Earnings Preview: BJ's Wholesale Club Inc.

AP News
Posted: Nov 16, 2009 5:38 PM

BJ's Wholesale Club Inc. is scheduled to report earnings for its third quarter Wednesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Shoppers increasingly turned to warehouse clubs like BJ's when the economy hit a downturn to save money on food and other everyday items. But the weight of the recession on shoppers' buying habits, plus lower prices for food and gas have dragged down the retailer's sales.

BJ's, which is the nation's third-biggest warehouse club and is based in Natick, Mass., has said food deflation will continue to be a challenge in the third and fourth quarter and consumers will likely keep tight controls on their spending through the holiday season. But the company said it expects solid margins for the year and recently raised its full-year earnings guidance to $2.46 to $2.56 per share.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect the company to earn 45 cents per share on revenue of $2.48 billion for the quarter.

ANALYST TAKE: Goldman Sachs has a "sell" rating on shares of BJ's, saying in a research note that the company may be feeling some pressure from more aggressive competition at Wal-Mart Stores Inc. and its wholesale division Sam's Club on top of weak consumer spending.

While Goldman Sachs anticipates the company's results will meet or beat expectations, analysts didn't see a near-term catalyst to drive BJ's shares higher _ making it a relative laggard into the fourth-quarter.

STOCK PERFORMANCE: Shares of BJ's rose near 4 percent during the quarter and are up more than 5 percent for the past 52 weeks.