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BJ's Wholesale Club (BJ) Q2 Earnings Top Estimates, Decline Y/Y
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BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) came up with its second-quarter fiscal 2023 results, wherein the top line fell short of the Zacks Consensus Estimate and declined from the year-ago period. Conversely, the company’s bottom line managed to surpass the consensus estimate but experienced a year-over-year decrease. While BJ’s Wholesale Club achieved growth in comparable club sales, excluding gasoline sales' impact, it revised full-year expectations for the metric, citing a shift in consumer behavior due to the macroeconomic environment.
Q2 Insights
BJ’s Wholesale Club reported adjusted earnings of 97 cents a share, which surpassed the Zacks Consensus Estimate of 90 cents. However, the quarterly earnings decreased 8.5% from $1.06 reported in the year-ago quarter.
This operator of membership warehouse clubs generated total revenues of $4,963.5 million, which fell 2.7% from the year-ago quarter’s levels and missed the consensus mark of $5,150 million. Net sales declined 2.9% to $4,859.8 million, while membership fee income jumped 5% to $103.7 million.
Total comparable club sales during the quarter under discussion decreased 5.3% year over year. We had accounted for a 2% decrease in total comparable club sales. Excluding the impact of gasoline sales, comparable club sales rose 1.1%, falling short of our projected 2% growth. Markedly, digitally enabled comparable sales advanced 15% during the quarter.
BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
In the second quarter, the gross profit rose to $896.8 million from $860 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 90 basis points from the year-ago quarter’s level. The metric was favorably impacted by disinflation, moderated supply chain costs and improved inventory management.
The operating income decreased 1.3% to $200.3 million, while the operating margin remained flat at 4%. We note that adjusted EBITDA declined 1.8% to $268.8 million during the quarter, while the adjusted EBITDA margin remained unchanged at 5.4%.
SG&A expenses rose 6.7% to $695 million from the year-ago quarter. This reflects higher labor and occupancy costs due to new club and gas station openings as well as other investments to drive strategic priorities. As a percentage of total revenues, SG&A expenses increased 120 basis points to 14%.
Other Details
BJ’s Wholesale Club ended the reported quarter with cash and cash equivalents of $26.2 million. The long-term debt amounted to $448.1 million, while stockholders’ equity was $1,231.3 million.
Net cash provided by operating activities during the 26-week period ended on Jul 29, 2023 was $269.5 million. Cash from operating activities and free cash flow were $150.4 million and $34.2 million, respectively, during the quarter.
As part of its share repurchase program, the company bought back 715,122 shares worth $44.6 million in the second quarter. BJ’s Wholesale Club opened one new club and one new gas station.
Outlook
Management now envisions fiscal 2023 comparable club sales, excluding the impact of gasoline sales, to increase roughly 2%, down from the prior projected growth range of 4-5%. The company had registered 6.5% growth in fiscal 2022.
BJ’s Wholesale Club expects membership fee income to increase approximately 5% year over year and merchandise gross margins to improve about 50 basis points. It guided fiscal 2023 adjusted earnings in the band of $3.80-$3.92 per share.
This Zacks Rank #4 (Sell) stock has declined 10% in the past six months compared with the industry’s decrease of 7.5%.
3 Stocks Hogging in the Limelight
Here we have highlighted some better-ranked stocks, namely Grocery Outlet (GO - Free Report) , The TJX Companies (TJX - Free Report) and Kroger (KR - Free Report) .
Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 2.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
The TJX Companies, the leading off-price apparel and home fashion retailer, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.1%.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings suggests growth of 7.4% and 18.7%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Kroger, which operates as a supermarket operator, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.8%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.2% and 6.9%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 7.8%, on average.
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BJ's Wholesale Club (BJ) Q2 Earnings Top Estimates, Decline Y/Y
BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) came up with its second-quarter fiscal 2023 results, wherein the top line fell short of the Zacks Consensus Estimate and declined from the year-ago period. Conversely, the company’s bottom line managed to surpass the consensus estimate but experienced a year-over-year decrease. While BJ’s Wholesale Club achieved growth in comparable club sales, excluding gasoline sales' impact, it revised full-year expectations for the metric, citing a shift in consumer behavior due to the macroeconomic environment.
Q2 Insights
BJ’s Wholesale Club reported adjusted earnings of 97 cents a share, which surpassed the Zacks Consensus Estimate of 90 cents. However, the quarterly earnings decreased 8.5% from $1.06 reported in the year-ago quarter.
This operator of membership warehouse clubs generated total revenues of $4,963.5 million, which fell 2.7% from the year-ago quarter’s levels and missed the consensus mark of $5,150 million. Net sales declined 2.9% to $4,859.8 million, while membership fee income jumped 5% to $103.7 million.
Total comparable club sales during the quarter under discussion decreased 5.3% year over year. We had accounted for a 2% decrease in total comparable club sales. Excluding the impact of gasoline sales, comparable club sales rose 1.1%, falling short of our projected 2% growth. Markedly, digitally enabled comparable sales advanced 15% during the quarter.
BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
BJ's Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ's Wholesale Club Holdings, Inc. Quote
A Look at Margins
In the second quarter, the gross profit rose to $896.8 million from $860 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 90 basis points from the year-ago quarter’s level. The metric was favorably impacted by disinflation, moderated supply chain costs and improved inventory management.
The operating income decreased 1.3% to $200.3 million, while the operating margin remained flat at 4%. We note that adjusted EBITDA declined 1.8% to $268.8 million during the quarter, while the adjusted EBITDA margin remained unchanged at 5.4%.
SG&A expenses rose 6.7% to $695 million from the year-ago quarter. This reflects higher labor and occupancy costs due to new club and gas station openings as well as other investments to drive strategic priorities. As a percentage of total revenues, SG&A expenses increased 120 basis points to 14%.
Other Details
BJ’s Wholesale Club ended the reported quarter with cash and cash equivalents of $26.2 million. The long-term debt amounted to $448.1 million, while stockholders’ equity was $1,231.3 million.
Net cash provided by operating activities during the 26-week period ended on Jul 29, 2023 was $269.5 million. Cash from operating activities and free cash flow were $150.4 million and $34.2 million, respectively, during the quarter.
As part of its share repurchase program, the company bought back 715,122 shares worth $44.6 million in the second quarter. BJ’s Wholesale Club opened one new club and one new gas station.
Outlook
Management now envisions fiscal 2023 comparable club sales, excluding the impact of gasoline sales, to increase roughly 2%, down from the prior projected growth range of 4-5%. The company had registered 6.5% growth in fiscal 2022.
BJ’s Wholesale Club expects membership fee income to increase approximately 5% year over year and merchandise gross margins to improve about 50 basis points. It guided fiscal 2023 adjusted earnings in the band of $3.80-$3.92 per share.
This Zacks Rank #4 (Sell) stock has declined 10% in the past six months compared with the industry’s decrease of 7.5%.
3 Stocks Hogging in the Limelight
Here we have highlighted some better-ranked stocks, namely Grocery Outlet (GO - Free Report) , The TJX Companies (TJX - Free Report) and Kroger (KR - Free Report) .
Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 2.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
The TJX Companies, the leading off-price apparel and home fashion retailer, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.1%.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings suggests growth of 7.4% and 18.7%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Kroger, which operates as a supermarket operator, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.8%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.2% and 6.9%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 7.8%, on average.