Has COVID-19 transformed BJ’s warehouse club business for good?
BJ’s Wholesale Club management is feeling pretty good about the chain’s prospects after reporting a record-setting quarter where it drove better-than-expected numbers for memberships, sales and profits.
New memberships jumped 28 percent higher in the second quarter compared to the same period last year, pushing BJ’s total northward of six million members. The chain, whose clubs are concentrated on the East Coast, has brought in as many new members in the past six months as it would typically do over an 18-month period. Lee Delaney, BJ’s president and CEO, told analysts on an earnings call yesterday that his company could very well pick up the equivalent of three years’ worth of memberships before 2020 is over. He was particularly encouraged that recently attracted members tend to skew younger and more “digitally-engaged” than the chain’s average.
Mr. Delaney said BJ’s has increased its member outreach marketing with the chain’s focus on engaging all members, but new ones in particular. “We are closely monitoring their behavior and utilizing a targeted, personalized approach to keep them engaged in shopping,” he said.
Same-store sales rose 24.2 percent over the three months, well above the 15.5 percent gain expected by Wall Street. Digital, an underdeveloped portion of BJ’s business, rose 300 percent during the quarter adding six points to the chain’s comparable sales number.
Mr. Delaney said that three-quarters of the chain’s digital business growth was connected to its same-day delivery and buy online, pickup in-club (BOPIC) services.
“BOPIC sales tend to skew towards higher ticket items and same day delivery sales have the same margins as traditional sales in our clubs,” he said.
On the bottom line, the retailer reported adjusted earnings per share of 77 cents, also pushing pass the 60 cents consensus among analysts.
While saying that forecasting future results is difficult considering the “challenging and unpredictable” business environment BJ’s finds itself in, Mr. Delaney said he is bullish on his company’s prospects. He called 2020 a truly transformational year for the chain with the company having paid down nearly $500 million in debt and having accumulated nearly $170 million in cash.
“What we do know is that our business has strengthened significantly,” he said. “We are not the company we were six months ago, six quarters ago or six years ago. We have added more members and are accelerating investments to improve all facets of our business.”
- BJ’s Wholesale Club Holdings, Inc. Announces Record Second Quarter Fiscal 2020 Results – BJ’s Wholesale Club Holdings, Inc.
- BJ’s Wholesale Club Holdings, Inc. CEO Lee Delaney on Q2 2020 Results (Earnings Call Transcript) – Seeking Alpha
DISCUSSION QUESTIONS: Do trends that have arisen this year – stay-at-home, online shopping, one-stop shops, stock-up purchasing, et al – seem likely to work in BJ’s favor even after the pandemic ends? Where do you see the biggest opportunities and challenges for BJ’s at present and going forward?