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BJ's Wholesale Club (BJ) Q4 Earnings Top Estimates, Revenues Up

·5 min read

BJ’s Wholesale Club Holdings, Inc. BJ posted fourth-quarter fiscal 2020 results, with the top and the bottom line increasing year over year. Moreover, the company’s bottom line surpassed the Zacks Consensus Estimate. Notably, the company continued to witness strong comparable club sales. The metric gained from strength in the digital channel.

BJ’s Wholesale Club’s focus on simplifying assortments, expanding into high-demand categories and building own-brands portfolio is commendable. It also remains committed toward enhancing omni-channel capabilities and providing value to customers. Cumulatively, these endeavors have been contributing to growth in memberships, resulting in higher membership fee income and comparable club sales growth.

Shares of this Westborough, MA-based company have surged 59.7% in a year compared with the industry’s growth of 13.5%.

Q4 Insights

The operator of membership warehouse clubs reported adjusted earnings of 70 cents a share that surpassed the Zacks Consensus Estimate of 66 cents. Moreover, earnings surged 75% from 40 cents reported in the year-ago quarter. Management highlighted that overall business strength and reduced interest expenses fueled bottom-line performance in the said period.

BJ’s Wholesale Club generated total revenues of $3,946.6 million that increased 13.7% from the year-ago quarter’s levels. However, the top line missed the Zacks Consensus Estimate of $3,971 million. Net sales increased 13.7% to $3,860.5 million, while membership fee income was up 11% to $86.1 million.

Comparable club sales during the quarter under review rose 13%, following an increase of 14.1% in the preceding quarter. Excluding the impact of gasoline sales, comparable club sales surged 15.9% during the quarter, after increasing 18.5% in the preceding period. Growth in ticket and traffic fueled the company’s comparable club sales growth. Across several markets the company witnessed its members expanding their baskets and shopping trips to the clubs. Further, comparable sales grew 18% in the grocery division, while general merchandise and services division registered comparable sales growth of 9%.

We note that digitally-enabled sales soared 168%, and added 5 percentage points to comparable club sales, excluding gasoline sales. Digital growth was mainly fueled by consumer’s sturdy response toward the company’s app. The recently-upgraded app offers several utility including improved shopping experience, personalized promotions and gateway to fulfillment options. Moreover, the company’s investments toward expanding digital capabilities such as same-day delivery, curbside pick-up, and buy-online, pickup-in-club have been receiving favorable consumer response.

During the quarter, gross profit rose 19.4% to $742.6 million. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 50 basis points from the year-ago quarter’s levels. Continued execution of category profitability improvement was offset by costs related with COVID-19.

Operating income surged 76.8% to $144.7 million, while operating margin expanded 130 basis points to 3.7%. Adjusted EBITDA increased 36.1% to $204.5 million.

SG&A expenses rose 10.7% to $593.3 million from the year-ago period. The year-over-year increase in SG&A expenses was due to costs associated with the ongoing pandemic, which include wage increases, bonuses, safety and protective equipment, and other operating expenses.

BJs Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

BJs Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
BJs Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

BJs Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJs Wholesale Club Holdings, Inc. Quote

Other Financial Details

BJ’s Wholesale Club, which carries a Zacks Rank #3 (Hold), ended the fourth quarter with cash and cash equivalents of $43.5 million. Long-term debt amounted to $846.1 million, while stockholders equity stood at $319.3 million.

Additionally, net cash provided by operating activities during fiscal 2020 were $868.5 million, while free cash flow amounted to $676.1 million.

Additionally, as part of its share repurchase program, the company bought back $11.6 million worth shares during the fourth quarter. In fiscal 2020, the company bought back shares worth $99.7 million.

3 More Stocks Hogging the Limelight

Rent-A-Center, Inc. RCII has a trailing four-quarter earnings surprise of 12.2%, on average. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Crocs, Inc. CROX, also flaunting a Zacks Rank #1, has a long-term earnings growth rate of 15%.

Deckers Outdoor Corporation DECK, a Zacks Rank #2 (Buy) stock, has a long-term earnings growth rate of 21.5%.

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