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BJ's to Raise Membership Fees

NATICK, Mass. BJ's Wholesale Club here said last week it would raise its annual membership fees by $5 to $50 beginning in January, and invest the increased revenues in store remodels. The membership fee increase, BJ's first since 2006, would generate about $20 million in annual revenue, officials said, including an expectation that renewals would decrease by 1% to 1.5% as a result of the hike. BJ's

NATICK, Mass. — BJ's Wholesale Club here said last week it would raise its annual membership fees by $5 to $50 beginning in January, and invest the increased revenues in store remodels.

The membership fee increase, BJ's first since 2006, would generate about $20 million in annual revenue, officials said, including an expectation that renewals would decrease by 1% to 1.5% as a result of the hike.

BJ's made the membership fee announcement while reviewing financial results from its fiscal third quarter, which ended Oct. 30. An easing of competitive pressure and increased sales of perishable foods during the quarter sparked net earnings to increase 32.2% to $23 million on sales of $2.6 billion, officials said. As previously reported, sales improved 4.8%, and comparable-store sales excluding gasoline increased by 1.5%.

BJ's officials did not address news reports that the company had put itself up for sale.

Comparable sales of perishable foods improved by 7% during the third quarter, with strong unit sales growth in produce, fresh meat and dairy departments, officials said. This performance helped drive increases in store traffic, but average basket size declined 1% as sales of general merchandise and consumables were below expectations.

Perishables accounted for approximately 29% of BJ's sales, up from 27% at the end of the third quarter last year, said Laura Sen, BJ's chief executive officer.

“Some of our discretionary departments were challenged by a lack of consumer confidence during the third quarter,” she added. “However, this is an item business and as usual our merchants did a great job of finding the right items and pricing them to sell freely.”

Sen said the company felt less pressure in the third quarter than it did in the second quarter when Wal-Mart's aggressive rollbacks, particularly on food and consumables, sparked a response at BJ's that hurt earnings. But the company is anticipating a highly promotional holiday season, with general merchandise sales under greater pressure than initially anticipated.

“I would expect Black Friday is going to be crazy,” Sen said, referring to the unofficial launch of the holiday shopping season this week. “We've already seen a lot of noise from Wal-Mart and Target on toys and a lot of early pre-promotion on electronics. I think everybody is trying to get ahead of the curve somehow.”

Sen said BJ's was stepping up advertising, with an effort on better delivering its brand message to potential shoppers.

“We feel we have a lack of broad understanding of our brand as we'd like,” she said. “We would like to put our message out there in a bolder way.”

Asked about inflation, Sen said retailers including BJ's were being “rational” at passing along their price increases when they get them, particularly for items like milk.