BJ’s Wholesale Club turned in more double-digit net and comparable sales gains in the fiscal 2022 second quarter, lifted in part by higher fuel prices and inflation versus a year ago.
At the bottom line, BJ’s also topped Wall Street’s consensus earnings-per-share estimate by over a quarter and exceeded analysts’ high-end forecast.
For the second quarter ended July 30, net sales climbed 22.4% to $5.01 billion from $4.09 billion in the fiscal 2021 quarter, when the top line rose 5.6%, Westborough, Mass.-based BJ’s said Thursday. Membership fee income grew 11.3% to $98.8 million, giving the retailer total quarterly revenue of $5.1 billion, up 22.2%.
Comparable-club sales surged 19.8% year over year but were up 7.6% excluding fuel, compared with a 4% overall uptick and a 3.4% decrease excluding gasoline in the prior-year period. BJ’s noted that comp sales were up 21.2% on a two-year stack, with growth of 20.8% excluding fuel.
Online sales surged 47% versus the prior-year period, when BJ's had lapped hefty gains fueled by pandemic-driven e-commerce engagement.
The Q2 results built on a robust Q1 performance, which brought growth of 16.3% in net sales, 14.4% in comp sales (4.1% excluding fuel) and 26% in online sales.
“Our strong results in the second quarter were led by gains in traffic and market share as we continued to deliver tremendous value across virtually every aspect of our business,” BJ’s President and CEO Bob Eddy said in a statement.
Digital sales jumped 47% versus a year ago, when the warehouse club chain had cycled big prior-year gains driven by the pandemic. In the 2021 quarter, e-commerce sales had risen 4%.
“Our relentless focus on investing in our long-term initiatives has put us in a place to capitalize on current trends and deliver this strong performance. Our member base is growing in both quality and size. We are improving our merchandising to offer more value. We are growing our digital business, offering more convenience and optionality for our members. We are expanding our footprint into new and existing markets with success,” Eddy explained.
BJ’s, too, is benefitting as consumers battle high prices for food, groceries and other essential products and seek retailers like warehouse clubs that provide more for the money, he noted.
“Our business model is designed to work well in the current consumer environment, where value is king,” Eddy stated, “and we believe we are well-positioned for growth by doing what we do best — delivering great value to our members.”
Plans call for BJ's to open 11 new club locations during fiscal 2022.
On the earnings side, net income came in at $141 million, or $1.03 per diluted share, compared with $111 million, or 80 cents per diluted share, a year ago. Adjusted net income came in at $144.3 million, or $1.06 per diluted share, versus $113.3 million, or 82 cents per diluted share, in the 2021 quarter.
Analysts, on average, had projected adjusted EPS of 80 cents, with estimates ranging from a low of 68 cents to a high of 96 cents, according to Refinitiv.
BJ’s reported that, during the second quarter, the company finalized its acquisition of four perishables distribution centers and their transportation fleets from longtime partner Burris Logistics, a deal announced in January. The transaction total ended up at $375.6 million, including inventory.
Expansion remains on track for fiscal 2022, with 11 new club openings expected, BJ’s said. In mid-June, the company announced four upcoming clubs, including in the Indianapolis suburb Noblesville and in New Albany, Ohio; Wayne, N.J.; and Midlothian, Va. Most recently, BJ’s had opened a new club with a gas station in Lady Lake, Fla. — its 229th location and 159th fuel center — on May 13. The latest stores will raise the company’s club total to 233.
“Our outlook on the business is strong, given the sustained strength in our grocery business and our gains in market share,” according to Executive Vice President and Chief Financial Officer Laura Felice. “We expect fiscal-year 2022 comparable-club sales growth, excluding the impact of gasoline sales, to be in the 4% to 5% range, up from our original guidance of low single digit. While we expect continued merchandise margin rate pressure, we also expect fiscal-year 2022 EPS to be in the $3.50 to $3.60 range, up from our original guidance of approximately $3.25. We remain confident that the strength of our core business and our intense focus on delivering value will continue to drive long-term growth.”
Before BJ’s reported Q2 results, Wall Street’s consensus fiscal 2022 adjusted EPS estimate for the company was $3.33, with a range of $3.25 to $3.51, according to Refinitiv.
BJ’s closed out the second quarter with 229 warehouse clubs and 160 BJ’s Gas stations in 17 states, compared with 222 clubs and 151 fuel stations a year earlier.
“Second-quarter results demonstrate the strength of value in the current environment, as comps (excluding fuel) of +7.6% and adjusted EPS of $1.06 well outpaced consensus of +4.2% and 80 cents,” Jefferies analyst Corey Tarlowe wrote in a research note on Thursday.
“BJ’s is a defensive name by nature, given that it sells a high mix of food as a percentage of sales. Coupling this with a membership model that drives predictable sales and profits and an attractive value-orientation, we believe BJ’s is well-positioned for share gains ahead,” Tarlowe explained. “Further, the company has a long runway for unit growth in both new and existing markets, as demonstrated by management’s target for 4% to 5% unit growth per year, and should see ongoing margin benefits from increasing private-label penetration (new target of 30% of sales versus prior 25%).”
