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    Weather, Economy Cause BJ’s Q2 Sales to Suffer

    Citing such factors as a cool, rainy summer and an economy in recession, BJ’s Wholesale Club, Inc. posted total sales for the second quarter of 2009 of $2.5 billion, a 5.2 percent decline, while comparable-club sales fell 7.7 percent, including a adverse impact from sales of gasoline of 10.6 percent.

    Citing such factors as a cool, rainy summer and an economy in recession, BJ’s Wholesale Club, Inc. posted total sales for the second quarter of 2009 of $2.5 billion, a 5.2 percent decline, while comparable-club sales fell 7.7 percent, including a adverse impact from sales of gasoline of 10.6 percent. Excluding the impact of gas, merchandise comps for the second quarter increased 2.9 percent. In the year-ago period, the company posted a comparable-club sales increase of 15.5 percent, including a contribution from sales of gasoline of 8.1 percent. Excluding the impact of gasoline, merchandise comps for the second quarter of 2008 grew 7.4 percent.

    Meanwhile, net income for the second quarter ended Aug. 1, 2009, was $35.1 million, or 64 cents per diluted share, vs. net income of $36.5 million, or 61 cents per diluted share, in the year-ago period. For the first half of 2009, net income was $59.4 million, or $1.09 per diluted share, compared with $53.7 million, or 90 cents per diluted share, last year.

    “Our second-quarter sales were unfavorably affected by unseasonably cool and wet weather in the Northeast, weak consumer spending, and increased price deflation, particularly in some perishable departments such as dairy, milk, meat and produce,” noted BJ’s CFO Frank Forward during a conference call this week. “Despite these top-line challenges, our earnings beat the midpoint of our guidance range of 60 cents to 64 cents per share by two cents per share, primarily due to the higher-than-planned merchandise margin rates, strong gasoline profitability, and good control of public expenses. Also worth noting is that Q2 comp traffic remained strong at 4 percent, and we continue to see good unit sales growth, both of which are encouraging signs of increased market share.”

    Additional good news came from the food departments. “The increased penetration of high-margin perishable foods was an important component of our merchandise margin expansion during the quarter,” observed president and COO Laura Sen during the call. “Strong comp sales growth in food and consumables and our consistently strong traffic increases also demonstrate that we are making good progress in capturing a larger share of our members’ weekly food budget. Despite significant price deflation in a number of high-velocity departments, comparable-club sales of food increased by 6 percent on top of a 10 percent increase in last year’s second quarter. In perishables, where we saw accelerating rates of price deflation in meat, produce, milk, eggs and dairy, comp sales increased by approximately 6 percent on top of a 12 percent increase in last year’s second quarter.”

    Sen added that the company plans “to open seven new clubs this year compared to four new clubs last year.”

    In line with its second-quarter results, BJ’s updated its sales and earnings guidance. For the year ending Jan. 30, 2010, the company now anticipates an increase in net sales of 0.5 percent to 1.5 percent and a decline in comps of 1 percent to 3 percent, including a negative impact from gasoline sales of 6 percent to 8 percent. Merchandise comps excluding gasoline are expected to grow 4 percent to 6 percent. For the full year ending Jan. 30, 2010, BJ’s now expects to report net income in the range of $134 million to $140 million, and diluted earnings per share in the range of $2.46 to $2.56.

    Natick, Mass.-based BJ’s operates 184 BJ’s Wholesale Clubs in 15 states.

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