BJ'S COMPLETES ROLLOUT OF NEW PRODUCE-PURCHASING SYSTEM 2004-11-22 (2)

NATICK, Mass. -- BJ's Wholesale Club here last week said it completed the rollout of direct purchasing for produce three months ahead of its original plan.

ew system had enabled the company to lower prices by 12%.

"Today, our members can find higher quality and better value in this department than they could a year ago," he said.

The company said comparable-store food sales were up about 10% in the third quarter, while general merchandise comps were flat. Overall comparable-store sales rose 6.1% for the period, with the strongest performance in the Southeast at 18%. Comparable-store sales in other regions included a 2% rise in New England, a 3% rise in upstate New York, a 6% rise in metro New York, and a 4% rise in the Mid-Atlantic.

BJ's said it had double-digit comp-store sales increases in beauty care, dairy, domestics, household chemicals, meats, milk, paper products, televisions and water. Weaker performers included best-seller books, appliances, toys and prerecorded video.

It said store traffic increased by about 1.5% in the period, and average transaction size grew by 4%.

Overall BJ's reported net income of $23.2 million in the 13-week third quarter, an increase of 13.8% over year-ago results. Sales in the period rose 9.8%, to $1.8 billion. Through the first nine months, the company said net income rose 25.6%, to $67.4 million, on a sales gain of 11.5%, to $5.2 billion.

During the quarter, the company also opened its first ProFoods outlet in New York for supplying food-service operators.

"We are watching the ramp-up closely, and we have seen an increase in sales in every week since the opening," said Wedge.

He stressed that the store, located in the Bronx, is a test and the company's primary focus would be on the opening of traditional club stores. A second ProFoods is scheduled to open soon in Queens.

Asked by an analyst about whether the company might eventually cancel the ProFoods test, Wedge said the success of the brand depends on the sales volume it generates.

"We know we can operate it profitably," he said. "But in the end, it's going to be, 'Where does the volume settle out?"'