BJ's Wholesale Club Holdings, Inc. (BJ Quick QuoteBJ - Free Report) has been making significant strides in redefining its strategies and upgrading its capabilities to maintain a competitive edge. With a strong emphasis on quality, pricing, enhancing members' shopping experience and operational enhancements, BJ's Wholesale Club is paving the way for sustained growth.

The company's unwavering dedication to expanding its membership base, streamlining assortments, improving digital capabilities and expediting club openings has yielded positive results, driving sales. BJ's Wholesale Club has left no stone unturned in fortifying its omnichannel operations and scaling up its delivery services, ensuring a seamless and convenient experience for its customers.

Let’s Delve Deep

BJ's Wholesale Club’s commitment to bolstering marketing and merchandising capabilities, coupled with its foray into high-demand categories and own-brand portfolio, has yielded remarkable results. These initiatives have played a pivotal role in driving membership signups and renewals, leading to a surge in membership fee income.

In the first quarter of fiscal 2023, membership fee income witnessed a year-over-year increase of 6.1%, fueled by strong renewal rates and successful membership acquisition. 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.

Conclusion

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.

Despite the positive aspects as discussed, the market dynamics have hurt the stock. Shares of this Zacks Rank #3 (Hold) company have fallen 9.6% in the past year compared with the industry’s decline of 11.6%.

Although BJ's Wholesale has experienced a decline in its stock value, it has managed to fare better than the industry. Moreover, with a Value Score of B, BJ's Wholesale presents an opportunity for investors to acquire shares at a discounted price. The company's business model, membership growth strategies and operational improvements have positioned it favorably within the market.

Stocks Looking Red Hot

Here we have highlighted three better-ranked stocks, namely Lamb Weston Holdings (LW Quick QuoteLW - Free Report) , The TJX Companies (TJX Quick QuoteTJX - Free Report) and Walmart (WMT Quick QuoteWMT - Free Report) .

Lamb Weston, a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers worldwide, currently carries a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 29.6% and 117.3%, respectively, from the year-ago reported numbers. The expected EPS growth rate for three to five years is 42.7%.

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 14.8% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.

Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.

The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.