BJ’s Wholesale Club Holdings, Inc. BJ reported its fourth-quarter fiscal 2024 results, showcasing mixed performance. While revenues fell short of the Zacks Consensus Estimate, earnings surpassed expectations. Both the metrics declined year over year. Nonetheless, comparable club sales growth accelerated sequentially.
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BJ’s Fourth-Quarter Insights
BJ’s Wholesale Club reported adjusted earnings of 93 cents a share, which came ahead of the Zacks Consensus Estimate of 87 cents but decreased from $1.11 reported in the year-ago period.
This operator of membership warehouse clubs generated total revenues of $5,278.5 million, which fell 1.5% from the year-ago quarter’s level and missed the consensus mark of $5,309 million. Net sales decreased 1.7% to $5,161.5 million, while membership fee income jumped 7.9% to $117 million.
Total comparable club sales during the quarter under discussion rose 4% year over year, following an increase of 1.5% registered in the third quarter. Excluding the impact of gasoline sales, comparable club sales jumped 4.6%, led by robust traffic, and fared better than our estimate of a 2.8% increase. Robust traffic boosted comparable sales by more than 3 percentage points, marking the 12th consecutive quarter of growth. Markedly, digitally enabled comparable sales advanced 26% during the quarter.
BJ's Wholesale continued its expansion in fiscal 2024, adding seven new clubs and 12 gas stations. The company plans to open five new clubs in the first quarter of fiscal 2025 and targets 25 to 30 new club openings over the next two fiscal years.
Shares of BJ's Wholesale hit a 52-week high of $113.80, before closing at $112.33 yesterday. Shares of this Zacks Rank #2 (Buy) company rose 12.2% during the trading session yesterday. In the past six months, the stock has advanced 44.5% against the industry’s decline of 2.2%.
BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
BJ's Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ's Wholesale Club Holdings, Inc. Quote
A Look at BJ’s Margins
Gross profit decreased to $949 million from $963.3 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, contracted 10 basis points from the year-ago quarter’s level. Merchandise margin was adversely impacted by the mix of sales as well as continued investments in the business.
Operating income declined 16.6% year over year to $178.4 million, while operating margin, as a percentage of total revenues, shrunk 60 basis points to 3.4%. We note that adjusted EBITDA fell 9% to $264.6 million during the quarter, while the adjusted EBITDA margin contracted 40 basis points to 5%. We had anticipated 80 and 70 basis points of decline in operating and EBITDA margins, respectively.
Selling, general and administrative (SG&A) expenses rose 2.3% from the year-ago quarter to $758.2 million. This reflects higher labor and occupancy costs stemming from new club and gas station openings in addition to an increase in incentive compensation. As a percentage of total revenues, SG&A expenses deleveraged 60 basis points to 14.4%. We had anticipated SG&A expenses to deleverage 80 basis points.
BJ’s Wholesale Financial Snapshot
BJ’s Wholesale Club ended the quarter with cash and cash equivalents of $28.3 million. The long-term debt was $398.8 million, while stockholders’ equity was $1,847.5 million.
Net cash provided by operating activities and adjusted free cash flow totaled $271.9 million and $111.5 million, respectively, for the 13 weeks ended on Feb. 1, 2025. As part of its share repurchase program, the company bought back 645,294 shares worth $61.6 million in the quarter. Since launching the program in the fourth quarter of fiscal 2021, the company has repurchased 6,826,153 shares, fully utilizing its $500 million authorization.
Last year in November, BJ’s board of directors approved a new share repurchase program, authorizing the repurchase of up to $1 billion worth of shares, with the program set to expire in January 2029.
Here’s What BJ Guided
BJ’s Wholesale Club anticipates fiscal 2025 comparable club sales, excluding gasoline sales, to increase between 2% and 3.5% year over year. Management guided adjusted earnings per share between $4.10 and $4.30 compared with $4.05 reported for fiscal 2024. The company foresees capital expenditures of about $800 million for fiscal 2025.
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This article originally published on Zacks Investment Research (zacks.com).
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