BJ’s Wholesale Club now excels at store growth, expects more in 2024

Growth was the theme for BJ’s Wholesale Club during the retailer’s fourth quarter earnings call on Thursday.

Perhaps the most significant growth can be seen on the new store front. Bob Eddy, chairman and CEO of BJ’s Wholesale Club, acknowledged during the financial check-in that the company did not expand very well in the past. However, six new locations and six gas stations were opened in the fourth quarter and the company has  plans to power up 12 stores during fiscal year 2024. 

BJ’s Wholesale Club, based in Marlborough, Mass., set up shop in Kentucky on Thursday with the grand opening of a location in Louisville. BJ’s Wholesale Club currently has 244 clubs and 175 gas stations.

“It wasn’t long ago that we stopped opening clubs because we really did not know how to do it well,” said Eddy. “We weren’t doing it profitably and we didn’t have enough members when we opened the club.

“I’m pushing pretty hard to go even faster than where we are today.”

In addition to the dozen openings expected over the coming months, Eddy said there are currently more store units in the pipeline than the retailer has had in the past 20 years.

For the fourth quarter, net sales were up 8.7% year over year (over $5.2 billion) while comparable club sales, excluding gasoline sales, increased 0.5%. Traffic and unit sales both saw an increase.

BJ’s Wholesale Club’s perishables, grocery, and sundries divisions delivered comp growth of nearly 1% in the fourth quarter, Eddy said, which was driven entirely by year-over-year volume growth.

In addition, the retailer’s pricing index against grocery competitors improved against the same index a year ago, according to Eddy. The full fiscal year saw an improvement of 100 basis points.

BJ’s Wholesale Club’s private labels — Wellsley Farms and Berkley Jensen — now account for over 25% of total business, and this year the retailer expects to expand in categories like snacking nuts and coffee.

Membership fee income in Q4 increased by 6.5% year over year to $108.4 million, and the company achieved a 90% tenured member renewal rate during fiscal year 2023.

Since fiscal year 2018, Eddy said member count has grown by about 35% and currently BJ’s Wholesale Club has about 7 million members. Higher tier membership penetration is now 38% and has grown 13 points since 2018.

“We are expanding membership in both new and existing markets with our digital platforms becoming a dominant source of that growth,” Eddy said.

Turning to digital, BJ’s Wholesale Club’s digital comp sales grew by 28% year over year in the fourth quarter and digital now comprises over 11% of the retailer’s business.

Eddy said members who shopped digitally in 2023 spent 90% more than those who made the trip to the store.

“We believe we’ve only scratched the surface in our digital efforts and will continue to augment our conveniences in areas such as same-day delivery, in-app capabilities, and personalization to deliver even more value to our members,” Eddy said.

Adjusted EBITDA experienced 8.9% growth year over year at over $290 million in the fourth quarter. Gross profit was $963.3 million compared to $903.2 million in Q4 2022.

For fiscal year 2023, net sales came in at just under $19.5 billion for a 3.3% year-over-year gain. Membership fee income was up 6% and the Adjusted EBITDA was up 7.2%.

Looking ahead over the coming months BJ’s Wholesale Club is projecting comparable club sales growth of 1% to 2% year over year and merchandising gross margins to improve about 20 basis points.