Big Lots conservative, but not overly so

NEW YORK (Reuters) - Big Lots Inc's (BIG.N) is planning business conservatively for this upcoming Christmas shopping season, but not to the point of excessive caution, the close-out retailer's chief executive officer said on Tuesday.

"We're conservative with our plan for the fourth quarter of this year, but we're not going to cut off our nose to spite our face," Big Lots CEO Steve Fishman told the Reuters Global Retail Summit.

"We have the ability to do more business and at the same time make more money," he said.

Big Lots specializes in sales of excess inventory, ranging from TVs to rugs to toys. While demand for some of its discretionary items, like home decor and furniture, has suffered, Big Lots has been somewhat insulated from the recession as shoppers seek out its low prices on food, tissues or pet food.

Last year's U.S. Christmas shopping season represented the "low of lows" as consumers sharply curtailed spending amid a financial crisis, Fishman said. But he said retailers need to avoid the impulse to over-react in preparing for this year's holiday season.

"What you don't want to do is be too conservative because you could make a mistake in your business, and I hope that we haven't for this year," he said. "What you don't want to do is deliver yourself a bad plan and deliver yourself an opportunity not to do business."

TESTING APPEAL TO UPSCALE SHOPPERS

Since Fishman took the helm of Big Lots in mid-2005, he has worked to turn the retailer around, stocking its locations with more name-brand merchandise while also closing underperforming stores.

This year, the retailer has said it will open 45 stores, while it could close up to 40. It operated 1,345 stores as of May 2. The company has gotten a point where it can focus on increasing its store base, Fishman said.

One area where Big Lots is testing its ability to grow is in Columbus, Ohio, where it has opened a new store in a former Linens N' Things location.

While Big Lots said its average shopper has a household income of $50,000 to $55,000, the new store is in a relatively upscale area where the average income is closer to $85,000.

The location features better sight lines so shoppers can easily navigate around the store. Big Lots is also testing deeper fixtures that allow it to display more food on its shelves, and it is offering "Sh-baskets" -- a shopping basket that has wheels.

Big Lots has also put the area for seasonal merchandise at the front of the store.

"Our core customer loves our seasonal business and comes to us for seasonal; so when you walk into the store the first thing you hit is seasonal," Fishman said.

With the Columbus location open only about 30 days, Fishman said it is too early to have much data on how the store is faring.

"We're trying to find out the quality of the customer, we're trying to find out what the customer is coming there for, how much they're spending. We'll know all of that before we move forward," he said.

While the store has been well received, he said, "We want to get through the Christmas holiday season and then I'll tell you if it's really, really good or really not."

E-COMMERCE TEST BEING EVALUATED

Last year, Big Lots began offering limited-time online-only deals on its website. Fishman said the retailer will continue testing that e-commerce business throughout the year.

"I'm not real clear on how good it is, or how good it's not, and if we'll continue to move forward with it," he said.

He said the online business is very competitive, and his biggest worry about the e-commerce business is ensuring that Big Lots can make money.

"Margins are very thin online, and the items that currently we're finding that consumers are responding to are low margin items," he said. "Electronics is very good online, but you don't make a lot of money."

(Reporting by Nicole Maestri; Editing by Tim Dobbyn)