The company is benefiting from the growing popularity of clubs and superstores as it gets back on track to open 25-30 new clubs over the next two years.
Based on strong membership and digital sales growth, BJ Wholesale Club Holdings Inc. reported that its first quarter revenue for fiscal year 2025 has surpassed market estimates. Despite the challenging consumer environment, the company maintained guidance for the remainder of the year.
On May 22, operators of the Membership Warehouse Club in the Eastern Half of the US reported adjusted revenue of $1.14 per share for the quarter ended May 3, with Zacks’ average analyst estimates above 91 cents.
Revenue was $5.15 billion, up 4.8% from the previous year. This is because membership fee revenues increased by 8.1%, and an increase in 35% jumps that allow comparable sales growth to be digitally possible.
“We reported a strong start to this year, demonstrated the power of the model and continued momentum in our long-term growth priorities,” said Bob Eddy, chairman and CEO of BJ Wholesale Club.
“Providing great value is essential in today’s environment and we are proud of our team members who continue to care for the families that depend on us.”
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Another trend is the fusion of online and offline sales, creating new channels known as “digital-enabled sales.” Customers can order online and pick it up at their local store or have it delivered to their home the same day. This approach has helped traditional brick and mortar retailers compete more effectively with Amazon.
In addition to these preferred retail trends, membership fees apply. This allows wholesale club operators to target wealthier customers through market segmentation.
In addition to increasing sales, these factors help wholesale clubs allocate capital better, generating excellent returns for investors.
According to data published by Gurufocus.com, BJ Wholesale Club’s Invested Capital (ROIC) was 10.44%, almost twice the rate it paid to raise capital in the market.
BJ’s shares fell 1.3% on May 22nd. Stocks rose 29.79% per year, up 212% over the past five years, breaking the S&P 500 Index.
Laura Felice, Vice President and Chief Financial Officer of BJ’s Wholesale Club, believes the company continues its growth path and maintains guidance for the year.
“Looking at 2025, we are confident in our team, our market positioning and our growth drivers under our control. We will continue to focus on promoting ongoing transportation and market profits in opposition to long-term priorities,” she said.
“Based on what we know today, we leave our guidance for 2025 unchanged and continue our assessment as the year progresses.”
On March 6, the company’s fiscal year 2025 guidance called for annual revenue growth for comparable clubs with earnings per share adjusted in the range of $4.10 to $4.30, excluding the impact of gasoline sales.
Meanwhile, the company is on track to open 25-30 new clubs over the next two years to update and upgrade its business model.
“In the past few years we have updated our clubs with the latest signing packages and invested in supporting key growth initiatives, including digital and fresh 2-point zero,” Eddy said in a revenue conference call.
“We are also trying to identify relocation opportunities to better position the fleet for tomorrow.”
Georgios Koimisis, a professor of economics and finance at Manhattan University, is skeptical of BJ’s ability to continue winning streaks on Main and Wall Street.
“BJ’s stock has outperformed the broader market this year,” he told the Epoch Times via email. “BJ, however, appears to be managing costs and profits well, but has not consistently increased sales beyond expectations.”
Koimisis believes this situation is getting worse in the current environment of rising long-term interest rates and a sharp decline in consumer trust.
“Depending on consumer spending could shift the focus from profit to sales performance due to increasing economic uncertainty, and sustained revenue growth is a more important factor in investor confidence going forward,” he said.
