BJ's Wholesale (BJ) Rides on Membership Surge & Digital Drive
In the ever-evolving retail landscape, BJ's Wholesale Club Holdings, Inc. BJ stands as a testament to the significance of adaptability and innovation. Recognizing these as pivotal elements for success, the company has consistently expanded its membership base, elevated digital capabilities and pursued operational excellence, creating a foundation for enduring growth.
BJ's Wholesale Club places a premium on delivering quality products at competitive prices, reinforcing its position in the industry. The strategic approach involves refining product assortments, expediting club openings, expanding delivery services and crafting a winning formula that fortifies the company's market standing.
Strategies Unveiled
BJ's Wholesale Club’s commitment to bolstering marketing and merchandising capabilities, coupled with its foray into high-demand categories and expansion of its own-brand portfolio, has yielded remarkable results. It has played a pivotal role in driving membership signups and renewals, resulting in a notable surge in membership fee income.
In the third quarter of fiscal 2023, membership fee income witnessed a year-over-year increase of 6.6%, fueled by strong renewal rates and successful membership acquisition. We foresee a sustained improvement in membership fee income as new club openings ramp up.
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BJ's Wholesale Club's focus on expanding digital capabilities is another key aspect of its growth trajectory. Offering members convenient options such as same-day delivery, curbside pick-up and buy online, pick up in-club, the company ensures an engaging and seamless digital shopping experience. A robust digital portfolio, encompassing platforms like Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and the BJ’s mobile app, underscores the commitment to digital excellence.
Teaming up with DoorDash for on-demand grocery delivery and introducing Same-Day Select, which offers members unlimited or a set number of same-day grocery deliveries in as little as two hours, further highlights BJ's commitment to meet evolving consumer needs.
Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only. Digitally enabled comparable sales rose 16% in the third quarter. Clubs fulfill approximately 90% of digitally enabled sales.
Conclusion
BJ's Wholesale Club's growth strategies, effective price management, positive membership trends and digitization efforts are anticipated to continue supporting comparable sales trends. The company's long-term financial targets project a low-to-mid-single-digit-percentage increase in comparable club sales (excluding gasoline sales), mid-single-digit percentage total revenue growth and a high-single-to-low-double-digit-percentage increase in earnings per share.
Despite the positive aspects as discussed, the market dynamics have hurt the stock. Shares of this Zacks Rank #3 (Hold) company have fallen 5.3% in the past three months against the industry’s increase of 15.5%. Nonetheless, with a Value Score of B, BJ's Wholesale presents an opportunity for investors to acquire shares at a discounted price.
3 Picks You Can’t Miss Out On
Here, we have highlighted three better-ranked stocks, namely Ingredion Incorporated INGR, Target TGT and Ollie's Bargain OLLI.
Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2 (Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.8%, respectively, from the year-ago reported numbers.
Target, a general merchandise retailer, currently carries a Zacks Rank #2. TGT has a trailing four-quarter earnings surprise of 30.8%, on average.
The Zacks Consensus Estimate for Target’s current fiscal-year earnings suggests growth of 38.5% from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 15.1% and 74.7%, respectively, from the year-ago reported numbers.
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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
