in the business and with the store operations team to sacrifice for an extra store or 2, here or there, so we've pushed them into next year. So we're very comfortable with where we are from a real estate standpoint in the openings and closings this year.

And this is a follow-up. I think it was probably 4 or 5 years ago when the company was growing the store base. And part of the pitch to investors is that Big Lots achieved the best same-store sales growth in its newer location. Of course, that's usually the case with other retailers as well. If Big Lots' store base is not growing, do you think that's going to be a headwind to same-store sales growth? Is it the fact that the store base is getting older a lot faster?

No. I do not believe that. In fact, I think what we were talking about when the availability was larger and some of the other retailers have gone out of business was the opportunity for us to move into locations that weren't available to us before. The -- more of the A-type locations or Polaris here in Columbus or others. So that was an opportunity that was unique in time as we're learning now. But I want to go back to the first part of your question. Our stores typically ramp actually slower than other retailers in terms of year-on-year performance in the first couple of years. So new stores have, to my knowledge, in the 14 years I've been here, never really been significant driver of comp store growth in that year 2 or year 3. That's -- there's not enough of an impact there to really move the needle. So it's a little bit different model, a little bit different approach maybe than what you're hearing from other retailers, but again, focusing on our strategy and what we do best. I think the biggest opportunity for comp store growth going forward is not a real estate play as much as it is all the other elements of the three-legged stool that everybody's focused on.

Right. I would add -- I would just add to what T.J. said lastly is that the -- we -- as an example, we just opened up a new store here in Reynoldsburg, just a suburb of Columbus. That's the right way to open a store, right? We walked that store. It has a door in the middle. You can turn right. We have furniture in the front where it belongs. In the first 3 days of that grand opening were probably some of the powerful grand opening days we've had in the company's history, and it's because we're doing it the right way. And you're right, maybe 4 or 5, 6 years ago, there was a huge ramp up to run out and open a bunch of stores with -- but there was absolutely 0 process in place and thinking on does the store have a door in the middle. We put barriers up for Jennifer. We put -- what do you call it, blocking the way for her to get in and out of the stores from Asset Protection point of view instead of focusing in on the customer. So again, we talk about Jennifer here and in the company ad nauseam, which is fantastic, right? But everybody in this company is focused on that shopping experience for her, including all of those barriers that a lot of our stores currently have. Over the next 7 years, we will reposition as many stores as we can with furniture in the front of the store. And where we see the comp store growth coming out of there, obviously, we believe it's the shopping experience. It starts with product. It's starts with great marketing, but the shopping experience -- those barriers that we have blocked her ability to shop in a pleasant way have to go away and they will. And I'm telling you, it's working right now, and we're seeing it. And I think you know, as you covered our stock for a long time, from a productivity point of view sales per square foot, we have significant upside. And that all starts with buying better product instead of just throwing junk in the stores and hoping that the customer is going to buy it. And we say it all the time in this building, hope is not a strategy. The thing that you have to believe in, and all of you guys out there, is we actually we have a real strategy. There is a thought process on how we buy product and how we market the product and how we execute it in stores. That's going to give us the productivity not just opening up hundreds of stores and filling them with stuff. That's just not how you run a retail business. It comes up, and at a certain point in time, the consistency is more important than just opening stores for the sake of opening stores.

Thank you, everyone. Lori, will you please close the call.

Certainly. Ladies and gentlemen, a replay of this call will be available to you within the hour and will end at 11:59 p.m. on Friday, September 12, 2014. You can access the replay by dialing the following numbers. For toll-free U.S.A. and Canada (888) 203-1112 and entering replay pass-code number 3761105. For international, (719)457-0820 and entering replay pass-code number 3761105. Ladies and gentlemen, this concludes today's presentation. Thank you for your participation. You may now disconnect.