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Here's Why BJ's Wholesale (BJ) Stock Warrants Your Attention
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BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) , a membership-only warehouse club chain, exhibited a decent run on the bourses in the past year. Due to its operational initiatives — strengthening omnichannel solutions, expanding its customer reach and focusing on brand innovation — the stock has outpaced the industry. In the said period, shares of this Zacks Rank #1 (Strong Buy) company have risen about 16.4% against the industry’s decline of 9.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Growth Drivers
BJ's Wholesale Club 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 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%. It foresees comparable club sales, excluding the impact of gasoline sales, in the band of 4%-5% for the fourth quarter.
Urban Outfitters, a leading lifestyle product and services company, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year revenues suggests growth of 5% from the year-ago reported figure.
Arhaus, which operates as 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 16.1%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Albertsons Companies, which operates food and drug stores in the United States, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for Albertsons Companies’ current financial-year revenues and EPS suggests growth of 7.8% and 6.5%, respectively, from the year-ago reported figure. Albertsons Companies has a trailing four-quarter earnings surprise of 17.2%, on average.
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Here's Why BJ's Wholesale (BJ) Stock Warrants Your Attention
BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) , a membership-only warehouse club chain, exhibited a decent run on the bourses in the past year. Due to its operational initiatives — strengthening omnichannel solutions, expanding its customer reach and focusing on brand innovation — the stock has outpaced the industry. In the said period, shares of this Zacks Rank #1 (Strong Buy) company have risen about 16.4% against the industry’s decline of 9.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Growth Drivers
BJ's Wholesale Club 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 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%. It foresees comparable club sales, excluding the impact of gasoline sales, in the band of 4%-5% for the fourth quarter.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Urban Outfitters (URBN - Free Report) , Arhaus (ARHS - Free Report) and Albertsons Companies (ACI - Free Report) .
Urban Outfitters, a leading lifestyle product and services company, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year revenues suggests growth of 5% from the year-ago reported figure.
Arhaus, which operates as 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 16.1%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Albertsons Companies, which operates food and drug stores in the United States, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for Albertsons Companies’ current financial-year revenues and EPS suggests growth of 7.8% and 6.5%, respectively, from the year-ago reported figure. Albertsons Companies has a trailing four-quarter earnings surprise of 17.2%, on average.