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For BJ’s, a record-breaking fourth quarter

All-time-high renewal rates and member fee income spur strong performance

BJ's Wholesale Club reported better-than-expected fourth-quarter earnings, with comparable club sales for the fourth quarter of fiscal 2018 increasing 2.8% compared to the fourth quarter of fiscal 2017.

Excluding the impact of gasoline sales, merchandise comparable sales increased 2.9%, representing the sixth consecutive quarter of positive merchandise comparable sales. For fiscal 2018, comparable sales increased 3.7% compared to fiscal 2017. Excluding the impact of gasoline sales, merchandise comparable sales for fiscal 2018 increased 2.2% compared to fiscal 2017.

The company reported net income of $64.3 million, or 46 cents per diluted share, and adjusted net income of $62.1 million, or 44 cents per diluted share, for the quarter. For the full year, BJ’s had net income of $127.3 million, or $1.05 per diluted share, and adjusted net income of $186.2 million, or $1.33 per diluted share.

Gross profit increased to $628.9 million in the fourth quarter of fiscal 2018 from $621.3 million in the fourth quarter of fiscal 2017. For the full year, gross profit increased to $2.36 billion from $2.24 billion in fiscal 2017. Excluding the impact of gasoline sales and membership fee income, merchandise gross margin rate increased by approximately 10 basis points over the fourth quarter of fiscal 2017 and by approximately 60 basis points over the full year of fiscal 2017. The improvement was primarily driven by continued progress in our category profitability improvement program.

BJ’s reported a record fourth-quarter adjusted EBITDA of $165.4 million and $578.4 million for the full year.

“We’re pleased with our fourth-quarter and full-year performance, which exceeded our expectations for sales and earnings,” said Christopher J. Baldwin, chairman and CEO. “We ended the year with all-time-high renewal rates and membership fee income. We delivered strong fourth-quarter merchandise comp sales, supported by a successful holiday season and continued momentum through January. Looking ahead, we intend to continue to invest in our strategic priorities and look forward to driving further improvement in our business in 2019 and beyond.”

BJ's Wholesale Club is primarily based on the East Coast, with about 215 locations across 16 states and 5 million paying members. Larger rival Costco Wholesale, which will be reporting earnings Thursday, has 93 million members. BJ's stores also tend to be smaller than Costco's huge warehouses.

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