Andrew D. Regrut - Director of Investor Relations Timothy A. Johnson - Chief Financial Officer, Principal Accounting Officer and Senior Vice President David J. Campisi - Chief Executive Officer, President and Director

Patrick McKeever - MKM Partners LLC, Research Division Matthew R. Boss - JP Morgan Chase & Co, Research Division Meredith Adler - Barclays Capital, Research Division Paul Trussell - Deutsche Bank AG, Research Division Joseph I. Feldman - Telsey Advisory Group LLC Anthony C. Chukumba - BB&T Capital Markets, Research Division Nathan Rich - Citigroup Inc, Research Division David M. Mann - Johnson Rice & Company, L.L.C., Research Division Joan L. Bogucki-Storms - Wedbush Securities Inc., Research Division Jeffrey S. Stein - Northcoast Research Laura A. Champine - Canaccord Genuity, Research Division Daniel R. Wewer - Raymond James & Associates, Inc., Research Division Morris Ajzenman - Griffin Securities, Inc., Research Division

Ladies and gentlemen, welcome to the Big Lots Second Quarter 2013 Conference Call. This call is being recorded. [Operator Instructions] At this time, I would like to introduce today's first speaker, Andy Regrut, Director of Investor Relations. Please go ahead, sir. Andrew D. Regrut: Thanks, Anthony, and thank you, everyone, for joining us for our second quarter conference call. With me here today in Columbus are David Campisi, our CEO and President; and Tim Johnson, Senior 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 risk and uncertainties and are subject to our Safe Harbor provisions as stated in our press release and our SEC filings and that actual results can differ materially from those described in our forward-looking statements. All commentary today is focused on adjusted non-GAAP results from continuing operations. For the second quarter, this excludes a nonrecurring after-tax benefit of $0.4 million or $0.01 per diluted share associated with the settlement of a store-related legal contingency. Reconciliations of GAAP to non-GAAP adjusted earnings for both this year and last year are available in today's press release. This morning, T.J. will start the call with an overview of Q2 results and an update on our outlook for fiscal 2013, then David will provide his insights before taking your questions. So with that, I'll turn it over to T.J. Timothy A. Johnson: Thanks, Andy, and good morning, everyone. For the consolidated company, net sales for the second quarter of fiscal 2013 were $1.226 billion, an increase of 0.06% (sic) [0.6%] over last year. Comparable store sales decreased 1.9% for the quarter, which was slightly better than our communicated guidance which called for a 2% to 4% decline. Adjusted income from continuing operations was $17.7 million or $0.31 per diluted share compared to our guidance range of $0.17 to $0.27 per diluted share and last year's income from continuing operations of $22.1 million or $0.36 per diluted share. For our U.S. operations, sales were $1.188 billion, an increase of 0.4% over last year. Comparable store sales for stores opened at least 15 months decreased 2.2% compared to our guidance of a 2% to 4% decline. From a merchandise perspective, our best-performing category was seasonal, which comped up mid-single digits. This was particularly encouraging given the weather-related challenges we experienced in the lawn and garden and summer businesses during May and throughout the first quarter of this year. Furniture had another strong quarter, comping up nearly mid-single digits, with strength in mattresses, upholstery and ready-to-assemble items. Consumables comps were down slightly for Q2 and flattish for the spring season, representing an improvement compared with how we finished Q4 and last fall. Food was down for the quarter, but sales trends improved during Q2, which is -- was an encouraging result. The remaining categories experienced challenges in Q2 as home, along with hardline and toys, were down single digits, while electronics and other was down low doubles. For the second quarter of fiscal 2013, adjusted operating profit dollars from continuing operations for our U.S. business were $35.9 million as our operating rate declined to 3% compared to 3.6% last year. As anticipated, our gross margin rate of 39.2% was down 10 basis points to last year, with the decline directly attributable to higher markdowns and promotional activity needed to address the weather-sensitive categories of seasonal and hardlines. Total adjusted expense dollars were $429 million, and the second quarter expense rate was 36.2%, up 50 basis points to last year. Expense deleverage was attributed to the fixed cost of occupancy and depreciation. The balance of the expense structure, which includes our major operations of the business, was essentially flat as a percent of sales to last year despite the negative 2.2% comp for the quarter. Interest expense was slightly lower than the prior year due to average -- lower average borrowings and lower costs due to our recently extended credit facility, which we announced earlier in Q2. Our adjusted U.S. tax rate of 38.7% was down slightly from last year's rate of 39.1%. In total, our U.S. business reported adjusted income from continuing operations of $21.5 million or $0.37 per diluted share. This compares favorably to our guidance of $0.27 to $0.32 per diluted share and last year's result of $0.42 per diluted share. From a real estate perspective, we opened 13 new stores in the U.S. and closed 4 in the second quarter, leaving us with 1,514 stores and total selling square footage of 33.1 million. Now turning to Canada. Sales were $37.9 million, an increase of 8.2% compared to the $35 million we reported for the second quarter last year. Comparable store sales increased 8.3%. Sales results were consistent with our guidance. During the quarter, we experienced favorable results in our Big Lots stores in Canada. Our new store opened in April displayed continued strength. And during Q2, we rebranded our first 2 stores from LW to Big Lots, and comps during June and July were encouraging. Our net loss of $3.8 million or $0.07 per diluted share was in line with our guidance, which called for a net loss of $3 million to $6 million or $0.05 to $0.10 per diluted share, and compares to last year's result of a $3.3 million loss or $0.05 per diluted share. From a stores perspective, we ended Q2 with 3 Big Lots stores and 76 Liquidation or LW stores in Canada. Moving on to the balance sheet. Inventory ended the second quarter of fiscal 2013 at $914 million compared to $881 million last year. The growth in inventory was driven by an increase in store count and a 1% increase in inventory per store. We ended the quarter with $64 million of cash and cash equivalents and $142 million of borrowings under our credit facility. This compares to $62 million of cash and cash equivalents last year and $243 million of borrowings under our credit facility. Capital expenditures for the second quarter totaled $34.4 million compared to $42.4 million last year. And on a year-to-date basis, CapEx totaled $51.7 million versus $60.7 million a year ago. Turning to guidance. As many of you know, Q3 is somewhat of a transitional quarter for Big Lots and most retailers, as we incur inventory costs and set up for holiday, ahead of a spike in sales in Q4 for the November, December time frame. For Q3, we are forecasting results from our U.S. operations to be in the range of income of $0.02 to a loss of $0.03 per diluted share compared to a loss from continuing operations of $0.03 per diluted share in the third quarter of fiscal 2012. This estimate is based on comparable store sales in the range of flat to minus 2%, a higher gross margin rate and expenses as a percent of sales which are expected to be flat to slightly higher than last year. The improvement in the margin rate is a function of lower markdown rate and expected improvements in merchandise mix. The potential for deleverage in expenses is a function of our flat to minus 2% comp expectations as expenses on a per-store basis are forecasted flat to up only slightly. In Canada, third quarter sales are expected to be in the range of $40 million to $43 million, resulting in a net loss in the range of $4 million to $6 million or $0.07 to $0.10 per diluted share. This compares to sales of $39 million in the third quarter of fiscal 2012, which resulted in a net loss of $4.3 million or $0.07 per diluted share. And for the consolidated company, for the third quarter of fiscal 2013, we're forecasting a loss from continuing operations in the range of $0.05 to $0.13 per diluted share compared to a loss of $0.10 per diluted share for the third quarter of fiscal 2012. For our U.S. business, in Q4, we are forecasting income from continuing operations in the range of $2.02 to $2.12 per diluted share compared to income from continuing operations of $2.08 per diluted share in the fourth quarter of fiscal 2012. This forecast assumes comps in the range of flat to up 2%, improvements in the gross margin rate and expenses as a percent of sales flat to slightly up to last year. The improvement in the margin rate anticipates a lower markdown rate and improvements in merchandise mix, and expenses as a percent of sales could increase slightly based on potential bonus payouts this year compared to no payouts in the prior year. In Canada, fourth quarter sales are expected to be in the range of $50 million to $55 million. At this level of sales, we anticipate our operating results will be in the range of breakeven to a $3 million operating profit for the all-important holiday quarter. This translates to a range of breakeven to $0.05 per diluted share. This range compares to sales of $48.6 million in the fourth quarter of 2012, which resulted in a slight profit. For the consolidated company, income from continuing operations is estimated to be in the range of $2.05 to $2.15 per diluted share compared to $2.09 per diluted share for the fourth quarter of fiscal 2012. Our updated outlook for the full year fiscal 2013 calls for adjusted consolidated income from continuing operations to be in the range of $2.80 to $3.05 per diluted share. This compares to fiscal 2012 adjusted consolidated income from continuing operation of $2.99 per diluted share. We expect this level of financial performance will generate approximately $175 million of cash flow. For our U.S. operations, we estimate adjusted income from continuing operations for the full year of 2013 to be in the range of $3.05 to $3.20 per diluted share. This compares to our 2012 adjusted income from continuing operations of $3.21 per diluted share. Our updated guidance is based on total sales in the range of flat to plus 1% and comparable store sales flat to down slightly. We estimate the adjusted operating profit rate for the U.S. operations for 2013 will be down slightly to last year, principally due to flat to negative comps, as well as a 53rd week in the retail calendar in fiscal 2012. The adjusted gross margin rate for fiscal 2013 is expected to be up slightly and expenses as a percent of sales are expected to increase in this model, with the entirety of the increase and more coming from higher depreciation, occupancy costs and an expected higher bonus expense. Filling out the rest of the U.S. P&L for 2013, we expect net interest expense of approximately $3 million, and the effective income tax rate is forecast to be in the neighborhood of 39%. For our Canadian operations for fiscal 2013, we now expect sales to be in the range of $165 million to $173 million, with a net loss in the range of $9 million to $14 million or $0.15 to $0.25 per diluted share. Now over to David for his insights on the business. David J. Campisi: Thanks, T.J., and good morning, everyone. With my first full quarter of business behind me now, I want you to know I'm extremely excited and even more convinced of the growth opportunities for Big Lots over the long term. The team has been very open and honest with me about what is working and what is not and what the opportunities are as they see them. I have met hundreds of associates here in Columbus, in the office, as well as in the stores. And last week, we held our company-wide leaders meeting with both the U.S. and Canadian management teams in attendance. What a great experience and a venue to share my thoughts and vision and the opportunity we have to look forward and build great future for our customers, our associates and our shareholders. We have adaptable, flexible and incredibly dedicated teams throughout the organization, and I believe the company is well positioned for success. Candidly, a lack of "customer first" mentality has hurt the business. The good news is our core customer still loves us. She brags about us, and we have a better understanding of who she is and how she shops. Her name is Jennifer, and teaching this group how to see everything we do through the lens of Jennifer has been amazing. I am confident in developing a new mentality to focus on her and all facets of our business will pay off and begin to drive positive comps over time. My relentless focus as CEO has to be the 3 legs of the stool, as I'd like to call it: merchandising, marketing and stores. It's the juice that drives the bus. I have been impressed with the strength and talent across the support areas of our company, planning, distribution, finance, HR, et cetera, which allows me to focus my time on driving sales. Over the last 100 days, as a team, we have walked the stores, all merchandise divisions, probably have 50-plus hours in our stores, and we have evaluated each business and each category at a detailed level with the key decision-makers. The picture is very clear, where we are and what is working and what is not and where we need to go with this strategy. The differences between major merchandise categories are significant in terms of execution, inconsistent direction and how we market or communicate to our customer. Briefly, here are some of my observations on the 3 legs of the stool after 100 days. From a merchandising perspective, I am not going to go through each category with you and not share specific direction for the future. Frankly, we still have questions to answer and decisions to make. I will let you know, I like the major categories we play in. Furniture and seasonal have been and will be consistent winners. Food and consumables are not consistent for Jennifer, and we can and will do better. And finally, home, hardlines and electronics will be a part of our future, but will likely not be executed the same way going forward. So stay tuned, as we have strategy changes or more to share, we will. Regardless of the category, when you walk a store, you will see examples of great value, but you will also see examples of us trying to be everything to everyone. It can be confusing to the customer and quite frankly, makes the business model more complicated than it needs to be. Edit to amplify is a merchandising strategy you will hear about from me for many quarters and many years to come. It is important to understand Edit to amplify is not a narrow and deep strategy. It is a strategy that edits categories or classifications, where we are not top of mind with Jennifer and amplifies or provides additional resources, either inventory or lineal footage to businesses where we are winning or we are known for by our customer base. A good example might be jewelry or watches. Are we really known for this category? Do we need to be in this category year-round or solely on certain holidays? Could we use the space for something we are becoming known for, like electronic accessories, earphones, earbuds or data storage. This is one small example, but there are many others. We must look at the store and think across categories with Jennifer in mind. We must amplify those businesses we are known for and winning in our stores. Next, I'd like to talk about our resources, both quantity and quality. This topic is at the top of my list of priorities, particularly in merchandising and planning areas. For a number of years, the company has been very diligent and frugal on headcount and resources, some might say to a detriment. I am absolutely convinced there is an opportunity to add talent and drive sales and add better training and on-boarding processes to develop our associates and lower our risk in the event we have turnover or transition. Additionally, how we source or allocate our inventory is another big-picture topic. Closeouts are an important part of our heritage, but if a closeout is not a meaningful brand or an item or category we are known for, it can be lost with the customer, lost in the store and not a good use of our cash. Our buyer should not be purchasing closeouts to hit a specific target or because we think we have to buy every deal. Again, thinking through Jennifer's lens, she wants quality, tasteful, branded merchandise at great values. She does not necessarily know how or where we source product or whether it's a closeout or a never out. She knows what she likes, and she wants great value. Please don't misinterpret this to mean we are walking away from closeouts. We are not. We have an opportunity to provide more consistency for Jennifer through how we source our goods. And at the same time, we can still provide her with surprises in every aisle, every day. And by the way, more consistency to Jennifer applies not just to food and consumables, but also home, hardlines and even some of our smaller classifications. Similar to the opportunities in merchandising, our marketing efforts have not evolved nor have they kept up with the competition. Our marketing has to be ownable, with a consistent brand message well into the future. Our marketing message also has to be easy to understand. A good example of that is our new rewards program set to roll out in October. It is simple and easy to understand, offers more frequent rewards for a broader cross section of our loyal shoppers. Today, Jennifer gets her information from a number of sources, but she is becoming increasingly more dependent on social and online forms of media. As we all know, merchandise content drives marketing efforts for retailers, so as one gets better, both get better. Going forward, a growing rate of our advertising spend will go to social and e-commerce, as other forms of spending are likely to decline. In terms of e-commerce, we have engaged one of the leading retail consulting firms to help us develop a strategy and identify resource needs to be successful in this space. We will spend the fall season working on these details of the plan and be ready for 2014. The third leg of the stool is the stores. As part of our store walks, we brought each regional vice president to Columbus to participate and learn how to teach and train their teams differently, covering every aisle with their teams, not just race-tracking or walking the perimeter or to drive aisles, seeing the store in the way our customer sees the store. Today, our operational execution store to store is inconsistent, and the group learned how to see the store through Jennifer's eyes, from ticketing to signage and in-store communication to how our people provide friendly customer service and a clean store. I started my commentary with Jennifer and the customer, so I'm not going to bring it back full circle to close with the customer. In near term -- I am going to bring it back, I'm sorry. To talk about the near term, there are some very exciting results from our testing I wanted to share, tests focused on meeting Jennifer's needs and desires while driving traffic and sales to our stores. First, we reported on our last call 75 stores in 5 markets we're testing coolers and freezers. The goal of the test was to offer the necessary assortment of food-related items and classifications of merchandise, which would position us towards becoming SNAP eligible. Good news, our test has been successful. It's driving higher transactions, higher sales and introducing new customers to our stores. It is a profitable model, and earlier this week, we discussed with our board what our rollout program looks like for the next couple of years. We believe this removes a barrier to entry for our customers, who would like to shop our stores on a regular basis. This is a win for our customer. A new test in Q2, which we have discussed, involves furniture financing. Today, we offer a private-label credit card program through one of the major banking institutions. The bankcard program has very low acceptance rate and we believe, puts us at a disadvantage compared to other more aggressive furniture or rent-to-own retailers. In June, we began testing a new different financing vehicle through a third-party financing company. The test results have been very encouraging, driving incremental sales and a furniture basket nearly 3x our current furniture transaction size. This program is high on our list of priorities and resource needs, and we are hopeful to be in a position to expand the program as early as possible in 2014, another win for our customer. Another test which began in Q2 revolves around urban locations. As a reminder, in these locations, we reworked store layout to expand the presence and consistency of product flow of consumables and food, including coolers and freezers, while downsizing other merchandise categories which might not be as relevant to a customer living in an urban setting. The process of changing the store was not as extensive as a full market remodel or as cost- or capital-intensive. We intend to allow this test to run for another quarter before passing judgment, but 2 elements are very clear: first, further validation that coolers and freezers are exciting to our customer; and secondly, we have experienced some good learnings on expanding food and consumable assortments, learnings which may apply to the chain, not just the urban locations. The final testing initiative I want to update you on is our full market remodel test. Here, the results are not as consistent as the results I just covered for you. We continue to track our 2 test markets from last year: Miami, Florida; and the Modesto, Fresno area in northern California. Miami continues to do extremely well. In fact, it's one of the best-performing districts in the company to finish 2012 and in the spring of 2013. Modesto appears to be okay, but not to the same degree as Miami. We have started the work on 3 test markets for 2013 located in Florida, California and Tennessee, Virginia area. The work for these stores is occurring as planned, with Tennessee completed, the Tampa market re-grand opening this Labor Day weekend and our San Francisco market deep into the remodel efforts. Once again, we will continue to provide updates as the test progresses. Generally speaking, I like what remodeling a market can do for Jennifer and for our brand, but I would like to feel a bit more comfortable with the sales lifts and financial returns before we extend a program like this much further. So in summary, the last 100-plus days have been extremely exciting and a lot of good work and understanding has been accomplished. I believe we will see our business slowly start to improve in the second half of this year, as improvements in product and a higher level of energy towards customer focus starts to cascade throughout the organization. We have a number of positives ready as we move into 2014, and the entire leadership team is committed to delivering a new strategic plan for the next 3 years, with a renewed focus on the customer, our associates and our shareholders. So with that, I will now turn the call back over to Andy. Andrew D. Regrut: Thanks, David. Anthony, we would now like to open the lines for questions at this time.

[Operator Instructions] It appears our first question comes from Patrick McKeever with MKM Partners. Patrick McKeever - MKM Partners LLC, Research Division: Just going back to the cooler -- the frozen and refrigerated food test. Can you just talk through some of the numbers there? How many stores are now on the test? And maybe give us a little additional color on the traffic and ticket impact and whatnot. Timothy A. Johnson: Yes. Patrick, it's T.J. I'll start and then, if David wants to chime in from a merchandising perspective. But at a real high level, we've got 75 stores identified in the test markets, 5 markets, as you know, across the country, so we had a pretty representative sample. In those test markets, we're seeing a lift in comps, and that lift in comps is coming solely from transactions, which was the goal of the test, as you will recall. So we feel very good about that outcome. The basket size in a traditional, I guess, cooler or SNAP basket is slightly lower than our company average, but still, I'll call it, in the low-20s. So we're encouraged by that as well. We like what it's doing for, again, taking out that barrier to entry in the store. In round numbers, the cost was about $30,000 to $35,000 per store in terms of CapEx, and we're comfortable, given the sales lift that we're seeing, that, that is certainly going to pay for itself over the longer term. We won't go into details of comps versus margin rates versus et cetera, et cetera, on this call. That's something we'll talk about at potentially a later date. Again, the good news here is we had a pro forma in place. When we put the test in place, it says, "If we hit this, we'll call that success and we'll move forward." We reviewed that with the board this week, and they were as encouraged as we were. So what we're communicating today is the group internally is working on the rollout plan for the next couple of years, understanding what our resource needs are and how we balance that against other initiatives in the business to make sure we're prioritizing the right thing for the customer.

Our next question comes from Matthew Boss with JPMorgan. Matthew R. Boss - JP Morgan Chase & Co, Research Division: Can you elaborate on top line trends as the quarter progressed, and particularly performance in August versus the 3Q guidance so far? Timothy A. Johnson: Sure, Matt. Q2 -- the trends or the trajectory in Q2 was as expected. If you'll recall from the last call, we were concerned about the early trends in May and particularly, the Memorial Day weekend, where, as you'll recall, in most markets, it could have been 15 or 20 degrees cooler than the prior year. Memorial Day weekend is typically a big, big kickoff for us for summer and lawn and garden merchandise, and that business did not happen in May. In June, business got incrementally better, and in July, the comps for the month of July were actually essentially flat. So May comps were below the quarter, June comps were in line with the quarter and the July comps were essentially flat or better than the quarter number, which was very encouraging to us. So we're sitting here at the end of July saying we're right on trajectory to go into the back half of the year. Candidly, the first 2 weeks of August were not as encouraging for us, and comps were down to last year. Now the last week to 10 days, comps are back closer to that flat range. So what you see reflected in our Q3 guidance -- Matt and for others, because I know this is probably a common, common question out there, what you see reflected in our Q2 guidance is us acknowledging that we've got 2 different trend results here in August as we start the quarter. We do understand that as the quarter goes on, obviously, our business got more and more challenged last year, so we understand that there's a little bit lower bar out there. But coming out of second quarter, we felt pretty confident going into the third. And then again, the first 2 weeks of August gave us a little bit of, hopefully, what plays out to be a head fake, but we're really not sure just yet. So again, 90 days ago, we would have been talking about slightly positive comps in the third quarter. We thought it was prudent to adjust our expectations for third quarter and acknowledge that the early start to August and for some back-to-school was not as robust as we would have liked.

Our next question comes from Meredith Adler with Barclays. Meredith Adler - Barclays Capital, Research Division: I was wondering if you could talk a little bit about Canada. It does look like earnings per share guidance change was mostly in Canada, and maybe talk about what you're seeing there. And is there anything that you're concerned about or it's a new business and it's just developing maybe differently than you expected? Timothy A. Johnson: Meredith, you are correct. If you look at our -- the 2 components of guidance which we've historically given to you guys, we've split out Canada and the U.S. since day 1 in the acquisition. If you look at the year for the U.S., the U.S. guidance, we actually narrowed the range slightly and kept the high end. The beat in Q2 helped us raise the low end, and that beat in Q2, candidly, funded some of the shortfall in Q3, acknowledging the early trends in August. From a Canada perspective, Q2 was in line with guidance. However, during the quarter, sales did get a little bit softer than we would have expected. And into Q3, again, acknowledging those trends, Q3, the sales number is lower than we would have been giving 60 or 90 days ago potentially. We think within the Canadian business, there are probably 2 or 3 categories where we're not as strong as we would like to be. We've made some changes there both in terms of people and product coming, pointing at us, and we're hopeful, as to the fall season, that starts to get a little bit better. But most of the guidance change in Canada was reflective of acknowledging third quarter trends. A fair amount of the fourth quarter business that we do in some of the -- particularly, in some of the program -- the areas of seasonal and even some of the furniture areas, there is a fair amount, I'll call it, piggybacking, it's kind of the phrase internal, of what we do here in the U.S. So that's a data point to get us more comfortable that as the fourth quarter comes, business should start to get a little bit better. But it's really, to answer your question, acknowledging trends coming out of second going into third that we're seeing in the business. David and I have -- actually have a trip scheduled to go up to Canada here in the next few weeks, which will give him a better opportunity to kind of assess the second part of your question in terms of the merchandising and the strategy and to meet with some of the buying team. David J. Campisi: Yes. And I think I might add to that, Meredith, that the team up there has done a very good job. With the -- the openings of the Big Lots stores have been very well received, and we think there's obviously bigger opportunities to re-brand or relocate with the Big Lots brand. So it's very encouraging to see that. I've spent some time with that team last week at the leaders meeting, and I see lots of upside. And as T.J. just said, we'll be up there in a few weeks to spend some time in the stores as we did down here, walking every aisle and every business.

Our next question comes from Paul Trussell with Deutsche Bank. Paul Trussell - Deutsche Bank AG, Research Division: I was just hoping if you could expand a little bit on some of your comments about the merchandising that you've seen, David, in the stores in your first 100 days. You said certain categories obviously are going to remain a focal point. But if you could talk about a little bit, you said home and a couple of the other categories that might see some changes. David J. Campisi: Sure, Paul. A couple of things, I guess, just to reiterate. When you really dig deep into our furniture business and you see how strong we are, a very strong team in businesses and categories where we dominate in, in things like mattresses, where we rank in the top 10 in the U.S. in volume, I see lots of opportunity there to continue to grow that business with a heavier focus on it. And when I look at the home, I see opportunities there for us to do more cross-merchandising with categories with furniture, like area rugs and some of our framed art. The comments on the home are really more about us getting back to the core parts of the business and really getting into the, what I call, ownable classifications of core, core basics. We really have a heavy emphasis on fashion and a lack of emphasis on never-outs, more replenished core basic programs in domestics and in some of the other areas. It's very encouraging to see what's happening with the renewed emphasis on tabletop. The business is actually starting to comp up very nicely. But when I get into the kitchen textiles area and some of those businesses, there's really been an emphasis on closeouts that, candidly, aren't very good quality and the taste level of it is not very good either. So really working closely with that team, and in fact, I'm meeting with them at noon today to review their spring '14 buys as well. When you look at the hardlines business, Paul, some of the categories that we're looking at that we just aren't a destination for would be -- some of the examples I would give you would be things like power tools and kitchen faucets and some of those categories that I think just aren't meaningful and aren't important to Big Lots. And what my strategy there is going to be, again, Edit to amplify and take those dollars and shift it over to the businesses that are more meaningful. Those would just be a few highlights. There's many, many more of those businesses out there like that, but those are some of the key things that I would tell you we're heavily focused on.

Our next question comes from Joe Feldman with Telsey Advisors Group. Joseph I. Feldman - Telsey Advisory Group LLC: I wanted to ask -- 1 question was about getting some more color on where you could maybe add some resources. You talked about, Dave, in your prepared remarks that there are some areas where you may have been -- you've been too lean in the organization. And I just wanted to understand where you thought that might be and maybe even where progress has been in the past quarter on that front. David J. Campisi: Yes. That's a good call-out, Joe, and a very heavy focus of mine. I've spent the last 100-plus days, really, in the stores and in the building with the merchandising and planning group. It's quite obvious that we're running very lean in some of those businesses, both on the buying side, but equally or more importantly on the -- whether it's the planner side or the allocation side of the business, and we need to get more eyes on to the details. And I think that there is tremendous upside on the top line as we navigate through what our needs are. As an example, you have 1 planner and I think it's 4 or 5 buyers in the food area. So you got 1 planner in that area managing that many classifications and that many businesses. And a business, as you guys well know, is in upwards of $800 million. It just doesn't work, and there's too many misses that take place. And I refer to these things as sawtooth, where we -- 1 week, we're up double digits; the next week, we're not. And I believe firmly that a lot of that is because we don't have the -- not just the talent, but we don't have enough people looking at these businesses. So throughout the entire organization, and candidly, we will be looking at adding GMMs back into the building as well. A company of our size cannot operate without general merchandise managers that have a strategic point of view about their businesses. So as -- over the next 60, 90 days, we will be making some changes in the organization and adding some folks in there. And candidly, when you think about, "Okay, where are the dollars going to come from?" Well, we spend a lot of money over the last, I don't know, 5 or 6 years, T.J., correct me if I'm wrong, but spending a lot of money with outside consulting firms, working on merchandising and marketing strategies, where none of these things got executed. And whether the ideas were good or bad, it's clearly an opportunity for us to shift those dollars into the talent in the building so we can actually execute because, as you guys well know, it's very simple to put a strategy on paper. But that's 1/12 of the work that needs to be done, the execution piece is the other 11/12. So that's really what we're talking about, adding some Gs [ph] into the building and then adding some people into planning and allocation and potentially, replenishment. Because when you look at our replenishment or what we call our NVOs, it's the strongest part of our business and the fastest-turning piece of our business. So we continue to look at that, and we'll continue to shift some of our SKU count from never -- or in and outs, I'm sorry, to never-outs. And that requires additional headcount and talent in the building.

Our next question comes from Anthony Chukumba with BB&T Capital Markets. Anthony C. Chukumba - BB&T Capital Markets, Research Division: Just had another question related to Canada. You mentioned the re-branding efforts and getting a nice comp lift there. I guess, I was just wondering, first off, what's the cost involved with re-branding from LW to Big Lots. Second off, is it just kind of changing the signage? Or are there other changes that you make in the store? And the third off, what's your -- what are you thinking in terms of timing on re-branding, I guess, all the stores or a significant portion of the stores? Timothy A. Johnson: Anthony, it's T.J. I guess, we've rebranded 2. So it's -- to give you a cost of 2 stores, I think is probably not representative of what it could look like if we were to do more. So I don't want to go down that path because, candidly, one of the stores that was rebranded was one of the most recent store openings before we purchased the company. So that number is going to be, obviously, not representative of some of the stores that might be older or in more need of work. I think it's fair to say we need to understand better now, 2 years into this kind of the composition of how many stores ought to be Liquidation and LW stores versus Big Lots stores based on these most recent results. And that's a portion of the reason why David and I will be going up to Canada to meet with Joe and his team. Obviously, the other portion of that visit is so David can get a very clear understanding of the merchandising strategy and efforts and presentation in the stores. So I hope that answers your question, Anthony. But I guess the takeaway, for us anyway, is the 3 stores under the Big Lots name in Canada have been very well received by the customer. And now it's on to an evaluation of the balance of the chain, as well as the merchandising strategy from David's eye is that how he sees things kind of going forward, looking at it, coming in new to the strategy.

Our next question comes from Nathan Rich with Citi. Nathan Rich - Citigroup Inc, Research Division: David, can you provide some more color on who Jennifer is? And how she shops the store and also, what the opportunity is to increase her loyalty to Big Lots? David J. Campisi: Sure. Well, we -- first of all, we did a lot of research, both externally and internally. A lot of the demographics come from our Buzz Club rewards program, as well as using data from Orbit and Simmons. And what the whole focus on Jennifer was, is -- again, we just had our leaders meeting, and we introduced Jennifer on stage as "meet the new boss". And again, this is about focusing in on a woman who's 25 to 54 years old. The data told us her average age is 42. 56% of our customers are married. 51% of them have kids at home. And so on that household income range, annual household, is a pretty broad range of between $30,000 and $100,000, with the average household income of $54,000. And obviously, there's more demos percent, Caucasian African American, Hispanic, et cetera. But the real focus here, guys, is to get both our stores and our corporate office, which I've always believed in retail today is where the consolidation of retail has taken place and you have a centralization of buying. You lose focus on who you work for, and that's Jennifer. And Jennifer, the name really came from the most popular name in our Buzz Club rewards program as we rank them. And we also have -- the other side of that coin is the customer. We haven't forgotten about the guy, his name is Chris. But candidly, Jennifer controls 85% of the household's spend. And there's lots of other data that I could share with you, and I won't go into detail. But we certainly want everybody in our company from the DCs to our stores to the corporate office to be focused on only 1 thing, and that's seeing everything through the eyes of Jennifer. And it is amazing what you see and what you learn, when instead of merchandising -- and I can just give you a little bit more color back to one of the questions, I think, that came from Paul was, we merchandise things the way we buy them. As an example, we'll put screwdrivers in 3 different locations, in the same gondola run or paintbrushes or many, many other examples in the electronics areas as well, as well as other businesses because part of what we buy is an in-and-out, part of it's a closeout, part of it's a never-out. That's not how the customer shops. So she doesn't care how we buy it. And those are the significant shifts and a significant paradigm shift that's taking place as we speak. And I can't overemphasize how exciting it is to see our people. When I meet with the merchants in our store, guys, everything they talked to me about is, "Jennifer says" or "Jennifer this". And it's contagious, and I think it's going to deliver, over time, positive comps again.

Our next question comes from David Mann with Johnson Rice. David M. Mann - Johnson Rice & Company, L.L.C., Research Division: David, really appreciate the details of the strategy as it's coming together. Question, as you talk about this edit and amplify strategy, can you give some sense on how you see that impacting gross margin over time, in the sense that as a lot of your discount competition has gone more towards coolers, where you're clearly having some success, that put pressure on margins? I'm curious how do you see the longer-term gross margin here and how do you manage to that, given all the changes you're planning on putting in place. David J. Campisi: That's a good question, David. I would tell you that I don't think we're going to see any margin erosion significantly, as we roll out the cooler/freezer program. Again, the businesses of food and consumables penetrate about 30% of the business. You might see a little uptick in food, but we certainly have plenty of triggers in those categories. It's a very high closeout part of our business, with some surprising incredible values in that category, but some really, really good gross margin as well. As far as the edit to amplify, candidly, the focus areas there is, again, "Where do we win? What are the categories that are ownable and winnable? And where do we win today?" And in a lot of cases, those are high-margin businesses. So as we continue to expand those categories or businesses and edit some of the other businesses that -- quite honestly, the ones I've really focused on are actually lower margin, and so we'll shift some of those dollars into higher margin. But again, the strategy isn't -- we're in -- we just finished part 1 of part 3 on our strategic planning process. And as the team moves through the next 2 to 3 months, we will be able to move to part 2, and it'll be much clearer what that operating plan will look like matched up to the merchandising strategies. But I don't see any significant erosion to gross margin. If anything -- and we'll make the right decisions. If there is a business opportunity out there that has tremendous upside on the topline and we have to give up a little bit of rate to get those gross margin dollars, we'll make that decision. And those are the types of things that my team is very focused on, and T.J. can add to that, that we work very closely with Lisa Bachmann and John Martin -- Lisa, our Chief Operating Officer, who has the planning side of the business; and John is our Chief Merchant, T.J. and I on making those decisions that if it makes sense for the business and we see significant upside in gross margin dollars, we'll go after it.

Our next question comes from Joan Storms with Wedbush. Joan L. Bogucki-Storms - Wedbush Securities Inc., Research Division: On the merchandising transition and you talked about sort of, in the third quarter, in the past, how that is transitional for you and every year you sort of change things up a little bit. Can you talk about sort of back-to-school? Previously, you thought potentially the merchandise was a little bit better, but now there's been some mixed results in August. And then the fall harvest and then your transition into holiday and what the plans are there. David J. Campisi: Sure. Good question, Joan. I would tell you that back-to-school, and I know you guys have heard some guidance from a lot of other retailers who got off to a slow start in a lot of key categories for a lot of retailers, including things like backpacks and some of the back-to-college categories. I would tell you, though, later in August, those businesses are starting to move in a positive trend. And I think again, the back-to-school business continues to come back later and later. I had some concerns in the home. Again, there's a lot more fashion in the soft side of our home for back-to-school. And I think that as we move into later third quarter, really in mid-September and onward, I'm very, very encouraged by the significant changes in content that I see moving into the fourth quarter. We still have plenty of work to do there, but I believe that the strategy is starting to come together and a clearer understanding by that team of what the expectations are. As far as the fall harvest, we have had some success in some of the categories. In our stores, if you've been out there looking, there is a collection called glitter and glisten, and that is actually performing very well. It's a little early on some of the other businesses, but I'm very encouraged by that. And again, as you said, the merchandising side of the business is always in flux and it's always a living, working part of the business that changes based on trends and what's happening in the marketplace. So we're very fluid there from the standpoint of being able to react to what we need in the businesses. So feel very good about that, and quite honestly, the bigger stamp on the business happens, as I said on the last call, 2014.

Our next question comes from Jeff Stein with Northcoast Research. Jeffrey S. Stein - Northcoast Research: A question on the cooler program. Can you talk at all about the attach rate you're getting from that incremental customer? Is he shopping the rest of the store? Or is he just coming in for the consumables? David J. Campisi: Good question, Jeff. I'm going to have T.J. take that because he's a lot closer to the numbers than I am on the tracking of this test. Timothy A. Johnson: Yes. Jeff, to date, in the test, what we're seeing is 1 level of, obviously, sales out of the cooler, which is encouraging. But the highest attach currently is into the food area, where that customer can use their assistance credits or dollars. That's the biggest attach currently. Now what we're going to learn over time, as we watch these customers -- and our best view into the customer is for those customers who, with their SNAP purchase, are actually signing up for the rewards program and monitoring that rewards activity over time. Because, again, when we're attaching to SNAP transactions, we can see what's in that transaction but we also want to understand, when they come into the store, if they come into the store without using their assistance program. So what's also encouraging in this result, and David kind of mentioned in his prepared comments, is in our urban locations, primarily on the West Coast, where we're testing currently where we could expand the presence of food and consumables to the tune of about 80 or 90 feet in the store, we're actually seeing a stronger result or a stronger response to the cooler and freezer transactions and attach rates, so to speak. So all indications so far for us point towards positive sales and transactions. This was the goal. All indications point towards this can be a profitable way for us to expand our business, which, again, was the goal. And to date, we're having very little difficulty kind of making room for the coolers or we're having very little lost volume in the event that we do need to make room for them. So most of the data points are all positive. And as David mentioned, the win for the customer and the win for our stores teams, frankly, that have been asking for this opportunity has been pretty encouraging.

Our next question comes from Laura Champine with Canaccord. Laura A. Champine - Canaccord Genuity, Research Division: My question is about gross margins in Q2, which were well ahead of our expectations. T.J., you mentioned in the back half that you expect lower markdowns and a better mix. I'm assuming that's what drove the upside in Q2. Can you talk about -- can you quantify those drivers? How much of it was lower markdown? How much of it was better mix? And explain how you got there with the lower markdowns. Timothy A. Johnson: Yes. I guess, Laura, if I look to the high end of the range, just speak to the U.S., which I think is where your question lies, our guidance was, on the high end, $0.32. We came in at $0.37. The way I would characterize it is probably about $0.01 of that to our own internal models, $0.01 to $0.015 was the margin rate and the balance was expenses. In terms of the margin rate, couple of things happening during the quarter. First off, obviously, the strength in lawn and garden and summer when it finally did get warm and the strength in fans and air conditioning and outdoor lighting, et cetera when it finally did get warm was very encouraging for us. And we sold through a lot of product. The other piece of upside in terms of the margin rate was obviously from a mix perspective, with seasonal being our leading category. That was the helper. Seeing a little bit of improvement throughout the quarter in home to our expectations was a helper. On the flip side, the challenges we had in electronics, which is a lower-margin category, actually, in a backwards kind of way, helped our rate as well in terms of the volume. From a markdown perspective, though, as David mentioned, working with John and Lisa and their teams, we're comfortable, very comfortable that we came out of the spring season clean on lawn and garden and summer. And when you look at it on a cost basis, the inventories are actually down to last year, so that's where we wanted to be. So again, a little bit better sell-through on lawn and garden and summer helped on the markdown side. And from a mix perspective, again, seasonal, which is higher margin; home, which saw a little bit of improvement and is higher margin; and electronics, where we came in a little bit below our expectations, is lower margin. So that all kind of worked together. But again, if you look at the upside to the model that we gave and we look at it internal about $0.01 or $0.015 of that came from the margin rate and the balance in the U.S. was in expenses.

Our next question comes from Dan Wewer with Raymond James. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: T.J., just wanted to confirm the third quarter guidance. I didn't see it in the news release. But were you indicating a loss of $0.05 to $0.13 consolidated? If so, that looks lower than expectations. But it looks like the -- your fourth quarter estimate, you're assuming business is back on track. I was just curious, given that we're off to a slower start in 3Q, what gives you the confidence on this fourth quarter outlook. Timothy A. Johnson: Yes. We actually -- our past practice even last year, is to make sure that when we give you guidance for the third and fourth quarter, we actually spell it out on the conference call rather than putting it into the release and leaving a lot of unanswered questions. So what we spelled out earlier on the conference call, in the prepared remarks was a loss consolidated of $0.05 to $0.13 for the third quarter, again acknowledging August trends were off to a slower start, but the last week to 10 days was better. What I would also remind you of is in the last year number, that I think a lot of models are probably based on, you'll recall we had a pretty significant adjustment in terms of stock comp expense. That was a favorable or a helper to the last year number. So I can't really speak to each of the individual models out on the street. I can speak to internally, from our models, what changed in the last 90 days. It was an acknowledgment of early trends in August, getting off to a slow start and was lowering our expectations internally to a flat to minus 2% comp versus, 90 days ago, we would have been looking at a slightly positive comp for the third quarter. That's the bulk of the change in the U.S. From a Canadian perspective, again, acknowledging softness in July and early August and adjusting our sales expectations and our inventory back there as well. And secondarily, we were in transition mode in Canada, out of 1 DC and into another on the West Coast, and we incurred some incremental SG&A that needed to be reflected in the third quarter. So in summary, reflecting an August trend and reflecting some incremental expense in Canada is the bulk of the change to our models internally. I'm not sure how that lines up to what would have been modeled. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: How did the fewer days in the -- between Thanksgiving and Christmas impact your fourth quarter outlook? Timothy A. Johnson: That was baked in our original outlook, Dan. And in terms of what would our expectations be, I think David spoke to it earlier. The expectations for fourth quarter is solely based on merchandise content, improvements and changes to the mix as you go into the fourth quarter from the third quarter. Obviously, we've had a lot of successes in the business when times were good or when times were even more challenging in our seasonal and trim business. That's a big part of our business in the fourth quarter, and we have every expectation that will improve. It's a small part of the business in the third quarter. Furniture has been a strong business for us all year long. We have every expectation that, that business will improve in fourth quarter. Really, the trend changes coming out of spring going into third and fourth quarter and leading to that positive comps are really focused in 2 areas, food and consumables. But we think we are in better position today from a content standpoint than we were in spring and in home, where the expectation is the newness that we will deliver will perform.

And our final question comes from Morris Ajzenman with Griffin Securities. Morris Ajzenman - Griffin Securities, Inc., Research Division: David, thank you for the strategic insight, as well as the merchandising and how you see the company evolving over the next year or 2. I guess, the $64,000 question clearly is, how long this repositioning of the company takes. And understand guidance only goes out to the end of calendar '13, but can you give us a 64,000-foot view of how 2014 -- not using numbers, but is 2014 a work in progress as it relates to the repositioning, the re-merchandising strategies going forward? Will it take beyond 2014 when we start seeing the fruits of that labor? And then how that plays out also, secondarily, to use of free cash flow generation. It was continuously pretty abundant. Timothy A. Johnson: Okay. Morris, it's T.J. I'll start. I mean, 64,000-foot view is that's a pretty rare air up there. But I guess, we'll try to give you what we can. The short answer, from a financial standpoint, the finance guys, we do not have some models that we're going to be speaking to for '14 and beyond. As David mentioned, collectively, as a leadership team, we're working on David's version of the strategic plan, recognizing that he has some thoughts and we all have a different focus now in terms of the customer than might have been planned for in the past. So it will change. It will look different from a strategy standpoint. Having said that, I think we're all motivated to get moving in a very short time frame. I think we'll have a very clear picture of where we want to go coming out of this fall season. And I think when we look into early spring, in that March, April time frame, we'll have a much clearer idea of what the strategy is going to look like. And I think our methods of communicating that to you might look differently in terms of potentially hosting something here in Columbus, introducing you to the new team and the new strategy. So I know that's not going to help you, for now, to adjust your expectations for next year. But please understand, we're early on. We're 100 days into the newness of what we're trying to accomplish. And all of that, obviously, goes directly to the last part of your question, which was free cash flow usage. I think, again, premature to speak to that other than just say that we will look at all uses of cash as we always do with the board. It was a topic of conversation, as it always is, just recently, this week, in the board meetings, and we'll make good decisions on how to return cash to shareholders over the long term. But from a merchandising or strategic and marketing standpoint, I'll ask David to kind of comment. David J. Campisi: Yes. Thanks, T.J. So Morris, I would just add to that, that, again, that 64,000 feet maybe I could take you down to 50,000. But the thing that I would tell you is lots of the things I've talked about are happening as we speak. Again, some things you can't impact, some things you can't touch. But from the standpoint of the shift in merchandising, one of the biggest things that's taking place and I'm excited about is our field team has really embraced this. As I said earlier, our regional vice presidents were here in Columbus over that 12-week period, walking in the stores with myself and my team. And they're taking that torch out, out into the field and making some significant changes in how we present the product to Jennifer. And while we're doing that, we're in the midst of finalizing spring '14 financial plans at the department level, class level. And we are making those changes for '14 and we're -- what businesses we're going to edit to amplify and really explode and win in and shifting those dollars where I believe we don't win or we don't -- we're not meaningful or important to Jennifer. So '14, certainly, there'll be significant changes in merchandising. And again, I just want you to understand that it's evolving, where that 3 legs of the stool I talked about, you'll see some changes in fourth quarter, as well in our approach to talking to Jennifer via our marketing strategy. So lots of excitement, good things to come. Andrew D. Regrut: Okay. Anthony, I think that's it for today.

Ladies and gentlemen, a replay of this call will be available to you within the hour and will end at 11:59 p.m. on Friday September 13, 2013. You can access the replay by dialing toll-free U.S. and Canada 1 (888) 203-1112 and entering the replay code of 6561929. International callers may dial (719) 457-0820 and entering the replay code of 6561929. Ladies and gentlemen, this does conclude today's presentation. Thank you for your participation. You may now disconnect.