BJ's Wholesale Club Holdings, Inc. BJ, a leading name in the membership warehouse club industry, has strengthened its position through a solid customer value proposition and an effective business model. The company’s initiatives to grow its membership base, refine product assortments, enhance digital capabilities and expand its club network have been key drivers of sales growth. Moreover, BJ's remains focused on bolstering its omnichannel operations and broadening delivery services to meet evolving customer needs.
Membership Growth Fuels BJ’s Momentum
BJ's Wholesale Club has achieved impressive growth by refining its marketing and merchandising strategies while diversifying its private-label offerings and expanding into high-demand product categories. These strategic moves have significantly increased membership signups and renewals, driving a notable rise in membership fee revenues.
In the third quarter of fiscal 2024, BJ’s reported an 8.4% year-over-year increase in membership fee income, fueled by strong renewal rates and successful membership acquisition efforts. As the company continues to open new clubs, it anticipates sustained growth in membership revenues. BJ’s first membership fee increase in seven years went into effect on Jan. 1, 2025.
Shares of this Zacks Rank #3 (Hold) company have advanced 13.7% in the past three months compared with the industry’s growth of 1%.
BJ’s Digital Transformation Drives Engagement
BJ's Wholesale Club has invested heavily in its digital capabilities to better connect with members and offer a seamless shopping experience. Key offerings include same-day delivery, curbside pickup, and buy-online, pick-up-in-club services. The company has built a comprehensive digital ecosystem with platforms like BJs.com, BerkleyJensen.com, WellsleyFarms.com and BJ’s mobile app, enabling members to browse and purchase products, add digital coupons and track annual savings.
To enhance convenience, BJ's Wholesale Club has partnered with DoorDash, Instacart and Roadie for on-demand delivery. The company also introduced the Same-Day Select program, allowing members to pay an upfront fee for unlimited or 12 same-day grocery deliveries per year, offering added flexibility and convenience.
Management has observed that digitally engaged members tend to shop more frequently and have higher average purchase values than those who shop exclusively in-club. In the third quarter of fiscal 2024, digitally enabled comparable sales surged 30%, with more than 90% of these sales fulfilled through club locations.
Final Thoughts on BJ
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 guided total revenue growth of a mid-single-digit percentage. The company also projected a low-to-mid single-digit percentage increase in comparable club sales, excluding the impact of gasoline sales. It expects a high-single to low-double-digit percentage increase in earnings per share in the long run.
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The Zacks Consensus Estimate for United Natural Foods’ current financial-year sales and earnings calls for growth of 0.3% and 442.9%, respectively, from the year-ago reported numbers.
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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of 7.2% and 11.8%, respectively, from the year-ago reported numbers.
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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Freshpet, Inc. (FRPT) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
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