BJ's Wholesale 2Q net income up on membership fees

AP News
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Posted: Aug 17, 2011 8:06 AM
BJ's Wholesale 2Q net income up on membership fees

BJ's Wholesale Club Inc.'s second-quarter net income rose 28 percent as it made more money from membership fees and customers spent more per visit.

Membership-based warehouse club operators were among the businesses that performed well during the recession as consumers looked to stretch their dollars further. With the economy still unstable and recent stock market volatility weighing on shoppers' minds, consumers are still buying in bulk and watching their spending.

"It is clear that our members are doing more of their weekly food shopping with us. And I believe that we have tremendous opportunities to further grow our business," Laura Sen, BJ's president and CEO, said in a statement.

BJ's, the nation's third-largest warehouse club operator, on Wednesday said it earned $45.7 million, or 84 cents per share, for the period ended July 30. That's up from $35.7 million, or 67 cents per share, a year ago. BJ's said its quarterly performance was helped by favorable merchandise margins and better-than-expected expense controls.

The earnings easily topped the 77 cents per share that analysts polled by FactSet expected. It also surpassed BJ's guidance for earnings between 74 cents and 78 cents per share.

The company's stock rose 71 cents to $51.23.

BJ's said results were buoyed by the average transaction amount, which climbed about 3 percent in the quarter, with food sales up about 5 percent for the second straight year. Shoppers were honed in on perishable foods, which posted an 8 percent sales increase. General merchandise sales were up 1 percent.

Revenue climbed 11 percent to $3.05 billion from $2.75 billion, beating estimates of $2.98 billion. Revenue from membership fees increased to $51.8 million from $47.5 million, while net sales rose to $2.98 billion from $2.69 billion.

Revenue from warehouse clubs open at least a year, a key gauge of a retailer's performance because it excludes stores recently opened or closed, rose 7.8 percent. Taking out a 4 percent contribution from gasoline sales, the figure climbed 3.8 percent. Traffic was essentially flat when removing gasoline's impact.

Some of the strongest categories included beauty care, coffee, dairy, deli, meat, prepared foods, produce, salty snacks and computer equipment. Softness was seen in books, televisions, toys and video games.

By region, BJ's strongest performance was in the Southeast, which posted an 11.4 percent increase in revenue at warehouse clubs open at least a year. Upstate New York reported a 10.9 percent gain, while New England saw the figure rise 7.8 percent. The Mid Atlantic reported a 7.2 percent increase and Metro New York posted a 4.8 percent gain.

BJ's, which runs 190 of its warehouse clubs in 15 states, is being taken private. Leonard Green & Partners and CVC Capital Partners are buying BJ's in a $2.8 billion deal. The transaction is expected to close in the fourth quarter.