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BJ's Wholesale (BJ) Rides on Value Proposition & Digitization
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BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) , being laser-focused, has been redefining strategies and upgrading capabilities to deliver great value to members and drive strong results. Quality, price, customer shopping experience and digitization have been its key areas of focus.
Let’s Introspect
BJ's Wholesale Club’s 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.
Its 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 fourth 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.
We foresee a sustained improvement in membership fee income as new club openings ramp up. For fiscal 2023 and 2024, we expect membership fee income to increase 5.5% and 5.3%, respectively. Moreover, we anticipate comparable club sales, excluding gasoline sales, to increase 4.2% and 2.5% in the current and next fiscal, respectively.
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, 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 sales rose 22% in the fourth 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. 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.
Shares of this membership-only warehouse club chain have exhibited a decent run on the bourses in the past three months. In the said period, shares of this Zacks Rank #2 (Buy) company have risen about 8.9% against the industry’s decline of 2.8%.
3 More Stocks to Consider
Here we have highlighted three other top-ranked stocks, namely Kroger (KR - Free Report) , Sprouts Farmers (SFM - Free Report) and General Mills (GIS - Free Report) .
Kroger, which functions as a supermarket operator, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
Sprouts Farmers, which retails fresh, natural and organic food products, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 9.5%.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of 5.2% and 5.4% from the year-ago period. SFM has a trailing four-quarter earnings surprise of 12.5%, on average.
General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings suggests growth of 6.3% and 7.4% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
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BJ's Wholesale (BJ) Rides on Value Proposition & Digitization
BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) , being laser-focused, has been redefining strategies and upgrading capabilities to deliver great value to members and drive strong results. Quality, price, customer shopping experience and digitization have been its key areas of focus.
Let’s Introspect
BJ's Wholesale Club’s 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.
Its 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 fourth 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.
We foresee a sustained improvement in membership fee income as new club openings ramp up. For fiscal 2023 and 2024, we expect membership fee income to increase 5.5% and 5.3%, respectively. Moreover, we anticipate comparable club sales, excluding gasoline sales, to increase 4.2% and 2.5% in the current and next fiscal, respectively.
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, 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 sales rose 22% in the fourth 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. 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.
Shares of this membership-only warehouse club chain have exhibited a decent run on the bourses in the past three months. In the said period, shares of this Zacks Rank #2 (Buy) company have risen about 8.9% against the industry’s decline of 2.8%.
3 More Stocks to Consider
Here we have highlighted three other top-ranked stocks, namely Kroger (KR - Free Report) , Sprouts Farmers (SFM - Free Report) and General Mills (GIS - Free Report) .
Kroger, which functions as a supermarket operator, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
Sprouts Farmers, which retails fresh, natural and organic food products, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 9.5%.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of 5.2% and 5.4% from the year-ago period. SFM has a trailing four-quarter earnings surprise of 12.5%, on average.
General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings suggests growth of 6.3% and 7.4% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.