BJ's Wholesale (BJ, Financial) recently reported a slight edge past Q4 EPS estimates, driven by an uptick in club traffic and robust membership growth. The company's comparable club sales, excluding gas, increased by 0.5%, aligning with the higher end of its forecasted range. Despite a 1.0% decline in FY24, BJ's anticipates a positive shift in comparable club sales for FY25, projecting a 1-2% growth.
Key highlights from BJ's report include:
- Comparative growth appears modest, especially against Costco (COST, Financial), which reported a 3.8% comp growth in Q1, primarily fueled by the food and sundries category.
- Sales trends for BJ are improving, helping counteract the effects of disinflation.
- The 1% comp increase in perishables and grocery for BJ was driven by volume gains, indicating a competitive edge in bulk purchases similar to Costco.
- BJ's membership growth remains strong, with a 90% renewal rate in FY24 and a 6.5% increase in membership fee income to $108.4 million in Q4.
- Despite a decline in general merchandise and services comps by 11% last quarter, a significant improvement was noted in Q4, especially during the Black Friday period, with consumer electronics seeing a notable 9% positive comp.
While BJ's growth rates and comp growth may not seem as aggressive as Costco's, the company's Q4 earnings showed significant improvements in traffic and general merchandise comps. With FY25 EPS guidance set between $3.75-$4.00, slightly below expectations, BJ's is focusing on expansion, planning to open twelve new clubs in FY25. This expansion marks the most significant growth in the company's pipeline in the past two decades.
