BJ’s Wholesale Club (BJ)2025-05-29 20:38Financial Performance - Net sales for the first quarter of fiscal year 2025 were $5.0 billion, a 4.7% increase from $4.8 billion in the first quarter of fiscal year 2024[96] - Operating income for the first quarter of fiscal year 2025 was $203.6 million, compared to $160.8 million in the first quarter of fiscal year 2024[94] - Comparable club sales increased by 1.6% in the first quarter of fiscal year 2025, with merchandise comparable club sales rising by 3.9%[100] - Adjusted net income for Q1 FY2025 was $150.9 million, up from $113.4 million in Q1 FY2024, resulting in adjusted EPS of $1.14 compared to $0.85[119] - Adjusted EBITDA increased to $285.8 million in Q1 FY2025 from $236.4 million in Q1 FY2024, highlighting improved core operating performance[123] Membership and Fees - Membership fee income increased by 8.1% to $120.4 million in the first quarter of fiscal year 2025, up from $111.4 million in the same period last year[104] - The annual membership fee for Club Card membership increased to $60 from $55, effective January 2025, which is expected to positively impact membership fee income[85] - The company has over 7.5 million members, with a tenured membership renewal rate of 90% at the end of fiscal year 2024[88] Club Operations - The company operates 255 clubs at the end of the reporting period, an increase from 244 clubs in the previous year[94] - Pre-opening expenses rose significantly to $5.0 million in Q1 FY2025 compared to $0.9 million in Q1 FY2024, reflecting the timing and number of club openings[112] Costs and Expenses - Cost of sales was $4.2 billion, or 83.1% of net sales, in the first quarter of fiscal year 2025, down from 83.9% in the same period last year[106] - SG&A expenses increased by 5.4% to $760.9 million in Q1 FY2025 from $721.8 million in Q1 FY2024, primarily due to higher labor and occupancy costs[109] Cash Flow and Investments - Net cash provided by operating activities was $208.1 million in Q1 FY2025, an increase from $200.8 million in Q1 FY2024, driven by higher net income[128] - Net cash used in investing activities rose to $142.3 million in Q1 FY2025 from $105.7 million in Q1 FY2024, attributed to increased capital spending for new clubs[131] - Adjusted free cash flow decreased to $67.6 million in Q1 FY2025 from $95.1 million in Q1 FY2024, primarily due to higher capital expenditures[134] Debt and Interest - As of May 3, 2025, the company's total debt outstanding was $550.0 million, comprising $150.0 million under the ABL Revolving Facility and $400.0 million under the First Lien Term Loan[146] - Interest expense, net decreased to $11.1 million in Q1 FY2025 from $14.0 million in Q1 FY2024, due to reduced borrowings and interest rate fluctuations[113] - The effective income tax rate improved to 22.2% in Q1 FY2025 from 24.4% in Q1 FY2024, driven by higher tax benefits from stock-based compensation[115] - The interest rates for the ABL Revolving Facility and First Lien Term Loan are 5.42% and 6.07%, respectively[146] - A 100 basis point change in prevailing market rates would result in an annual interest cost change of approximately $5.5 million[146] - The primary market risk faced by the company is interest rate risk, which could materially impact cash flow and net interest expense[145] - The company plans to use interest rate caps and/or swap agreements in the future to manage interest rate risks associated with variable rate debt[145] Future Outlook - The company anticipates that infrastructure investments will support continued profitable growth and enhance the shopping experience[90]