BJ’s Wholesale Club Inc.’s stock rose 5% Thursday and was headed toward its record closing high after the company posted better-than-expected earnings for its fiscal fourth quarter.
The stock was last trading at $78.05, after closing at a record of $80.01 on Nov. 10 of last year.
The Marlborough, Mass.-based company posted net income of $129.8 million, or 95 cents a share, for the quarter to Jan. 28, up from $107.6 million, or 78 cents a share, in the year-earlier period. Adjusted per-share earnings came to $1, comfortably ahead of the 88-cent FactSet consensus.
Sales rose 13.2% to $4.828 billion from $4.264 billion, also ahead of the $4.786 billion FactSet consensus. Same-store sales rose 9.8%, almost double the 5.5% FactSet consensus.
“A beat is a good way to start the Analyst Day,” wrote DA Davidson analysts after the earnings were released early Thursday.
Membership-fee income rose 8% to $101.8 million in the quarter, and the company had a record 90% tenured-member-renewal rate. Digital sales grew 22%, and the company has opened five new clubs since the end of the third quarter and expects to expand into a 20th state this summer with a new club in Tennessee.
But costs were higher, with selling, general and administration expenses rising to $707 million from $630.5 million in the year-earlier period, driven by higher labor and occupancy costs due to new club and gas station openings, as well as the costs relating to a new club support center and other investments.
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The company launched a co-branded credit-card program with Capital One
COF,
in February. The card offers up to 5% rewards on in-club earnings and up to 2% rewards on out-of-club earnings, as well as discounts of up to 15 cents per gallon at BJ’s Gas.
“We look ahead to fiscal 2023 with the understanding that there is still significant uncertainty in the macroeconomic backdrop as well as its influence on the U.S. consumer,” Chief Financial Officer Laura Felice said in a statement.
BJ’s is now expecting fiscal 2023 earnings per share to be about flat, while same-store sales are expected to rise 4% to 5%, excluding gas sales. The current FactSet consensus is for EPS of $3.82, which compares with the $3.76 posted for 2022. The consensus for same-store sales is for growth of 2.7%.
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The company also provided longer-term guidance as part of the investor day, saying it expects same-store sales to grow by a low- to mid-single-digit percentage, excluding gas sales. It expects revenue growth of mid-single-digit and EPS growth of high-single- to low-double-digit percentages.
DA Davidson said that the outlook “shows BJ’s as transformed versus prior to the pandemic.”
The stock has been the second best-performing name in DA Davidson’s retail coverage since the start of the pandemic, analysts led by Michael Baker wrote in a note to clients. The firm has a buy rating on the stock and an $88 price target, almost 13% above the current price.
“We believe these results should continue to support that momentum and we maintain our buy rating,” they wrote.
The stock has gained 28% in the last 12 months, while the S&P 500
SPX,
has fallen 6.7%.
