BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) delivered better-than-expected fourth-quarter fiscal 2018 results, with the top and the bottom line beating the Zacks Consensus Estimate. In fact, this marked the company’s third consecutive quarter of positive earnings and sales surprise. Moreover, the bottom-line improved year over year, while sales declined from the year-ago quarter’s levels.
The quarterly results benefited from growth in merchandise comparable sales that marked its fourth quarter of positive comps. The company registered strong performance in the apparel category including outerwear, kids apparel and women's activewear. Going forward, the company expects consistent growth in the category.
Meanwhile, the Zacks Rank #3 (Hold) stock has gained 7.4% in the past three months, against the industry’s decline of 6.5%.
Q4 in Detail
This operator of membership warehouse clubs reported adjusted earnings of 44 cents a share that beat the Zacks Consensus Estimate of 35 cents and increased from 36 cents in the year-ago quarter. This Westborough, MA-based company generated total revenues of $3,416.9 million that surpassed the consensus mark of $3,389 million but fell 3.9% year over year.
Notably, net sales declined 4.2% to $3,343.8 million in the quarter under review. Meanwhile, membership fee income improved 10.7% to $73.1 million owing to hike in membership fees and increased members.
Comparable club sales rose 2.8% during the quarter under review backed by positive comps in all product categories and regions. Excluding the impact of gasoline sales, merchandise comparable sales increased 2.9% driven by strong traffic, marking the sixth straight quarter of growth.
Gross profit was $628.9 million, up 1.2% from the year-ago quarter’s tally. Also, gross margin expanded 70 basis points (bps) to 16.6% driven by reduced gasoline cost. Excluding the impact of gas sales, merchandise gross margin grew roughly 10 bps on the back of the company’s procurement efforts.
Operating income increased 18.6% to $109.9 million, while operating margin expanded 60 bps to 3.2%. Adjusted EBITDA increased 4.7% to $165.4 million while adjusted EBITDA margin improved 40 bps to 4.8%. SG&A expenses amounted to $517 million, down 2% from the year-ago quarter’s figure.
Other Financial Details
The company exited the quarter with cash and cash equivalents of $27.1 million, long-term debt of $1,546.5 million and stockholders' deficit of $202.1 million. Management projects capital expenditure for fiscal 2019 of roughly $200 million.
The company opened two gas stations in the reported quarter. Moving ahead, it plans to open five new clubs along with 8-10 gas stations during fiscal 2019.
BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
Management issued forecasts for fiscal 2019, wherein net sales are expected in the range of $12.9-$13.2 billion compared with the reported figure of $12.7 billion in fiscal 2018. Merchandise comparable store sales (excluding gasoline) are expected to rise 1.5-2.5% compared with 2.2% reported in fiscal 2018. Adjusted EBITDA is projected between $590 million and $600 million compared with $578.4 million reported in fiscal 2018.
The company now envisions adjusted earnings of $1.42-$1.50 per share for the fiscal year, reflecting a rise from $1.33 in fiscal 2018. The Zacks Consensus Estimate for the fiscal year is pegged at $1.46.
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