Andy Regrut - Director, Investor Relations David Campisi - President and Chief Executive Officer Tim Johnson - Executive Vice President and Chief Financial Officer

Brad Thomas - KeyBanc Capital Markets Peter Keith - Piper Jaffray Paul Trussell - Deutsche Bank Anthony Chukumba - BB&T Capital Markets Meredith Adler - Barclays Patrick McKeever - MKM Partners Joe Feldman - Telsey Advisory Group David Mann - Johnson Rice Jeff Stein - Northcoast Research Matthew Boss - JPMorgan

Ladies and gentlemen, welcome to the Big Lots Third Quarter 2014 Teleconference. This call is being recorded. During this session, all lines will be muted until the question-and-answer portion of the call. [Operator Instructions] At this time, I would like to introduce today’s first speaker, Andy Regrut, Director of Investor Relations. Please go ahead, sir.

Thanks, Deanna and thank you, everyone for joining us for our third quarter conference call. With me here today in Columbus are David Campisi, our CEO and President and Tim Johnson, Executive Vice President, 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 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. All commentary today is focused on adjusted non-GAAP results from continuing operations. Reconciliations of GAAP to non-GAAP adjusted earnings are available in today’s press release. This morning, David will start the call with a few opening comments; TJ will review the financial highlights from the quarter and update the outlook for 2014 and David will complete our prepared remarks before taking your questions. With that, I will now turn the call over to David.

Thanks, Andy and good morning, everyone. I am pleased with the results we reported this morning. In prior years, the third quarter has been challenging for our business as we transition out of summer and begin to prepare for the holiday season. But for the first time in 3 years, we comped up in Q3. And we were in line with our guidance provided to you 90 days ago. Based on our sales results which were a continuation of a positive spring, we believe our business is becoming more consistent and reliable for Jennifer. From a merchandising perspective, 4 of the 7 merchandise categories reported comp increases. Once again, food was the top performer, up double-digits. Trey and his team continued to do a great job improving our assortments in this category. We have responded to Jennifer and expanded the number of never-outs in our stores, nearly doubling the everyday selection of her favorite brands in areas, where she has told us consistency and predictability matter. We also have completed this year’s rollout of coolers and freezers. As planned, we are now SNAP eligible in roughly 750 stores. We have taken a pause from the rollout during the holidays and we will resume in January by installing coolers and freezers in another 500 plus stores. Furniture was also a top performer up double-digit for the quarter. Case goods, upholstery, mattresses and ready-to-assemble assortments posted strong results and benefited from a full quarter of furniture financing or easy leasing as we like to call it in our stores. The team has done a super job improving our offering with fashion forward colors, new patterns, fabrics and items as well as a fresh assortment of fireplaces for the winter months. And the easy leasing program continues to produce strong, consistent results, even in the stores, where we have anniversaried the launch from a year ago. Next is soft home. Martha’s team comped up mid single-digits for the third quarter and it is clear, Jennifer recognizes the meaningful improvements in back-to-school and back-to-campus and the QBFV. We are still very early in the transformation of this category and I am very excited with the prospects for Q4. And finally, consumables up low single-digits. The team has done a great job here as well. This quarter we were particularly strong in household chemicals, home organization and pet. And similar to Q1 and Q2, the team produced solid results, but both never-out and close-out products add great values for Jennifer. The businesses that were down in the third quarter were planned down, so no surprise. As anticipated, electronics and hard home were down in the teens, similar to the performance in Q2. You may recall these categories experienced a majority of the edit and exit clearance activity we began at the end of last year. Seasonal was off high single-digits as expected. Remember, we planned Halloween down and had conservative plans for harvest as Jennifer continues to be a little more reserved or cautious on these shorter seasonal periods. Christmas trim comped positive at early Q3. However, sales slowed in late October and into November, early November. I am confident in our assortment and our inventories are under control. We are watching it closely and we will react with pricing if needed. So, with that, I will turn the call over to TJ for more detail on the quarter.

Thanks, David and good morning, everyone. Net sales from continuing operations for the third quarter of fiscal 2014 were $1.107 billion, an increase of 0.2% over the $1.105 billion we reported last year. Comparable store sales for stores open at least 15 months increased 1.4%, which compares to our guidance of an increase in the low single-digits. We are encouraged with this result, particularly given the fact we had one last add in Q3 this year versus last year and we were trending in the 2% range heading into the last 2 weeks of the quarter. Consistent with commentary from other retailers, August was our strongest comp and October was softer. The softness in October was not the result of any promotional changes or differences in merchandise flow, but we believe more symptomatic of the flow of retail traffic. We did experience an improvement in trend as we moved into November. The loss from continuing operations for the third quarter was $3.1 million or $0.06 per share, which compares to our guidance range of a loss of $0.04 to $0.10 per share and last year’s adjusted loss from continuing U.S. operations of $4.1 million or $0.07 per share. Our gross margin rate for the quarter was 38.9%, down 10 basis points compared to last year’s Q3 rate. This was consistent with our expectations as we experienced a double-digit increase in food, a lower margin category and negative comps in seasonal by higher margin category. Total expense dollars were $435 million and the expense rate of 39.3% was down 30 basis points to last year. Again, this leverage was expected. The loss from discontinued operations for the third quarter of fiscal 2014 was $0.3 million or $0.01 per share, which was in line with our expectations. Moving on to the balance sheet, inventory ended the third quarter of fiscal 2014 at $1.075 billion compared to $1.238 billion last year. The reduction in inventory was driven by an 8% decrease in inventory per store, a lower store count and the strategic decisions made last year to close our business in Canada and liquidate our wholesale operations. CapEx for the third quarter of fiscal 2014 totaled $36.1 million compared to $32 million last year. On a year-to-date basis, CapEx totaled $74.6 million versus $83.7 million a year ago. Depreciation expense for Q3 was $30.3 million, an increase of $1.3 million in the last year. We ended the third quarter with $62 million of cash and cash equivalents and $283 million of borrowings under our credit facility. This compared to $68 million of cash and cash equivalents and $324 million of borrowings under our credit facility last year. Our use of cash generated by our U.S. operations was focused on returning cash to shareholders through both dividends and share repurchases, lowering our overall debt levels and funding closing activity of our former Canadian operations. Earlier this week, as part of the dividend program initiated in June, our Board of Directors declared a quarterly dividend of $0.17 per common share payable on December 30, 2014 to shareholders of record as of close of business on December 16, 2014. Also during Q3, as part of our August 2014 repurchase program, we invested $115 million to repurchase 2.6 million shares or approximately 5% of our outstanding shares at an average price of $44.13 leaving $10 million of authorization remaining at the end of third quarter. As noted in our press release earlier this morning, we completed our August 2014 share repurchase program during the month of November. In total, we invested $125 million to repurchase 2.8 million shares at an average price of $44.21, which was favorable to yesterday’s closing price. In total for Q3 between dividends and share repurchases, we returned $124 million of cash to shareholders. We believe this activity adds value and is an important lever to drive overall shareholder return. During Q3, we opened 12 new stores and closed 9 stores, leaving us with 1,496 stores and total selling square footage of $32.7 million. In the first three quarters of this year, we have opened 24 new stores and closed 21 locations. For fiscal 2014, we now believe we have opened 24 new stores and closed 57 stores ending the year with 1,460 stores in the U.S. Now, turning to guidance, we are updating our Q4 guidance of income from continuing operations to be in the range of $1.70 to $1.80 per diluted share, which compares to our previous guidance of $1.70 to $1.76 per diluted share and to income from U.S. continuing operations of $1.45 per diluted share in the fourth quarter of fiscal 2013. This forecast assumes a comp increase in the low single-digit range, a significantly higher gross margin rate and expenses as a percent of sales slightly higher to last year. From a sales perspective, we remain confident in our ability in execution to drive a low single-digit comp in Q4. As I noted earlier, we were encouraged by the start to November, particularly the first three plus weeks, where comps were up again about 2%. However, Thanksgiving and Black Friday results were down to the prior year, again not all that surprising based on industry data and reports from NRF and others. November comps did end up slightly for the month. We expect December to be the strongest month of Q4, particularly given the extra shopping day and we also believe January as opportunity, especially in food, furniture and soft home. In terms of the gross margin rate, the rate improvement anticipate fewer markdowns this year as we anniversary the impact of the edits and exit in last year’s Q4 results. Expenses as a percent of sales are expected to increase slightly driven by potential bonus payouts this year compared to minimal payouts last year. For the full year, we are affirming our guidance for income from continuing U.S. operations to be in the range of $2.40 to $2.50 per diluted share. This compares to fiscal 2013 adjusted income from U.S. continuing operations of $2.45 per diluted share. Our guidance is based on a total sales increase of approximately 1% to 2% and comparable store sales up 1% to 2%. We expect this level of financial performance will generate approximately $250 million of cash flow from our U.S. operations. The combination of $250 million of share repurchases and $28 million of dividend payments equals a shareholder distribution of cash of $278 million for fiscal 2014, again further demonstrating our commitment to return excess cash to shareholders. So with that, I will turn the call back over to David.

Thanks TJ. Before we open the lines for questions this morning, I want to share a few thoughts in closing. Q3 was an important quarter for our company. As I mentioned in my opening comments historically Q3 has been difficult for us, but the strategic changes made in merchandising and marketing are beginning to provide more consistency to our business, and I can’t overemphasize that word about consistency. During Q3, we passed a few critical milestones as we continue to transform our business. We completed this year’s rollout program of coolers and freezers and expanded our assortment of food with more never outs. We enjoyed our first full quarter of easy leasing chain wide and made meaningful improvements to the back-to-school and back-to-campus. Rich and his team have done a great job deploying the new buying discipline of QBFV or quality, brand, fashion and value and providing more disciplines around inventory management. These were major accomplishments for us and add to the success from the spring season. We also have one additional highlight in merchandising. Michelle Christensen joined our company in September as Senior Vice President, General Merchandise Manager for Seasonal, Electronics and Accessories. I am delighted to have Michelle on board. I have known her for a number of years dating back to our days with Fred Meyer. Michelle has extensive experience in many of the merchandised categories, strong strategic thinking and leadership skills. Next, from a marketing and customer engagement perspective, Andy and his team are changing how we communicate with Jennifer. Our online video, the Pet Focus Group was yet another award winning campaign. Building off the success of the Hostess, The Thrift is Back and a secret top brand alert, the team continues to expand our online presence through digital channels and social media. And our holiday campaign, Big Lots helps moms nail this holiday, incorporates TV spots with a catchy holiday jingle on some of Jennifer’s favorite intelligent networks. Now, turning to stores or our third legged stool, Lisa and her teams have completed the implementation of the J-Score, a numeric scoring system for assessing, tracking and in-store execution. This was no small undertaking. Each of our stores in the fleet, nearly 1,500 in total, were graded and development plan was created to improve execution and consistency of the shopping experience in our stores. And finally, we return excess cash to shareholders with the balanced approach TJ described at our Investor Conference in June. We exhausted the share repurchase authorization from August and we declared our third dividend under the new strategy. Once again, this quarter we did what we said we are going to do and deliver the financial results strongly in line with our guidance. None of this could have been achieved without a complete team effort working cross-functionally. We are one team with one goal. And I want to thank all of our associates in the field, the distribution centers and our corporate office for their hard work, dedication, willingness to change and the uncompromising drive for improvement. Clearly, it’s not business as usual here at Big Lots. And with that, I will turn the call back over to Andy.

Thanks David. Deanna, we would now like to open the lines for questions at this time.

Thank you, sir. [Operator Instructions] We will take our first question from Brad Thomas of KeyBanc Capital Markets. Brad Thomas-KeyBanc Capital Markets: Thank you. Good morning and congratulations on the continued progress here.

Thank you.

Thanks Brad. Brad Thomas-KeyBanc Capital Markets: I wanted to first just ask about inventory and connecting the dots to the Edit to Amplify strategy, this was the biggest decline that we have seen in inventory all year, could you just help connect the dots on where we are with the editing process, how much of a drag that was and when you might be able to benefit from the reallocation of space?

Do you want to take that? Go ahead.

Yes. I guess Brad from our perspective the inventory levels were right in line with our internal targets that we work with our merchant teams on each and every month, so there really was no surprise there. Again, some of the categories that we exited those inventory levels in the overall divisions were down high-teens or low-20s, again as expected. The reallocation of footage has already occurred as you know and is one of a number of elements that are helped driving our food comps as we sit here today. I guess from our perspective the drag that you – as you mentioned in terms of sales, that drag will be with us through really the middle part of first quarter call it. As you will recall, we started aggressively marking down product in the edit and exit categories really about this time last year in the fourth quarter. So, we are up against the promotional part of it, but obviously we have had that impact for a number of quarters now. I think from our perspective, particularly as we look at where our business is today and the strategy and how competitive some of those categories that we exited are, particularly in electronics we feel even better about our decisions today than we might have 12 months ago. Brad Thomas-KeyBanc Capital Markets: Great. And if I could just follow-up on two of editing categories for hard home and electronics, what is the expectation for comps for those categories in the fourth quarter?

You want me to take that TJ. First, the electronics piece Brad will certainly be down double-digits as we continue. A year ago, this month we were selling TVs and we are not in that business any longer. And we have down trended the tablet business significantly over the last year. So the plan there is down double digits. And I think it’s important that everyone understands in Q3. Again, the strategy is working. I mean as I mentioned the businesses that we told you guys, we were going to win in food, consumables, furniture and seasonal and soft home are working. And it’s not any different in Q4 where we are going to see double digit drops in electronics and parts of hard home. Hard home primarily being categories that we exited like automotive and paints and some of the electrical parts of the business and plumbing and then the other part of home that we don’t talk a lot about is actually running out very strongly like table top and kitchen gadgets and appliances and so on. So with those categories our go forward businesses within the hard home classification, we actually believe we will start to see some significant improvement in that business as well. Brad Thomas-KeyBanc Capital Markets: Great. Thanks so much and good luck this quarter.

Thanks Brad.

We will take our next question from Peter Keith of Piper Jaffray. Peter Keith-Piper Jaffray: Hi. Good morning everyone. Thanks a lot for taking the question. I wanted – I will keep it to one question, but I will ask it in two different parts. So number one, on the rollout of your coolers and food stamps, now that you have it in a broad assortment of stores, I was hoping you can provide some insight on the ramp, is it – is there a pretty immediate lift or does it take a little while to build up in your results and how does some of those cooler stores look that are now over a year old in their process? Thank you.

Sure. Peter, the – I guess as we move into a new store for instance that has not had coolers and freezers before, but the process kind of sort of works like this. We put the coolers and freezers into the location and we see immediate reaction of the category selling within the coolers and freezers and that we call the DSD department, Direct Store Delivery. There is a period of time call it 30 days plus or minus where we have to apply for and receive certification in order to receive, snap an EBT benefit. Once that occurs, we see kind of a second leg up or a second lift in not only the DSD product, but then the overall food business is eligible to take that form of tender for a payment. So it’s kind of a two-step lift. We still believe this is a very positive move for our business. We are confident it’s taking down a barrier for entry for a large percent of the customer population out there. The second part of your question in terms of stores that have now kind of sort of anniversaried the launch from a year ago, I would tell you that overall we are still pleased with the results. There is a little bit of disparity by market. And we are certainly learning a lot in terms of how quickly pricing changes and how we need to react in order to stay competitive. It’s not likely that all of the prices in our cooler and freezer product will be below the competition, but I will stress we are going to be competitive. So, overall, again at a real high level, we are pleased with the results. We think it was absolutely the right move for our business. And as soon as we can get to the month of January, we want to start working on completing that last 500 plus stores give or take. So that really in the call it spring season of 2015, we should be fully where we want to be. Peter Keith-Piper Jaffray: Okay, thank you. Tim, one last quick question just for modeling purposes, on the gross margin, it’s going to be up substantially in Q4. I guess that could be interpreted in a number of different ways. The SG&A dollars are flattish. Are we talking about the upwards of like the 150 to 200 basis points of gross margin expansion?

Actually, Peter, just a point of clarification, we actually said the SG&A rate as a percent of sales would go up in fourth quarter. It’s all about the bonus opportunity if the business continues to perform. I would think about the gross margin rate this way. Again, we are not giving specific numbers, but we took roughly a 100 basis point or more hit in fourth quarter last year as a result of that edit to amplify activity. Historically, in our business, the fourth quarter margin rate has been high 39s or low 40. That’s what we are talking about when we talk about significant improvement. Again, I don’t want to pinpoint it down to a number, because there are a number of variables here in the fourth quarter, particularly our commitment to make sure that we do what we need to do to exit all seasonal categories clean going into the spring season. Peter Keith-Piper Jaffray: Okay, thanks a lot for that color and good luck for the rest of the holiday season.

Thanks Peter.

Thank you. We will go next to Paul Trussell of Deutsche Bank. Paul Trussell-Deutsche Bank: Good morning. I wanted to just go back to discussing the comp performance. It’s good to see the results are positive for third consecutive quarter, but if we go back a little bit in time, I do believe the conversation was calling for an acceleration in comps throughout 2014 and then accelerating further in 2015 as you cycled and got behind you going against some of these edited categories and obviously rolling out the additional coolers. Just wanted to kind of get your updated thoughts on that given a little bit of a deceleration in 3Q and now a little bit of softness with November being only up slightly, what gives you that confidence regarding the December comp being the best of the month, especially since you did indicate that I think the Christmas tree or some of the seasonal aspects did slow in late October and that continued into November. Thank you.

Yes. I guess, Paul, I will start kind of with the numerics, and David certainly I know has a perspective on categories and opportunities, but what gives us the confidence candidly is the fact that even in the third quarter again as you will recall from the prepared comments, we did drop an ad circular in the third quarter. That ad circular moved into second quarter. So obviously, there is some timing difference there. The second point I would remind you of is really through the first 11 weeks of the third quarter, comps were up 2% plus. So, we were right on track to doing exactly what you just said and exactly what we had talked about earlier in the year. The last 2 weeks of November were soft for us and our data is that they were soft across retail. So, we don’t think we get real smart or real stupid overnight. We didn’t change anything in our business in the last 2 weeks. We did not deliver a floor set or not set a floor set or do anything like that to dislocate business, but for whatever reason, those last two weeks were down slightly to the prior year and that was just enough to move us to one floor from something that started with the two. Again, we were encouraged that moving right back into November. The first really 3.5 weeks until you got to Thanksgiving, our comps again started with the 2. So, we were right back on track. From our perspective, the Black Friday and Thanksgiving weekend was difficult. Again, I think that’s been well-documented. The interesting part in our business though that I would just remind everybody is that if you shop at our stores on Thanksgiving Day and Black Friday and even on the Saturday, where we missed volume to last year was really focused in one department and that was electronics. So, while the competitive landscape out there had many, many retailers selling electronics products and trying to drive people in the store with doorbuster deals that our math suggests it would be very difficult for anyone to make money at those prices. We did not do that. So, we make money on Thanksgiving. We make money on Black Friday. The strategy is exactly what we laid out 12 months ago. We choose not to participate in high ticket, low-low margin electronics business. And that hurt us a little bit over the Thanksgiving weekend. So, that’s kind of the – those are the facts and kind of the cadence of how we are thinking about the sales trend and why we believe that moving into December and into January, our business moves right back to the positive trends that we had been seeing.

And Paul, this is David. Just to add to that, I would just tell you that, obviously all of us were out in the stores on Thursday, Friday and Saturday. And certainly standing in some of the big competitors out there on Friday morning was pretty stunning at 9 o’clock in the morning not to see one customer at the cash register. So, traffic, it was certainly down. There is no question about it. But I would tell you the good news is again, I can’t overemphasize this and we have talked about this a lot is the strategy of those winnable and ownable categories is working. As TJ said, we made the decision to exit those negative margin or single-digit margin businesses like TVs and reduce our positioning on tablets and so on and happy that we did, as TJ said, because of what was going on over the weekend there with the crazy pricing on TVs. And so again, when you go up against those big events and it’s behind us and we feel good about it is while the business was soft, we still comped up in soft home, food and furniture. And on Sunday, we snapped right back as TJ said with all of those categories that we have talked about that we want to grow food, consumables, soft home and furniture are all comping positive and continue to comp positive as we move into December. So, when you ask about what makes us feel confident about it, obviously, we believe our strategy is solid. We are not going to deter or panic or do something stupid like go out and buy TVs to drive traffic, we don’t need to. Black Friday is behind us. So again, things are working and candidly and when you talk about the momentum and comps, you have to remember as you exit a lot of those categories that I mentioned earlier, you are still up against those numbers in third quarter and fourth quarter. And as TJ said, a little bit in first quarter and then it’s behind us and then I believe that you are going to see as I have said over and over again, consistent positive comps quarter to quarter and stabilizing the business and improving the bottom line performance.

Yes, Paul one last sort of kind of data point to build on David’s last statement there. Our first three quarters obviously were positive. Our guidance for the fourth quarter is for a positive comp in the low single-digits as well. Achieving four quarters of positive comps, not flat, but positive comps in a row, in a year has not happened in this business since fiscal 2006. To us, that’s a very strong indication that the strategy is heading in the right direction and the customer Jennifer has recognized that. Paul Trussell-Deutsche Bank: I appreciate the detail. That was very helpful. Just as a quick follow-up, you guys spoke about some of the learnings taking place on the consumable side of the business, I would love to just dig into that a little bit more, especially on the pricing front as a number of other of your competitors use a lot of these consumable items and beverage items to be traffic drivers and there has been margin pressure in that category over time. How are you balancing that focus and need to drive comp in food and consumables and making sure that you don’t give the product away?

Let me take that. It’s a good question, Paul. A couple of things when you talk about the food side of it. The penetration in there on close-outs as you all know is pretty high. So, when you balance it out, you are absolutely right, we were in Coke and Pepsi at $0.88 for two year battle a few weeks ago to drive traffic into the stores which it worked. So there is pressure there, but at the same time because of the high penetration of close outs in food and then the specialty food margins as well, we continue to hit our planned margins in food. And then moving to the consumables side, which is a mix of everything from health and beauty aids to plastics, paper, chemical and pet the business there as well, some large close outs from some pretty big players as you well know, that’s where that whole secret top brand of there comes from. So Steven’s team in there, they are doing a great job of managing the penetration of close outs to never outs. And again, we continue to hit or exceed our margin plans in there. And obviously a much higher penetration in the third quarter with both of those businesses versus fourth quarter, so as we move into fourth quarter, furniture and seasonal become a much larger part of the business. And obviously, both of those have a much higher margin rates. So all-in-all, that being said we feel very good about the model and how we margin out the mix out, so. Paul Trussell-Deutsche Bank: Thank you.

Thank you.

Thank you. We will go next to Anthony Chukumba of BB&T Capital Markets. Anthony Chukumba-BB&T Capital Markets: Thanks for taking my question. Just had a couple of questions related to SG&A, I guess the first one, if you can just provide a little bit more color on the decline of the SG&A ratio in Q3, was that just all top line leverage or was there any expenses that you would like to call out. And then second, I just want to get some sense or even just directionally what the incentive compensation hit is going to be that you are – in the fourth quarter? Thanks.

Sure. Anthony, again for us there is always pluses and minuses at the line item level and in the department level when it comes to expenses, but big picture what we have talked about for a number of quarters now and really going even further back in time is our strong desire to keep the SG&A leverage point low. So again, beginning to have some consistency in top line performance is certainly probably the single biggest reason why we saw some leverage here in the third quarter. Again, there is pluses and minuses at the detail level when you look at it, but the comp piece is the biggest – the biggest determining factor. When you look at fourth quarter, the second part of your question what I would tell you is that again, we have forecasts on bonus expense, but year-over-year the bonus expense is the single biggest reason that the business is forecasting the de-leverage in fourth quarter. If you take that off of the table at a low-single digit comp, you would be looking at leverage in the call it 30to 40 to 50 basis point range. It’s that big of a determining factor when you look at the fourth quarter. Again, keep in mind we essentially had zero bonus payout last year as a business, because we did not hit our original targets. This year as I know you know we have been forecasting really the same, if not a little bit better full year earnings per share and operating profit performance consistently all year long. So, performing to our plan versus performing under our plan, you get the biggest impact of that in fourth quarter. We take the biggest impact of bonus-related expense in the fourth quarter where we make most of our money according to this forecast. So I hope that answers your question. Anthony Chukumba-BB&T Capital Markets: Yes, that’s helpful. Thank you.

Thank you. We will go next to Meredith Adler of Barclays. Meredith Adler-Barclays: Thanks for taking my question. I would like to try to understand a little better how to think about holiday, because part of the reason traffic was very soft for retailers was that a lot of business moved online. And at this point you guys don’t have an e-commerce strategy, I am still trying to understand why you think that that will be different as we get closer to Christmas and I am not saying it won’t be, but is it because you believe that the kinds of items people come into your store to shop for they just wouldn’t go online to buy or something about your pricing, I don't know – I am trying to understand what changes in the next couple of weeks?

Do you want me to take that, TJ? Hi, Meredith, it’s David. That’s a good question. Meredith Adler-Barclays: Hey, David.

And I would tell you we smile when you talk about that, because as you well know we are in the middle of building the e-commerce business from the ground up and looking at the back half of next year. Actually when you think about what happened over the holiday and on Cyber Monday, it’s probably going to be an interesting thing to see for a lot of those guys because as you well know, most people don’t make any money on e-commerce. Certainly, some of those guys actually called that out how tough it is to just get the breakeven. And then when you put pile on free shipping on top of it, with no limit, with some of the guys out there, as you increase your penetration of e-commerce, your total and put certainly huge, huge margin pressure on you, so we are not dealing with that factor. So with that being said, our customer, she does – we use our online if you watch what we do at the Buzz Club and over 14 million, 15 million members on there, she responds significantly to our e-mail blast. And candidly, we did a Cyber Monday e-mail blast with a coupon and we comped up nicely on Monday without an e-commerce business. So again, we are a brick and mortar retailer. And she knows that at this point in time and she continues to shop our stores and the traffic bounce right back as I said on Sunday, Monday, Tuesday. And we believe that it will continue into December just based on the reaction we get. And again, we are e-mailing her almost on a daily basis with our great values and great brands that we have to offer. Meredith Adler-Barclays: Okay. And I guess I would also like to – it’s kind of following on from that, it does sound like you are so completely transitioning the business and you will have tough comparisons probably through the first quarter, but is it fair to say that you are building a business that will be less holiday sensitive over the next couple of years by not having some of these big hot items like electronics?

Here is what I would say and that’s a good question too. We talked about that on Monday. And I actually said to the guys similar to what you just said that now that we have gotten through the nonsense of the Black Friday weekend. And as you know, a lot of retailers came out with we are going to have seven-day Black Friday. I will be the first to say as a retailer of 35 years the industry made a bad move by doing what we did in extending hours on Thursday and so on. We have taken the wind out of what was once a sense of urgency. I mean, there were no lines out there at any retailer at 4 am or 5 am or 6 am on Friday. So, I would say yes, it’s still a big, big holiday weekend from a volume standpoint and it always will be. But to TJ’s comment earlier, we make money on those days versus a lot of those guys who were just doing huge volume and making no money. So yes, our strategy, again TJ said it we haven’t had four consistent quarters of positive comps since 2006. It is our strategy to be consistent in comp quarter to quarter to quarter. And we believe we are at the beginning of the beginning as I have said to you over and over, but we are making tremendous progress on consistent day-in and day-out performance of those winnable and ownable categories. And so, yes we still believe holiday will always be important. We have an enormous trend business. The day before, just the Christmas trim category did more volume than food and consumables combined, that’s how important that Christmas tree, Christmas lights, ornaments and décor is to us from that standpoint. We will always be a leader there. But again, growing furniture, growing soft home, growing the categories we have talked about appliances, table top, food prep, and food and consumables is what we are and it has been well received by Jennifer and we continue to see on the days that are just, what I guess I would call normal non-holiday Black Friday type of days we comp positive. Meredith Adler-Barclays: Okay, great. I have another question, but I will get back in the queue.

Thank you. We will go next to Patrick McKeever of MKM Partners. Patrick McKeever-MKM Partners: Good morning everyone. I don’t know if I missed it, but did you mention the West Coast ports situation?

No, we didn’t talk about it, Patrick. I can add some commentary if TJ wanted to wing it on, he can too. We actually – we really took the offensive position on that very early on. Carlos Rodriguez who runs the distribution centers brought that to our attention way, way back early on. I don’t think I remember, TJ when it was, it was very early that there was going to be a challenge out there. So, we pulled up – pulled up a lot of inventory deliveries and worked with our partners in Asia to get containers on the water earlier than normal and brought inventories and that typically wouldn’t have come in until, let’s say, October. We brought some of that stuff in an August and September. So, we really – were there a few hiccups? Yes, but nothing significant. So, we were again rather than being on the defensive like some retailers and then finding out that this stuff was stuck there, we actually took a different position and really had very few hiccups. Patrick McKeever-MKM Partners: How about from a – just an opportunistic buying standpoint? Did it – do you think it’s going to open up any opportunities and close-outs or just excess merchandise that sort of thing?

Well, I would say it’s a good question. In fact, I have somebody reach out to me yesterday with a huge opportunity to buy a ton of apparel, which obviously I passed on, because he exited the apparel business. I think that area, the apparel, guys, you saw a lot of those guys come out, Ann Taylor and so on with very, very difficult third quarter performance and blaming a lot of it on the West Coast port. I think a lot of the stuff that’s delayed and stuck in there is in categories that we don’t play in. Patrick McKeever-MKM Partners: Okay. Okay, got it. Great, thank you.

Thank you. We will take our next question from Joe Feldman of Telsey Advisory Group. Joe Feldman-Telsey Advisory Group: Yes. Hi. Thanks, guys and good morning. I wanted to ask a follow-up on the easy leasing program and just get a little bit more color there. One question I guess relates to the name of it, because I understand its finance, but leasing to me implies that you are going to give it back like a car. I was wondering if you have seen any pushback with that? But the other more relevant question is how are the approval rates trending? How are the adoption for other categories or people using it, and yes, just maybe the general trends maybe you can talk about?

Yes, Joe. It’s TJ. I think we continue to be encouraged by approval rates. I don’t know that anything has really changed there in terms of trend. I think for us the impact on our business from test to roll has been very consistent and it’s surprisingly consistent across store groups and markets, which again just further demonstrates to us that there is a significant need out there for customers who have a difficult time with traditional credit to purchase product in our store through this program. Progressive continues to be a wonderful partner of ours. And most encouraging for me anyway, when I look at the numbers, which we look at it fairly detailed level every week, those stores that have been up and running for more than a year now continue to comp very strong. We think there is only opportunity as we go forward with this program. I would tell you in terms of extensions to other categories, it’s a little more difficult we are finding with Christmas, just because of the price points and the requirements from an approval standpoint on specific items. So, you are learning so far as obviously big impact on upholstery, big impact on fireplaces this holiday, significant impact on mattresses. We learned a lot with large ticket lawn and garden last year. So, as we roll into spring, that’s a full season opportunity for us, so nothing, but positive to talk about as it relates to the easy leasing or lease-to-purchase program.

And Joe, this is David, I would just add to that too. The one of the things that we haven’t talked about that I think is important to note as we move into 2015 in the furniture business is Lisa and Nick Padovano, who is our Senior VP of Stores are launching part of our strategic plan under that third leg of the stool, stores is to – we actually have a separate KRA, if you will, on furniture selling. So, we have a strategy out there to employ, if you will, real true furniture sales leaders, not just a furniture guy who hauls up furniture to some of these car. And that candidly, out of the 1,500 stores or 1,400 and whatever the number is 90 or something, the – a large percent of them do not have what I would call real true guys or gals who know how to sell. So, that is part of our strategic plan is to get folks that really do know how to convert. And as we add traffic counters and we measure conversion and do all the things that we are going to do under that strategic plan, I can’t be more excited about the sale side of it, because we are doing a lot of business as you know in furniture. And the easy leasing is a key part of the strategy too, but let’s not forget that as we change the model of our business and improve our selling associates, that’s going to be a driver for 2015 as well. Joe Feldman-Telsey Advisory Group: Got it. Thanks for that color, guys. And if I could follow-up with one other sort of separate question, I just was curious about the response you are getting to the latest advertising you are doing. And I know you guys had some of those kind of colorful ads and was just wondering how you felt the response rate was and are you getting the return on them?

It’s funny. We are getting tremendous – I mean it’s a little edgy as you well know. And I think I mentioned earlier that Andy and his team have done an incredible job of taking Big Lots, who has been pretty sleepy in the marketing world and creating a powerful social presence. And the blogging out there from our customers and the number of hits on those viral videos from those TV commercials again has been an incredibly received – well received. And candidly, TV is always hard to measure, to be candid, Joe, but I would tell you that we did some of that advertising tied into mattresses in one of the weeks in November and we had a tremendous, tremendous week in mattresses. So that tells us that the TV is working. But more importantly than just the TV, it’s really a balance of how we use the Christmas jingle. And if you really see what we are doing, we are very, very strategic. When you have three women singing and dancing and for us to have Caucasian, African-American and Hispanic in that ad is something that we have gotten tremendous response from. And again, in the industry side of it, we are getting a lot of – like I mentioned earlier, we won an award for that pet viral video as well. So, we feel very good about the relationship with OKRP, our advertising agency in Chicago and what Andy’s team is doing. It’s really bringing us out of the doldrums quite honestly and the responses have been fantastic. Joe Feldman-Telsey Advisory Group: That’s great. Thanks guys and good luck with this big quarter.

Thank you.

Thank you. We will take our next question from David Mann of Johnson Rice. David Mann-Johnson Rice: Yes, thank you. Excuse me, thank you, good morning. Congratulations on the comps. I guess my question relates to your comment on the performance of the trim category as you came into November. It seems like seasonal – you need that to perform very well on the fourth quarter to offset some of the categories you have added. So, if you can just elaborate on the trend there and why you expect that to improve?

Let me take that. Yes, I would tell you that I believe in the assortment and if you have been out in our stores, our product looks fantastic, David. And honestly, I walked some of the bigger guys out there that you well know, the big box guys and their assortment is nowhere near what we have and nor is our displays nowhere near. I would just tell you that over the holiday weekend, Black Friday weekend, the trim department outperformed the company for sure. So, we feel good about it. As I said in the prepared remarks, that we are watching it very closely. We have, as we always have it, what we call a glide path in a strategy, exit strategy in that business. And at this point in time, we really don’t have any real concerns. We think this is a big week and next week is a big week too, where people start to really decorate outdoors and then indoors. So, these next two weeks are critical. And again, I am very confident in the buy, the assortment and the pricing strategy and a tremendous amount of marketing behind it as well. David Mann-Johnson Rice: And the change in the merchant behind that category and some of the other key holiday categories, I was curious can you just talk about that?

Well, I would just tell you that as I said in the prepared remarks, I have known Michelle, she – I actually promoted Michelle to a Divisional Merchandise Manager, probably I don’t know, 10 or 11, 12 years ago or whatever it was. And we happen to just connect and it was an opportunity to add tremendous talent to the team and that’s why Michelle is here and the team that reports to her couldn’t be more excited. David Mann-Johnson Rice: Okay, thank you.

Thank you.

We will go next to Jeff Stein of Northcoast Research. Jeff Stein-Northcoast Research: Good morning David, just a question about store execution, I was in several stores this week and I know this is the busier time of the year, but I am just kind of curious with the expansion of your food assortments and looking at the lines at the register, I am just wondering if your checkout area is really setup to handle the increased volume that you are seeing in foods. In other words, you are really not setup like a grocery store and do you think any modifications are needed there?

Well, we are – we are in the 2015 updating our point of sales system with NCR and approximately I don’t know, TJ about 12 – all stores. And I think we got about what, 300 of them. So, yes Jeff, we are improving the front end point of sale. And as we joke inside the building, we think we are going to get one to two seconds of speed out of it. But I understand what you are saying that we don’t use the sliders and so on, but it hasn’t been an issue. And again, I have been very transparent with you and the rest of the guys that we have long ways to go from a consistent store execution from store-to-store. I am very pleased with the progress we have made. And again, I can’t promise you guys that 1,490 stores are executing at a high level, but I mentioned earlier about the grading system, the J Score. It’s a very serious one through five grading system, five obviously being the best. And Nick is all over this thing and so are the Regional Vice Presidents. And it’s – again, as we have talked over the last 18, 19 months, bringing this whole Jennifer perspective to our company has really caught on. And even our cashiers on the front end know who they work for. And they are doing a great job out there of managing the lines at the register. And we have a process in place of three in line and we need to open another register. Does that mean every store is operating at a high level, no but we believe over time we will get there. Jeff Stein-Northcoast Research: Got it. And any thoughts on store openings and closings for next year?

Yes. Jeff, we will give guidance obviously on the next call, but nothing has really changed from the Investor Day conversation back in June where – when we talked about the financial model. We expect net store contraction this year, next year and in 2016. But we will be more specific on the numbers when we get to the call in March. Jeff Stein-Northcoast Research: Thanks.

Thank you. We will go next to Matthew Boss of JPMorgan. Matthew Boss-JPMorgan: Hey, guys. Good morning. So, with the doubling of never outs, can you just talk about the closeout mix of the store today and going forward and also the value proposition of a closeout versus a never out to the customer as you identified some of the pricing in the coolers, maybe a little bit less competitive than other parts of the store?

Yes. I will take part of that and let TJ take the balance of it, Matt. And good morning, I know, it’s not even 6 am where you are at. So, appreciate you being up. The closeout penetration as I said before, it varies by category. And again the highest penetration is both in food and consumables and in hard home, because of the closeout and refurb business we do with appliances and on floor care. And then obviously too a much lesser degree in furniture and soft home and seasonal as you well know is our own private brand. So there is very little closeout activity in there, but every now and then if something comes our way. But I can overemphasize in any of these businesses, if it’s the right – if it passes the QBFV, we buy it. In fact, we just made a buy in soft home as a closeout. But soft home was one of the areas candidly that had too high of a penetration and it got us into a lot of trouble. And over the last three quarters, that business is comp positive, because we have reduced our exposure on closeouts and increased the never-out programs. Back to the value comment, I would just tell you that in those categories, whether it’s trim or furniture or soft home, we work very hard from a competitive point of view to make sure that our pricing is competitive. And in a lot of cases, we actually I think sometimes – I think we're actually underpriced in some cases. The comment about the freezer cooler Matt, we hear you and Trey and his guys and Mike have been out on the road with some of our vendors, DSD vendors. In fact we are on a trip a couple of weeks ago hitting a lot of stores, looking at what’s going out there. We know we have our challenges there. Again, we are not going to be below Wal-Mart or something in the freezer cooler category, because of the sheer volume that we do is nowhere near as we build on that piece. Today we rely on DSD vendors regionally and it makes it challenging. But it is on our radar in a much bigger way and we know we have some work to do on pricing there. TJ, I don’t know if you have anything to add. Matthew Boss-JPMorgan: Great. And as we think about multi-year SG&A, can you just walk through the timeline for e-commerce and omni-channel and any changes to think about from a fixed cost hurdle perspective as we look forward?

Yes, Matt this is TJ. At the investor conference in June, I will just remind everybody that the financial model we laid out was retail, because we did not have clear visibility of the timeline, etcetera for e-commerce and omni-channel. As we sit here today, it’s still our goal to be online in 2015. We still have work to do to make sure that we understand that timeline is achievable. If we have done anything well in the last few years one of the things we do very well from an IT perspective and a project plan perspective is make sure that when we set out a timeline, we can deliver on it. So we are still working through that on e-commerce and omni-channel, so I am not going to be able to answer your question on expense and fixed hurdles, etcetera for the program just yet. So, still it is a goal to be online in 2015, we have a lot more firmed up details on that initiative when we get to March. Matthew Boss-JPMorgan: Great. And then when you say the retail model, so you are basically saying the top line opportunity is not in there, but neither are any of the expenses in the model that you laid out?

The model we laid out was the store model. Yes, stores only. Matthew Boss-JPMorgan: Okay, perfect, great. Thanks guys.

Thank you. We will take our next question from Meredith Adler of Barclays. Meredith Adler-Barclays: I think my question has partly been answered, but I was hoping that you could give us a sense in terms of the J Scores, what kind of a distribution do you have of one to five rated stores, is it a lot of stores, whatever the worst is, are there a lot of them. And how quickly can you implement any kind of plans to improve the stores that are – that excluding the worst?

Well, so let me try to explain it as best as I can, Meredith. The J scoring process is literally a scorecard of one being what we call a 911, where we need to bring people and whether the backrooms are completely jammed up or the execution is not up to standard. But it moves from up to three being a good, to a four being very good, and then obviously a five being outstanding. But it’s a discipline that’s in place that has to be followed by the stores. The store managers do a daily what we call the J-walk, the Jennifer walk, right, where they walk every hour, every day. It’s more of a scoring system that’s managed by the district team leaders and then the regional team leaders as well, that just brings disciplines to play some standards. The good news is this is a very early on program, right. And what we are finding as our regional vice presidents and our district team leaders are actually being much tougher on the grading of the score. There is a checklist like anything of what the expectations are and what needs to be done in the store. I mean and most of it is from an execution point of view and how the stock rooms are managed and so on. So, it’s a big deal. I don’t know how I will explain it to you. We have so many initiatives in store service, but the measurements are just everything from how disciplined we are in the store. And we also just launched mystery shops too, so we are doing mystery shops in our stores for the first time. And again, all are watching all of those things, what it does is it creates a standard in our store, establishing core customer standards, associate, we are giving the associates the tools they need to provide an outstanding shopping experience. It’s really a cultural change for Big Lots where they used to be just get the stuff out on the floor to find a place to put it and that’s not what we are doing today. And again that there is a whole Go Big program out there too about greet the customer, offer assistance, bring your customer to their destination, ID yourself, get help if you need it, that type of stuff is very, very new in the very early stages of execution. But again, I would just tell you that the stores were thirsty for this, just like the merchants were thirsty for direction on QBFE. So again, I think when you shop our stores hopefully you are going to start to see some of those J plus type of service. And the J score is really all about the standards and how we look. Meredith Adler-Barclays: Great.

One additional comment, Meredith, I think from our perspective anyway, I think the great news is we have a – we have a baseline established for all 1,500 stores, both from our own internal measurement meaning our regional team leader, district team leader, store team leader walking the store and scoring it together. So, we have an internal measurement. And as David mentioned with the mystery shops now live, we are developing an external measurement. So, we will have a baseline of understanding which we have not had and I would hazard a guess, many retailers may not have. So, that’s very, very important for us, particularly as we go into 2015, which is going to be significant in terms of in-store execution initiatives, training, investment, both in people and in systems as David mentioned, so, really, really encouraging to have a baseline of understanding at every store in the chain. So, we can understand performance at that level. Meredith Adler-Barclays: That’s very helpful. Thank you.

Thanks everyone. That concludes today’s call. Deanna, will you please provide replay instructions?

Thank you, sir. Ladies and gentlemen, a replay of this call will be available to you within the hour and will end at 11:59 PM on Friday, December 19, 2014. You can access the replay by dialing toll free U.S.A. and Canada 888-203-1112 and entering replay pass code 1366606, international 719-457-0820 and entering replay pass code 1366606. Ladies and gentlemen, this concludes today’s presentation. Thank you for your participation. You may now disconnect.