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BJ's Wholesale May Benefit

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BJ’s Wholesale Club, Inc. ([url=]BJ[/url]) is the third-largest warehouse club operator in the U.S. It offers customers a broad array of branded merchandise at lower prices than traditional wholesalers, discount retailers, supermarkets, and specialty retailers.

BJ’s reported strong sales for the third quarter. Total sales increased by 13.4% to $2.4 billion, and comparable-club sales increased by 11.9%. The company also upped its earnings guidance for the third quarter to $0.45-$0.49 per diluted share, from previous guidance of $0.36-$0.40 per diluted share. We are increasing our fiscal 2008 EPS estimate, but we are slightly reducing our fiscal 2009 EPS estimate.

The company’s efforts to improve its merchandise and increase store traffic continue to drive its sales. The difficult macro-economic conditions are also pushing customers into discount stores and wholesale clubs, which offer a better value compared to supermarkets. We maintain our Hold rating, and our target price of $38.

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