Hi. Good morning, everyone. My name is Peter Keith. I am the Senior Research Analyst at Piper Sandler, covering hard lines and leisure companies. Very pleased to introduce our next company, Big Lots. Participating from Big Lots, we have three executives. We have Chief Executive Officer, Bruce Thorn, Chief Financial Officer, Jonathan Ramsden, and Chief Merchandising Officer, Jack Pestello. Hello. Many of you may know Big Lots, but for a quick overview, they are a neighborhood discount retailer operating over 1,400 stores across 47 states, with a product assortment that is focused on home essentials. That would include items like furniture, soft home, seasonal, food, and consumer. For today's format, we are going to be using Q&A. I am going to ask questions for a period of time, then we want to take questions from the audience. You should see a prompt at the bottom of the screen to input your questions, and I will address those later on in today's session. Welcome Big Lots team. Thanks for joining us today. Thank you. Thank you, Peter. Great. I want to kick it off with today's release. You had some preliminary results out for Q4 quarter to date. Just at a high level, you reported that the same-store sales trends are tracking up 7.5%. It's slightly below the consensus expectations of about 9.5%. Then you were guiding EPS to be about flat year-on-year, which is also a little bit below the consensus expectations. Maybe to kick it off with you, Bruce, first, could you give us an overview of the quarter to date period, maybe some of the positive surprises as well as some of the negative surprises? Yes, thanks, Peter, and thank you for everyone joining us. Overall, the quarter is shaping up to be pretty much what we expected with some distinctions. As you mentioned, sales comps are coming in high single digit range. Specifically, we're positive 7.5% quarter to date, and that number's increasing with every day. We're finishing Q4 and fiscal year 2020 in a strong manner with accelerating sales trends. We're seeing positive double-digit comps across all merchandising divisions, with the exception of food, which is positive low single digit, and also our seasonal business, where our sales were constrained in December due to a shortage in holiday inventory due to our decision in spring when COVID broke out to pull back on our purchase order and our inability to chase it effectively. Also the robust pull forward of our holiday sales in October and November, which were up significantly. Traffic in December was down more than expected. We saw that probably from the C-19 stay-at-home orders across the country, and also the fact that customers were avoiding traveling during or traditionally shopping during heavy traditional shopping days. Traffic and sales have rebounded nicely in January as we cycle through our seasonal sales comps and we start to begin to feel the tailwinds of the stimulus checks in our customers' hands. E-commerce, our omni-channel capabilities are clearly bolstering our top line growth and our overall demand growth is accelerating from Q3, and it's up 135% quarter to date as we put out in the release. What's more, and I think it's an important to note, our e-commerce business with Focus just passed the $250 million sales mark, which is a significant growth rate over the last couple of years. Margins coming in flat year-over-year for Q4 as expected, but with some nuances. While we're benefiting from less markdowns year-over-year, freight costs have been increasing as a result of a few things. One, congestion in shipping lanes worldwide. That's leading to delays, higher rates, as well as significant demurrage and detention charges we're seeing in our yards as we work with external and internal capacity constraints. In short, our DC network is operating beyond capacity and will require additional investment in 2021 to keep up with the growth, which is a good opportunity, and we're going to be very circumspect in our approach there as we expand our distribution capabilities in 2021 and beyond. Expenses for the quarter are pretty much in line with our prior guidance, reflecting the headwinds of our sale leaseback on our distribution centers, as well as COVID costs and higher bonuses stock comp, given the exceptional year we've had. In total, we're in the final few weeks of what's going to be a stellar year for the company, unprecedented year, and I can't thank our customers and associates enough for delivering such an incredible year. Okay. Wonderful. If I could maybe just break that apart a little bit. First, let's look at the seasonal category, which you'd indicated was down mid-teens. That was a surprise, at least certainly to me. If I understand, Bruce, what you're saying is that it was both an inventory and maybe a pull forward issue, and on the inventory front, it sounds like you had maybe canceled some orders much earlier in the year because there's usually a long lead time, and so that gave you less inventory than you would've liked, and maybe some of the benefit also showed up in Q3. Is that a fair way to understand it? Yeah, Peter, that's fair. We did a lot of things right this year. It's been an incredible year. We didn't do everything perfectly. Our seasonal purchase was not one of those things we did perfectly. We wish we could have a redo on it. It was a decision of ours in spring to pull back on that purchase order, and we just couldn't chase into it as well as we wanted to. If we had more inventory, we would have done even better in December, specifically that Christmas seasonal inventory was what we wish we had. Just couldn't chase into it. It impacted us in December. As we cycle through that, we're seeing really positive comp growth in January, as we mentioned. All these other things we did right, that was one we just pulled back too hard. Sure. Understandable. Maybe for Jonathan on the freight side. You articulated some of the challenges there that impacted gross margin. I think, in short, it sounds like sort of the sales volumes are surpassing the DC capacity, so maybe there's some third-party costs and things that you're paying for. Is this potentially an ongoing gross margin headwind for maybe we should think about for 2021 in advance of you expanding the DC capacity that Bruce, you mentioned? Yeah, Peter, let me parse that out a little bit. I think you asked the question on the last earnings call about where that freight impact was and could it be in the 150-200 basis point range. At the time, that wasn't where we were seeing it, but it did creep up into that range over the quarter. We were offsetting with less markdowns, which was what brought us back to the same overall rate position. It is, as Bruce said, a combination of external and internal factors, delays at the ports resulting in significant demurrage charges at the ports where we can't get our trailers out. Transportation spot rates being quite a bit higher. When merchandise is getting to our DCs, we're incurring detention charges because of a backlog there, which is a function of the exceptional sales trends we've seen all year and goes back a little bit to the inventory pullback we had several months ago. As factories closed down, as we got more conservative in receipts and then started to accelerate back to restore inventory levels, that's just created a backlog in the DCs, which has meant trailers have been sitting in the yards of the DCs for longer, and we've been incurring detention charges. We have a plan now where we're working that backlog down week by week. We're not yet where we want to be, but we have a trajectory over the next couple of months where we think we'll be in a much better place. There will be some seepage of this into Q1, but we believe we're on path to fix the problem and get caught up. It was, again, caused, I think, by the unique circumstances of 2020, which included, by the way, the fact that in at least one of our DCs, in Apple Valley, it was a hotspot for COVID. We've had significant challenges with labor there, and that's caused the processing times to slow down. We had that issue to some degree in the other DCs. It's kind of been a perfect storm of all those issues. We do believe it will be behind us as we move through the first quarter. Okay. Just kind of moving down the income statement on the expenses. You called out expense growth similar to Q3 year-over-year on lower same-store sales. You do have the sale-leaseback adding a few points to expense growth. Could you talk about some of the other factors? We'll talk more about it later on, but you do have a large cost takeout program. I guess on one hand, it's a bit surprising the SG&A dollar growth in conjunction with cost takeouts. Yeah. The dollar increase we're seeing in Q4 as we guided to in early December is consistent with what we saw in Q3. It's mainly driven by things that are not directly impacted by sales. The sale-leaseback rent expense, that is a structural change in our cost base. We'll get the benefit of that back over time with using the proceeds for share repurchases, but it does permanently increase the SG&A expense, and that's about a $12 million impact in each of Q3 and Q4. We've had a year where we're close to doubling our earnings, and that's driven significantly higher bonus expense and the back half in general, but the fourth quarter in particular bears the greatest element of that. The bonus is accrued in relation to the profits that we're making in the fourth quarter relative to the third. Our PSU expense is impacted by the higher stock price. When that gets valued is when the targets for the year are set and at the point at which they were set for the 2021 stock PSU vesting, performance share vesting. The stock price was significantly higher, and that impacted Q3 and Q4. It's obviously non-cash. The other piece that's somewhat fixed is the COVID costs. All these non-variable sales, which were $5 million or $6 million in each of Q3 and Q4. You add all those things up, and they are driving the expense increases we're talking about. The underlying expenses were a little bit higher in Q4 than Q3 relative to sales. That's a combination of a few different items. Importantly, though, to your point, we are taking structural cost out. We're going to have some tailwinds in 2021, both from structural cost takeout. Our bonus expense, which was way out higher this year because we're pretty much accrued to max, we'll be back to being accrued to target. That will be a significant reduction in expense. The PSU expense is a function of where the stock price is when we price those awards for 2021. We don't know that yet. We ultimately expect the COVID expenses to roll off too. Between the back half and front half of the year, that was a very significant number. We also had some one-off severance expenses in 2020, which we don't expect to be recurring. There's a lot of one-time expense in 2020, which we expect to normalize in 2021. Then on top of that, to your point, we do expect to be taking cost out structurally in 2021 over and above what we've already taken out. That remains absolutely part of the equation, and we'll give more color on that in March. Okay. All right. Great. I may dig into that a little bit more later in today's discussion. Lastly, just for the quarter to date trend, so far with ICR, a couple of companies have highlighted a decent start to January, maybe stimulus check related. You guys have historically been a big beneficiary of stimulus checks or tax refunds. Is that something that you're beginning to see so far in the first two weeks of the current month? Bruce, you want to take that one? I'll start, and Jack can chime in. There's no doubt that, as stimulus checks get in the hands of our customers, just like tax return checks, it's very elastic. They get out there and spend accordingly. We've seen that in recent weeks as the checks have gone out. We're also in a nicer situation now that we've cycled out of some of the seasonal inventory comps as well. Across the board, between stimulus checks and just the getting back in shape inventory wise, filling the stock, stocking the shelves, and the other product lines coming together, we're seeing a nice January shaping up. Maybe just to elaborate a bit, Peter, I'd say if you look at our underlying trend and you adjust for seasonal, running kind of around double digits for the quarter, we're going to get a stimulus benefit, which we are starting to see. The only other offset to that in January is we're being significantly less promotional than we were a year ago. Our gross margin is going to be stronger in January. We're happy to be in a position where we can pull back on those promos. I'll add the last part, which is we're seeing it across the business. Many of the same categories we saw in the stimulus earlier in this year or last year, those same categories are ticking along. We can see the benefit of the base business growing in the stimulus kick. Okay. Great. Next, I want to maybe just do a quick recap of 2020, because it was certainly a very dynamic year. Well, for everyone. For Big Lots, which is today's discussion, really quite a dynamic year for the company. I think Big Lots does get characterized as a COVID winner for the year, with numerous sales benefits, as we talked about with stimulus checks or maybe the shift to home spending. My view is, I've covered the company for quite a long time, there did seem to be some other positive changes sort of beneath the surface in terms of an overarching improvement story. Bruce, something you could address is maybe what are some things, looking back on the year, that you're proud of that you think might be getting overshadowed by the overall COVID demand? Yeah. Thanks for this question. It's a great question. I think the first thing that's important to note is that we are in a fantastic marketplace, Big Lots, that is, that continues to grow year-over-year. We're very well positioned in that marketplace as a friendly neighborhood discount store, easy and fun to shop with endless deals, from everything from giant gummy bears to Broyhill sectional sofas, and value never goes out of style. We're very fortunate to be in this marketplace and assorted and situated the way we are. Our assortment's an everyday essential assortment, not just during the crisis, the COVID-19 crisis or emergency. We've got a new leadership team. Over the past 18 months, that leadership team we've brought in, as well as the work we've done on a new plan or Operation North Star, which has been focused on growth, cost management, smart investment, and enablement of the company, actually was catching stride just as the pandemic broke. That plan put us in the right place to navigate an extremely arduous environment this year. We're very proud of what the team, our associates, and the leadership's done. We kicked off a number of compelling strategic initiatives this year. One being the launch of Broyhill in its first year. That continues to surprise and delight our customers. We are about to press the $400 million mark in this first year of Broyhill. In fact, we'll hit it this next week. That's a significant growth. I believe that we're well on our way for this brand to become a billion-dollar brand in a handful of years as Jack expands it across multiple divisions in our assortment. E-commerce is another one. I joined in late 2018. At that time, we had under $50 million in sales and were unprofitable. In a short amount of time, in the last few years, this business now just passed, as I mentioned earlier, $250 million, quarter of a billion dollars in e-com demand growth. We just hit that this week. I believe the e-commerce business is, again, another billion-dollar business in a handful of years. We've done a lot of things this year to make shopping fun and easy and convenient at Big Lots for our customers. We added not only BOPIS last year, but this year, curbside pickup, which made it very easy and safe for customers to shop with us. We added same-day delivery from our stores with two basic modes, which was Instacart everything that can fit in the back of a sedan trunk to our customers same day, as well as Pickup, which is all the other bulky things like sofas and so on, same-day shipping. We've also added 47 hub stores across the U.S. that have two-day shipping to 90% of our customer base and gives them another alternative and a lower cost of shipping to get it to them. Our merchandising initiatives, now with Jack's leadership and the team that he's putting in place, they continue to do what we expected them to do. The Lot, for example, is still hitting one to two points per store. We now have The Lot in about 750 stores. We'll have another 450 stores in Q1 rolling out. The Queue Line, same thing, adding about a point of comp, and that's in 750 stores as well. Another 450 in Q1 of 2021 will roll out. We just recently launched our pantry optimization, which de-emphasizes food staples and goes more into entertainment food as well as into the household cleaning chemicals. That is performing very well. It's still early, but performing very well. Closeout deals, as you heard us talk in the past, our emphasis on that and building back into that area, is exciting. It's exciting to see the growth. I'm sure Jack will talk more about that. Apparel sales as a part of that. I'm not saying we're going to be a massive apparel retailer, but the kind of apparel we're getting into that doesn't require a dressing room and is just comfort wear is what our customer wants, and we're seeing very exciting growth in that area. We've got loads of new growth initiatives that are in development and rolling out, but I'll leave that for Jack to talk as our new Chief Merchant. Real estate, I'll just hit on this momentarily. Real estate's another big growth opportunity for us that we've focused on. We are closing fewer stores year-over-year because we launched a store intervention team that takes struggling stores and improves them. We're relocating to better locations where it makes sense so we can have expanded footprint to grow one of our fastest-growing divisions, that being furniture. We believe that there's a significant store growth opportunity ahead of us as we look into 2021 and beyond. As a result, we just hired this week, and she's on board now, our new senior vice president of real estate, Shannon Letts. She comes to us from Walmart, where over the last 20 years, she's led various efforts in their real estate journey. When you think about it, Big Lots for the last decade or so has been a 1,400 store unit chain, roughly. At that same time, some of our competitors have, well, they've added thousands of stores. I think we're in a unique situation to both grow through our e-commerce channel and brick and mortar in the future. We'll be expanding our store footprint in 2021 and accelerating that in out years. Finally, I'll just end this question with, next week, we'll hit a milestone at Big Lots. We'll surpass $6 billion in annual sales next week. It's during an unprecedented year. We're very excited about the strategic plan we've put in place and what that's meant to us, and realize that we have a lot of hard work in front of us. We're excited about where we see the future going with our strategic initiatives in place and focused on growth. Okay, great. I want to parse apart a few of those different dynamics as part of today's Q&A and discussion. Maybe first, though, I do want to give Jonathan and Jack a chance to talk. Jonathan, you've now been the CFO for about a year and a half. I'm curious maybe how you feel now that you've been at the company for a period of time, how you've had an impact, maybe have had a different approach to managing expenses, managing the budget. Would just like to hear kind of a big picture view for the audience on your approach to being CFO at the company that may be different from prior years. Sure, Peter, I'll be happy to talk to that. I joined the company because as I engaged with Bruce and other members of the team and the board, I got very excited about the opportunity this company had and for all the reasons Bruce just enumerated. I strongly believe and believed then, and believe even more strongly now that we have a tremendous trajectory ahead of us, and it requires a lot of rigor and discipline. That said, we need to make sure we're making really smart decisions. We're focused on that. We're focused on really being disciplined around ROI, on reading decisions, on having the right data to go into them. Not to make it heavy, but to make sure that we're really being diligent and thorough in evaluating every decision, evaluating key capital decisions like the pivot we made on Store of the Future. As we delved into those returns, it caused us to go in another direction, and we can talk more about that in a moment. I think that's a key focus, having better analytical capabilities, having, frankly, a bigger team in that area than we've had historically to make sure we can get better insights and conclusions and less data. But we'll try and have the data, but we need to make sure we're focused on what are the insights and conclusions. Better measurement and accountability so that we are not only being clear about the assumptions we're making as we're going into some of these significant decisions, but we're being rigorous about how we're reading the results of those and having accountability for whoever is driving those decisions. As one small example, we're putting in a post-order review process for capital projects, which is launching right now and will be reported to the audit committee in the spring, which goes back and looks at all the capital projects we undertook over the trailing 12, 18 months. Were the assumptions valid? Were the strategic objectives met? What have we learned from it, if not? That just makes us better going forward and instills that sense of accountability into the process. I'd say those three things. Another key one is having a culture of frugality and making sure we're really examining every dollar to make sure it's a dollar well spent, whether it's capital or operating, and trying to run that through the entire organization. We have an initiative called Save Big Now, which is a grassroots bottoms-up program, where we solicit ideas from across the company. I can sit here in my office and I have visibility on a lot of things, but if you're working in a store, in a D.C., you're going to see things that I'm not going to see, and we're getting some great ideas coming from all of those places, which we're starting to implement. As well as delivering dollars to the bottom line, that's also creating a mindset where Thinking in frugal terms and how can I save money? How can we make sure that we're spending our dollars in the most efficient way possible? I would say in aggregate, they're the sort of cultural things that we've been working on. They're all-- certainly, finance plays a significant role in them, but they're not uniquely owned by finance, and they require some great cross-functional collaboration, which I think we're doing a really good job of, too. Okay, great. Jack, maybe a similar question for you, just asked a different way. You joined about six months ago, most recently from Walmart. Of course, you joined as Chief Merchandising Officer. What kind of initiatives are you taking? Maybe some changes that you're implementing where we could see your fingerprints start to show up on the business in 2021. Yeah. Peter, I think my first time with the group, thank you for having us, and I appreciate the time. Maybe I'll just give a little color and background of me coming to Big Lots. I'm a lifelong retailer. I started stocking grocery shelves back in college, and I've spent the last three decades really in the value space of retailing. Had the opportunity to work in Japan, New Zealand and Australia for about a decade. Whether it was there or whether it was my time at Walmart, I learned that there's a value customer and that that's really important for us to make that a focus in our business. One of the things I love about Big Lots is that we're well positioned for that. Customers love deals. Customers love surprise and delight, and Bruce mentioned this. They love that everyday value. Kind of moving ahead, I'll talk a little bit about my journey as well. I joined Big Lots now about six months ago. As Jonathan said, I was inspired by the strategy, the leadership team, the position in the market, more than anything, the ability to grow our business. I spent the first three months literally getting out to stores, walking categories with every single one of our buyers, leaders across the business. I was in DCs with Eddie, in our stores with Nick and team. I've hit about nearly 50 stores in 12 states, understanding our business and spending time with our buying team, understand where our opportunities are. We're going to move thoughtfully, we're going to continue to be a sustainable growth business, and that's probably the biggest fingerprint point that I would say for the business. We're approaching much more of an item merchandising mentality, how do we get those big bets, and how do we get that item merchandising through the pipeline and into our stores? We're going to focus on deals. That's the DNA of this company is about deals. Finding them, and then selling them, and making sure that we present them in the right way, and we distort in the stores so that we can actually lean in and drive item merchandising, which drives assortments, which drives categories, which drives the overall box performance as well as our e-commerce performance. As Bruce and Jonathan Ramsden mentioned, growing our footprint. One of the things that's come up a lot is that we're going to focus on closeouts. Now, we've done a good job of growing our closeouts in the last 12-6 months under Bruce's leadership and the team. We're going to expand that. We're seeing phenomenal growth, and so you're going to see continued growth in that space, and we can talk about more about that. A couple other points where I'd say you'll see fingerprints or a focus on is productivity of our macro space. I think we've talked in the past from the notes I've read, and what I've seen in the business is that we've got to be more productive with our categories and our macro space in the store, and we've got to do it with data and insights and make some fact-based decisions. We'll be implementing some tools that'll help us with space planning, macro store layout, and how we're thinking about engaging with the customer across the store and make sure it makes sense through the supply chain all the way to operations. The last thing I'd say is we're going to focus on category opportunities. I'm sure we'll get a chance to talk about The Lot and the Queue and how we're digging into apparel and how we can expand in certain areas of the store. You'll see us really think about and experiment with how do we drive some category growth, because we really can sell a lot more merchandise in the store than we're selling now. Very interesting. We'll look forward to seeing some of those changes as they unfold. We are at the halfway mark right now. I'll remind participants in the audience if they would like to ask a question, you can input a question down at the bottom, and we'll get to those in a few minutes. Maybe to circle back on the closeout topic. That does seem to get a lot of investor interest. Jack and Bruce, you both have talked about that. We'll just go back to Q3. You saw a 50% growth in closeouts with that quarter. Could you talk about maybe where you're finding some early success and then, how do you, I guess, ramp back into closeouts successfully without exposing yourself to markdown risk? Yeah. Do you want me to start with that, Bruce, and you can jump in? No, go ahead, Jack. Yeah. We've seen our closeout% of business and growth accelerate since the third quarter, and we're happy with that. We're being very thoughtful about what we do, but candidly, Peter, we haven't seen that intersection between that of value and availability, which means we're still looking at great deals and where we can find them. We're seeing success across the whole store. You think about some of the big buys and closeouts we're doing in apparel. We've been very successful in those. We've got them in hard home and soft home. Soft home has been a particular standout. We've been able to get some great closeouts in Justice and the Scott Living. We've been able to do some in furniture with some Sealy closeouts. If you think about hard home, Farberware and Black & Decker. All of these are million-plus dollar buys and great margin opportunities for us as a company. More than anything, it's bringing that deal mentality and that excitement, surprise, and delight to our customers, and we've just seen no end of it. We've got huge opportunities on all fronts. Okay. Wonderful. Let's see, maybe moving on, circle back on some of the initiatives. Bruce, can you talk about The Lot and the Queue Lines, those adding a point to comp? Are they generally performing in line with your expectations, and do you have any early test evidence of maybe how those initiatives might perform in year two of their existence? I'm happy to report that we tested both The Lot and the Queue Line, when we did that, we thought it'd be adding one to two points of comp in the stores where we had The Lot. We're hitting that. In fact, we're at the higher end of that range, in recent months, we're seeing weeks where we surpass that. We're excited about how we're performing. What that means is when we first started our journey on The Lot, lead times weren't as long as we'd like them, we were scrambling to figure out the events through the year. Keep in mind that it's an occasional business. It's an event-driven business. We work around holidays or life moments, building that and planning it out, we expected that we'd get better as time went on, that's exactly what's happening. Like I said, to the point where we're at the high end of that range or above in recent weeks. The Queue Line is a similar case. We thought we'd be about a point of comp, and that's right where we are. As we get more lead time and planning involved and continue to adjust it, we expect that we'll be at the top end of that range and beyond. Very happy with it, where we're heading in that. I think going into Q1, like I said, we've got 450 or so stores where we'll be introducing it. Those stores are excited to get it. They've seen what some of their neighboring stores have had, and I think the customers are gonna really like it as well. I do think that because now we've got a rhythm going, a cadence going, I do expect that we'll be able to comp the comp for the stores, the 750 stores of The Lot and the Queue Line. What's more is, we launched the pantry optimization as well in fall. That pantry optimization, there's a lot of noise because we've got tailwinds of a holiday season. There's stimulus coming in here now. We think that what we're seeing is very promising in how we're de-emphasizing food staples, emphasizing the entertainment food as well as the chemicals. We expect that the household chemicals, which we expect is gonna continue. We'll keep shaping it. We'll keep shaping it as we go through. Yeah, we're very pleased with how our strategic initiatives have come together, and Jack's got a lineup of new stuff coming as well. Okay. Great. Bruce, as a follow-up on the pantry optimization, it sounds like the consumables, more of the cleaning chemical products were quite strong. The food side was up, I believe, low single digit. Is that a bit of a disappointment? Should we expect maybe more strength to come in food as a part of this pantry optimization effort? Well, I'll start this, Jack, and maybe you can add some. Actually, no. It was right in line with what we expected, and we're very pleased with the food performance, especially given the transition in fall. The customers and how they transitioned from space giving up in food and into entertainment food and in the household chemicals. The fact that food in general went up low single digits was really very positive. We'll keep watching this, and we'll keep adjusting. No, we're happy with where we are right now. Jack? Yeah, I would add to that. You think about pantry optimization, we wanted to get better productivity in both food and consumables. We took some space from food to give it to consumables. To see that growth in food, we're encouraged, but we know we've got opportunities to keep growing the productivity and assortment there. To echo, you think about the consumer with this, where we're trying to get to in serving better in the consumable space, we're really pleased with the performance. On a net gain for the business, it's been a good choice. Last thing I'd say is, Bruce talked, we'll keep learning from this, and we'll move pretty quickly to make sure that we capture those each additional benefit, take it to the next level. Okay. Great. Well, we are starting to get a couple of questions from the audience. I'm gonna ask questions to the audience, also weave in some of my questions, which are related. Maybe the first, this is a nice follow-up to you, Jack, on that last answer. If we look at Big Lots for a number of years, the food and consumables categories have been challenged to grow. You're coming in from Walmart, most recently, running the food and consumables business. Just looking back at the company when, obviously, you weren't there, but what do you think have been the challenges and therefore, what are the opportunities? Yeah. Candidly, we've got to develop a very clear strategy for who we want to be in food and consumables, and I think we've probably, for the last decade, not been very clear. I would say that as much as I've been a retailer, I've leaned into that food space, and as you pointed out, when I left Walmart, I was managing about 20% of all Walmart's business, which was all their packaged goods business and food. That's in my wheelhouse. We're gonna spend some time and energy not just fixing how we think about where we go to market in food, but then how do we build in a solid private brand program to augment what we want to do with really solid branded merchandise in that space. I think we've got an opportunity to delight our customers in that space. There's going to be some growth that'll be very thoughtful, and we'll move smartly across that business. Same thing with consumables. If you think about our opportunities, we've got an opportunity to do better in pet, in cleaning, and household chemicals. We have to find if we can expand and sell into new categories and space in the consumables area. It's got to fit, and we have to do it in a Big Lots way that makes sense for the whole box and the way the customer engages with the store. We're spending a lot of time and energy in making sure that we move quickly, and you'll see some of that roll out in the market in the next year. Okay. Great. That sounds exciting. We'll see what's to come. Moving on to another topic, would just be on store growth. This is partly an audience question, partly a question I wanted to get to. Big Lots really hasn't had any store growth for, I think, the better part of eight years. You have opened stores, but you've also closed stores and relocated them. You are indicating you'd like to pivot back to store growth? Maybe could you give us a sense, if you're ready, is there some type of store growth target that you think you'd like to achieve on an annualized basis over the next couple of years? Yeah, Peter, I'll be happy to take that one. In 2021, we definitely expect that we will have our strongest year of net unit growth in a significant period of time. We're talking about low single digit percentage unit growth. Our store openings relative to 2020 will accelerate significantly. We'll probably have openings between 50 and 60 total openings in 2021. A decent number of those are relocations. With some outright closures, we expect the net amount to be, again, low single digits in terms of percentage terms. Part of it, again, is opening more stores going forward, but part of it is also closing fewer stores outright. We've had the store performance intervention team working for a while and have done a great job of limiting the number of stores we need to close by identifying the root causes of their underperformance and fixing them so they're stores that we're able to keep open. That's what 2021 looks like. Beyond 2021, we definitely think there's potential to accelerate that. We've done some detailed analysis over the past six, nine months about where we have opportunities, and that's both fill-ins within existing markets, but also opportunities to grow in markets that we haven't significantly penetrated in the past. We've had much better data around that. Our CRM rewards program database has helped a lot in evaluating that. Bruce mentioned earlier, but we brought Shannon Letts on board to head that up. She's got a phenomenal track record at Walmart. It's going to bring some great experience to that. She'll be heading all that up going forward. Also out there is the possibility of different concepts, which we're working on. Too early to say too much about that. Certainly in the near term, most of our growth will be in the core existing format. We do think it's an opportunity, and we'll validate it step by step as we go forward. We think there's the opportunity there to potentially have that be a very meaningful lever of growth over the coming years. Okay. Great. I will, again, just prompt the audience. If you'd like to ask a question, you can submit the question below. Maybe let's stick on the topic of the stores. Several years ago, the company had embarked on a big store remodel program called Store of the Future. Bruce, you sort of inherited that, but you guys did a number of remodels in 2019. Then coming into 2020, at least at the beginning of 2020, you said you were going to put that initiative on pause. Maybe give us a sense of how you think about store remodels going forward. Is it a Store of the Future 2.0? Are you not seeing the returns that warrant putting money into older stores? How should the audience think about it? I'll start that one off, Jonathan, and maybe you can add a little bit to it. Yeah. First off, I think I may have mentioned this before in other meetings, the Store of the Future was an initiative. It wasn't necessarily a strategy, and it was in play. When I joined the company, it was in its early form. 2019, we were still learning. What we learned about it is that the investment in the remodel or Store of the Future and expansion of those stores had a low return. That's why we backed up and thought about, we need a better strategy, which is where we came together with Operation North Star, which accentuated higher returning initiatives like you're seeing with The Lot, the Queue Line pantry optimization. How do we make their stores not just brick and mortar, but an omni-store experience, and how do we start bringing back deals and other things and what's next in adjacent and white space, et cetera. Really, our Store of the Future is really an emphasis on becoming a better omni store. That's going to be packaged together into what I would call a store investment or store evolution program, where we repaint the stores, clean up the floors, make it a better, more pleasant, better branded store. We've got a couple different versions out there across there, but not a heavy investment in terms of what the initial Store of the Future model was, but an investment to bring up the brand standards along with these new strategic initiatives that have a much higher return. It's enjoyed by our customers and our shareholders. Jonathan, if you want to add to that. No, I think you covered it, Bruce. It was a pretty expensive program, the full bore Store of the Future program. The initial lift we got, and again, as we learned too, that program was in place before any of Bruce or Jack or I got here, the initial lifts had looked pretty good, but they started to fade a little bit, and then the later tranches weren't delivering it. When you looked at it on an ROI basis, it was just hard to justify that model. To Bruce's point, we had other things we could invest in with much higher ROIs. What we've also done now is break out that Store of the Future into its component parts, which were repositioning of furniture to be front and center, some basic refresh with model CapEx, cleaning up the bathrooms, the floors, and then some other components which were around the sort of overall store experience and environment. We're looking at each of those three pieces separately. There are still situations where moving furniture front and center will make sense, depending on the characteristics of particular stores. As Bruce said, we're looking through a different lens, more of a street store evolution program. We do expect that over time, we'll need to touch most of our stores with elements of that. It will vary depending on the store, and we don't think the very expensive pull Store of the Future conversion is appropriate for most of our stores at this point. Okay. Wonderful. We are with nearly 10 minutes left, we're starting to get a fair amount of questions from the audience. One that I'd like to ask as a follow-up to some recent comments would just be on CapEx. It might be a little too early to give us an exact number for 2021, but you guys are talking about moving towards healthy store growth. You've talked about needing to expand DC capacity. Maybe at a high level, should we expect a notable jump to CapEx dollars from prior years as we think about maybe the next two years? Yeah, Peter, I'll take that one. We do expect CapEx to be somewhat higher in 2021 than in 2020. We don't expect it to go back to the levels we were at in 2018, 2019. Probably somewhere in between, maybe very high 100s is where we would expect to be for 2021 at this point, and that embeds the investments we think we need to make. 2022 obviously will be a function, partly as you alluded to, store count. That's broadly where we expect to be in 2021. Okay, great. Of course, you guys do have quite a bit of cash to work with, a pickup in CapEx, you certainly have the ability to fund that. Maybe on the subject of cash, there was a question around share repurchase. Maybe could you give us an idea on how you guys are approaching share repurchases so far? Do you primarily use some sort of 10b5-1 plan for systematic purchases? In a case like today where the stock is down, could you also look to be opportunistic and maybe accelerate the pace of buyback? I'll take that one. We typically do our share repurchases through 10b5-1 plans. We put them in place early in the quarter. To your point, they are structured so when there are significant dips, we become more aggressive. It's typically based on a preset plan coming into the quarter. As you've seen, we have been active quarter to date with share repurchases continuing the pace at which we were running through Q3. Generally, we would expect to keep doing it through 10b5-1 plans. Okay. Very good. We'll keep on the audience questions. We talked about closeouts a little bit. There is a specific question around the inventory levels. What does the inventory level look like for the closeout space? As you're moving into closeouts, do you see competition from closeouts from some of the traditional off-price players? Yeah, you want to take that, Bruce? I would say that, and I alluded to this earlier, we believe that there's big opportunity for us to grow. In one sense, we're out there looking for more inventory. We're seeing really high and quick sell-throughs on the inventory that we're getting on closeouts, and we're happy with its performance. We're going to keep seizing opportunities. To the competitive set, yeah, if you look at the last year, and you talked about even the manufacturing side of the business, and just what's happened with global supply chain, there's less in the market, but we're being smarter and more thoughtful about how we approach those, and we're getting what we would say is much more than we've gotten before, and we're going to keep on that track. Lower supply of some closeouts, but for us, it's about more supply that we've been getting and high sell-throughs and being really successful. We think that's a huge opportunity to keep growing because our customers keep buying. I would just add to that. Before this year, we primarily played in closeouts only in the food and consumables aspect. We had shrunk down to food and consumables. Jack's got every one of his buyers, with maybe the exception of seasonal to some degree, for obvious reasons, in the market looking. That's just opening up doors everywhere and new supplies. When you start from zero, it's a nice base to build off of, and that's what we're seeing. Okay. All right, great. We've got about five minutes left. We'll address a few more questions from the audience. This one, maybe we'll start with Bruce. It's also maybe a bit of a financial question for Jonathan. It's on the digital progress that you're making. Can you discuss the margin profile of digital in aggregate, relative to the retail business? Then are there distinct differences between BOPIS, curbside, ship to home from store? Lastly, to sum it all up, do you see a path of profitability on the digital sales? I'll start this, and Jonathan, if you can add some numbers. The way that we have grown the digital channel has been very thoughtful. When I started back in fall of 2018, like I said, we were doing probably around $46 million in total sales, and we're unprofitable. We didn't make money on it. We've been profitable since 2019, and we've grown into that. I think it's because the way that we've approached it, the margin rate on a buy online pick up in store is comparable to in-store. Curbside just adds maybe a slight labor component, which we've been able to absorb. That's making up at least half of all e-commerce digital channel sales, maybe even a little bit above that. The relationships that we've built with Instacart allows us to, we pay a fee, but we've also passed on that in terms of making a profitability there. Maybe a little bit less than what you'd see in store, but still profitable. The same thing with our Pickup delivery. As we think about the 47 store hubs, if you will, doing the two-day, that's a lesser cost that we pass on to the customer. Once again, all of these in a very productive manner are growing our business. Jonathan, maybe you can elaborate a little bit more on the numbers, but it's always been our intent to grow this business in an exciting manner, but also in a profitable manner. Yeah. Overall, the business now is significantly profitable, as Bruce said. I think the economics were very much as Bruce described them. For the pure direct business from the DC, that's closer to a break-even proposition, but the BOPIS and the curbside are all very significantly profitable. Then the ship from store piece, it's not as profitable as a pure in-store purchase, but we think a lot of those sales appear to be incremental because they're enabling us to use inventory that's in the stores to fulfill e-com orders that might not otherwise have gone unfulfilled. Overall, we're very happy with the economics and where they're headed. Okay, good. Another question is looking at, maybe it started getting in the line of a little bit of guidance, so I'll frame it up more big picture. Any way to think about range of outcomes for 2021 same-store sales growth? Obviously, you're going to face very tough comparisons, but at the same time, you have quite a number of initiatives and you're lapping some inventory shortages. At a high level, how are you guys thinking about 2021 and the various range of outcomes? Yeah. It's very complicated, Peter, as you say, because there are moving parts in every quarter based on, A, what will be happening this year. Stimulus is now starting to have an impact, as we talked about. Could be another round of stimulus that could be very significant if that comes along, particularly if it's anywhere near the numbers that have been talked about. We're going to be lapping stock up in March, then we're going to be lapping the first round of stimulus after that nesting trend shortage of seasonal inventory in the fourth quarter. I think the truth is, there isn't a single overall view of the year we can give. We've got to look at it kind of quarter by quarter, really, to build it up. Certainly that's how we're managing it is to look very closely quarter by quarter, month by month, week by week, where we think we're going to be. There are a lot of twists and turns. I think we'll give a lot more color on that when we get to the March earnings call. Okay, great. Maybe time for one more question. We'll talk kind of big picture around the EBIT/EBITDA margins. Go back maybe 10 years ago, Big Lots did achieve an EBIT margin of about 7%. Over a number of years, the EBIT margin moved down to 4% in 2019. Now you're tracking a little bit below, but closer to that 7% after the strong 2020. How should we think about the long-term opportunity with EBITDA margin? Is 10% something that you think can be achieved and sustained, or is that something at this point that maybe is a thing of the past? I'll answer quickly since we're running out of time. Great question. This business, our business, is all about value. In fact, I'm actually considering changing the name of our associates from associates to value creators because the value that we want to build with our customers, each other, communities we serve, and most importantly, the investors. We are building a model, a multi-year model, where we take all these inputs and we track out what will be our free cash flow and how we want to return that to invest in our company and also return to shareholders. It's premature for us to talk about that. We do think there's upside, and we'll work towards our 2021 plan and updating you and the community on our progress there. We're thinking in multi-years, long term, and we think we've got upside potential for growth on all of them. Okay. Well, that's great. We are unfortunately out of time. We will leave it there. Bruce, Jonathan, and Jack, thank you very much for your time and for taking some time to answer questions for us today. Certainly, good luck with the coming year. Sounds like there's a lot of exciting things going on. Thank you. Thanks, Peter.