BJ’s Wholesale Club saw both net and comparable sales climb by double digits in its fiscal 2021 third quarter, adding to double-digit sales gains from elevated consumer demand a year ago.
In reporting quarterly results on Thursday, Westborough, Mass.-based BJ’s also announced a same-day delivery partnership with last-mile specialist DoorDash.
For the quarter ended Oct. 30, BJ’s said net sales totaled $4.17 billion, up 14.4% from $3.65 billion in the fiscal 2020 quarter, which marked a 15.7% year-over-year increase.
Including membership income growth of 7.7% to $91.5 million, total revenue rose 14.3% to $4.26 billion, compared with a 5.6% gain to $3.73 billion a year earlier. The warehouse club chain said its member base expanded 3% to more than 6 million during the quarter, for two-year growth of 15%.
Fuel boosted comparable sales as BJ's saw a 20% jump in gallons sold along with continued gasoline price inflation.
Gasoline price inflation and sales helped lift comparable sales in the third quarter. BJ’s reported a 13.1% increase in comp-club sales, nearly matching the 14.1% uptick a year ago. Excluding fuel, which saw a 20% jump in gallons sold, comp-club sales advanced 5.7%, compared with 18.5% ex-fuel growth in the prior-year period, when gas prices were lower. The company said comp-club sales were up 24.2% over two years through the quarter’s end.
“We delivered another outstanding quarter, with results surpassing our expectations by every measure,” BJ’s President and CEO Robert Eddy said Thursday in a conference call with analysts. “Our business accelerated during the third quarter. Results were balanced across a number of dimensions. We saw growth in all of our divisions, acceleration in traffic and ticket, and growth in digitally enabled sales and conventional sales, all underpinned by strong membership statistics in both new and tenured attended members. And we continue to transform the business as we go.”
Chief Financial Officer Laura Felice cited grocery as a top category performer in the quarter.
“Our performance was again led by our grocery business, which had a 6% comp for the third quarter and a 25% comp two-year stack,” Felice said. “Despite in-stock challenges in certain food and other household categories, the team delivered a strong performance, which demonstrates our continued relevance with our members.”
BJ's said its grocery comp sales were up 25% over two years through the end of the third quarter.
Private brands also spurred grocery sales during the period, Eddy reported. “We continue to make strong progress here, growing own-brands penetration by nearly 200 basis points to 23% of merchandise sales,” he said. “This increase was driven by better sales of grocery and sundries products during the quarter, partially owing to better in-stock rates on own-brand items. We will continue to focus on further expanding our own-brands portfolio over the long term, which we believe will strengthen member loyalty, increase value and improve our margins.”
E-commerce sales surged 44% in the third quarter. Including growth of 200% in the 2020 quarter, comparable digital sales were up 244% on a two-year stack. Click-and-collect traffic, namely in curbside service, was a catalyst in the 2021 quarter, according to Eddy.
“Our digital platforms continue to resonate with members and allow us to offer convenient access to tremendous value every day,” he said. “More than 60% of BOPIC [buy online, pickup in club] orders were delivered curbside this past quarter. As we’ve said in the past, digitally engaged members have higher average baskets and make more trips per years than members who shop in-club only.”
DoorDash delivery set to launch
BJ’s also is bolstering its e-commerce service coverage on the delivery side through a new partnership with DoorDash, which has steadily expanded its presence in the grocery arena, most recently via deals with Albertsons Cos., United Natural Foods Inc. and Dollar General.
“I’m thrilled to announce that we just signed a partnership agreement with DoorDash to augment our existing partnership with Instacart,” Eddy said. “We expect the DoorDash marketplace to be live in January and Dashers to be making their first deliveries of orders made through BJ’s.com in Q1 [of fiscal 2022].”
BOPIC (buy online, pickup in club) orders, led by curbside service, drove digital sales in the quarter.
BJ’s has offered Instacart delivery from all clubs since the spring of 2018. But the DoorDash partnership will bring BJ’s more into the mix when it comes to same-day fulfillment, Eddy pointed out.
“This will be the first step towards a new model where our team members will pick all BJ’s.com orders and a stable of transportation partners make the deliveries. This vision should drive better experience and value to the member and better economics for us. Our members’ experience will be better as our team members pick with greater quality and care, driving better or accuracy. More competition also lowers prices on marketplaces,” he explained.
“Further, by having more than one [same-day delivery] partner, we can dynamically route deliveries based on a number of variables, such as service levels, speed, member ratings, cost and so on,” Eddy added. “Finally, as we will combine picking up the same day delivery orders with BOPIC and curbside orders, we will gain efficiencies in picking economics. We are thrilled to partner with [DoorDash CEO] Tony [Xu] and his team at DoorDash to grow both of our great companies.”
Brick-and-mortar expansion continues
For fiscal 2021, BJ’s expects to open another five clubs, and up to 10 new locations are on tap for 2022. Most recently, the company opened its 222nd club in Seabrook, N.H. The opening was one of six new locations announced in May, with the others including Port Charlotte, Fla.; Commack, N.Y.; South Fayette and Ross Township, Pa.; and Lansing, Mich.
“Our efforts to expand our footprint also continued to progress,” Eddy said. “Our Seabrook, N.H., club opened in June. We will enter the Pittsburgh market in December, and in January in Port Charlotte, Fla.; Lansing, Mich.; and on Long Island [N.Y.]. Our second club in Pittsburgh is scheduled to open in January as well. It has flipped by a few weeks, due to construction and supply chain challenges, and will open in the early days of next year.”
BJ’s also plans to add seven BJ’s Gas stations in fiscal 2021 and another dozen or so in fiscal 2022, which will give the retailer fuel stations at about 75% of its clubs by the end of the next fiscal year.
“We’re excited about our expansion, and our confidence is underpinned by the strong performance we are seeing in our new clubs,” Eddy said in the analyst call. “As you can see, we are making strong progress against all of our strategic priorities, despite what continues to be a challenging backdrop that features heavy inflation, a dynamic market labor market and inventory constraints.”
At the bottom line, BJ’s posted third-quarter net income of $126.5 million, or 92 cents per diluted share, compared with $122.8 million, or 88 cents per diluted share, a year ago. Excluding debt paydown charges and write-offs, a loss on a cash-flow hedge and tax adjustments, adjusted net earnings were $125.9 million, or 91 cents per diluted share, versus $128.5 million, or 92 cents per diluted share, in the prior-year period.
Analysts, on average, had forecast adjusted earnings per share of 80 cents, with estimates ranging from a low of 68 cents to a high of 92 cents, according to Refinitiv.
BJ’s finished the third quarter with 222 clubs and 152 BJ’s Gas locations in 17 states, compared with 219 clubs and 149 fuel stations a year ago.
