BJ’s Wholesale (BJ) Q1 Earnings Top, Comparable Club Sales Up

BJ’s Wholesale Club Holdings, Inc. BJ came up with its first-quarter fiscal 2024 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate. While total revenues improved from the year-ago period, earnings remained flat year over year. Additionally, BJ’s Wholesale Club’s comparable club sales showcased decent growth.

The company experienced stellar growth in membership, traffic and unit volumes during the quarter. BJ’s Wholesale Club’s enhancements in merchandising and digital conveniences, focused on providing compelling value, are effectively resonating with members. Additionally, the company is expanding its presence and is slated to open 12 new clubs this fiscal. It opened one new club and one new gas station in the quarter under review.

Q1 Insights

BJ’s Wholesale Club reported adjusted earnings of 85 cents, which beat the Zacks Consensus Estimate of 83 cents.

This operator of membership warehouse clubs generated total revenues of $4,918.5 million, which grew 4.1% from the year-ago quarter’s level and came ahead of the consensus mark of $4,882 million. Net sales increased 4% to $4,807.1 million, while membership fee income jumped 8.6% to $111.4 million.

Total comparable club sales during the quarter under discussion rose 1.6% year over year. Excluding the impact of gasoline sales, comparable club sales jumped 0.6%, faring better than our estimate of 0.5%. Markedly, digitally enabled comparable sales advanced 21% during the quarter.

BJ’s Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

BJ’s Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ’s Wholesale Club Holdings, Inc. Quote

A Look at Margins

The gross profit rose to $883.4 million from $880 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, shrunk 50 basis points from the year-ago quarter’s level owing to lower ancillary income.

The operating income decreased 13.9% to $160.8 million, while the operating margin, as a percentage of total revenues, contracted 70 basis points to 3.3%. We note that adjusted EBITDA declined 6% to $236.4 million during the quarter, while the adjusted EBITDA margin shrunk 50 basis points to 4.8%. We had anticipated 50 basis points of contraction in both operating and EBITDA margins.

SG&A expenses rose 4.7% from the year-ago quarter to $721.8 million. This reflects higher labor and occupancy costs as a result of new club and gas station openings in addition to other investments to drive strategic priorities. As a percentage of total revenues, SG&A expenses increased 10 basis points to 14.7%. We had anticipated SG&A expenses to deleverage 30 basis points.

Other Details

BJ’s Wholesale Club ended the quarter with cash and cash equivalents of $35.1 million. The long-term debt amounted to $398.5 million, while stockholders’ equity was $1,527.4 million.

Net cash provided by operating activities and adjusted free cash flow totaled $200.8 million and $95.1 million, respectively, for the 13-week period ended on May 4, 2024. As part of its share repurchase program, the company bought back 405,110 shares worth $30.2 million in the quarter.

This Zacks Rank #3 (Hold) stock has advanced 12.4% in the past three months compared with the industry’s rise of 3%.

Don’t Miss These Solid Bets

Sprouts Farmers Market SFM, which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 9.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of around 8% and 9.5%, respectively, from the year-ago reported figure.

Casey’s General Stores CASY, the third largest convenience retailer and fifth largest pizza chain in the United States, currently carries a Zacks Rank #2 (Buy). CASY has a trailing four-quarter earnings surprise of 12%, on average.

The Zacks Consensus Estimate for Casey’s current financial-year earnings suggests growth of around 10.4% from the year-ago reported numbers.

Tractor Supply Company TSCO, the largest rural lifestyle retailer in the United States, currently carries a Zacks Rank #2. TSCO has a trailing four-quarter earnings surprise of 2.7%, on average.

The Zacks Consensus Estimate for Tractor Supply Company’s current financial-year sales and earnings suggests growth of around 3% and 2.4%, respectively, from the year-ago reported numbers.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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