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

Jeff Stein – Soleil Securities David Mann – Johnson Rice Dan Wewer – Raymond James Mitch Kaiser – Piper Jaffray Ivy Jack – Barclays Capital Patrick McKeever – MKM Partners Laura Champine – Cowen & Company Charles Grom – JP Morgan Brandon Ross – Pali Capital Mark Mandel – FTN Capital Partners Anthony Lebiedzinski – Sidoti & Company

(Operator Instructions) Welcome to Big Lots Second Quarter 2009 teleconference call. At this time, I would like to introduce today’s first speaker, Vice President of Strategic Planning and Investor Relations, Mr. Tim Johnson.

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

We’ve known for the past several months that the first half of 2009 would be a stiff challenge for our merchants and the entire organization. We were up against multiple years of good comp store performance, gross margin expansion and an economic backdrop for the customer that is significantly more challenging then it was a year ago. We had every excuse not to perform but I’m proud to say that the team remained focused on our strategy, executed well, and delivered our 11th consecutive quarter of record earnings per share from continuing operations. Our EPS of $0.35 for the quarter was up 9% to last year and likely will put us in good company with a small group of retailers that were able to generate EPS growth year over year. I do believe that we’re executing well in most of the major merchandise categories in our store. During the second quarter we offered the customer brand names and better quality goods at unmatched prices. From a merchandise perspective our inventories remain under control and finished the quarter down 4% per store compared to last year. The deal environment remains good and we have maintained open to buy dollars to source incremental closeouts when and if it makes sense. Because we manage our inventories our margin dollars were relatively flat year over year even though our sales were off a couple of points. From a sales perspective seasonal hard lines and consumables led the way. Our seasonal business was very solid during Q2 with comps up in the low single digits even though the weather patterns weren’t the best in certain regions of the country. I continue to believe that the quality and value relationship of our seasonal offering is very compelling and the assortments get better and better each season. Hard lines produced a low single digit comp in the quarter as well. Our electronics business in particular was up significantly to last year. The flow of deals continues to be steady here and we expect that these trends will continue into the second half of this year. Comps in our consumables business were flat against a positive low double digit comp last year. Although we can estimate the impact a year ago from the government’s stimulus checks we do believe that this is a category that was most heavily impacted by the activity, which posted a pretty high hurdle this year. In my view, as I travel to the stores, the assortments and execution continue to improve and the flat consumable comps for Q2 were about last year’s strength and not about this year’s execution. After a pretty decent Q1, which is the biggest quarter of the year for furniture, this business was more challenged in Q2. Our offerings were substantially the same as Q1 and our promotional cadence was every bit as aggressive as last year but the customer did not appear to be focused on furniture in Q2. Our home results remain below last year. I’m confident our assortments will be better in the second half of the year based on some new programs and new closeout deals that were recently landed. At this point, it’s a wait and see how the customer will respond. While I’m not thrilled with the negative comp for Q2 I do think we managed through a difficult situation in terms of merchandising. The rest of the organization also executed very well and our costs were well under control. When you add it all up, our operating profit dollars increased 10% compared to last year. We generated record second quarter earning in an environment that was not great. We generated significant cash flow and our balance sheet remained solid.

Sales for the second quarter were $1.087 billion, it’s a 1.7% decrease compared to $1.105 billion for the second quarter of last year. Comparable store sales declined 2.4%. From a trend standpoint, May and June were the most challenged months and were below the comp for the quarter. Moving into July sales trends improved as we delivered the best comp month of the quarter, although still negative. While we continue to see very little disparity across the different income demographics of our store base, we’ve witnessed some differences in regional performance with the West Coast the best performing and the Southeastern Region continuing to trail the company average. The key financial metric we watch to evaluate our performance is operating profit and for Q2 both the operating profit rate and dollars were above LY. Our Q2 operating profit rate increased 50 basis points to 4.4% of sales and operating profit dollars increased $4.2 million or 10% despite the lower sales I mentioned earlier. Walking down the P&L our Q2 gross margin rate of 40.0% was 70 basis points above last year’s rate of 39.3%. The increase to last year was due to higher IMU, lower freight costs, and a lower shrink accrual rate. These improvements were partially offset by merchandise mix pressure due to out performance of certain lower margin categories, namely consumables and hard lines. Total SG&A dollars were $386.7 million or down 1% compared to last year. The second quarter SG&A rate of 35.6% was 20 basis points above last year with a higher rate, the result of a decline in comp store sales. We continued to experience significant leverage from our distribution and transportation initiatives and the store operations team did a nice job managing payroll and leveraged on the -2.4% comp. Additionally, lower consumption helped utilities costs below last year. We experienced favorable depreciation expense to the prior year and advertising expenses were also lower benefiting from some pricing opportunities in the marketplace. All of these items helped drive additional leverage in the model. Partially offsetting this favorability were higher occupancy costs, higher new store pre-opening expenses based on our growth plans this year and certain expense investments in our store initiatives around elevated standards and our refresh program. Additionally, you’ll recall that we experienced expense favorability last year in both Q2 and Q3 due to the amortization of proceeds related to an early lease termination buyout. Net interest expense was $0.5 million for the quarter compared to $1.1 million last year with the improvement result of the cash generated by the business over the last 12 months, partially offset by higher amortization expense related to our new bank facility issuance cost. Our tax rate for the second quarter of fiscal 2009 was 39.3% compared to last year’s rate of 38.3% which benefited from favorable state income tax settlement activity. In total, for the second quarter fiscal 2009 we reported income from continuing operations of $47.2 million or $0.35 per diluted share, compared to income from continuing operations of $42.4 million or $0.32 per diluted share a year ago. Our result of $0.35 per share was better then our guidance which called for earnings of $0.26 to $0.32 per share. The majority of the favorability to our guidance came from a better then expected gross margin rate and to a lesser extent the expense de-leverage of only 20 basis points on a -2.4% comp was a little better then we would have expected. Turning to the balance sheet, inventory ended the second quarter fiscal 2009 at $668 million compared to $698 million last year. This represents a 4% decrease per store with most major merchandise categories below last year. The majority of the decrease was isolated to the planned later deliveries of fall and holiday seasonal product, a reduction in the weeks of supply of certain never out product, and the fact that our furniture inventory levels last year included a higher level of stock as we transitioned out of our Columbus furniture DC to the regional DCs. We remain comfortable with this level of inventory as we begin the third quarter. Cash flow, which we define as cash provided by operating activities less cash used in investing activities, was $48 million for the second quarter fiscal 2009 which represents a $40 million increase compared to last year. This is directly attributable to lower inventory levels, better AP leverage, and lower CapEx during Q2 this year. We ended the quarter with no borrowings under our credit facility and $56 million of cash invested in money market securities, compared to borrowings under our credit facility of $148 million last year. For the second quarter, capital expenditures totaled $26 million, down $8.6 million compared to the second quarter of last year. The decrease in CapEx in Q2 is a function of two key factors from last year. First, our IT related spend is lower this year then last year based on timing of SAP costs and also we were finalizing our POS register system rollout in Q2 of last year. You’ll also recall that we opportunistically purchased two stores last year. Partially offsetting these decreases was greater new store construction activity in Q2 this year versus last year. Depreciation expense for the quarter was $18.9 million or $1.5 million lower then last year. During the second quarter we opened 11 new stores and closed six stores, leaving us with 1,350 stores and total selling square footage of 29 million at the end of the quarter. Year to date, we’ve now opened 19 stores compared to five stores at this time last year. At this point in time we expect to open approximately 50 stores this year compared to our original plan of 45. Moving on to guidance, based on the results of July and early August we expect Q3 comp sales in the range of flat to down 2%. This guidance assumes that August will be the most challenging month of the quarter for several reasons. First, last year’s stimulus effect appears to have continued through early August, however the impact seems to be winding down. Also, back to school shopping by most accounts and NRF surveys is starting slow as customers continue to shop later and later each year. Finally, from a calendar and marketing perspective the shift of the pre-Labor Day shopping traffic out of August and into September will negatively impact sales in the latter part of this last week of August. We have adjusted our Q3 marketing calendar and promotions accordingly. As we move into September and October we expect to experience more historical build rates in the business, not the unprecedented deceleration across retail experienced last year. You’ll recall that the middle of Q3 last year was when retail sales slowed meaningfully, coinciding with the dramatic slowdown in the economy and softening in consumer confidence. We expect that our Q3 gross margin rate will be flat to slightly higher then last year due to lower freight costs and a lower shrink accrual rate. Flat to slightly higher for Q3 is different then results we experienced in Q2 for a couple reasons. First, the mix of the business is historically different in Q3 versus Q2. In particular, consumables is at its peak in Q3 in terms of percent of mix and is lower then company average margin. In contrast, seasonal, which was very successful in Q2 and helped drive margin is at its lowest point of the year in terms of mix. Next, we expect that consumables and hard lines will continue to be leading sales categories in Q3 and the disparity could accelerate from what we experienced in Q2. Each of these categories is below the company average in terms of margin rates. Also, during the first half of the year there were certain consumable deals that came at very attractive margins that are not anticipated in Q3. The last point I’d like to add is that we’re making changes to our strategies in toys and additions to our assortment in electronics in Q3 that will negatively impact the overall margin rate but should help gross margin dollars and also help to position us for better comp performance as we move into Q4. From an expense standpoint we’re forecasting expense as a percent of sales to be flat to slightly lower then last year. Overall, expense dollars are expected to be slightly below last year as distribution and transportation and store payroll efficiencies are expected to be partially offset by higher occupancy and insurance related expense, an increase in pre-opening costs related to more new store openings this year and as I mentioned earlier, will be up against last year’s gain on early lease termination buyout of one of our stores. Based on these assumptions, Q3 EPS from continuing operations is estimated to be in the range of $0.14 to $0.19 per diluted share, compared to $0.15 per diluted share last year. For the fourth quarter we’re expected comps to be flat to slightly positive against a -3.2% comp last year. In a moment, Steve will touch on some merchandising changes and other reasons we believe Q4 will generate our best comp of the year. Let me just remind you that from a macro standpoint our key assumption all along has been that when we get to the second half of the year the customer will feel similar or marginally better then last year. Additionally, we expect to benefit from one extra shopping day between thanksgiving and Christmas and the absence of a national election this year could have a positive impact on early November. For Q4 the gross margin rate is forecasted to be slightly up to last year. SG&A as a percentage of sales is expected to be similar to last year on a flat to slightly positive comp. Included in this guidance is an anticipated pension settlement charge which could be in the $2 to $3 million range. Based on the amount of year to date benefit payments made to participants in our pension plan through the end of Q2 we anticipate that we will incur a non-cash pension settlement charge sometime in the second half of this year. All indications suggest this will occur in Q4 but it is possible this could shift into Q3 if benefit payment requests accelerate. The settlement charge should not impact required cash contributions to the pension plan. On the strength of Q2 results, we’ve increased our guidance for the full year and now expect income from continuing operations for fiscal 2009 to be in the range of $1.92 to $2.02 per diluted share, compared to our prior guidance of $1.85 to $1.95 per share. This guidance represents a 2% to 7% increase over last year’s income from continuing operations of $1.89 per share. We also now expect CapEx for the year to be in the range of $85 to $90 million, an increase of approximately $5 million compared to prior guidance of $80 to $85 million. The increase to guidance is reflective of approximately five additional new stores then originally planned and also the decision to invest in energy management systems or EMS in an additional group of stores to help control our overall utility costs. As a result of our increased earnings guidance for the year, improved inventory flow and our additional investment in CapEx I just mentioned, we now expect to generate approximately $155 million of cash flow compared to prior guidance of $145 million and last year of $123 million.

That’s our view of the financial model for the back half of this year. I’d like to spend a few minutes sharing parts of our strategies that we believe are new and different that should help to positively impact sales trends as we move through Q3 and into the all important fourth quarter. From a merchandising perspective, in the consumables area we’ve experienced active deal flow in the last 30 days that will start to deliver to the stores and should impact sales. Additionally, in the next few weeks we will be expanding again the footage allocated to our very successful pet category. In seasonal we’re setting our first ever tailgating section in time for the football season. In Q4 I’m very excited about our Christmas offerings this year with newness in lighting, trees and novelty items. Seasonal has been one of our most consistently executed strategies over the last few years so I’m confident we’ll stack up well in the marketplace for holiday. In home we’re setting new programs in towels, sheets and rugs in Q3 which will show the higher quality and better value I’ve been talking about some closeout featured in upcoming ads, we’re excited to see how well they’ll perform. In hard lines it’s about electronics. As I mentioned, the deal flow remains good here and we have some new programs in DVDs and gaming software that will be setting in Q3, each of which should drive incremental business to what we’ve experienced in the first half of this year. Finally, in toys we’ve made some pretty noticeable shifts to more branded products and the customers responded. We don’t talk much about toys in Q1 or Q2 because it’s such a small part of what we do. Comps in the spring were positive and that spilled over into early August. For those of you who followed us for a while you know that toys is 10% to 15% of our business in November and December and the business has not been good the last two holiday seasons due to the negative publicity and toy recalls, concerns impacting the consumer. If we were able to achieve positive comps in toys in Q4 it’d go a long way in helping to improve the run rate and top line of this business. I don’t expect that the fourth quarter should only be the merchant’s job. From a stores perspective I’m pleased with the progress I see in ready for business initiative and improvements to date toward a better in store shopping experience. We’re a long way from being done but we do look a whole lot better then this time a year ago. Our food refresh program is on track to being completed by the end of Q3. It’s too early to predict what impact this may have on our business but so far the feedback has been encouraging. In terms of store layout testing, we’ve slowed the process and will not do the 50 plus stores this year. Instead we have a group of maybe 20 or so stores included Columbus to analyze through the holiday season. This change in plan is not about performance; instead it’s more about giving the team more time to focus on near term initiatives of ready for business, food refresh, and training and recruitment talent to ensure we have the right teams in place to execute these higher standards we’re now demanding. From a marketing perspective we’re excited to announce that we’re rolling out a Buzz Club rewards program to all of our stores during Q3. This program is designed to encourage customer shopping frequency and will be the company’s first true loyalty card program and will allow us to learn more about our core customer shopping tendencies. Thinking ahead to the future, this opens up some micro-marketing capabilities that we have never had before as a business. This truly is an exciting development and yet another benefit of the new POS register systems that we invested in over the last couple of years. Also on the marketing front, in terms of print and media our message this year will be more aggressive and all focused on value and savings. Hopefully you get a sense that there will be several new and different initiatives in merchandising stores and marketing as we move through the third and fourth quarters that will translate to improvement in our top line. To summarize and then go on to a brief Q&A, up against some very challenging comparisons from last year we generated our 11th consecutive record quarter of EPS from continuing operations. We have some exciting new programs in merchandising initiatives for the second half of 2009 that we believe will help us to improve our top line trends. We have a unique and defensible niche in retail given our closeout sourcing advantages and we believe that the low prices, great value and saving money will always be in style. Our merchandise mix is highly discretionary which should position us well to benefit when the consumer confidence recovers. Our cost structure begins to generate expense leverage on a flat to slightly negative comp. We’re improving our in store standards and the shopabilty of our stores. We have a very strong balance sheet, generate lots of cash and invest it wisely. With that I’ll turn it back over to TJ.

We’d like to go ahead and open up the lines for Q&A at this point.

(Operator Instructions) Your first question comes from Jeff Stein – Soleil Securities Jeff Stein – Soleil Securities: On your seasonal program for the back half of the year, trim a tree I know that’s a big program for you for Q4. The industry had a real tough time in that category last year. I’m wondering how you’re planning that from a merchandising standpoint. Are you planning that category down or just from an inventory dollar commitment standpoint?

It’s just slightly up and slightly above where we’re planning it. We think we deserve some businesses back from last year. We were off slightly last year as everybody was, not near what the rest of the industry was but we think we still have huge upsides. I talk about it briefly, the tree business has just been really good for us and we think we have an opportunity to grow that. There’s a lot of new and exciting things going on in the light business and in fact if you’ve been in some stores we have a very, very early set for back to school and some of it revolves around some rope lighting and some LED lighting that’s new and different that’s going to be part of the Christmas strategy that we’ve had some real early success sales on. We’re real excited about that. Frankly from our point of view the consumer can only go so long without wanting to get back and decorate their home. We’re real encouraged about what we think the upside opportunity. We certainly have an upside better then what we have planned too from an inventory perspective. We have not planned that inventory down. Jeff Stein – Soleil Securities: I’m wondering how much did inbound freight boost the gross margin in the second quarter and will that mitigate as you start to anniversary lower fuel costs in the back half of the year?

We don’t specifically break down how much that contributed to the margin. We are planning, we generally anniversary that at the end of the third quarter, that’s when you’re talking about fuel costs, started to decline last year. We’ve got some other freight initiatives that have been going on particularly the re-bidding of the outbound freight that those benefits will start being realized by the company in the back half of this year. I think you were speaking about fuel but we also have some transportation initiatives that we’ve generated savings from. Jeff Stein – Soleil Securities: The outbound freight, that shows up though in SG&A correct?

Yes. Inbound freight in margin outbound freight is in SG&A.

Your next question comes from David Mann – Johnson Rice David Mann – Johnson Rice: On the furniture category can you just delve a little deeper, was that an overall weakness or a weakness in some sort of the Jennifer Ferrell versus other programs and anything you’re doing to do differently to try and pick that business back up.

We experienced a slow down in most of the major classifications, although the upholstery business continues to perform better then the case goods business and the mattress business really slowed in the second quarter. As a student of the furniture business I think you’ll see that the mattress business nationwide has been in a depression. We haven’t experienced near the drops in our business that the industry has but it’s slowed and that’s been a good business for us. Dining and chairs continue to do okay and there’s some new stuff on the floor and upholstery that seems to be really working well, particularly the sectional business. We’re trying to chase that business as fast as we possibly can. There will be some eggressive posturing in furniture in the third quarter I can promise you. I won’t say more then that. David Mann – Johnson Rice: In terms of advertising, two things there, number one should we expect advertising expense to generally be lower in the back half similar to what you’ve seen in the second quarter? Secondly, on the last call you talked about a marketing test in some markets where you were going to drop some pre-prints and utilize the Buzz Club to save some money, can you give us an update on how that may have performed for you.

That’s a little early to talk about and really I’m not going to share that information. We’re certainly encouraged. As far as the efficiencies in marketing go we’re benefiting just like everybody else in the marketplace. Newspaper costs, print costs and paper costs are down and we’re trying to take advantage of that we intend on taking advantage of that for the balance of this year. Although our overall marketing pre-prints won’t really be down it’ll be virtually the same as last year for a number of pre-prints and our television is going to be slightly more aggressive. I mentioned, I think in the first quarter conference call that we’re shifting some of our spend to media from print. Overall we’ll have the same aggressive program it just will cost us slightly less this year.

Your next question comes from Dan Wewer – Raymond James Dan Wewer – Raymond James: In the consumer electronics category a number of the full priced retailers of gaming hardware and software have been seeing some pretty staggering declines in demand. Can you walk through when Big Lots will begin to see the benefits of that in terms of deal purchases but also if there is any concern, overall weakening might even impact the off price channel.

Their weakening has been our advantage to be quite honest with you our DVD business continues to be vibrant, we’re adding another price point between now and the end of the third quarter, I alluded to in my comments. That part of our business continues to be really significant in high single digit, low double digit comp increases. The gaming piece of the business is relatively new to us. We tested it in about 25 or 30 stores and we have a program rolling out to the entire chain that actually should be done by the middle of September but don’t hold me to that. If you’ve been in some of our stores you’ve seen it and we’re very encouraged to the incremental volume that that is going to contribute to our business. Their disadvantage is our advantage because there’s great value being offered from a lot of the studios and a lot of the gaming manufacturers to try to move inventory out and we become the beneficiary of that. Dan Wewer – Raymond James: Trying to understand the consumables flat during the quarter compared to some of the more discretionary categories up low single digits. You alluded to last year that stimulus checks may have benefited consumables. I was curious as to why you think last year consumables had a bigger benefit from the stimulus checks then some of the other discretionary categories?

First we can say consumables is one of the areas that we went to our never out program and that’s actually some of the few items that we carry year to year, same like items. We could see the impact year over year. Also anecdotally that the stimulus checks were not large dollar amounts of money and so they were, we feel like our customer is coming in and picking up some of those discretionary consumables. I know that sounds like an oxymoron but when you go through and you see salty snacks and cookies and some of the food products that may be was treat for the family, again that’s all anecdotal but when we look at our never outs we can see the lift last year and the impact this year in that particular category. Some of the other categories in the store we don’t have the capability of seeing the year over year impact.

It was fairly well written last year that there was a lot of stocking up going on. Again, to Joe’s point, we did not cash the checks in our stores so it’s really difficult to nail down with precision what it meant. What we know is our consumables comps last year in the first quarter were up high singles, they went up in the second quarter to low doubles and then they settled back down to mid singles in third quarter. Clearly we saw a spike in our business in the second quarter last year and to Joe’s point, a lot of that was in our day in day out business, in never out products we were really looking at.

It was across the consumables category but what we’re saying is we could see specifically the skus that we carry year over year and those are like comps and that’s where we went back and did some of our year over year evaluation.

Your next question comes from Mitch Kaiser – Piper Jaffray Mitch Kaiser – Piper Jaffray: Maybe you could talk about what you’re seeing on the real estate environment. I know that you’ve taken the store growth up by five new stores and maybe you could categorize the flavor for those stores that you’re seeing and then maybe what you’re seeing on rent rates?

I think that what we’ve seen on stores probably isn’t a whole lot different from what we’ve seen earlier in the year. As I’m sure you can appreciate we’ve always got a pipeline deals coming down and the reason we’ve increased the additional five stores reflects a couple of things. First of all being able to find the right size box helps us get the deal done quicker because as you can imagine were not building demise wall. Some of the locations were going in have permitting requirements that are easier to satisfy then other ones is kind of the second thing. Finally the quality of the box, if you look at a box if you look at a Linens n’ Things it takes less work to get in that then it could a former supermarket or for that matter even a Circuit City its got a different interior on it. That’s the over all flavor of how we’ve got up to increase, the 50. I don’t think there’s a big difference out there. I was at the Florida ICSC Show last week and it’s interesting because some of the more significant landlords are really starting to form kind of a dichotomy out there. One group of them is concerned about I’ve got to get somebody in my box and they’re being more flexible on rent requirements. There’s also a contingent out there that quite frankly is concerned thinking that the economy is starting to turn and they’re concerned about getting locked into long term rent deals where if they can hold out for the next year to 18 months they think if the economy comes back they may have the opportunity to even get a higher rent. I think those are kind of the main reasons that we’ve seen the action that we have. Mitch Kaiser – Piper Jaffray: Are people looking for shorter lease terms then?

They’re actually not. The concern is, it really depends on what part of the country it is too. California is a challenged part of the country right now that historically has commanded a pretty significant rent. I think what they’re really concerned about, especially on the West Coast and some even the southeast is not getting locked in. They’ve got lending requirements and as they try to refinance their own projects it’s the old adage they want it both ways. They want to have a secure credit worthy tenant in there but they also don’t want to get to a point where they’re locked in too long. I think what we’re really seeing and what we’re trying to do is to build in reasonable rent steps so that everyone gets comfortable that if the economy does turn around we can have a spot four or five or seven year period and then at the first option period looking at what a reasonable step may be. As you’ll recall from earlier calls just because we’ve got the option out there it doesn’t necessarily mean that we always pay the step increase in the rent. It gives the landlord a little bit better feeling that should things pick up they’ve got a little bit more security on being closer to what they perceive market to be. Mitch Kaiser – Piper Jaffray: If you think about the balance sheet with $155 million in free cash this year its looks in our model that you’re going to have north of $100 million and no debt. How should we think about how you deploy that for next year?

I know we’re to defer that decision till after the end of the year. Right now we’re focused on deploying our working capital to build inventory for the holiday season. Yes, we will have a significant amount of cash; we project that to start 2010. We’re certainly talking about that and discussing that internally but we’ll share that when we have something after holiday.

Your next question comes from Ivy Jack – Barclays Capital Ivy Jack – Barclays Capital: Can you talk about the West Coast stores and all the reasons that you think those stores are probably performing better than some of the rest of the store base. Even though it’s a little early, are there any take aways from the performance of the locations that are in the A+ real estate, how are they doing, the new stores?

The A+ locations are too early to tell. I know that that’s not an answer anybody wants to hear. We’re certainly encouraged though with what’s going on. We really feel like we need to give it some time. The ones been open in Polaris here since May and continues to make us feel good as far as its performance. We want to get through the Christmas season at least. Then we have three or four other ones if I’m not mistaken that open between now and November to give us a little bit better understanding of what’s going on. We clearly are trying to understand what those opportunities are for future growth plans and I think we’ll probably be in a position to talk more about that in the year end conference call when we talk about what the growth plans look like for next year. As far as the West Coast goes, we hope that it’s a couple of different things. It’s been a little stressed for a while for us and my point of view has always been that we just didn’t execute as well on the West Coast as we did in some of our other marketplaces. We made some pretty significant changes to how we manage and run the West Coast about a year ago at this particular point and in many cases that’s how long it takes to start getting performance back. We’ve now anniversaried that and we’re starting to see that return on investment. I think the ready for business out there is moving along nicely and I think Chris is spending a fair amount of time out there with our management team. They’re very smart people, they’re committed to wanting to execute at a better level. I think we’re benefiting from that better execution on the West Coast. Not that we’re not performing well and executing in the rest of our regions but we had some performance execution needs that needed to be resolved on the West Coast for a while and it wasn’t a secret, I talked about it on a number of conference calls. We made changes; we have a really good talented group of people in there now. They’re performing and responding well and consumer appreciates it. Ivy Jack – Barclays Capital: Can you also just review, you said for the Buzz Club you’re expanding it now into a loyalty club, what that means in terms of, are you issuing cards.

We are actually between now and the next 30 days you can either go into our store even though you’re a Buzz Club member and our Buzz Club membership are the first ones being offered that opportunity and you’ll have a card and be able to go in and every purchase over $20 will be registered and after I believe its 10 purchases of over $20 you’ll receive a discount to come in and purchase. We know in the past that although we only run friends and family I think twice a year those 20% off discounts are pretty significant return on sales for us. That’s a piece of it. We want to encourage our loyal customers to shop us frequently and more consistently and at the same time we’ll be able to generate a tremendous amount of micro marketing knowledge that will be able to eventually go back to them and start to make offerings to them specifically on how they purchase and what they’re looking for.

Your next question comes from Patrick McKeever – MKM Partners Patrick McKeever – MKM Partners: On the non-cash pension related charge, is that in your guidance for the back half of the year?

Yes, it’s in for the fourth quarter. As I said in my comments there is a chance that could accelerate into the third and we’ll speak to that obviously on our third quarter call but right now we anticipate that that charge would be incurred in the fourth quarter. Patrick McKeever – MKM Partners: You said it was $2 to $3 million?

Right, $2 to $3 million. It really depends on the extent of lump sum payments. As the lump sum payments go up then the settlement charge would go up. Patrick McKeever – MKM Partners: You’re not buying back stock this year, I know your focus was on debt reduction but there was that question earlier about the cash generation and so forth. It sounds like you’re not going to talk about a buy back until perhaps early next year, is that the case?

I’d say never say never. What I said was right now we do not have a buy back in place approved by the board and right now our intention is to deploy our capital into inventory for the holiday season and more to come. Obviously things can change at any given time so at this point we would anticipate discussing that as we look to 2010. I am not ruling out any use of cash at this time.

Being in a cash position is a real nice place to be from our perspective at this particular point. It allows us a lot of different options going into 2010. We’ll make the best decision as we have in the past and I think we’ve demonstrated to our Board of Directors who have supported us along the way and to our shareholders we’ll make best use of that cash. Patrick McKeever – MKM Partners: Toys, you talked about the percent of sales for toys in the November, December period. Roughly what percent of sales were toys in the first half of the year or even the second quarter?

Low single digits. It does ramp significantly late October on into November and December; it’s a leading category in the store along with trim. Post holiday obviously it moves back down. It was low single digits in the front half and does have quite a spike in the fourth.

Your next question comes from Laura Champine – Cowen & Company Laura Champine – Cowen & Company: It looks like with the new stores you announced today will probably end the year with 15 or 20 net new stores. Is that right? As we look at 2010 and beyond do you think that number of new stores accelerates from that level?

The number of new stores would potentially be 10. We had said all along we were going to open 45 and close 40, now it looks like we’ll open 50, we don’t have any revision on the 40 yet and probably won’t between now and the end of the year. We also have said on a number of occasions it would likely ramp up at a higher rate going into future years but we haven’t given that number and we will look forward to giving that number at the end of the year. Laura Champine – Cowen & Company: On your comp guidance, it looks like it would imply a deceleration on a two year basis. I heard you comments about a slower start to back to school but is there anything else from a macro or merchandising perspective that would cause a deceleration in the back half of the year?

We tend to look more at what is the actual run rate of the business from a dollar perspective and a build perspective, what categories are working, not working, what promotions are coming, what are the upcoming ads look like, etc. I know its pretty common on the street to look at stack comps whether its two year or three year but please keep in mind there were a lot of different things going on in our business today versus what was going on in the economy a year ago. Our forecasts are much more of a detailed level. I think as Joe mentioned in the prepared comments the early part to third quarter we did expect that stimulus moves on. It was July 11th I think last year when the last checks went out. There was still a fair amount of money out there in the system here into the third quarter. Additionally, with the Labor Day shifting essentially back a week a lot of that traffic moves into September and along with that I’m hearing in the Eastern parts of the country a lot of the back to school moves back even a week further. Kind of compounding the later shopper in the season area of the store. We try to take all of those things into account when we set guidance. Having said that we do think when we get into September and October that the business should improve. We do not expect the kind of fall off that we had a year ago which was really unprecedented in our business and in most of retail. We’re going with best information that we know of right now. As Steve mentioned earlier we’ll be ready to chase the business, we’ll be in good inventory position if the trends are different then that. Its really best information we know right now, a lot of moving parts from July to August to September and we’re doing our best to try to forecast that and buy accordingly.

Your next question comes from Charles Grom – JP Morgan Charles Grom – JP Morgan: A follow up to that question. Just to clarify on the same store sales is it safe to say that August trends month to date are in line with the flat to down 2% or a little bit worse then that. I’m just trying to get a sense for how things are this month.

August trends are in line with what we’re guiding to from the perspective of we know that back to school has shifted, we know that we’ve moved a lot of marketing out of August into September. We know that customers are shopping later and we know that and a lot of stores on the East Coast, some of that back to school hasn’t started yet. We look at all of those factors when trying to set our monthly expectations. We’re not going to break out comps by August, September, October but we have really the first three plus weeks of August and are comfortable with the flat to -2%. Charles Grom – JP Morgan: On the consumable front if you look at some of the grocers and the warehouse clubs they’re all talking depletion, in fact USDA just lowered their forecast about 20 minutes ago for deflation across many categories, some of which you guys sell and some of which you don’t. Is it possible that the softness in the consumable business isn’t necessarily from the stimulus but more because of deflation? Maybe you could flush it out a little bit. I don’t know if you have any data on unit volume and price direction.

We looked at it pretty closely, I’m not sure I’ll give exactly what you want. First off we don’t play in as many of those classifications because we’re not truly in the grocery business or the food business. What we have seen deflation in is two categories in our consumable business that clearly have affected those individual businesses. One is beverages, specifically the water business, and prices have really come down there, it’s become a very promotional business even more so today then six months ago. The other piece that unfortunately some people probably don’t’ have in the consumables business, they may have it in the house wares business but we have it in consumables it’s the plastics business. Because of the cost of plastics they have come down as much as 20%. Those two businesses we have seen deflation in. Clearly it puts a lot more stress on having to sell a number of units. Other then that the rest of our businesses we really haven’t seen it, the chemicals business, the paper business, although the deals have been terrific in those areas for us. I think if you go though our stores even right now today you’re going to see better name brands then probably you’ve seen in the last six month or a year in that business overall other then a burp in the second quarter has been pretty darn good.

I’d just tack on regarding the stimulus, the timing of the lift last year and then also the impact this year correlated to closely to the stimulus and obviously the timing of the deflation doesn’t correspond. That’s what’s driving us to conclude that there was some impact from the stimulus. Charles Grom – JP Morgan: Can you quantify what the distribution out bound transportation number was? I know you’ll have it in your Q. Can you give it to us today?

Q2 distribution and transportation was $37.8 million this year, $44.9 million last year, a decrease of $7.1 million principally due to the consolidation out of the furniture building here in Columbus into the regional buildings, low overall fuel costs and then pretty much in every building across the chain we had record units processed per hour performance in the DCs due to some investments we made but also due to, as Steve mentioned, the inventory flow was very good during the quarter. Charles Grom – JP Morgan: That was about a 60 basis point benefit year over year. Just to clarify that’s all in cogs correct?

Outbound distribution is in SG&A. Charles Grom – JP Morgan: So it’s a combination of both. How much of that 60 basis points was in cogs versus SG&A?

The numbers that we quantify in the Q are all SG&A and all outbound, we do not segregate gross margin.

Your next question comes from Brandon Ross – Pali Capital Brandon Ross – Pali Capital: I know you said that the deal flow has been good but I’m just curious with tighter inventories across the board in retail and in manufacturing, if looking head to holiday you’re concerned about deal flow at that time?

We’re really not. It’s very consistent, it always is consistent. The statement of the fact that we sometimes don’t know where it’s going to come from is true but it’s good and it continues to flow. I know we both hear the same thing about manufacturing is down and people are really trying to cut back but we just continue to see deal flow, we continue to get calls every single day. We’re absolutely not concerned about the fourth quarter. In fact, we’re really dialed into the fourth quarter and have been dialed into the fourth quarter for a long time. We could lock it down right now. We certainly have open to buy dollars available because we always tend to get telephone calls in October and early November it just seems to happen every year no matter what. We’re not waiting on those calls and they are not contingent upon our fourth quarter performance. Brandon Ross – Pali Capital: In terms of the deal flow being good would you say it’s at the same level it has been over the past year?

It’s very consistent.

Your next question comes from Mark Mandel – FTN Capital Partners Mark Mandel – FTN Capital Partners: This year was going to be the year that you’re focusing on your stores. I was just wondering if you could give us some additional color as to how many stores your touch, to what extent and what kind of results you’re seeing.

The ready for business results are something that we look at internally and we certainly think that probably, hopefully all of our stores have been touched in some form or another. I think the reality is and we’ve talked about this, its one of the reasons why we made a decision to slow down some of those retrofits and some of the other stores, we wanted all the stores and district managers to be able to concentrate to get to what we consider to be the minimum level standard of being ready for business. The reality is probably two thirds of the stores will be, by the time we get to Christmas, at a standard level that we’d like them to be. Is that acceptable? Probably Chris would tell you no but it is substantially better then where we were at a year ago at this particular point. The balance of the change should follow right after the end of Christmas into the first quarter of next year. Then at that particular point we’ll focus on the next level of standards that we think the stores need to step up to. I’ve been in all parts of the country myself personally in the last 30 to 45 days and in a couple parts of the country that you guys tend to get into a couple of times within a couple of weeks, particularly on the East Coast, those stores look better and are performing better then I have seen them in the four years that I’ve been here. I would hope that particularly the East Coast analysts would say the same thing because I’ve been in Carle’s Place and Coplay and a couple of the other stores in and around New Jersey, not far from New York and those stores look better then they’ve ever looked before. Those are the ones that you guys get to. We’ve been in the West Coast, they’re doing better and looking better their performance is indicative of it. The guys out of the Southwest have been performing consistently year over year over year and we’re getting better in the Midwest too. I was in Chicago just last week and although we all agree there’s a ways to go there they absolutely look better then they’ve ever looked before. Mark Mandel – FTN Capital Partners: We’ll have to wait till towards the end of the year when you give us more detail on your capital spending plans for next year.

Absolutely but you guys should be, and I know you will be, you’ll be the judge of it too because you get into our stores pretty consistently too. As you travel the country you’ll stop into the stores and you tell me what you think. We’ve gotten more positive feedback from people who we do business with and people who we don’t do business with across the country then we ever have before. We have a long ways to go, we’re not satisfied, I don’t want that misinterpreted but we do look better and we’re executing better. Mark Mandel – FTN Capital Partners: Do you have the number for the Buzz Club members now and what you’re anticipating?

Its about 4.8 million Buzz Club members today which we’re really proud of. We hope to get it to of course a little over five million as we get into the holiday season. What’s exciting now is the retention level of some of those because clearly there’s some that sign up and then don’t stay with it and then the new ones. The run rate of signing up new members which has been a real focus here is pretty exciting but we’d love to get that number higher and higher and higher. What will be more even interesting is to see who signs up for the rewards card program and we’ll find that out between now and the holiday season. Mark Mandel – FTN Capital Partners: What about spending per member, can you give us those figures?

No. Mark Mandel – FTN Capital Partners: On the comp performance traffic versus ticket the breakdown?

We don’t do that.

Your last question comes from Anthony Lebiedzinski – Sidoti & Company Anthony Lebiedzinski – Sidoti & Company: As far as your expectations for inventory reductions for the holiday season can you just comment on that a little bit and also the impact on your markdowns because of better inventory flow?

Traditionally we just talk about our margin.

The color that we provided is we don’t break down the markdown component from a forecast basis. From an inventory standpoint was your question where do we expect it to be? Anthony Lebiedzinski – Sidoti & Company: Where do you expect it to fare as far as inventories?

We don’t give forward inventory guidance but we do give inventory turn guidance which calls for essentially a flat turn year over year. If you look at flat turn year over year and you’ve got a comp that’s in the range of zero to minus one which is our guidance you can derive from that what we’re expecting inventories throughout the year to be relatively flat to slightly down. Anthony Lebiedzinski – Sidoti & Company: You mentioned that you’re expanding the pet category. What segments would you consider shrinking as you expand the pet category and impact the margins?

Actually the plastics category is shrinking. We have a real dramatic square footage run in the plastic business and it’s a very good business for us, we like it a lot. There are margin challenges in that business and competitive issues in that business so to take some small square footage away from it and put it into the pet category that has been just a terrific performing double digit comp increase year over year over year business, even though it’s a smaller business as a percent to total, the margins are more significant there. So it will be plastics that’ll be expanded into. Anthony Lebiedzinski – Sidoti & Company: That will have certainly a positive impact on your margins right?

We hope so.

Thank you everybody for joining us for the call today. We look forward to talking to you at the end of the third quarter.

(Operator Instructions) That does conclude today’s conference call. We thank you for your participation.