BJ’s Wholesale Registers to Sell Backers’ Remaining Shares

The private equity firms that acquired BJ’s Wholesale Club and later sold a portion of the company back to the public have registered to sell the remainder of their ownership stakes in the company.

Entities controlled by the firms CVC Beacon Capital and Leonard Green and Partners each retain a 20.8% stock ownership in BJ’s, following an initial public stock offering over the summer and a secondary stock sale in the fall. This week, the retailer registered all of Beacon and Green’s remaining 58 million shares for a potential sale. Based on a proposed maximum price of $26.80 per share, the offering could raise up to $1.56 billion—with proceeds going not to the company but to the sellers.

CVC and Leonard Green acquired BJ’s in 2001 in what turned out to be a lucrative leveraged buyout. The investors were the recipients of $735.5 million dividend a year ago, repaying their initial equity investment—although $1.9 billion of debt remains on the books.

Further, Westborough, Mass.-based BJ’s was able to execute a turnaround under their private watch, installing a new leadership team that implemented what the company called “significant cultural and operational changes,” including using data to improve member experience; instilling a culture of cost discipline; adopting a more proactive approach to growing membership; and building an omnichannel offering through significant investment in technology.

BJ’s said the changes have resulted in rapid sales and profitability improvements, including positive comparable sales for its last six reported quarters through the third quarter ended Nov. 3. Net income grew by 109% and adjusted EBIT by 31% in fiscal 2017. BJ’s is expected to report fourth-quarter and 2018 fiscal-year financial results later this month.

BJ’s operates 216 membership warehouse clubs, primary on the East Coast. It reported total revenues of $12.7 billion in 2017, including $259 million in membership fees. In a filing accompanying the stock registration, BJ’s said it had more than 5 million paid members.