BJ’s Wholesale Club raises membership fees for the first time in 7 years

Emboldened by some of the best membership numbers of the year and continued success with fresh food, BJ’s Wholesale Club announced Thursday it will soon increase membership fees for the first time in seven years.

Membership fee income rose 8.4% year over year in the third quarter, allowing BJ’s to reach the 7.5-million-member milestone, the company said in announcing its third-quarter earnings.The warehouse retailer’s membership base has grown 40% since 2018, and renewal rates have reached their highest point in company history.

Warehouse club competitors Sam’s Club and Costco raised membership fees over the last year.

Wall Street responded positively to the earnings news, driving the stock price for the Marlborough, Mass.-based warehouse retailer up more than 10% by midday Thursday.

“We’ve more than doubled the number of members in our premium tiers, and higher-tier membership penetration continues to grow,” said BJ’s Wholesale Club Chairman and CEO Bob Eddy during the earnings call, according to a transcript from financial services site AlphaSense.

Beginning Jan. 1, the base annual membership fee will rise by $5 to $60, while the Plus tier membership will increase by $10 to $120 and will include two free same-day deliveries per year.

Eddy noted that the fee increase will support investments in labor.

Fresh products also continue to thrive for BJ’s Wholesale Club. Perishables, groceries, and sundries delivered more than 4% comparable growth in the third quarter, according to Eddy. Perishables led the way with strong performances in dairy, meat, and produce, and BJ’s Wholesale Club gained market share in grocery both in units and dollars.

“We’ve improved our assortment in fresh and general merchandise and focused on our own brands, which now account for more than a quarter of our merchandise sales,” said Eddy. “Our efforts have strengthened the business, delivering significantly more value to our members.”

BJ’s Wholesale Club’s data showed that members who shop at the warehouse as their primary fresh destination visit at least once a week and have, on average, nearly 30% larger basket sizes per trip compared to non-fresh shopping members. As a result, these members spend about eight times more per year than those who don’t engage with fresh products.

“Our freshness initiatives are designed to encourage these behaviors across our broader member base,” said Eddy. “We’ve worked hard over the past year to bring excitement and even more freshness to our produce assortment.”

The company has improved supply chain velocity and expanded vendor relationships to increase in-stocks and rotate new, seasonally relevant produce. It has also implemented essential fresh training across all clubs.

Comparable-club sales, excluding gasoline sales, grew by 3.8% year over year in the third quarter. Traffic accelerated year over year, contributing more than four percentage points to BJ’s Wholesale Club’s same-store sales. .

Digitally enabled comparable sales jumped 30% year over year, with growth in app usage and express pay by members.

BJ’s Wholesale Club launched a new AI-powered search engine to enhance search relevance, resulting in better member engagement and conversion, executives said. 

The retailer has also optimized its digital order fulfillment through batch orders, AI-enabled pick passing, and temperature-controlled safeguarding.

Net sales reached almost $5 billion, marking a 3.4% increase compared to Q3 2023, while adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose to $308.2 million, a 13.5% increase. Net income was $155.7 million, up 19.4% year over year.

Gross profit for the third quarter was $975.5 million, $73 million more than a year ago.

Looking ahead to the fourth quarter, BJ’s Wholesale Club expects comparable-club sales, excluding gasoline sales, to increase 2.5% to 3% year over year, bringing the full-year fiscal 2024 growth to between 2.3% and 2.4%.

BJ’s Wholesale Club said it is elevating its private-label offering, where opportunities exist. For example, its recently launched snack nuts program became one of the retailer’s best-performing private-label brands in the third quarter. Eddy said the company spent several months refreshing the assortment, elevating the quality—especially for almonds and cashews—and improving the packaging for better aesthetics and functionality.

Three new clubs and four gas stations opened in the third quarter, with eight more locations expected before the fiscal year ends.

BJ’s Wholesale Club is also installing gas stations at some existing clubs. One of the four gas sites that opened in the third quarter was the first BJ’s Wholesale Club in Medford, Mass.

“Every club that has gas performs better than similar clubs without it,” Eddy said. “They do so in two important ways: they have higher comp sales, and membership renewal rates are higher. Gas is probably the best way to show value out there.”