This is a partial transcript from Your World with Neil Cavuto, November 20, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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NEIL CAVUTO, HOST: You'll find more than specialty items in stock at Big Lots. The discount retailer sells everything but the kitchen sink and it's gearing up for this holiday season. In fact, as far as I know, they might start selling the kitchen sink. Its quarterly results just off a penny from Street estimates, but its stock is up 35 percent from a year ago. Joining me now, the chairman and CEO of Big Lots, Michael Potter.
Mr. Potter good to have you.
CAVUTO: You heard from the Brookstone CEO, how go by you?
POTTER: Well, actually we had a very good third quarter. Our same store sales were up 7 percent. We actually beat the Street estimate by a penny in our earnings. Our earnings were 10 cents better than last year. And the year-to-date our comps are 10 percent. And our earnings are up about 33 cents. So we are having a wonderful year.
CAVUTO: What is the draw here? I know some of your primary competitors, Kmart, Wal-Mart, 99 Cents Stores, some of these guys, where discounting seems to be the rage, tell me a little bit about your customer?
POTTER: Well, what is unique about us is that we are not a discount retailer, we're a close out retailer. We're the nation's largest. And there is really no competition nationally for what we do. We have a unique store size and most of our merchandise is acquired through close outs. So our value proposition.
CAVUTO: So it's discontinued merchandise anywhere else, we should stress that, that's what this is.
POTTER: No. Not necessarily. We often times have very current items. But our value spread is between 20 to 30 percent over most of the discounters of regular retail. So there is a true differentiation in what Big Lots does.
CAVUTO: OK. But what I meant to ask is, if I go inside your store, isn't the understanding that the merchandise I am looking at is no longer sold elsewhere?
POTTER: No, not true at all. There certainly is some of that in terms of products that have run their life cycle or been discontinued. A lot of what we acquire is through package changes. So you are going to find regular consumable product, maybe different packages, perhaps its excess production for the time period. It could be a retailer cancellation. So a lot of the merchandise we get is acquired many different ways. But the majority of what we have is very current product and very appealing product.
CAVUTO: Now, Wal-Mart keeps giving us sort of like a Jekyll and Hyde read of the holiday season. One week they think it looks good, the next week, I guess this latest week, they say it doesn't look so hot. Going into the crucial Christmas holiday season, what does it look like to you?
POTTER: Well, I think what we've seen that most retailers have seen, there was some slow down in the month of September, and I'm not sure it's fully recovered. There has been some fits and starts as far as the consumer has been. But what our history has taught us is that October and even the first part of November really never predicts the heart of the holiday season. And our customers.
CAVUTO: So what do you think percentage gain you are going to be looking at this year over last year?
POTTER: We are looking for a low to mid-single digit comp for the fourth quarter, so we expect to be up. It is a little bit less than what we have seen prior to that, but we have a last minute shopper who is very need-based, so those last four weeks prior to Christmas we think are going to be very big and probably very strong.
CAVUTO: The fact that Christmas shopping begins six days later because of the late Thanksgiving, does that do anything bad for you or what?
POTTER: It does have an impact. The fewer days you have between Thanksgiving and Christmas, typically you lose some sales. We think for us that is worth about 2 to 3 points in our comp store sales.
CAVUTO: There is a move afoot, and you've probably heard it, too. And maybe even sure you endorse it to make Thanksgiving the third Thursday, call it a day, make sure you have 33 days minimum to do Christmas shopping. I think that is what they are looking for. Are you for that?
POTTER: Well, that sounds like retailers trying to have a little bit more influence than they need to have.
CAVUTO: Over the calendar.
POTTER: The calendar is what the calendar is and we just have to manage it to the best of our ability.
CAVUTO: I never understand why they kept moving Thanksgiving around. But that's me. All right. Michael Potter, thank you very much, appreciate it.
POTTER: Thank you.
CAVUTO: The president and CEO of Big Lots stores.
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