Big Lots 2009 Annual Report Download - page 5

DEAR SHAREHOLDERS:
BIG LOTS, INC. 2009 ANNUAL REPORT
Steven S. Fishman
Chairman, CEO and President
When I decided to join Big Lots nearly five years ago,
I looked at this business as any investor would. What
was clear to me from the beginning was that we
had talented people and a strong niche in the retail
marketplace. At the same time, we had an incredible
opportunity to transform Big Lots from a good company
to a world-class organization.
We set out looking at our business in new ways,
challenging how we operate and our assumptions about
what our customers expect. We cast aside a “business
as usual” approach, knowing that in retail if you are
not changing or reinventing your business constantly,
you run the risk of losing ground with your customer.
We reviewed all aspects of our strategy and business
processes. We worked diligently to test, learn, and
develop a long-range plan for our business. We focused
on creating shareholder value through programs to
improve merchandising, marketing, and store-level
performance, supplemented by diligent and strict
expense control. We committed to healthy growth,
and we said we would not grow the store base until
we could assure you that we were doing so in a profitable
manner. These strategies and disciplines are now deeply
embedded in our culture and have served us well. We
have grown our operating profit from $27 million in 2005
to over $325 million in 2009 — a year that will likely
go down as one of the most difficult environments in
retail history. And along the way, we have generated
nearly $1.2 billion of cash, the majority of which we have
returned to you, our shareholders, in the form of share
repurchase activity.
I am very proud of the team’s effort. During this past
year, when the global recession took its toll on the
market and economic news turned morning coffee bitter:
• We completed our 3rd consecutive year of record
EPS performance, a span that now dates back
13 consecutive quarters.
• We generated record operating profit dollars
of over $325 million.
• We grew our store base for the first time since
2004 by opening more stores in 2009 than we
have in the last 3 years combined.
• We invested in new systems and put capital to work
in our business and fleet of stores to enhance the
customer experience.
• And, in a world where cash is king, we generated
over $300 million in cash.
• Our Board of Directors has authorized the repurchase
of up to $400 million of our common shares.
In the balance of this letter, I will detail some of the
significant 2009 highlights, and also lay out for you
some of our thoughts on the future and our plans for
continuing to enhance shareholder value.
READY FOR GROWTH
Our business has generated a significant amount
of cash in recent years. My job as CEO is to ensure
we are investing your cash in the opportunities that
we expect to generate strong returns, whether that is in
our existing concepts or new strategies. I have said on a
number of occasions that we have “an open to receive”
and would look at any opportunity to drive profitable
growth and shareholder value. Looking forward to 2010
and beyond, we believe the best opportunity (internal or
external) is to reinvest in our current locations and grow
our fleet of stores profitably.
Clearly our business model has gotten stronger each
year, and we are confident in our plans heading into
2010. Additionally, the difficulties experienced in the
economy have taken their toll on retailers and the
commercial real estate market. As a result, today
there are fewer retailers vying for locations and, in
our estimation, real estate prices are becoming more
appropriately valued in the marketplace. The
combination of our improved performance and a softer
real estate market enabled us to move into a store