Big Lots 2010 Annual Report Download - page 5

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Dear Shareholders:
It’s hard for me to believe that over five
years have gone by since I first wrote to you
in my role as Big Lots’ Chief Executive
Officer. In that first letter, I told you that I saw
my job as rather straightforward. Essentially, it was about setting priorities so that you, our shareholders, would achieve the
kind of return you expect from your investment. That statement was every bit as true this past year as it was back then.
Last year I said that in fiscal 2010, Big Lots would build upon the things that were working so well for us — namely, keeping
our organization focused on a few key initiatives as we grew our fleet of stores profitably. I told you that Big Lots associates
around the country were dedicated to delivering results and building the value of the company. I’m pleased to report that
our organization delivered on those objectives and more, achieving our 4th consecutive year of record income and EPS from
continuing operations. Specifically:
We remain in a
growth
mode. We expanded our footprint with the opening of 80 new stores and now have operations
in all of the 48 contiguous states. Our new store sales and profitability exceeded our plans for 2010, which validates
to us that our growth strategy is working. In fact, new stores are likely the best investment we can be making right now
for the future of the company.
We aggressively expanded our new “A” store strategy as 33 of our 80 new store openings were A-type locations. This
strategy enables us to open stores in the strongest retail trade areas or “power strips” in a given market … retail trade areas
with better demographics (population density or household income), stronger retail brands surrounding us driving traffic to
the center, and often times a customer base that we are not currently serving with our traditional locations. We believe we
are attracting a meaningful number of new customers to our “A” store format — customers who may not have a Big Lots
store in their normal shopping pattern. I feel particularly good about our direction in real estate and the sales volume we’re
experiencing in our new locations.
We grew sales productivity and gross margin dollars. Our discretionary merchandise categories performed very
well … categories like Furniture, Home, and Seasonal helped to further differentiate Big Lots from a crowded retail
landscape. Interestingly enough, these categories are some of our higher ticket, or higher average item retail businesses,
further reinforcing our motto that it is all about
great quality
and
unmatched value
. The customer responds to
change and newness at great value — and in the retail business, if you are not continually changing and offering something
different to the customer, you will fall behind. In certain of our businesses, namely Consumables, I don’t believe we have
been changing fast enough or presenting enough newness and value … so we have been working very hard and swiftly
We focused
on a few
key initiatives
as we grew
our fleet
of stores
profitably.
Big Lots, Inc. 2010 Annual Report