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BJ's Wholesale (BJ) Outpaces Industry Year to Date: Here's Why

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BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is one of the top-notch performers amid the pandemic, courtesy of its sound fundamentals and growth efforts that reinforce its position in the ultra-competitive environment. Impressively, shares of this operator of warehouse clubs have climbed 55.6% so far in the year against the industry’s decline of 14.4%.

This Westborough, MA-based company has also comfortably outperformed the S&P 500 Index that has advanced 21.2% in the aforementioned time frame. The stock is hovering close to its 52-week high of $59.81. There is a likelihood that BJ's Wholesale Club with a long-term earnings growth rate of 8.2% can attain new highs. A VGM Score of A highlights this Zacks Rank #1 (Strong Buy) stock’s upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Markedly, the Zacks Consensus Estimate for current and next financial year earnings per share has moved up 1.4% and 2.3% to $2.92 and 3.16, respectively, in the past 30 days.

This Bull Run Has Momentum

BJ's Wholesale’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories as well as building own-brands portfolio bodes well. The company remains committed toward enhancing omni-channel capabilities and providing value to customers. These endeavors have been contributing to growth in membership signups and renewals, resulting in higher membership fee income, higher average members per club and decent comparable club sales growth.

It has been directing resources toward expanding digital capabilities in order to better engage with members and provide them a convenient way to shop, including same-day delivery, curbside pick-up and buy-online, pickup-in-club (BOPIC). Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only.

 

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The company has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and the BJ’s mobile app. This enables members to buy, review products and digitally add coupons to their membership card. Markedly, the company has launched curbside pickup and expanded BOPIC service for fresh and frozen grocery items at all its locations.

Also, BJ's Wholesale holds a three-year exclusive agreement with CommerceHub, a leading e-commerce platform that allows online order fulfillment and delivery solutions. The company’s partnership with Citizens Pay for providing online financing solutions for large purchases is encouraging as well. In certain club locations, shoppers can utilize their EBT card for SNAP qualified items during checkout, when they shop on BJs.com for in-club pickup or contactless curbside pickup.

Wrapping Up

BJ's Wholesale is leaving no stone unturned to improve top-line performance and expand customer base, be it through better pricing, private label offerings, merchandise initiatives or digital solutions. These endeavors have been contributing to growth in membership signups and renewals. Management stated that sturdy membership trends, assortment initiatives, enhanced digital capabilities and robust real estate pipeline would help the company to sustain stellar growth in the long term. Markedly, the Zacks Consensus Estimate for current and next financial year sales indicates an improvement of 3.8% and 6.2%, respectively, from the year-ago period.

3 Stocks to Consider

Kroger (KR - Free Report) has a long-term earnings growth rate of 8.9%. It currently sports a Zacks Rank #1.

Walmart (WMT - Free Report) has a trailing four-quarter earnings surprise of 14.3%, on average. The stock carries a Zacks Rank #2 (Buy).

Costco (COST - Free Report) has a long-term earnings growth rate of 8.6%. It presently carries a Zacks Rank #2.