BJ’s Files for IPO

Seven years after being acquired by private-equity investors, BJ’s Wholesale Club is coming back to public ownership.

The $12.8 billion warehouse club operator on Thursday filed to register its stock for a public offering, with its owners—private investors Leonard Green & Partners and CVC Capital, whose partnership was known as Beacon Holding Inc.—selling an unspecified stake to public investors. BJ’s intends to use proceeds of the offering to repay debts incurred in part through a $735.5 million dividend paid to its private owners a year ago.

Green and CVC combined to acquire BJ’s—then publicly traded—for $2.8 billion in June of 2011 and, according to the filing, would retain more than 50% of the company following the IPO.

BJ’s has since been able to improve its financial performance and its sales through new stores, higher member-retention rates, a new management team and a $230 million investment in technology, the company said in its registration statement filed with the Securities and Exchange Commission.

BJ’s appointed Chris Baldwin as its CEO in September of 2015, succeeding Laura Sen. Baldwin on Thursday was also named chairman of the company's board of directors.

BJ's stock will trade under the symbol BJ on the New York Stock Exchange.

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BJ’s said Baldwin and his team have “implemented significant cultural and operational changes to our business, including transforming how we use data to improve member experience, instilling a culture of cost discipline, adopting a more proactive approach to growing our membership base and building an omnichannel offering oriented toward making shopping at BJ’s more convenient."

“These changes have delivered results rapidly, evidenced by positive and accelerating comparable-club sales over the last two quarters, and net income growth of over 109% and adjusted EBITDA growth of 31% in aggregate over the last two fiscal years,” BJ’s said. “We believe that these changes will continue to impact sales, profit margins and free cash flow performance favorably in the future.”

For the fiscal year ended Feb. 3, BJ’s posted total revenue of $12.8 billion, net income of $50 million and adjusted EBITDA of $534 million. Comparable-club sales for the fiscal year improved by 0.8% last (excluding gasoline, comps declined by 0.9%), but that represented an increase from 2016's 2.3% non-gas comp decline.

BJ’s said it would look to continue to grow membership, particularly its high-value BJ’s Perks Rewards members, which have grown by 317% in the past three years. Perks Rewards members pay an annual fee of $110 and get an associated MasterCard offering 2% cash rewards, vs. $55 for its base Inner Circle membership.

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BJ’s said it was driving sales through customer data that informs its assortments and greater customer engagement. It said it intends to expand its offerings deeper into apparel, tools and other “family-oriented categories.”

The company will also look to grow its store base, with plans to open 15-20 stores annually in the coming years. Its six distribution centers are capable of supporting another 100 stores within its existing and adjacent East Coast markets. “We also expect to benefit from recent club and department store closures in several of our markets and adjacent markets,” the company said.