NATICK, Mass. -- BJ's Wholesale Club here said last week strong sales of food and consumables, combined with strong expense controls, helped offset weaker general merchandise sales in the third quarter and 39 weeks ended Nov. 3.
$33.5 million for the quarter and an earnings decline of 66.1% to $26.0 million for the 39 weeks as a result of a $63 million after-tax charge for its contingent liability related to 41 House2Home leases.
BJ's and House2Home were part of Waban prior to 1997 and were part of the TJX Cos. prior to 1989. According to BJ's, when Waban was spun off from TJX in 1989, Waban agreed to indemnify TJX against any liabilities TJX might incur on those leases, and pursuant to a subsequent agreement, BJ's said it would indemnify TJX for 100% of House2Home's lease liabilities guaranteed by TJX through Jan. 31, 2002 and 50% of such liabilities thereafter.
Excluding those losses, BJ's said net income rose 7.8% to $29.5 million for the quarter and 16% to $89 million for the nine-month period.
Jack Nugent, president and chief executive officer, said third-quarter earnings "were in line with expectations, despite a challenging economic environment for the retail industry."
He also said strong expense controls throughout the chain, combined with strong sales of food and consumables, helped offset weaker sales of general merchandise.