BJ's Boosts Fresh Food Offering

NATICK, Mass. The new president and chief executive officer of BJ's Wholesale Club here said last week it is cutting back on coupon promotions in order to emphasize its everyday low prices, and is expanding and upgrading its perishables offering. We are committed to making major improvements in our perishable food this year, both in quality and in space allocation, said Herb Zarkin, chairman, president

NATICK, Mass. — The new president and chief executive officer of BJ's Wholesale Club here said last week it is cutting back on coupon promotions in order to emphasize its everyday low prices, and is expanding and upgrading its perishables offering.

“We are committed to making major improvements in our perishable food this year, both in quality and in space allocation,” said Herb Zarkin, chairman, president and chief executive officer, in a conference call discussing results for the fourth quarter and year that ended Feb. 3. “We have plans to extend our assortment of organic and prepared foods as well as other high-margin perishables, such as imported cheese and fresh meat. We're also investing in better training of our in-club perishable managers.”

Zarkin recently took over as president and CEO after the departure last year of former CEO Michael Wedge, and has realigned the top management at the warehouse club chain.

In addition to fortifying its perishables offering, BJ's is also seeking to reduce its SKU count and is evaluating its private-label offering to achieve the best margins and reduce inventory costs.

“We went too much too fast into private label,” Zarkin said. “We're going back and rechecking all the items — are they really the items we want to be in, are they the right quality, the right packages, the right brand?”

The company said it planned to invest $140 million to $160 million in capital expenditures in 2007 and open eight to 10 stores, mostly in the Northeast.

BJ's reported net income for the fourth quarter of $11.9 million, vs. net income of $51.6 million in the year-ago quarter, after several one-time charges in the recent period, including $15.2 million, after taxes, for the closure of the Pro Foods concept.

Revenues for the 14-week quarter, which included an extra week, were up 13.4% to $2.4 billion. Comparable-store sales were up 1.5%.

For the year, net income was $72 million, vs. $128.5 million a year ago. Revenues for the year rose 7.2%, to $8.5 billion. Comps were up 1.2%.