BJ's Plotting Michigan Invasion

BJ’s Wholesale Club is headed to the Motor City.

The Westborough, Mass.-based club merchant said it's planning for two stores in southeast Michigan in 2019 and was seeking additional sites around metro Detroit in a new market expansion.

BJ’s currently operates clubs along the U.S. East Coast from Maine to Florida but also has sites around Cleveland, Ohio. CEO Christopher Baldwin said BJ’s anticipated opening sites in Madison Heights and Taylor, Mich., by late 2019, saying the combination of customers and current competition was a match for the grocery-focused membership club.

“This represents a new market for us, and we're thrilled to be part of Michigan’s future,” Baldwin said in a conference call. “At BJ’s we proudly serve hard-working middle-class families and see eastern Michigan as a great fit for our company.”

Both Sam’s Club and Costco Wholesale already compete in proximity to the towns where BJ’s has identified new sites. Baldwin said, however, that the market looks ripe, crediting Bill Werner, BJ’s SVP of strategic planning.

“Bill and his team have done a really good job of working on the markets that we think that our offering would be a value add to the consumers we have the good fortune to serve, and as we looked at eastern Michigan, the combination of the consumer base and the competitive environment was one that was pretty compelling to us,” Baldwin said.

Baldwin’s remarks came as BJ’s reviewed a strong sales and earnings performance in the fiscal third quarter, driven by performance of new stores, membership increases and improved procurement coming against a backdrop of deflating prices, especially in perishable food.

Sales increased by 4.5% to $3.2 billion, while comparable club sales, excluding fuel, improved by 1.9%. While perishable comps were flat, unit sales were up on pricing and in-club execution, Baldwin said. Net earnings for the quarter improved by 139% to $54.4 million. The 13-week quarter ended Nov. 3.

Baldwin said the chain’s newest locations, including sites in Kearney, N.J., and Somerville, S.C., that were developed with a “data-driven approach,” are outperforming previous new-store figures. Baldwin said the chain would open at least four new clubs in 2019, including the Michigan sites. Its next opening is set for Clearwater, Fla., next spring.