Grocery boosts BJ’s Wholesale Club to 24% Q2 comp-sales growth
E-commerce sales soar 300%, fueled by store pickup service
August 20, 2020
BJ’s Wholesale Club posted double-digital net and comparable sales gains in the fiscal 2020 second quarter, with net income nearly doubling year over year.
BJ’s said Thursday that for the quarter ended Aug. 1, net sales climbed 18.4% to $3.87 billion from $3.27 billion a year earlier. Including 10.4% growth in membership fee income, total revenue was up 18.2% to $3.95 billion. The membership base grew 10.6% to over 6 million paid members.
At the bottom line, net earnings came in at $106.6 million, or 76 cents per diluted share, compared with $54.5 million, or 39 cents per diluted share, in the 2019 second quarter. Adjusted net income totaled $107.5 million, or 77 cents per diluted share, versus $55 million, or 39 cents per diluted share, a year ago.
Earnings surpassed the high end of Wall Street’s forecast. Analysts, on average, had projected adjusted earnings per share of 60 cents, with estimates ranging from a low of 52 cents to a high of 72 cents, according to Refinitiv/Thomson Reuters.
“Q2 was another remarkable quarter with strong top-line growth, profitability and free cash flow,” BJ’s President and CEO Lee Delaney said today in a conference call with analysts. “As I reflect on our results to date and the implications to the future, I believe that we have turned the corner from merely reacting to the pandemic to proactively transforming our business to enable a much brighter future for the company.
“We have a radically different company than we had just six short months ago,” he noted. “In many areas of the company, we are now years ahead of how we thought our transformation would evolve, and we are actively looking for ways to increase the pace of progress.”
Comparable-club sales in the 2020 second quarter surged by 17.2% overall. Merchandise comp sales, which exclude fuel, were up 24.2%.
“Our merchants did a terrific job engaging with existing and new suppliers to keep us in stock and to expand into highly relevant new categories. We added 32 new vendors to bolster our supply chain in food, paper and cleaning supplies, and to participate in new personal protective equipment categories,” Delaney said. “We dramatically accelerated the reset of our food business with a new set in nearly 200 clubs that incorporates more healthy and organic options months ahead of our initial schedules. We knew new changes here would be important to engage younger members and accomplish so quickly. It should aid our retention efforts with our first-tier members.”
Comparable sales in grocery climbed 25% in the second quarter.
Increases in customer traffic and ticket size helped propel comp-sales in the quarter, according to Chief Financial Officer Robert Eddy.
“We had significantly more members shopping our clubs, consolidating their trips and growing their baskets. These trends were relatively consistent across all of our geographies,” he told analysts in the call. “We saw consistently strong comp performance during the quarter, with comps exceeding 20% for each month. We exited the quarter with July merchandise comp growth of 24%, and trends remained strong in August, which is running at a 20% comp so far.”
Grocery proved to be a catalyst in the quarter, with comp sales rising 25%, Eddy reported. “We saw very strong growth rates in expected categories — paper products, cleaning essentials, fresh meat and produce, frozen, dairy and beverages,” he explained. “Our team improved our in-stock levels during the quarter, including in certain very active in categories by innovatively working with both existing and new suppliers. Our general merchandise and services division saw a comp growth of 22%, driven by strong sales in apparel, TVs and other home-related categories.”
Online sales skyrocketed in the second quarter, jumping 300% and continuing the momentum from 350% growth in the first quarter.