BJ’s Q2 Sees Rising Membership Rates But Lower Comps

In its second-quarter fiscal 2021 results for the 13 weeks ending July 31, BJ’s Wholesale Club Holdings Inc. continued to report improved membership size and quality, with first-year renewal rates remaining at historic levels. However, perhaps as a consequence of fewer shoppers stockpiling food and other items at this stage of the pandemic, comparable-club sales, excluding sales of gasoline, were down 3.4%, reflecting two-year stacked comps of 20.8%. Total comps, however, were up 4.0%, reflecting two-year stacked comps of 21.2%.

Digitally enabled sales rose 4%, reflecting two-year stacked comp growth of 304%, with members continuing to enthusiastically adopt such new services as curbside pickup. The company further noted “consistent, robust performance across its categories and geographies.” Earnings per diluted share of 80 cents reflected a 5.3% year-over-year increase, while adjusted earnings per diluted share of 82 cents reflected 6.5% year-over-year growth.

“When I reflect on our impressive performance, it is clear that our progress against our strategic priorities has powered our success,” noted BJ’s President and CEO Bob Eddy, who took the helm in April, following the sudden death of Lee Delaney. “We drove outstanding membership results, expanded our market share and continued to benefit from elevated consumer spending trends. I am thankful for our team members’ dedication and excellent execution, which continues to enable our success. We have invested into our team members, the value of our membership, our digital infrastructure and physical footprint to continue to accelerate our growth flywheel. With these investments, we are confident that we are well positioned for long-term success.”

BJ’s gross profit grew to $763.5 million in the second quarter of fiscal 2021, from $756.4 million in the year-ago period. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 30 basis points over the second quarter of fiscal 2020. According to the company, merchandise margins benefited from improved private label penetration and the mix of its general merchandise sales, partly offset by higher freight costs and price investments in inflationary categories. BJ’s operating income rose to $163.8 million, or 3.9% of total revenues, in the second quarter of fiscal 2021, versus $163.6 million, or 4.1% of total revenues, in the second quarter of fiscal 2020. 

For the first half of fiscal 2021, BJ’s comparable-club sales, excluding the impact of gasoline sales, fell 4.2% compared with the first half of fiscal 2020 (Total comps rose 2.2%). Gross profit dropped to $1,490.3 million in the first half of fiscal 2021, from $1,493.1 million in the year-ago period. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by about 50 basis points over the first half of fiscal 2020. BJ’s said that merchandise margins benefited from the mix of its general merchandise sales, higher private label penetration and ongoing execution of category profitability improvement initiatives, partly offset by increased freight costs and price investments in inflationary categories. The company’s operating income declined to $290.0 million, or 3.6% of total revenues, in the first half of fiscal 2021, compared with $307.3 million, or 4.0% of total revenues, in the first half of fiscal 2020.

Despite expressing satisfaction with its Q2 performance, BJ’s once more decided not to provide financial guidance, citing the upheavals associated with COVID-19.

“Looking ahead, we remain confident our business will continue to thrive and that our solid membership trends, assortment initiatives, enhanced digital capabilities and robust real estate pipeline will drive sustained and strong profitable growth,” said Laura Felice, BJ’s EVP and CFO. “Given the level of uncertainty associated with the evolution of the pandemic, fiscal 2021 remains difficult to forecast. Our view of the future has improved from last quarter, but we will continue to refrain from offering formal detailed guidance.”

In May, while reporting its Q1 results, BJ's revealed that it would open six new locations in Florida, Michigan, Pennsylvania, New Hampshire and New York. These locations include two new markets for the retailer: Lansing, Mich., and Pittsburgh.

Based in Westborough, Mass., BJ’s Wholesale Club operates 222 clubs and 151 BJ’s Gas locations in 17 states. The company is No.is No. 27 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America.