NATICK, Mass. -- BJ's Wholesale Club here last week said that its efforts to expand its fresh- and prepared-food offerings have helped increase customer traffic, shopping frequency and ticket size.
In a conference call discussing the company's results for the fiscal year ended Jan. 31, Michael Wedge, president and chief executive officer, said the addition of rotisserie chicken, delis and fresh seafood helped drive a 5% increase in traffic for the year.
In the fourth quarter, the company had a 9.9% increase in food sales and total comparable-store sales of 7.5%, compared with the year-ago quarter. For the year, the company posted a 6.5% increase in food sales and comp-store sales gains of 7.8%.
"On the food side, we made significant progress in updating and expanding our fresh areas, including produce, bakery, seafood and imported cheeses," said Wedge.
He said the company plans to add another five fresh-seafood departments this year. BJ's also plans to renovate about 20 stores this year, some of which will be expanded to contain larger fresh-food departments.
The company also has been expanding its private-label offering with such new brands as Rozzano Authentic Italian foods. Sales of private-label products accounted for about 6.5% of total sales at the end of the year, vs. about 5% of sales at the end of 2002.
"I think we've got an awful lot of opportunity there to build that and enjoy some margin enhancement as a result," said Wedge.
He said the company would continue to seek a larger share of consumers' grocery spending. "Supermarkets certainly are in our crosshairs, when we look at less efficient forms of retail," he said. "We all know that's a business model under tremendous pressure."
He described supermarkets as having restrictive work rules that drive up their labor costs and inefficient logistical systems.
In the 13-week fourth quarter, BJ's posted a 1.5% gain in net income, to $49.2 million, on a 12.5% gain in revenues, to $1.9 billion. For the year, BJ's posted net income of $102.9 million, a decline of 21.4% from year-ago levels, reflecting higher selling and administrative expenses. Revenues totaled $6.7 billion, up 14.8% over the preceding year.
The company said its savings, general and administrative expenses as a percent of sales increased by 42 basis points for the year, which it attributed to bonus accruals, asset impairment charges and store payroll.
The 150-store chain, which operates along the East Coast, also plans another 10 to 12 new stores this year.