Behind a format officials say was uniquely prepared to deal with shopping changes associated with the coronavirus pandemic, BJ’s Wholesale Club posted robust sales and comps during its fiscal first quarter.
The Westborough, Mass.-based membership warehouse club said a strong foundation in value-priced and large-sized groceries met a consumer shopping base looking to consolidate shopping trips and buy more per visit. New memberships rose by 40% vs. last year’s first quarter and groceries—which comprise 85% of BJ’s merchandise sales—saw comparable increases of 33% in the period, which ended May 2. The comp figure was shaved somewhat by a 3% comp decline in general merchandise and services but overall added to ex-gas comps of 27% in the quarter. Digitally enhanced sales, which includes growing options for club pickup and same-day delivery, increased by 350%.
Sales of $3.7 billion increased by 21.1%, and despite added costs for worker salaries and safety measures, delivered a 167.4% increase in net earnings, to $95.7 million.
CEO Lee Delaney, discussing the results in a conference call with analysts, credited BJ’s with a model that was able to both identify and adapt to these conditions quickly and efficiently for helping to realize the outsized benefits, which he said were consistent across its geographic markets. “We believe we have gained considerable share in every region across most categories in which we compete,” Delaney said, according to a Sentieo transcript.
“We operate efficiently with focused labor and lower marginal expenses than any of our competitors,” he added. “We have upgraded our operational standards with new practices and systems improvements, and we have built an expanded suite of digital capabilities with relatively advantaged economics.
“Together, the model and our improved capabilities allowed us to rapidly scale our business, beat unprecedented levels of demand for digital shopping, invest in our team members, deliver improved bottom-line performance and generate cash.”
While disruption from the pandemic triggered some delays in planned club expansion, Delaney predicted larger market disruptions would make for “increasing availability of good real estate” that “will open more opportunity in 2021 and beyond.”
Delaney, who took over as CEO earlier this year, said BJ’s would continue to pursue a cost reduction and investment strategy known as Project Momentum, which remains on track to deliver $40 million in savings this year.
“The No. 1 focus of our entire team is to take this opportunity to turn one quarter's fantastic performance into many years of growth in front of us,” added Chief Financial Officer Robert Eddy. “We’ve got earnings to invest. We’ve got a ton of cash to play with. And we will be aggressive in doing so [and] that will take many forms as we go. Real estate is just one of them.”
Stock in the company was up more than 18% following the report.