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BJ's Wholesale's (BJ) Omnichannel Endeavors Support Growth
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BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is one of the leading operators of membership warehouse clubs. It has been reinforcing its position in the industry with its strong customer value proposition and business model.
Its relentless efforts to boost the membership base, simplify assortments, enhance digital capabilities and accelerate club openings have been contributing to sales. The company has been sparing no effort to bolster omnichannel operations and ramp up delivery services.
Let’s Introspect
BJ's Wholesale Club’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories and building its own-brand portfolio bodes well. Own brands penetration increased to 24% of merchandise sales in the third quarter of fiscal 2022. These endeavors have contributed to growth in membership signups and renewals, resulting in higher membership fee income and decent comparable club sales growth.
While the membership fee income jumped 8.7% year over year, the member count increased 6% in the third quarter, buoyed by healthy renewal rates and membership acquisition. Markedly, total comparable club sales jumped 9.7% in the third quarter of fiscal 2022. Excluding the impact of gasoline sales, comparable club sales rose 5.3%, driven by traffic and basket growth.
Image Source: Zacks Investment Research
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, pickup 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, BJ's Wholesale Club’s ExpressPay allows members to scan items as they shop and pay for their purchases in the BJ’s mobile app. The company also 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 sales rose 43% in the third quarter. Clubs fulfill approximately 80% of digitally enabled sales.
Bottom Line
We believe that BJ's Wholesale Club’s growth strategies, better price management, decent membership trends and digitization should keep supporting comparable sales trends.
Management now envisions fiscal 2022 comparable club sales, excluding the impact of gasoline sales, to increase between 5% and 5.5%, up from the prior view of 4-5% growth. It foresees comparable club sales, excluding the impact of gasoline sales, in the band of 4%-5% for the fourth quarter.
Impressively, shares of this Zacks Rank #3 (Hold) company have climbed 20% in the past six months compared with the industry’s rise of 4%.
The Zacks Consensus Estimate for Five Below’s current financial-year sales suggests growth of 6.8%, respectively, from the year-ago period. Five Below has a trailing four-quarter earnings surprise of 26.3%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.4% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.
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BJ's Wholesale's (BJ) Omnichannel Endeavors Support Growth
BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is one of the leading operators of membership warehouse clubs. It has been reinforcing its position in the industry with its strong customer value proposition and business model.
Its relentless efforts to boost the membership base, simplify assortments, enhance digital capabilities and accelerate club openings have been contributing to sales. The company has been sparing no effort to bolster omnichannel operations and ramp up delivery services.
Let’s Introspect
BJ's Wholesale Club’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories and building its own-brand portfolio bodes well. Own brands penetration increased to 24% of merchandise sales in the third quarter of fiscal 2022. These endeavors have contributed to growth in membership signups and renewals, resulting in higher membership fee income and decent comparable club sales growth.
While the membership fee income jumped 8.7% year over year, the member count increased 6% in the third quarter, buoyed by healthy renewal rates and membership acquisition. Markedly, total comparable club sales jumped 9.7% in the third quarter of fiscal 2022. Excluding the impact of gasoline sales, comparable club sales rose 5.3%, driven by traffic and basket growth.
Image Source: Zacks Investment Research
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, pickup 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, BJ's Wholesale Club’s ExpressPay allows members to scan items as they shop and pay for their purchases in the BJ’s mobile app. The company also 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 sales rose 43% in the third quarter. Clubs fulfill approximately 80% of digitally enabled sales.
Bottom Line
We believe that BJ's Wholesale Club’s growth strategies, better price management, decent membership trends and digitization should keep supporting comparable sales trends.
Management now envisions fiscal 2022 comparable club sales, excluding the impact of gasoline sales, to increase between 5% and 5.5%, up from the prior view of 4-5% growth. It foresees comparable club sales, excluding the impact of gasoline sales, in the band of 4%-5% for the fourth quarter.
Impressively, shares of this Zacks Rank #3 (Hold) company have climbed 20% in the past six months compared with the industry’s rise of 4%.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Five Below (FIVE - Free Report) , Arhaus (ARHS - Free Report) and Ulta Beauty (ULTA - Free Report) .
Five Below, an extreme-value retailer for tweens, teens and beyond, carries a Zacks Rank #2 (Buy). FIVE has an expected EPS growth rate of 19% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Five Below’s current financial-year sales suggests growth of 6.8%, respectively, from the year-ago period. Five Below has a trailing four-quarter earnings surprise of 26.3%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.4% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.