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BJ's Wholesale (BJ) Widens Spectrum on Operational Efforts

BJ's Wholesale Club Holdings, Inc.’s BJ relentless efforts to boost the membership base, simplify assortments, enhance digital capabilities and accelerate club openings have been contributing to sales. The company has been sparing no effort to bolster omnichannel operations and ramp up delivery services.

Let’s Introspect

BJ's Wholesale Club’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories and building its own-brand portfolio bodes well. These endeavors contribute to growth in membership signups and renewals, resulting in higher membership fee income and decent comparable club sales growth. We foresee a sustained improvement in membership fee income as new club openings ramp up.

BJ's Wholesale Club has been directing resources toward expanding digital capabilities to better engage with members and provide them with a convenient way to shop, including same-day delivery, curbside pick-up and buy online, pick up in-club. It has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and BJ’s mobile app. These enable members to buy, review products and digitally add coupons to their membership cards.

Further, the company teamed up with DoorDash to provide on-demand grocery delivery from its stores. It also rolled out Same-Day Select, through which members, on payment of an upfront fee, can avail of either unlimited or a set number of same-day grocery deliveries delivered in as little as two hours.

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 19% in the first quarter of fiscal 2023. Clubs fulfill approximately 90% of digitally enabled sales.

Zacks Investment Research
Zacks Investment Research


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Bottom Line

We believe that BJ's Wholesale Club’s growth strategies, better price management, decent membership trends and digitization should keep supporting comparable sales trends. As part of its long-term financial targets, BJ’s Wholesale Club projected a low-to-mid-single-digit-percentage increase in comparable club sales, excluding the impact of gasoline sales.

The company guided total revenue growth of a mid-single-digit percentage. It expects a high-single-to-low-double-digit-percentage increase in earnings per share in the long run.

Shares of this Zacks Rank #3 (Hold) company have risen about 4% in the past year against the industry’s decline of 19.6%.

3 Picks You Can’t Miss Out On

Here we have highlighted three better-ranked stocks, namely Kroger KR, The TJX Companies TJX and General Mills GIS.

Kroger, which operates as a supermarket operator, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.

TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.

The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.

General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.

The Zacks Consensus Estimate for General Mills’ current financial-year sales suggests growth of 6.3% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.

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