BJ’s Wholesale Club Holdings, Inc. (BJ Quick QuoteBJ - Free Report) came up with its fourth-quarter fiscal 2023 results, wherein the top line marginally fell short of the Zacks Consensus Estimate but improved from the year-ago period. Conversely, the company’s bottom line managed to surpass the consensus estimate and registered a year-over-year increase. Additionally, BJ’s Wholesale Club’s comparable club sales, excluding gasoline sales, also showcased decent growth.

Q4 Insights

BJ’s Wholesale Club reported adjusted earnings of $1.11 per share, which surpassed the Zacks Consensus Estimate of $1.06. The quarterly earnings rose 11% from $1.00 reported in the year-ago quarter.

This operator of membership warehouse clubs generated total revenues of $5,357.3 million, which grew 8.7% from the year-ago quarter’s levels but fell short of the consensus mark of $5,374 million. Net sales increased 8.7% to $5,248.9 million, while membership fee income jumped 6.5% to $108.4 million.

Total comparable club sales during the quarter under discussion fell 0.4% year over year. Excluding the impact of gasoline sales, comparable club sales jumped 0.5%. Markedly, digitally enabled comparable sales advanced 28% during the quarter.

A Look at Margins

Gross profit rose to $963.3 million from $903.2 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, shrunk 40 basis points from the year-ago quarter’s level.

Operating income increased 11% to $214 million, while the operating margin, as a percentage of total revenues, expanded 10 basis points to 4%. We note that adjusted EBITDA rose 8.9% to $290.7 million during the quarter, while the adjusted EBITDA margin remained flat at 5.4%. We had anticipated 20 and 40 basis points of contraction in the operating and EBITDA margins, respectively.

SG&A expenses rose 4.8% from the year-ago quarter to $741.1 million. This reflects higher labor, occupancy, and depreciation expenses as a result of new club and gas station openings, as well as other investments to drive strategic priorities. As a percentage of total revenues, SG&A expenses decreased 50 basis points to 13.8%.

Other Details

BJ’s Wholesale Club ended the quarter with cash and cash equivalents of $36 million. The long-term debt amounted to $398.4 million, while stockholders’ equity was $1,458.9 million.

Net cash provided by operating activities during the 53-week period ended on Feb 3, 2024, was $718.9 million. Cash from operating activities and free cash flow were $274.4 million and $155.2 million, respectively, during the quarter. As part of its share repurchase program, the company bought back 797,056 shares worth $53.2 million in the quarter.

Outlook

BJ’s Wholesale Club has outlined its expectations for fiscal 2024. Management foresees comparable club sales, excluding gasoline sales, to increase in the band of 1% to 2% year over year. Additionally, the company anticipates an improvement in merchandise gross margins by approximately 20 basis points compared to the previous year.

Moreover, BJ’s Wholesale Club expects its fiscal 2024 adjusted earnings per share to be within the range of $3.75 to $4.00, compared with $3.96 reported last fiscal. Furthermore, the company plans to invest approximately $500 million in capital expenditures, underscoring its ongoing dedication to strategic growth initiatives.

This Zacks Rank #3 (Hold) stock has increased 19.7% in the past three months compared with the industry’s rise of 6.1%.

Stocks to Consider

Here, we have highlighted three top-ranked stocks, namely Chewy, Inc. (CHWY Quick QuoteCHWY - Free Report) , Post Holdings, Inc. (POST Quick QuotePOST - Free Report) and Grocery Outlet Holding Corp. (GO Quick QuoteGO - Free Report) .

Chewy, a trusted destination for pet parents and partners everywhere, sports a Zacks Rank #1 (Strong Buy). CHWY has a trailing four-quarter earnings surprise of 234.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings suggests growth of about 10.3% and 11.3%, respectively, from the year-ago reported numbers.

Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 52.2%, on average.

The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of around 15.2% and 3.4%, respectively, from the year-ago reported numbers.

Grocery Outlet, a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2. GO has a trailing four-quarter earnings surprise of 17%, on average.