BJ’s Wholesale Club had strong online sales and exceeded Wall Street’s earnings per share guidance for its first quarter of fiscal 2021, despite poor same-store sales due to the boom cycle. last year’s sales at the onset of COVID-19.
For the quarter ended May 1, BJ recorded net sales of $ 3.78 billion, up 1.7% from just under $ 3.72 billion a year earlier, when the chain of warehouse clubs recorded an increase of 21.1% in a context of panic buying linked to the pandemic. Membership dues revenue increased 8.6% to $ 86.4 million – fueled by 8% growth in the membership base – and increased overall revenue 1.9% to 3 , $ 87 billion, the company reported Thursday.
Comparable club sales edged up 0.3% year over year, but excluding fuel were down 5% for the quarter. BJ’s noted, however, that comp-club sales increased 22% on a two-year cumulative basis excluding fuel, including a 27% gain in the first quarter of 2020.
“In February, the comps were slightly behind our internal plan,” CFO Laura Felice told analysts on a conference call Thursday morning. “We saw an acceleration in March and April compared to our expectations as we benefited from stimulus payments, strong member retention and high sales in the general merchandise categories.”
Comp sales in the grocery category, which account for about three-quarters of BJ’s overall sales, remain on a healthy growth path, according to Felice.
“Our grocery division’s comps were stacked 23%, reflecting a negative 10% comp for the current quarter and a 33% comp the previous year. As expected, we saw a decline in our grocery and sundries division as we lacked the hype of demand for paper products, essential cleaning supplies, packaged goods and beverages brought on by the start of the pandemic last March, ”she explained. “On a two-year stack basis, we saw robust growth across all divisions, particularly in perishables, where stack compositions were in the average 20% range, and we saw growth of fresh meat, frozen meals and fresh produce. Our General Merchandise and Services division grew 32%, reflecting a compilation of 29%. As a reminder, our general merchandise and services division experienced a production decline of approximately 3% the previous year, as apparel sales declined and we closed our service activities. “
Digital sales were a bright spot in the first quarter, climbing 31% and reflecting cumulative growth of 381% over two years, incorporating a 350% jump from quarter 2020.
“Our digital business allows us to offer convenient access to the tremendous value we deliver every day. Our digitally activated sales grew 31% this quarter and 381% on a cumulative basis, exceeding our high expectations, ”said President and CEO Robert Eddy, who took over as CEO of BJ in April following the death. by Lee Delaney.
“We are more relevant than ever in the digital space, and the engagement of our members is most evident through the increased use of our app, which has been downloaded over 5 million times. About a third of our members regularly use our app. On a scale-adjusted basis, our app’s engagement remains ahead of many of our competition as we continue to make shopping significantly easier and faster, ”Eddy said in the call. “In addition, our extensive digital processing options continue to resonate with members, as more than half of our BOPIC [buy online, pickup in club] orders were delivered to the curb during the last quarter. Finally, our plan to allow members to use EBT payment when shopping at BJs.com for club pickup and curbside pickup remains on track. Pending state approval, we expect digital EBT payments to be available in all eligible countries over the coming months. “
Felice noted that online sales generated about 7% of BJ’s 22% of stack-to-merchandise sales in the first quarter.
“On a cumulative basis, we have seen robust and strong growth across all of our digital channels, particularly in BOPIC, curbside pickup and same day delivery. As you know, our digital business is economically advantageous over many of our peers, and most of our digital growth is happening through our clubs. In addition, we operate in a warehouse environment with a limited number of SKUs and a higher average ticket, which allows us to be more efficient. BOPIC and trendy sales tend to shift towards bigger baskets, and same day delivery sales have the same margins as traditional sales in our clubs, ”she said. “Most importantly, the growth of our digital channels underscores our relevance. Digitally engaged members have higher average baskets and take more trips per year than members who buy only from the club. As we said before, generally the more a member buys and spends, the more likely it is to renew itself. “
The Westborough, MA BJ’s finished the first quarter with 221 warehouse clubs and 151 BJ’s gas stations in 17 states. On Thursday, the company unveiled plans to open six new clubs in fiscal 2021, including in Seabrook, NH; Port Charlotte, Florida; Commack, NY; South Fayette and Ross Township, Pennsylvania; and Lansing, Michigan. Locations in the greater Pittsburgh and Lansing area will mark new markets for BJs.
Eddy said in the call that BJs could open up to 10 new clubs in fiscal 2022.
“We also plan to open nine gas stations in 2021, followed by a dozen or more gas stations in 2022, which means three-quarters of our clubs will have gas stations by the end of 2022. “, he added. “We are excited about our expansion efforts and our confidence is based on the solid performance we are seeing in our new clubs, especially in terms of membership gains and renewal rates. At our Michigan clubs and Pensacola, Florida, retention rates in the first year are well above chain-wide averages. This reinforces our confidence in our expansion efforts because it shows that our brand resonates in new markets. “
On the earnings side, BJ reported first quarter net income of $ 81.6 million, or 59 cents per diluted share, compared to $ 95.7 million, or 69 cents per diluted share, a year ago. Excluding stock-based compensation, loss of cash flow hedges, debt charges and write-offs, severance pay and tax adjustments, net income was $ 99.7 million, or 72 cents per year. diluted share, on an adjusted basis from $ 95.7 million, or 69 cents per diluted share, in the 2020 quarter, the company reported.
Analysts on average projected adjusted earnings per share of 57 cents, with estimates ranging from 48 cents to 70 cents, according to Refinitiv.
“Overall, we are extremely proud of the progress we have made. Looking ahead, we continue to face uncertainties related to market factors beyond our control, including the trajectory of home food consumption and the overall macroeconomic environment, ”Eddy told analysts. “In fiscal 2020, we saw historically high comp sales, and a significant portion of our performance was driven by pandemic-related purchases, particularly the need to buy wholesale and eat. at home. As the pandemic subsides and consumer behavior changes, we expect to forgo some of these sales gains resulting from increased home food consumption. “
While the return to normal after the pandemic “creates noise” for the remainder of fiscal 2021 and through 2022, BJ’s expects its membership trends, optimized and expanded assortment, growth digital and its club expansion lead to an average and higher turnover. future growth, according to Eddy.
“Our confidence has been reinforced by the belief that macroeconomic trends will work in our favor. We believe home food consumption will reset to a little higher than historical levels as consumers are more inclined to consume food at home than before the pandemic, ”he said. “Economic uncertainty will continue to place more emphasis on value and the demand for convenience will likely remain relevant. Therefore, we expect our unbeatable offer, value and convenience to be a winning formula. “