Retail Watch: Big Lots Rolling Out More Stores in Higher-End Locations
March 9, 2011
Big Lots Inc. is boosting its plans for new store openings this year, looking to spend $50 million to cover opening 90 new stores. That would be 10 more new stores than opened last year. And more so than in the past couple of years, the discount retailer is looking at opening in higher-end locations.
Speaking on an investor call this past week, Charles W. Haubiel II, legal and real estate, general counsel and corporate secretary for the discount retailer, said: "The success of our new store programs for both 2010 and 2009 has let us to target a higher number of store openings for 2011. Our plans for 2011 call for 90 new stores and our expectation for 45 store closings equaling net store growth of approximately 45 stores or a little over 3%. We feel comfortable with the 90 store openings at this point, and are making a very concerted effort to open the best stores we can as early in the year as possible."
In 2010, Big Lots opened 80 stores and closed 43 stores for a net addition of 37 stores. Of the stores closed, 23 were relocations of older stores being relocated to higher traffic areas in better strip centers or stores too small for a full size furniture department that were relocated to a larger space to accommodate our full furniture assortment.
Looking at the breakout of types of stores for 2011, Haubiel said the retailer expects to open 60 to 65 traditional locations and 25 to 30 new 'A' type locations.
"In terms of traditional locations, the availability remains good, and we're certainly an attractive potential tenant as our overall credit profile and business model remains strong," Haubiel said. "Traditional locations opened in 2010 performed very well and are trending near company average sales productivity with forecasted cash flow in the neighborhood of $300,000 per store in their first full fiscal year."
"In terms of 'A' type locations, we see the potential for adding 25 to 30 stores in those locations this year, bringing the total to be in the range of 70 to 75 stores by the end of fiscal 2011," Haubiel said,
Big Lots defines 'A' locations as its highest volume stores; often power strip centers with strong co-tenants, strong population density or household income or all of the above.
Haubiel acknowledged that such 'A' spot locations are not as easy to come by as they were in the past two year.
"I'm not going to say the window is closing but what was available a year ago in the form of maybe (let-ins) or circuits are starting to dry up," Haubiel said. "Having said that there has been a couple of additional retailers that have either recently filed [for bankruptcy reorganization] or are pretty strong rumored to file that could open up some space in additional 'A' centers."
While Haubiel said that landlords are getting more aggressive about what they are asking for in terms of rents in such locations, "they are also getting more aggressive about thinking about adding some new square footage."
"We've got new relationships with the developers and as they are thinking about where they are going to be adding a footprint, they are also thinking about us being part of that," Haubiel added.
