Andy Regrut – Director, IR David Campisi - CEO Tim Johnson - CFO

Jeff Stein - Northcoast Research David Mann - Johnson Rice Patrick McKeever - MKM Partners Brad Thomas - KeyBanc Capital Markets Paul Trussell - Deutsche Bank Dutch Fox - FBR Capital Markets Anthony Chukumba - BB&T Capital Markets John Garrett - Wedbush Securities Matthew Boss - JPMorgan Meredith Adler - Barclays Joe Feldman - Telsey Advisory Group

Ladies and gentlemen, welcome to the Big Lots Fourth 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.

Thanks, Tracy and thank you, everyone for joining us for our fourth 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 result 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 fourth quarter of fiscal 2014 and provide an outlook for the full year and first quarter of fiscal 2015. 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 our fourth quarter results and a strong finish to the year. Earnings for the quarter were solidly in line with our guidance as comps increased 2.9%. Our Q4 comps were the strongest of 2014 and represented our fourth consecutive quarter of positive comps under our new SPP and merchandizing strategies. This was the first year since 2006 when all four quarters saw positive comps from a merchandizing perspective the four key categories which are central to our SPP were the biggest winners in Q4 and showed largest amount of comp growth. Furniture was the top performer up in the mid-teens; mattresses, upholstery and case goods posted very strong results throughout the quarter with noticeable acceleration in the month of January. Our merchant team has done a great job improving our offering with fashion forward assortment while the stores organization is improving in-store presentations. Our easy leasing programs continues to perform very well. Q4 was the first holiday season with the program in 1300 stores and our results remains consistent with low double digit lift in the furniture category. And for our stores celebrating the first anniversary with easy leasing the outlook is encouraging and sales increases continue in the mid-single digit range so we're comp’ing the comp. Food was up low double digit once again this quarter, the fourth consecutive quarter in this range and a real testament to the tremendous work this team is doing and a significant investment in capital and incremental space provided in the store. We experienced strength across many different areas of food and Jennifer has voted in favor of our expanded assortments of never-outs. Post-holiday we resumed our roll out of coolers and freezers and we installed them in another 500 plus stores this year, essentially finishing the fleet near the end of Q1. Next is Soft Home also up double digits with particular strength in fashion bedding and rugs. Our team has transformed the assortments in this category. As well as table top, food prep and appliances through the disciplines of QBFV; our quality, brand, fashion and value and our in-store displays and merchandize presentations have improved significantly. We're still in early innings and my excitement continues to build for this business. And finally consumables up mid-single digits for the Q4 and another great job by the team. Once again this quarter we grew comps and household chemicals and pet along with housekeeping and paper. This business continues to exhibit solid fundamentals and deliver results. As we note in our pre-release in mid-January, Christmas trim was up low single digit for the quarter. We're very pleased with our performance over the holidays and with the low inventories as we exited December. In total for Q4 the seasonal category was down year over year but this was largely a function of lower Toy volume and not a reflection on Christmas seasonal assortments. We've now transitioned our stores to lawn and garden and in our warmer weather markets early results are very encouraging. As expected the edit and exit categories of electronics and hard home were down to last year but fairly close to our plans. The good news is Q4 of 2014 represented the most significant comp headwind from this activity. And Q1 of 2015 will be the last quarter where we're up against any meaningful sales as we deemphasized these categories last year. The next key element of our SPP and the Jennifer pillar is our marketing efforts and new strategies which were displayed in Q4. Our marketing team continues to break new ground for our business as we reached Jennifer through our more new and different channels than ever before. In Q4 we reached our goal of 1 million Facebook fans. We enjoyed two social media sweepstakes #theholiday was launched on Facebook, twitter and Instagram. We also hosted our first ever Pinterest sweepstakes, Christmas like crazy which drove over 3.2 million impressions. Remember, our company had virtually no social media presence 18 months ago. So 2014 was a major step forward. Aside from social media we also expanded our reach from a multi-cultural perspective. Our Christmas campaign was our first holiday -- holiday television spot airing in multiple languages on culturally diverse television networks, which we see as an accomplishment for our company and for Jennifers everywhere. The final leg of the three legged stool, or the Jennifer pillar is our stores. Store execution and most importantly our people in the field, during our most challenging time of the year the stores team maintained their standards and actually improved their scores during Q4, whether it would be the J plus score or other customer feedback measurements. So with that I will now turn the call over to TJ for more insight on the numbers.

Thanks David and good morning everyone. Net sales from continuing operations for the fourth quarter of fiscal 2014 were 1.593 billion, an increase of 1.4% over the 1.572 billion we reported last year. Comparable store sales for stores opened at least 15 months increased 2.9% which compares to our guidance of an increase in the low single-digit. As David mentioned we are very pleased with this result, particularly given the significant amount of edit and exit activity in Electronics and Hard Home from a year ago. From a monthly cadence perspective November was slightly positive as previously reported. Sales accelerated in December and built further during the month of January. Income from continuing operations for the fourth quarter was 94 million or $1.76 per diluted share which compared to our guidance of $1.70 to $1.80 per diluted share and to last year’s income from continuing operations of 84.2 million or $1.45 per diluted share. Our gross margin rate for the quarter was 40.8% up 200 basis points compared to last year’s Q4 rate. This was consistent with our expectation as we anniversaried the markdowns associated with Edit to Amplify from a year-ago. Total expense dollars were 497 million and the expense rate of 31.2% was up roughly 100 basis points compared to last year. This performance was also in line with our expectations and was almost entirely related to incremental bonus expense year-over-year. As a company we have performed slightly above our plan for the year and essentially on plan in Q4. You may recall fiscal 2013 results were below plan throughout most of the year and we began our Edit to Amplify process in Q4. These two factors combined to result a minimal store bonuses and essentially zero payout from a bonus perspective for management last year. In addition to higher bonus expense we intentionally increased our advertising spend in Q4 and we believe this was one of several contributing factors to Q4’s strong comp. The final significant increase in cost to LY in Q4 was the strategic decision to sell off company aircraft. In doing so we incurred additional cost and impairment charges in Q4 and Q3 for that matter, but to a lesser degree. As of last week we no longer own company planes. This is one of a number of opportunities embedded in our SPP we are executing to, to lower cost this year and into the future. Moving on to the balance sheet inventory ended the fourth quarter of fiscal 2014 at 852 million compared to 915 million last year. The reduction in inventory was driven by 4% decrease in inventory per store, a lower store count and the strategic decision to close our business in Canada. During Q4 we closed 36 stores with no new store openings leaving us with 1460 stores and total selling square footage of 32 million. For the year we opened 24 new stores and closed 57 locations. For the full year of fiscal 2014 capital expenditures were $93 million compared to 105 million last year and depreciation expense was a 120 million, an increase of 7 million to last year. Cash flow defined as cash provided by operating activities less cash used in investing activities was $254 million for our continuing U.S. operations and 228 million for the consolidated company after the impact of the wind down our Canadian discontinued operations. We ended the fourth quarter with 52 million of cash and cash equivalents and 62 million of borrowings under our credit facility. This compared to 69 million of cash and cash equivalents and 77 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. For a fiscal 2014 we invested $250 million to repurchase 6.1 million shares or approximately 10% of our outstanding share base at a weighted average price of $40.94 per share or approximately 17% lower than yesterday’s market close. Additionally, we returned $28 million to shareholders through three quarterly dividend payments in July, September and December. For the full year $278 million of cash was returned to shareholders. We believe this strategy adds value and is an important lever to drive overall shareholder return. Now turning to annual guidance for fiscal 2015, we estimate income from continuing operations to be in the range of $2.75 to $2.90 per diluted share compared to income from continuing operations of $2.46 per diluted share in 2014. Our guidance is based on a comparable store sales increase in the low single digits and total sales essentially flat to LY due to a lower store count. Additionally, our annual guidance reflects approximately $0.05 of expected expense drag related to the support and development of our new e-commerce site which is expected to go live post-holiday. The gross margin rate for 2015 is expected to be slightly higher than last year and expenses as a percent of sales are expected to decline in this model. We estimate our expense leverage point to be approximately a flattish comp for fiscal 2015. Filling out the rest of the P&L for '15 we expect net interest expense of approximately $3 million to $4 million and the effective income tax rate is estimated to be in the range of 38% to 39%. For the year capital expenditures were expected to be approximately a $130 million to $135 million. Maintenance cap is expected to be about $40 million which covers our stores, DCs and the general office. New store capital is estimated to be approximately $10 million for opening 15 new stores the majority of which will be relocations. We also estimate in this model we could close as many as 45 stores. The balance of the CapEx relates to investments in certain other strategic initiatives which will represent approximately $80 million to $85 million in 2015. These dollars will be focused on completing our rollout of coolers and freezers, investments in IT systems and completing our refresh of our store point of sales systems. Additionally, we're estimating in the range of $30 million to $35 million will be invested to establish the framework and infrastructure to support our initial foray into e-commerce. Depreciation expense for 2015 is forecasted at approximately a $120 million to $125 million against a $120 million in 2014. We expect this level of financial performance will result in cash flow of approximately a $175 million. In support of our shareholder return initiatives we anticipate returning $240 million to you our shareholders during fiscal 2015. We announced today, our Board approved a share repurchase program providing for the repurchase of up to $200 million of our common shares. Assuming completion during 2015 we estimate the average diluted share count is to be approximately $51 million to $52 million shares. Also announced in the press release earlier today the Board of Directors voted unanimously to increase the company's quarterly dividend rate by approximately $0.12 by declaring a quarterly dividend of $0.19 per common share payable on April 3, 2015 to shareholders of record as of close of business on March 20, 2015. We believe this new increased dividend displays our Board's confidence in this team, our strategies and our ability to consistently execute. Assuming our fiscal '15 guidance this new dividend rate represents a 26% to 28% payout ratio which we believe is appropriate for our business and well within the capacity and the cash flow potential of the business. We estimate four quarterly dividend payments at this higher quarterly rate will result in approximately $40 million return to shareholders. So 200 million in share repurchases plus 40 million in dividend payments equals 240 million for fiscal 2015 or approximately 9% to 10% of our market cap. In terms of our first quarter guidance we estimate income from continuing operations to be in the range of $0.55 to $0.60 per diluted share compared to income from continuing operations of $0.50 per diluted share last year. Comp store sales are expected to increase 1% to 2%. The gross margin rate for the first quarter is expected to be higher than last year and our expense rate is expected to be slightly higher than last year. Speaking to sales for just a moment you will notice our guidance for Q1 of plus 1 to plus 2 is different than the low single-digits which we're guiding too for the full year. This difference is solely related to month of February which was slightly below the low end of our guidance. Said another way had February been on plan we would have been guiding the low singles for Q1 consistent with the year. February results were strong in warmer weather markets such as the south, southwest and west coast where comps were up in the low single-digits and the key category of Furniture, Soft Home, Food and Consumables all performed well and were up significantly to last year. For those of you listening in to the northeast towards the New York or Boston area you will not be surprised when I tell you that the northern and Mid Atlantic markets were actually below last year which we firmly believe is the direct result of much more challenging weather than this time a year ago. Weather impacts were particularly noticeable in these markets in transactions our seasonal and with our furniture business which is predominantly cash and carry. Each of these markets had very similar merchandise assortments and promotional calendar but results did differ a little bit regionally. Based on the trends over the last few quarters we're confident in our low single-digit comp forecast for Marple or March and April which will deliver the guidance we're providing today. 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. 2014 was a very good year for our company; our team made meaningful and lasting improvements to our business strategy and our corporate culture and did so while delivering on our full year financial commitments established at the beginning of the year. We improved our consistency which was reflected in our quarterly results. In short, we did what we said we were going to do. We established a solid foundation set out to deliver with our SPP and position the company for a long-term success for many years to come. And while I'm the first to tell you we are still at the beginning of the beginning, it is important for me to take a moment to thank and to congratulate all of our associates in our stores, our field operations, the DCs and the office here in Columbus. We are one team with one goal. And 2014 with cross-functional engagement from all levels of the organization is a great example of how we win together. 2015 is a next step in our journey and we're prepared as an organization to raise our gain. This is not a time to rest and there was no room for complacency, we need to lead with what I call the four Cs: curiosity, courage, confidence and consistency. The cross-functional teams from the SPP continue to work the initiative critical for our future, not only in '15 but in the years to follow. As an example is our store revolution, it is an ambitious program to improve our stores and the shopping experience for Jennifer through five major areas of focus. The first one defining the roles and responsibilities of our store associates. Number two, improving the flow of merchandise from our backrooms to the store for the four, utilizing online recruiting tools to deepen our bench strength. And four, automating the labor scheduling process and last, training our furniture associates on the art of the sale. This is by far the company's most comprehensive in-store execution program ever. As TJ noted, we will be making meaningful investments in the development of our e-commerce strategy during 2015. We have discussed the need for this channel almost since the day I walked in the building and I'm so excited to see the opportunity coming together. Our plans are to finalize the development of the site, our infrastructure and begin testing in small chunks in January or post-holiday with a goal of a full blown marketing launch of this site in early Q1 of '16. This first phase of developing our omni-channel capabilities we’ll focus solely on e-commerce. We're allowing a customer to order product online and we will ship to the customer from our DC here in Columbus. We know Jennifer wants to buy online from us and we know we have somewhere in the neighborhood 2 million to 3 million visitors to our current Web site each and every week. We also know we get one chance to get this right with Jennifer. So I support the diligence we are taking to get this right first time. Longer-term, we want to take the next test into the omni-channel space, meaning mainly drop shipments by online pickup in store and maybe someday by online ship from store, but I want to emphasize here we are solely focused on first things first and as delivering Jennifer to the option of purchase from us online. Each of these initiatives will step forward in full view and importance in 2015. They share a common goal to fundamentally improve our business with even more focus on Jennifer. I think our new marketing campaign Big Lots First sums it up best. We want to be the first stop when Jennifer shops, the first employer for our associates and the first investment for our shareholders. It's not business as usual here at Big Lots and it hasn’t been for some time and I'm more excited than ever on what's to come. And now I'll turn the call back over to Andy.

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

[Operator Instructions] We'll go first to Jeff Stein from Northcoast Research.

First a question on e-commerce, I'm wondering I know it's still a little bit early, but David I'm wondering if you could just kind of give us a glimpse into what your offering might look like online, I presume furniture would be a piece of that? And do you intend to be able to offer your progressive financial leasing program online? And then just a quick follow up, with regard to the port situation any impact that you've seen in the first quarter? Thank you.

Thanks Jeff. I'll take the first part of that, the e-commerce piece is definitely in the early stages, but we have done a lot of work looking at the SKU count that we're going to launch within next year and I would tell you for sure furniture is a big piece of that. And obviously Soft Home and parts of Hard Home will be part of that as well, Appliances, Table Top and so on, as well as some of the seasonal businesses. We're obviously not going to put Food and Consumables on the Web site, but we certainly clearly know what the SKU count looks like because we have to make those buys over the next few months, so yes, very excited about the categories that we will launch with and it's very focused. Again as I said before first things first we're going to crawl before we run here and make sure we do a lot of testing and get it right. As far as the progressive thing initially we don’t have plans to launch with Furniture, the easy leasing program. The second part of your question on the port issues, I would tell you the team did a great job last year of -- Carlos's team brought that to our attention early on and we pulled up a lot of deliveries to ensure that we didn’t have any hiccups. But candidly like everybody we've been dealing with a slowdown now for quite some time and it hasn't impacted us from a top line point of view. But we are managing our way through that backlog right now and we certainly have some receipts that we like to have into our DCs right now. So we're probably going to run couple of weeks behind before we get ourselves caught up over the next 30 days. But nothing to be concerned about, no significant impact to the business.

We'll go next to David Mann from Johnson Rice.

Question about the leasing program. Can you talk about some opportunities there to enhance the spend -- the average spend there to talk about also attachment you're seeing in some of the other categories as well.

I think at a real high level couple of data points to share with everyone, obviously we're about to anniversary the full roll out of Easy Leasing here coming up actually in the second quarter. But what's been encouraging to us is those stores that were in early test mode, that have been in the program from more than a year are comping the comp as was mentioned earlier in the conference call. So I think that’s probably the single biggest opportunity as we go into second quarter and the back half of the year. Comping the comp on this program is real good information for us. And gives us a lot of confidence as we go into the back half of the year. Specifically to your question expanding that average amount spend on each transactions so to refresh memory for everybody on average we get about 65% or about two thirds the customers are approved, on average customers were approved for about $1200, recent history has been getting about half of that at point of sales or about $600 and changed on the initial purchase from each customer. Two or three things we're doing in 2015 to try to increase that spend, first off of our partners at Progressive have invested in our business by investing in their field team and adding to the number of field reps that are out there working with our district and regional team leaders that’s step one. Step two is in the latter part of February we actually added the Soft Home category to the Easy Leasing program with the understanding that customers could add Soft Home to their purchase if they were also purchasing furniture. So said another way, we're not going to allow customers to lease a couple pillows but we will allow them to lease as part of their purchase of a sectional or a mattress and box spring, if they want to add top of bed or if they want to add something to that transaction that already involves furniture they are now allowed to do that, that’s new in 2015. The third thing I would point out is as part of the store revolution that Lisa and Nick are championing for the organization, in the back half of the year we’ll be rolling out some enhanced furniture sales training clearly that can help the average easy leasing purchase and just the overall furniture purchase. That sales training has been in test mode for the better part of a quarter now and we're obviously seeing good enough results that we want to roll it as soon as possible. So I hope that answers your question; there are two or three different things David that we're trying to execute here in 2015 to increase the average spend on transaction.

Couple of house-keeping questions if I could. Can you give us a sense on what the added category headwind was in Q4? What it might look like in Q1 and how much was the airplane charge you alluded to in the fourth quarter? Thank you.

Last question first, the airplane impairment charge was about $2 million in the quarter and we had roughly a $0.5 million of maintenance related cost to get the plane ready for sale. It was on its standard maintenance schedule, so that had to be done before the sale could close. The sale actually closed last week and cash is in the bank, so we're out of the airplane business. First part of your question David -- the comp headwind -- from the Edit to Amplify activity that we were up against in fourth quarter, I guess I’d answer it this way it was in those categories where we had activity last year that are no longer in the store in broad strokes we did probably a little over $50 million on that product in Q4 of '13. So that number essentially went to zero or close to zero in Q4 of '14 which again speaks to the strength of the quarter that is somewhat masked, so if you think about the quarter being up roughly $20 million what that means is, the balance of the category -- or the categories where we have to win in long term, the customer absolutely responded Jennifer likes what we are doing in those key categories and they were up pretty significantly, the last year to more than offset the Edit to Amplify activity from Q4 of 13, that number roughly fell $50 million David it goes down to -- I’ll say teens in Q1 and essentially zero in Q2. So we truly believe the worst of that is behind us.

We will go next to Peter Keith from Piper Jaffray.

This is actually John on for Peter this morning. Great quarter. My first question is just in regards to your three year strategic planning process operating margin goal of 6% by 2016, based on where you finished 2014 do you think you are tracking in line with where you thought you were going to be or you running little behind at this point?

Full transparency, we are slightly behind in 2014. Again if you think of the where we came into our original guidance for the year we came into round about 246, the high-end of our guidance or typically our SPP or our straight targets are going to be towards the higher-end of guidance. So we are slightly behind coming out of 2014. Having said that again the guidance that we gave today moving more towards the high-end of fiscal ’15 guidance puts us right back on track from an operating profit rate perspective on where we need to be. 2016 obviously is -- of the three years is where we make the biggest amount of movement in terms of leverage. Keeping in mind there is a significant amount of investment going on in the business this year; it’s our highest year from a CapEx standpoint. It’s our highest year from an investment in our people and the training and the store revolution as an example, all the warehouse management systems that went in last year, that we’re still getting ramps back up in terms of productivity this year. So moving towards the higher end of our original guidance for ’15 puts us right back on track to ’16. But clearly there is a lot of work ahead of us. When we think about the targets for ’16 up 6%. We just going to see where we count up 1.8% to get to that 6% we got to be camping towards the higher-end of the range that we gave you guys and gals back in June that’s added 2% to 3% comp. So we got to be towards the higher-end of low single digits in order to have ’16 at 6% still on our sights.

And then just looking at your category comps for 2015 and how we should be thinking about how the categories may perform, you assume CE is going to be less of a headwind certainly, but how should we be thinking about Furniture and Food I mean should they be -- are they going to stay about the same or decelerate from 2014?

John this is David, I will respond to that. Again as we consistently told you guys that we are focused on five key categories to drive our comps over the next -- really not just three years, but the next forever. But I would tell you that the plan there is to have Furniture and Soft Home and Food pretty close to the same projected comp. So those three would be at the high-end followed by Consumables. And then the seasonal categories are always business that you want to plan flat to slightly down because of Toys being in that number, that’s typically what we do as we continue to drive that business down. And then obviously Hard Home and Electronics and Accessories would be at the very low-end. So in that ranking, Furniture, Soft Home, Food, Consumables are obviously at the high-end. So hopefully that answers your question.

We will take our next question from Patrick McKeever from MKM Partners.

So just on e-commerce you talked about some of the merchandise categories, are you planning to do much in the way of as many other retailers are in-store pick-up and shift from store and those kind of things, so that will be my first question. And just the second one -- just as you evolved the business with Edit to Amplify program and the store numbers related to Food and Furniture financing and some of the other things that you are doing. Do you feel like you are competitive set is changing and if so who would some of the new competitors be here? How would it be evolving?

I will take the first one Patrick, its David. As I said earlier in the e-commerce strategy I want to be very, very careful in how we execute. So first things first we are going to start with an e-commerce business first and insure that we can ship the product to Jennifer and make that piece work out of the box for 2016, and certainly the bulk is for buy online pickup and store is definitely in their horizon but I would say that, that probably is in more of the 2017 at best and may even be a 2018 initiative. We’ve got to get the e-commerce things up in running first. And then we’ll follow that with the BOPIS strategy and the drop ship actually will probably come before the buy online pickup and store, we are very anxious to make that work as well. And that technology is being built into the system as we build out in 2015. The second part of your question if I understand it correctly is with the Edit to Amplify strategy and to be your question about competitive set, I believe you also mentioned freezer coolers. We really -- again we’re not seeing anything significant out there that would make us feel that we have some issues with competition, as you see those numbers and hear those numbers this morning for Q4, the strategy is working I mean we're driving consistent comps in Furniture, Food, Soft Home and parts of Hard Home like appliances and table top and food-prep and then also the consumables business. So consistently over and over again, day after day after day those businesses are performing well. And my guys did a great job, I mean in the food area Trey and Mike and his team have done a lot of work with our vendor community and they are out in the market shopping competition and ensuring them that we're competitive. Are we going to be the lowest priced guy everyday on milk, no we don't have our own dairy farms but we play in a space where we feel that where we compete for convenience we're competitive.

And Patrick -- just one thing I want to add to what David said. Early on, upon launch and for the foreseeable future after launch we're really trying to hit the basics in terms of just e-commerce shipping from here in Columbus and hit the basics in terms of categories not likely to have food, not likely to have most consumables on the web at that time available for sale. Additionally, some of other initiatives outside of just e-com only as an example like the drop ship activity that David's talking about again that won't necessarily be available right out of the box with the launch of e-commerce and that will limit us a little bit in terms of what we can offer in terms of some of the big bulk seasonal as an example or most of our furniture as an example would be something we will be thinking about more in dropship that doesn't mean that there could be some smaller furniture items but the bulk of that furniture in seasonal business is likely more akin to a dropship business which will come later. So there has been a lot of work that's gone into this but I think to overemphasize what David said and what the team is focused on here is getting the site up and running in a very customer friendly way. We've got one chance to make this right and make it work for Jennifer and we certainly want to exceed those expectations. So we will be a little more limited in terms of the skew count that we offer online compared to the store but we want to get it right for 2016 and get off to a great start with e-com. We think Jennifer consistently tells us she wants to buy from us online, we consistently see a significant amount of web traffic to our current site and we totally believe this is the right path for us but we're going to be very diligent about how we go about it.

Got it. And then just a question on -- I guess this is the question of the day but are you feeling any wage pressure? Is that in your guidance and how much exposure just broadly speaking or thinking do you have to that, let's say the lower end of the spectrum as it relates to retail wages?

Patrick its David. Here I am going to answer that the best way I can. There is a couple of things, one is we certainly have paid attention to what's going out there externally. We've taken a hard look at that and have run some numbers. But I would tell you that we have a lot of long-term associates in our stores that are making way over $9 an hour. And so we haven't really felt any wage pressure what so ever. And candidly, we wouldn't go public with something like that anyway because it's not our style to go out there and play in that space and communicate that way. We take care of our associates and I think it's deeper candidly if I can, than just a $0.50 an hour raise. We believe in what we're doing at Big Lots is creating a culture of I get to go to work at Big Lots and I want to go. As we improve our store conditions, our folks are happy; we see it in our culture assessment surveys. And so we look at it a little bit differently from the standpoint of culture, store conditions and so on. But I do want to leave you one other thing that we don't talk a lot about. Our associates very much appreciate -- it's when I first came to the company almost two years ago I was pretty shocked to see that we give a 20% associate discount in food. I worked for Kroger as you know back in my Fred Meyer days there was no discount and that's traditionally the case with some of the guys who came out with the $9 an hour announcement. So again our associates appreciate that discount, we offer them a couple of extended discounts during the year, a 30% off and they take advantage of that and I think you have to put the benefit piece of it into the equation and maybe TJ can add a little bit color of the benefit side of it from healthcare as well.

Yes I think Patrick, we're looking at it more as a total comprehensive package, so wage rate clearly is part of that as David mentioned. We have a lot of tenured associates who make significantly more than $9 an hour, we have a lot of states out there where obviously the state law is already close to $9 an hour or certainly within the mid to high 8. Full time associates are eligible for healthcare as David said. The discount and the incremental associate discount days that we run are very well received across the country. We haven't touched a lot around on this but one the initiatives that David pushed very early on when he came to the company was getting more plugged in and being more extensive in terms of our philanthropic effects and we have launched the Big Lots foundation which was extremely well received, so there's a lot of really positive momentum around recognizing the importance of the culture in general not just what is the wage rate. So in those ways we feel like we might be in a little bit different place in the -- you know what candidly after a couple year where the business was not performing as well, everybody likes to be on a winning team and there were a lot of store team leaders, district team leaders and regional team leaders this year that certainly won and when they received their bonus cheques here in a couple of weeks they will be very, very happy to be part of the team. So we think of it a little more comprehensively than a wage rate.

We'll go next to Brad Thomas from KeyBanc Capital Markets.

Wanted to get two quick questions in. First, with respect to traffic, wondering if you could comment at all in terms of what you are seeing out of Jennifer these days. And then, secondly, if you could talk a little bit about the puts and takes on gross margin in the quarter and how you are thinking about that for 2015? Thanks.

Yes I'll start-off Brad, from a traffic perspective -- actually I will speak from a transaction standpoint relative to other quarters in the year, fourth quarter was one of our better performances, certainly better than second or third from the transaction standpoint. All be it still down slightly to the prior year, we certainly saw better performance on that metric in fourth quarter than second and third, so that was encouraging to us. From a traffic standpoint, we do not monitor traffic in all stores; however with the implementation of EAS systems or the Electronic Article Surveillance systems at the front of the store one of the side benefits to that is we will be able to count people coming in and leaving going forward. So, again as we think about the SPP, we're really focused on conversion and what does that conversion rate look like, we'll take the better part of '15 to develop the trend and develop an understanding by store and have more to communicate to our associates and incent them on as we go into '16 and '17 and beyond. So there is a lot of focus on traffic conversion and obviously transactions in this SPP and as part of the store evolution roll out. The second part of your question which is related to gross margin, during the quarter I would tell you that almost entirely the entire increase in terms of gross margin rate year-over-year came in the form of a lower markdown rate. And when I say that, I would say 2014's markdown rate in Q4 was a little closer to history in 2013 as you'll remember it was more of the anomaly. And the bulk of that was the beginnings of the Edit and Amplify strategy from a year ago, the bulk of that came in candidly some categories like Electronics, where our markdown rate was higher. Again from some of the categories that we decided to exit and have downplayed this year, so Q4 was almost entirely markdown related. Additionally, just maybe anticipating the next question as you also remember in first quarter of '14 last year which we're up against now in first quarter of '15, we still had some Edit to Amplify markdown activity going on until that product was marked out of stock in early Q2, so the increase in gross margin rate here in the first quarter is expected to be from a lower markdown rate as well. Again not an unusual markdown rate compared to our history going back to '13 or '12 or '11 just the unusual activity it was in Q1 of '14 last year.

We'll take our next question from Paul Trussell from Deutsche Bank.

Just to touch base on CapEx of $130 million to $135 million, TJ, you mentioned that I think $80 million to $85 million of that spend is toward some strategic initiatives, which is certainly understandable given all the investments you are making this year. Just help us understand the go-forward run rate as you complete the cooler rollout and given how hefty the investment is in e-commerce this year. And then similarly on SG&A, I think you mentioned that the leverage point is flattish. Is that something that is sustainable?

Good questions Paul. Back to the CapEx starting their first, if I think about the 130 million to 135 million as an example we're calling out 30 to 35 of that gets us live with e-commerce towards the end of the year beginning of '16, that's again I'll call it the peak for the e-commerce piece. Now that's not to say that as we get into '16 and '17 to David's point earlier, incremental capital needed to execute buy online pick up in store or drop shift or buy online ship from stores sometime way in the future or drop shipping product or adding a second DC at some point those are will necessitate capital, that’s not something we're looking at here for '15 and it’s probably not significant capital increase or number in terms of '16 or '17. We just don’t know enough about that yet Paul to know for sure to put the layer into the future. I guess the best way to think about this is in round numbers in that strategic initiatives bucket of 80 million to 85 million you've got a cooler rollout that will be completed in first quarter, that numbers goes to zero in '16 that’s roughly $10 million of capital here in '15 that we won't be repeating. Additionally, we'll be completing the POS refresh, again new point of systems in our stores if it's completed that’s not a go forward number that’s roughly $30 million here in '15 against it’s not go forward. 2015 -- So if you just take those two numbers out Paul, your back down around $100 million as the base 2015 was always intended to be the largest CapEx number of the three year plan or of the SPP that we communicated back in June ’14. So there is no changes to that that’s very, very consistent. I guess the only other piece going the other way is if new store activity were to increase or ramp up obviously that would be a plus to CapEx. We don’t foresee that in '16, but we do foresee that at some point in the future whether it be '17 '18 or '19 somewhere out there. So hopefully that helps you from the CapEx standpoint. The second part of your question in terms of SG&A leverage point, absolutely that was a key tenet in the operating profit model to 6% and beyond the SPP was to keep the comp leverage point low and close to a flattish comp. So it's absolutely embedded in our model. Do we think it's realistic, yes we do otherwise we wouldn’t have communicated it. So that is what we're tasked with as an organization and I'm proud to say that group came back with a plan this year that will allow us to deliver that here in 2015.

Just one housekeeping, on total sales. I think you grew sales about 1% or so this past year, closing net around 30 stores. It looks like the store closings would be similar, yet you expect flattish sales growth. Just any color you can provide around that that spread between comp and sales growth and just how we think about that going forward also.

I think about it very similarly I think one thing to kind of look at in the models might be the fact that so much of the store closing activity came late in the year primarily in fourth quarter and I would expect that to happen again 2015. So again, said in another way the first three quarters of the year, this year will obviously have a negative impact of those store closing on the total sales number. Now having said that one of the key factors we look at when closing of stores is not just that store’s performance, but what are our opportunities or ability to transfer that volume to nearby stores and thereby help the comp in '15 and that’s factored into our numbers as well. So I would look at timing of store closing being late in the year as you think about your comp spread going forward.

We'll go next to Dutch Fox from FBR Capital Markets.

I had a couple quick questions. First and foremost, you talked about the port issues as it relates to your inbound inventory receipts, but are you seeing anything out there, disruption caused to other retailers that you might opportunistically be able to take advantage of? Are you planning for that, or if that comes along, is that just a benefit? And then I have a quick follow-up.

I would tell you that the guys who really got hung up in a bad way was a lot of the apparel guys. As you probably well know by all the press out there. Dutch, we exited the apparel business when I got here and it’s a business I understand probably better than any business because living in that one for 25 years, but we do sell socks and underwear and things like that. But we're not in the -- what you'd called ready to wear hanging business. So we've had few people come after us and want to see if we would be interested in taking that kind of step on. We certainly continue to buy tons of closeouts in food and consumables and to a lesser degree and the rest of the businesses. But we don’t see any opportunity there for anything that significant in our space that we would jump all over. I think many of these guys are just scrambling to get there product out of there and we don’t see that as an opportunity for us and we're not certainly planning for it.

A number of retailers have talked online and off-line too about being very concerned about delays to patio furniture, grills, summer seasonal, pools, pool toys, things like that. You are not necessarily seeing that out there yet?

No, I mean we took early delivery. As you guys know we have a warm market, cold market strategy and so we were able to get our inventory into the stores where we planned it. Certainly, there is some backup as I said earlier and that would be in those categories, especially in Patio and Gazebo. But we have the inventory in the stores today. So again our team, we have a very strong team in a DTNS and these guys under Carlos his team, they have been out there and it’s really under control for us. Are we behind and receive versus where we like to be, yes, but not anything significant to cause any alarm or concern for us.

Okay, great. Thank you. And a quick follow-up, I just want to make sure I understand you are talking about the impact to the edit category. You indicated that there was a sizable impact to 4Q, a moderate impact to 1Q. Do you expect the residual of those edit categories to return to stable to positive comps in 2Q through 4Q or do you kind of see some of these categories as being just kind of a secular decline in comp categories for a few more quarters before they get to where you really want them to be?

I will take that and then TJ may want to add some color too, but good question. I would just tell you that as he said earlier and we talked about that big headwind being behind us. I mean the biggest chunk of that volume certainly was in Q4 and with residual into Q1. So once we get through Q1 it becomes almost non-existent and we do see those edited businesses starting to comp-up later in the back half of the year. Again we are going to continue to -- we talk about the SPP all the time and it’s important you guys understand, we set that plan in ’14 for three years but that doesn’t mean, we have three years and we are done. So we are already working on 2017. So every year we will add the next year as we continue to navigate through what I refer to as a living working documents that is very strategically driven. And we will continue to reduce footage in some of those categories that we don’t believe we win in. So we can reallocate more space in the areas like furniture and home. So again we think we have taken them down to a point where the numbers are so small that we will start to comp positive in the back half.

I think it’s also important to note Dutch, even with -- like hard home as an example clearly hard home had a fair amount of the what we used to call hard lines activity in automotive, in tools, et cetera and those have been deemphasized in the store, doesn’t mean that there aren’t certain smaller categories within those that are working. Additionally, I would say again in the hard home area with Bob and his team they are parts of that business that are working extremely well, included in that area stuff like table top and food-prep and appliances which -- those categories actually did comp during the fourth quarter and we have expectations it will comp during 2015. It’s just some of the edit activity within that division, they are up against is masking what is really good performance in some of the parts of hard home. So again as we get into the back half of the year as David said and particularly in hard home we’d expected it to start to flatten out or start to comp positive and certainly in some of the electronics and accessory areas, some of the accessory areas we have got growth plans for going into the back half of the year. So, those teams are executing the plan just like the other five categories are and are very close to their numbers and doing a great job. It’s just the other categories sometimes get a little bit more mention because they’re so positive in terms of comps. But the entire merchant team is executing against the plan very well.

So this is kind of the way that we should be looking at your comp cadence to accelerate against tougher compares in the back half of the year? That's kind of how you expect to drive comps through I guess through 2H 2015 among other things?

I guess yes and no Dutch, I think the categories as David said where we are winning, we’ll continue to have outsized comps full-stop, and that’s the expectation. I think where we start to get up again -- I hesitate to even call tougher compares because as you know we had a couple of years where we didn’t perform as well, but certainly we will be up against positive comps in the back half of the year. The four key categories have to continue to outperform the store and nice incremental benefit that we have not experienced in the last handful of quarters will be categories like hard home and electronics and accessories starting to flatten out and hopefully turn slightly positive in the back half. So yes, that does provide a little more incremental lift as we go into the back half of that year.

We will go next to Anthony Chukumba from BB&T Capital Markets.

Bit of a housekeeping question. So you mentioned -- I just want to make sure I had this right -- the sale of the Company aircraft, that was about a $2.5 million pre-tax charge?

So about $2 million impairment charge and then we had standard maintenance cost of about $0.5 million to get the plane ready for sell, which we completed last week.

Okay, got it. So by my calculations, that's sort of like a 20 basis point headwind to your operating margin in quarter and about $0.03 of EPS. Is there any particular reason you didn't back that out in your numbers?

Candidly Anthony in the fourth quarter we didn't view -- we wouldn't back out repair and maintenance that standard. Whether we're going to sell the plant or not we had to take it in for maintenance. $2 impair -- our $2 million impairment charge in the fourth quarter were our operating profit number, at its peak during the year we didn't view it as material and that's why we included it in the commentary today to help you understand it but to back it out and non-GAAP it, typically the numbers are little bit higher when we do that and in quarters where it's a little more significant to the quarter.

Okay. That's perfectly fair, but I mean clearly that $2.5 million pre-tax charge will not be recurring in the fourth quarter of 2015, is that correct?

And you are correct and you are being kind. So said another way at a 2.9% comp if you back that number up we would have been closer to high end of our guidance, again suggesting that the model is becoming little more consistent and little more predictable than maybe what you guys and investors have been used to in the past.

[Operator Instructions] And we will go to John Garrett from Wedbush Securities.

I was wondering if you could give us an update on the rewards program maybe in terms of the number of members or any changes you expect to make with respect to messaging those customers during 2015. Then similarly, do you anticipate any meaningful changes to the profile or cadence of your overall marketing spend?

Good question. You know what John we haven't talked about the rewards program in a while. Obviously, it's still a very key part of our strategy -- I would tell you that the number hasn't grown significantly over time. It's been hanging right around that say $13 million to $14 million member number. And somewhat less than that is the number of people we actually email or have let's say good information on to include in our email activity every day, week or month. But it's still a very important part of the strategy and I know that you are a member and get those emails on a regular basis as I am sure most people do. And hopefully more importantly than the number of members John, hopefully what you have sensed is a little more urgency in the message, a tighter tie-in to what we're doing with marketing online, in-store and in print and on TV. It's a very -- I will say more cohesive message today than maybe where we've been two or three years ago. And we did use it I would say very frequently during the fourth quarter. And this whole conversation -- there is a conversation about email fatigue, but there is also a conversation about if we want to be competitive essentially you need to be messaging your customer almost every day during the fourth quarter. Now we will back that down a little bit here first quarter but it's still a very key part of the strategy and Andy and his team are still very focused on the rewards program, but candidly the second part of your question you will see a little bit more of the advertising spend move towards digital here in 2015 and maybe a little less in terms of print both in the cost of what it takes to print today but also the readership and the circulation is down a little bit year-over-year. So there will be a slight move I will say from print towards more digital with TV kind of hanging in there at about the same rate of spend.

And we will go next to Matthew Boss from JPMorgan.

Larger picture question, what percent of your business today in total is closeout and how should we think about the mix of closeout in both food and nonfood on a go-forward basis?

I will take that and TJ may want to add some color to it too. So Matt as we've talked before our closeout penetration in food and consumables would be the highest in the business. And within food there are categories that are very high, whether it's in salty snack or cereal category those are very high penetrated closeouts and as you know we expanded the NVO in there, so that did drive the penetration of closeouts down, but it's still a significant part of the business. And as you navigate through the strategy and you look at those top five categories, we're heavily focused on -- you move in to Soft Home which is really performing quite well. We still buy closeouts when it passes QBFV and so that has reduced, candidly the number of closeout significantly because there isn’t a whole lot of quality, brand, fashion and value closeouts out there any longer, but when there is one, we jump all over it. So the penetration in that world has been reduced when you move over into Hard Lines and you talk specifically about really the housewares home side in Bob's world. The appliance category still a very refurbished to high penetration as is floor care to the total. So there is still a closeout activity going on in there. Again and you move to the next business in consumables Steve and his team are always on top of as you know a big relationship with guys like the P&G and Kimberly-Clark and so on. And we have a pretty high closeout penetration in there especially when you get into some of the categories in food or -- I’m sorry, chemicals and so on and paper those are big categories where we continue to drive big closeout opportunities. Last in there would be seasonal, which as you well know that's our own product that we develop in Asia both in Patio and in Trim, so there is virtually very little closeout activity in there, although I would tell you, a year ago or so I was contacted by somebody I knew and we bought a big, huge clay pot closeout. So again when there is an opportunity even in those categories, if it makes in sense and it passes QBFV, we will go after it, but it's hard to give you a total number and as a percentage because it is influx and it does vary from month-to-month based on the opportunities out there.

Okay, great. Then, Tim, one financial follow-up. As you talk about the 6% margin goal for 2016 and, like you said, if you hit the high end of 2% to 3% comps the next two years you can get there. I guess my question is what is the actual margin that we should think about on a reported basis? Is slightly less than this, given some of the e-commerce investments, or is that 6% is the retail? I'm just trying to think of the best way that we should be thinking about it from a modeling perspective.

6% that was always the retail number. If you think back to the June 14th conference, we didn’t necessarily have any estimates or financial models as related to e-commerce, so 6% has always been the retail operating model goal for 2016 and obviously, where you guys have the best amount of history to kind of go look at where we've performed in the past and what you might think it takes to get there. So to answer your question this and next year when you factor in what our e-commerce results ultimately end up being that will take the operating margin rate as a company down slightly. So again 6% was always the operating model for retail stores only and we're just now getting a better understand of just '15, in terms of what the expense and CapEx needs are going to be not even speaking to '16 since we haven’t officially sourced anything or sold the first thing online yet.

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

I have two questions. First is about stores. And I know that you are -- most likely you are not closing any stores where the lease hasn't expired or is close to expiring. But as a strategy, what stores do you focus on to close? Is it about the real estate, the demographics; what is the strategy?

Yes, it's a little bit of all those Meredith, I could give you all different types of examples and ranging anything from it's a store that from a productivity standpoint either isn’t delivering or hasn’t hit the targets. We have a number of stores particularly in some of our older markets where the leases are extremely favorable and we run out of options and all of sudden it goes to market and the profile looks much different. The $1 to $2 stores that -- now the markets at $10 or $12, so that -- there's a wide ranging reason. Having said all of that, we're focused on as you would expect us to be the four-wall returns of the store and if it's not up to our expectation than the second step is we look at the stores organization as part of every decision to open or close a store and get their input in terms of what's possible what are the reasons, is the competition, is that execution on our part, is there something we could do differently from a marketing perspective and what are our options to improve performance. If that's not an opportunity then we look at candidly what kind of volume could we transfer to a nearby store. And the overall market productivity from a profitability standpoint or a return standpoint gets better, so we look at the number of different factors just not just one thing. Typically though, the single biggest challenge would be volume and top-line lower productivity stores, as someone else come into the market or candidly as the market moved within a town or city in we’re just not in the right spot anymore, so typically its productivity.

Okay. And then I will ask just one other question. Obviously adding a lot of consumables and having a lot of strength there puts pressure on the gross margin. At the same time, your furniture business is also very strong. Is it right to think about the mix of sales and the impact on the gross margin by looking at those two trading off each other, or offsetting each other I guess is the right word?

Yes, Meredith its David, that's a good question too and the answer to that is yes. The food margin obviously is lower than those other two businesses and consumables is just slightly higher than food, but as we continue to grow furniture the way we have been and soft home and then again other parts of home as well. But as we grow that business those two businesses and seasonal by the way are all the three categories that have a much higher gross margin rates. So we continue to grow those at the same pace as we grow food, the mix works and that’s were when TJ runs the model out -- three years out and you see how that looks and how we're planning businesses. Again we need to win in furniture and home and seasonal so that the penetration of food and consumable doesn’t take over and that’s clearly our strategy on long term, is to manage that mix that way. So I'll let TJ, if you want to add some color to that.

Yes the other piece in there Meredith is soft home and you Mark and Kevin their team have it going on right now in soft home in a big way both from a comp perspective and it is one of the highest margin contributors, margin rate and margin dollar in the company. So at real high level soft home and seasonal or above the company average. Parts of furniture above, parts of furniture are below the company average in terms of those promotional businesses. And then as you would expect food and consumables to your point or a little bit below the company average, but for right now we think all of that works together. We think the margin rate holds here or gets slightly better and that’s what's embedded -- was embedded in the SPP from the beginning and for us it’s embedded in our guidance for fiscal '15.

We'll go to Joe Feldman from Telsey Advisory Group.

Wanted to ask, you had called out earlier in the call that toys were weak and I know it's not a huge category, but I was just wanting to understand that because I thought -- we had heard from a few other retailers that toys were decent for them and I was wondering if it was competitive pressure or was it the mix of what you had or any color you could add would be helpful?

Sure Joe, this is David. As I talked to you guys all the time about what's earnable and what's winnable. We plan toys down intentionally and have taken some linear footage away to grow what TJ just talked about, the soft home categories. The margin in toys is about the same as it is in food and when you look at winning against toys or us or a target and I know those guys came out with -- talking about their business in that category being very good. What sometimes we don’t know and you don’t know is what falls into that toy. What other categories may be in there that we're not into, that they are. So sometimes you got to be careful with how they look at it and purely we're not including any type of electronics in there anything like that in that categories. So and some of the other guys do. So it's very difficult to look at that. But as you well know Mattel and Hasbro, especially these guys in a very difficult challenge right now if you see what's going on with them and you saw what happen with Barbie. I mean we had to play in that space in the fourth quarter too where everybody was basically running at a buy one get one free to move the inventory. It's a down trend in category if you look at the purest part of it. So if you walk into Toys R Us and you see all of the electronics in there and all the Apple product and so on. If you just backed out real true traditional toys, this is just my belief you would be hard pressed to say that you're comp in positive. So again we planned it down because it's strategically not a growth category for us we will be in the business and I'll be honest with you we brought in the new buyer, she is very good but she inherited a pretty poor assortment and we think that’s under Michelle and Steve's leadership that we can get that business stabilize. But it's going be an editing process, We’ll participates this spring in Star Wars, we think the Frozen opportunity in the back half of the year is an opportunity for us but it's not a growth business.

Yes I think Joe one thing that kind of level that’s for everybody to. As you walk in stores here in the spring season again very consistent with the SPP from the beginning. Toys will actually give up some space here in the spring season in favor of expanding soft home. So again to David's comment winnable, ownable category soft home, high margin doing extremely well right now will be a space beneficiary in the spring season. Again if you think about what we're doing, tying it into Easy Leasing and everything else that’s makes all the sense in the world for us. But it certainly will impact what we're able to do in toys going forward. But again for the customer and for what Jennifer thinks of this first, that makes all the sense in the world.

And then also another thing you guys have mentioned was February obviously being a little sluggish up here in the Northeast and the northern part of the country because of the weather. You mentioned, if I heard it correctly, furniture was a little slower in those markets and I was just curious if there is any inventory that might need to get cleared out? Is there markdown risk I guess to that inventory or is it nothing to really worry about?

We're not worried about it. I guess the comment there, you don’t typically think about furniture has been weather sensitive. But in our business it definitely is Joe. Again a traditional furniture retailer has delivery and everything else that goes along with it. We offer that, but a lot of our customers can’t really come in and take the couch home that day, take the mattress home that day, strap it to the top of their car, put it in the back of their car and it’s hanging out and you’re not going to do that, if it’s raining, snowing or both. And it might sound different but it’s real, it’s real in our business. And the other data point to considers is, we know -- I am staring at the map in front of me and we have a very good understanding that quarter to-date in California, Texas, Florida to Southeastern states up and down Pacific Northwest, Arizona, Nevada all of those states where weather is less of an issue. Our business is just where we need it to be and is fine. And then I look at states like Tennessee, Kentucky up into the -- Connecticut, Massachusetts those businesses which if you follow weather map are very colorful every day. So we know that’s impacting our business, we know that will come to an end at some point; we know we have strategies in place to try to recover some of that business that was lost in those markets. Not a lot different than what we went through in the fourth quarter, coming out of November where we felt very confident we had strategies in December and January, we feel very confident about what we’ve got planned for March and April. So we look at those markets for a couple of weeks as anomalies, that we’ve got to work harder to get it back, but we are confident we can do it.

If I could sneak one more in, I apologize, just gas prices, any benefit you guys have seen from the lower gas prices?

Joe its David, we are just smiling as you say that because as you know, that’s a good question. Everybody asked that question and it’s talked about a lot, what they don’t about is how the food prices and not necessarily at a big loss, but the traditional grocery food prices have gone up significantly while fuel prices have gone down. So I kind of look at it as one cancels out the other, it’s hard for us to figure out, whether that guys who was putting 10 bucks in his tank is now putting 15 and there something like that. I just don’t -- we certainly don’t look at it as something that’s embedded in our forecast, that’s an opportunity. It’s too difficult to predict and we just think that it’s a lot of -- It’s talked about a lot, don’t think it’s meaningful. And TJ, if you want to add to that?

It is difficult to extrapolate our business, do we like lower gas prices or higher we like lower. But it’s difficult to flip the switch and see it having a significant impact on our business, one way or the other. I do think psychologically when gas starts with a 4, that’s the challenge. But from where we are today, we would like it lower than higher certainly.

And we will take our last question from Dan Wewer from Raymond James.

Okay Tracy we will call it a day. Would you please close the call with replay instructions?

Ladies and gentlemen a replay of this call will be available to you within the hour. The replay will end at 11:59 PM Friday, March 20, 2015. You can access the replay by dialing toll free U.S.A. and Canada 888-203-1112 and enter the replay pass code 5083776 followed by the pound sign, international 719-457-0820 and entering the replay pass code 5083776 followed by the pound sign. Ladies and gentlemen, this concludes today’s presentation. Thank you for your participation. You may now disconnect.