On May 23rd, BJ's Wholesale Club Holdings Inc. (BJ) announced results for Q1 of FY 2023 ending April 29th 2023. The Company disappointed against a consensus topline of $4,800 million in sales and a growth in comparable sales of 5.9 percent pulling the stock down 7.0 percent at the open on May 23rd post-release.
For the period, the company earned $116.1 million on revenue of $4,725 million with a diluted EPS of $0.85. Comparable figures for Q1 FY 2022 were net earnings of $112.5 million on revenue of $4,496 million with a diluted EPS of $0.82. For the most recent quarter, BJ’s achieved a gross margin of 18.6 percent (17.6 percent Q1, FY 2022) and an operating margin of 4.0 percent (3.3 percent Q1 FY 2022).
During the quarter, comparable club store sales excluding fuel increased by 5.7 percent compared to Q1 of FY 2022. Digital sales increased by 19.0 percent.
In commenting on the quarter Bob Eddy, President and Chief Executive Officer stated “We reported a record first quarter in net income and adjusted EBITDA, demonstrating the power of our business model and the warehouse club channel,” said, He added “We drove topline growth bolstered by robust traffic and share gains. We also made significant improvements on our merchandise margins largely due to waning supply chain pressures and moderating inflation. We remain focused on our strategic priorities and believe that we are well-positioned to maximize long-term shareholder value.”
Guidance for FY 2023 issued at the end of FY 2022 was unchanged and included a 4 to 5 percent increase in comparable store sales; a 40 basis point improvement in gross margin but wit a flat EPS.
The Company operates 237 warehouse stores with 167 fuel stations in 18 states.
On April 29th 2023 BJ’s posted total assets of $6,495 million including $1,123 million in goodwill and intangibles, offset by long-term debt and lease obligations of $2,677 million. BJ's had a market capitalization of $10,078 million at noon, May 23rd. The company has traded over the past fifty-two weeks in a range of $53.43 to $80.41 with a 50-day moving average of $74.68. Over the trailing twelve-month period, operating margin was 3.9 percent and profit margin 2.7 percent. Return on assets was 7.8 percent and return on equity, 60.7 percent.
BJ’s is a bellwether for the retail sector along with larger competitor big box warehouse clubs Costco and Sam’s. The current retail environment was characterized in the earnings call by comments that consumers are “trading down” and “more discerning.” These sentiments were implicit in the Target and Walmart calls.