You are here
NATICK, Mass. -- BJ's Wholesale Club, Inc. here today posted net income of $15.4 million, or 23 cents per diluted share, for the first quarter ended April 29, a decline of 17 percent from the year-ago period, when the company reported net income of $18.6 million, or 27 cents per diluted share. In a conference call yesterday the company's acting c.f.o., Frank Forward, cited such factors as continued soft traffic and general merchandise trends and rapidly rising gas prices for the downturn.
Many grocery categories performed solidly, however, according to Forward, among them soda and water, household chemicals, paper products, personal health, and produce, the last of which saw increased comparable-club sales of 20 percent. Private label was also a star performer, leading to a 25 percent rise in comp sales for the category, or 13 percent of total sales at the end of the quarter vs. 10 percent last year. Noting the success of private label at BJ's, which he said "[generates] member loyalty through exceptional value," president and c.e.o. Mike Wedge observed that there was "still opportunity for growth in this area."
Wedge noted that the fresh food offering had already been expanded in about one-third of BJ's stores, with an additional 60 locations set to receive a larger fresh presentation. He later characterized local market dominance in food retailing as a "critical factor."
Net sales for the first quarter of 2006 rose 6.3 percent to $1.9 billion and comparable-club sales grew 2.0 percent, including a contribution from gasoline sales of 1.4 percent. For the first quarter of 2005, BJ's posted a net sales increase of 9.8 percent and a comparable club sales increase of 5.8 percent, including a contribution from gasoline sales of 70 basis points.
Wedge admitted that the company's attempts to build traffic through incremental marketing plans funded by a $5 increase in the membership fee hadn't been as successful as BJ's had hoped. He pointed out, however, that the retailer was still working on the problem by testing such strategies as increased staffing in select locations, member retention programs, and a win-back campaign for lapsed members.
According to Wedge, the company plans to open 12 to 13 clubs in 2006, including a third research and development club in an as-yet-undisclosed location, vs. the eight new clubs opened in 2005. Also, in the second quarter BJ's will open a 620,000-square-foor cross-dock facility to replace an older, smaller facility in the same geographic area, he said. In 2006 the company will fund 2 million additional square feet of retail and distribution expansion, noted Wedge.
The company also said that it repurchased 658,500 shares of BJ's common stock during the first quarter at an average cost of $30.58 per share, for a total of about $20.1 million.
As of the end of the first quarter, BJ's operated 165 BJ's clubs and two ProFoods Restaurant supply clubs.