NATICK, Mass. — BJ's Wholesale Club is determined not to let deflation blunt gains in volume and unit sales.
The retailer here last week posted a comparable-store sales gain of 3.9% for the third quarter, excluding gasoline, on a net sales gain of 2% to $2.45 billion, although net income was hit by one-time charges.
Laura Sen, president and chief executive officer, called the quarterly comp increase an “outstanding achievement,” particularly given the fact that product price deflation was greatest in the category that is also the fastest growing at BJ's — perishables.
In a conference call with analysts, Sen said there was no indication from suppliers that deflation — which has affected prices and revenues in dairy, produce and meat departments — was letting up. But she acknowledged the company would start cycling the falling prices in the middle of next year, which could provide a boost to comps.
Asked about competitors, Sen said she felt supermarkets have been especially price competitive with BJ's on key items but have risked profits and shoppers by “overpricing” elsewhere in the store.
“Supermarkets are being aggressive on key items to create a price impression … and it's clear to me, at least when I walk around, that they're making it up in the rest of the assortment,” she said.
BJ's shoppers may be more inclined to spend on discretionary items this holiday season, Sen said, citing a recent slight increase in sales of general merchandise.
“We believe the consumer has a little more confidence this year than they did a year ago,” she said. “I think there are still quite a few economic challenges out there but we believe we have a stronger ability to deliver sales in that part of the business based on what we've seen in the last few months.”
New stores opened in the third quarter slightly cannibalized comparable sales at existing locations, but have been strong performers overall, the company said. This was especially true in the metro New York market where BJ's opened two stores in the third quarter and is planning a third in January.
Net income of $17.7 million for the quarter, which ended Oct. 31, was down 37% compared with the same period last year, due in part to settling a wage-and-hour lawsuit that cost the company $11.7 million.
Excluding the settlement and other charges, BJ's earnings totaled $24.6 million, down 12.8% from the same period last year.