EPS of $0.83 decreased by 15.2% from previous year
Gross margin of 18.0%
Net income of 111.02M
""Our team continues to manage the day-to-day well while staying laser-focused on executing our long-term strategic priorities." - Bob Eddy, CEO" - Bob Eddy
BJ's Wholesale Club Holdings Inc (BJ) reported a solid first quarter for fiscal 2024, with net sales reaching approximately $4.9 billion, reflecting a 4% increase year-over-year. The company showcased resilience amid challenging market conditions, particularly lapping last year's inflation dynamics. Comparable sales growth, excluding gas, saw an increase of 0.6% driven by strong traffic and membership momentum. Management emphasized the robust performance in perishables and grocery categories, alongside an impressive 8.6% growth in membership fee income, highlighting BJ's compelling value proposition. Despite facing some headwinds in general merchandise, the company is optimistic about ongoing improvements throughout the year and plans to expand its footprint significantly with new club openings.
Key Performance Indicators
Revenue
4.92B
QoQ: -8.19% | YoY:-0.91%
Gross Profit
883.39M
17.96% margin
QoQ: -8.29% | YoY:-1.50%
Operating Income
161.62M
QoQ: -27.25% | YoY:-19.30%
Net Income
111.02M
QoQ: -23.89% | YoY:-15.46%
EPS
0.84
QoQ: -23.64% | YoY:-15.15%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $4.918 billion, up 4% YoY
**Net Income**: $111 million, reflecting a 15.5% decline YoY
**EPS**: $0.84, down 15.2% YoY
**Membership Fee Income**: $111.4 million, up 8.6% YoY
**Comparable Sales Growth**: 0.6% (excluding gas)
Financial Highlights
Financial Highlights
- Revenue: $4.918 billion, up 4% YoY
- Net Income: $111 million, reflecting a 15.5% decline YoY
- EPS: $0.84, down 15.2% YoY
- Membership Fee Income: $111.4 million, up 8.6% YoY
- Comparable Sales Growth: 0.6% (excluding gas)
- Digital Sales Growth: 21% YoY
- Cash Flow from Operating Activities: $200 million
- Total Debt: $2.895 billion with a debt-to-equity ratio of 1.895, Management Insights
- CEO Bob Eddy stated, "Our quarter was marked by continued strong growth in membership fees and market share. We are particularly proud of our continued momentum underpinned by strong traffic and unit growth."—reinforcing the positive outlook.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.92B
-0.91%
-8.19%
Gross Profit
883.39M
-1.50%
-8.29%
Operating Income
161.62M
-19.30%
-27.25%
Net Income
111.02M
-15.46%
-23.89%
EPS
0.84
-15.15%
-23.64%
Key Financial Ratios
currentRatio
0.74
grossProfitMargin
18%
operatingProfitMargin
3.29%
netProfitMargin
2.26%
returnOnAssets
1.63%
returnOnEquity
7.27%
debtEquityRatio
1.9
operatingCashFlowPerShare
$1.52
freeCashFlowPerShare
$0.72
priceToBookRatio
6.41
priceEarningsRatio
22.06
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Membership and Sales Performance
- Bob Eddy highlighted, "Comparable club sales excluding gas sales, grew by 0.6% in the first quarter. Consequently, we gained market share in both units and dollars in the quarter."
- CFO Laura Felice: "Net sales in the quarter were approximately $4.8 billion, growing 4% over the prior year. Digitally enabled comp sales grew 21% year-over-year."
Future Outlook and Strategic Initiatives
- Management confirmed ongoing investments in digital enhancements and product offerings, stating, "We believe we are well preserved to deliver sustainable growth to maximize shareholder value."
"Our team continues to manage the day-to-day well while staying laser-focused on executing our long-term strategic priorities." - Bob Eddy, CEO
— Bob Eddy
"We are seeing strong engagement in digital channels, with digitally enabled comp sales up 21% year-over-year." - Laura Felice, CFO
— Laura Felice
Forward Guidance
BJ's management maintained its fiscal year guidance for comparable sales growth (excluding gas) in the range of 1% to 2%, indicating optimism for the latter half of the year as inflationary pressures stabilize and consumer sentiment improves. The company's continued emphasis on enhancing its digital capabilities and expanding its club footprint, with plans for 11 new openings this year, is expected to create further growth opportunities. Management projects adjusted EPS for the fiscal year in the range of $3.75 to $4, underpinned by robust membership retention strategies and operational efficiencies.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BJ Focus
17.96%
3.29%
7.27%
22.06%
BIG
33.70%
-12.30%
-2.52%
-12.80%
DLTR
30.80%
5.51%
4.10%
21.91%
DKS
36.30%
11.70%
10.20%
14.84%
WSM
48.30%
19.50%
12.00%
17.30%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The fundamentals of BJ's Wholesale Club remain robust, supported by strong membership growth and operational momentum. Although the market landscape poses challenges, the company's strategic responses through innovative initiatives and digital enhancements position it favorably for sustainable growth. The projected EPS for the coming year aligns with positive operational outlook, making BJ's a potentially appealing investment for those seeking exposure to the consumer defensive sector.
Key Investment Factors
Growth Potential
BJ's demonstrates strong growth potential through expanding membership, enhanced digital sales initiatives, and expected operational improvements. The company’s goal of owning 30% of sales through its own brands supports margin enhancement in the long term.
Profitability Risk
Market volatility, consumer discretionary spending slowdowns, and competitive pricing pressures present risks. Additionally, the company faces potential headwinds from rising inflation impacting operating margins and the timing of seasonal inventory sales.
Financial Position
BJ's maintains a healthy balance sheet with total assets of approximately $6.8 billion and total liabilities of $5.3 billion, showcasing a reasonable debt load with a long-term debt to capitalization ratio of 20.7%. At the end of the quarter, BJ's had a net cash position staying stable, which positions it well against ongoing capital investment needs.
SWOT Analysis
Strengths
Strong growth in membership fees, increasing 8.6% YoY.
Strong traffic growth and market share gains in perishables, grocery, and sundries.
Robust digital growth strategy, evidenced by a 21% increase in digitally enabled sales.
Weaknesses
Decline in net income and earnings per share compared to previous year, indicating pressure on profitability.
General merchandise sales have been slightly negative, impacted by weather conditions.
Opportunities
Expansion plans including 11 new clubs can capture greater market share.
Improved efficiencies and product assortment through initiatives like Fresh 2.0 could enhance consumer attraction.
Threats
Inflation and economic instability may impact consumer spending habits.
Increased competition in the retail and grocery sectors may pressure pricing strategies.