BJ’s Wholesale Club (BJ) - 2025 Q1 - Quarterly Results

Executive Summary & Company Overview This section summarizes BJ's Wholesale Club's Q1 FY24 performance, financial highlights, fiscal 2024 outlook, and company background First Quarter Fiscal 2024 Highlights BJ's Wholesale Club reported strong Q1 FY24 results with increased comparable club sales, membership fee income, and digitally enabled sales, alongside stable adjusted EPS - Comparable club sales increased by 1.6% year-over-year[9][38] - Comparable club sales, excluding gasoline, increased by 0.6% year-over-year[1][38] - Membership fee income increased by 8.6% year-over-year to $111.4 million[9][37] - Digitally enabled comparable sales growth was 21.0% year-over-year[16] - Earnings per diluted share (EPS) was $0.83, and adjusted EPS was $0.85[9][37] - Merchandise gross margin rate decreased by 50 basis points year-over-year[16] - The Company opened one new club and one new gas station[37] - CEO Bob Eddy highlighted strong increases in membership, traffic, and unit volumes, attributing it to merchandising improvements and digital conveniences, and confirmed being on track for 12 new club openings this year[9] Key Measures for the Thirteen Weeks Ended May 4, 2024 | Metric | 13 Weeks Ended May 4, 2024 (Thousands) | 13 Weeks Ended April 29, 2023 (Thousands) | % Growth (Decline) | | :-------------------------------- | :------------------------------------- | :---------------------------------------- | :----------------- | | Net sales | $4,807,129 | $4,620,620 | 4.0 % | | Membership fee income | $111,390 | $102,522 | 8.6 % | | Total revenues | $4,918,519 | $4,723,142 | 4.1 % | | Operating income | $160,755 | $186,770 | (13.9)% | | Income from continuing operations | $111,019 | $115,988 | (4.3)% | | Adjusted EBITDA | $236,386 | $251,538 | (6.0)% | | Net income | $111,019 | $116,077 | (4.4)% | | EPS ($) | $0.83 | $0.85 | (2.4)% | | Adjusted net income | $113,408 | $115,646 | (1.9)% | | Adjusted EPS ($) | $0.85 | $0.85 | — % | | Basic weighted-average shares outstanding (Thousands) | 132,397 | 133,312 | | | Diluted weighted-average shares outstanding (Thousands) | 134,111 | 135,902 | | Additional Financial Highlights Gross profit increased due to membership fee income, while SG&A expenses rose from new club openings and investments, leading to decreased net income and adjusted EBITDA, alongside reduced income tax expense and share repurchases - Gross profit increased to $883.4 million in Q1 FY24 from $880.0 million in Q1 FY23, driven by membership fee income growth[18] - Merchandise gross margin rate decreased by 50 basis points year-over-year, primarily due to lower ancillary income[18] - Selling, general and administrative expenses (SG&A) increased to $721.8 million in Q1 FY24 from $689.3 million in Q1 FY23, mainly due to increased labor and occupancy costs from new club/gas station openings and strategic investments[11] - Net income decreased to $111.0 million in Q1 FY24 compared to $116.1 million in Q1 FY23[12] - Income from continuing operations before income taxes decreased to $146.8 million in Q1 FY24 compared to $172.1 million in Q1 FY23[39] - Income tax expense decreased to $35.8 million in Q1 FY24 compared to $56.1 million in Q1 FY23, primarily due to higher tax benefits from stock-based compensation[19] - Adjusted EBITDA decreased to $236.4 million in Q1 FY24 compared to $251.5 million in Q1 FY23[40] - The Company repurchased 405,110 shares of common stock, totaling $30.2 million, in Q1 FY24[20] Fiscal 2024 Outlook BJ's Wholesale Club maintains an unchanged fiscal 2024 outlook, confident in sustaining strong traffic, unit volumes, and market share through member value and strategic execution - The Company's outlook for fiscal 2024 remains unchanged[41] - Management is confident in maintaining strength in traffic, unit volumes, and market share[41] - Strategic priorities include delivering value to members and executing on growth plans[41] About BJ's Wholesale Club Holdings, Inc. BJ's Wholesale Club Holdings, Inc. is a leading membership warehouse club operator, providing diverse products and services across 244 clubs and 176 gas locations in 20 states - BJ's Wholesale Club is a leading operator of membership warehouse clubs[14] - The company's purpose is "We take care of the families who depend on us"[14] - Offers a wide assortment of fresh foods, produce, deli, bakery, household essentials, gas, technology, home decor, apparel, and seasonal items[14] - Operates 244 clubs and 176 BJ's Gas locations in 20 states[14] - Pioneered the warehouse club model in New England in 1984[14] Financial Statements (Unaudited) This section presents the unaudited condensed consolidated statements of operations, balance sheets, and cash flows for BJ's Wholesale Club, detailing the company's financial performance and position Condensed Consolidated Statements of Operations Total revenues increased by 4.1% year-over-year, driven by net sales and membership fee income, while operating income, income before taxes, and net income all decreased Condensed Consolidated Statements of Operations (Amounts in thousands, except per share amounts) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :------------------------------------------------ | :------------------------- | :-------------------------- | | Net sales (Thousands) | $4,807,129 | $4,620,620 | | Membership fee income (Thousands) | $111,390 | $102,522 | | Total revenues (Thousands) | $4,918,519 | $4,723,142 | | Cost of sales (Thousands) | $4,035,129 | $3,843,150 | | Selling, general and administrative expenses (Thousands) | $721,771 | $689,328 | | Pre-opening expenses (Thousands) | $864 | $3,894 | | Operating income (Thousands) | $160,755 | $186,770 | | Interest expense, net (Thousands) | $13,951 | $14,690 | | Income from continuing operations before income taxes (Thousands) | $146,804 | $172,080 | | Provision for income taxes (Thousands) | $35,785 | $56,092 | | Income from continuing operations (Thousands) | $111,019 | $115,988 | | Income from discontinued operations, net of income taxes (Thousands) | — | $89 | | Net income (Thousands) | $111,019 | $116,077 | | Income per share attributable to common stockholders - basic: Income from continuing operations ($) | $0.84 | $0.87 | | Income from discontinued operations ($) | — | — | | Net income ($) | $0.84 | $0.87 | | Income per share attributable to common stockholders - diluted: Income from continuing operations ($) | $0.83 | $0.85 | | Income from discontinued operations ($) | — | — | | Net income ($) | $0.83 | $0.85 | Condensed Consolidated Balance Sheets Total assets increased due to property, lease assets, and inventories, while total liabilities decreased from reduced debt, leading to a significant increase in stockholders' equity Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | May 4, 2024 | April 29, 2023 | | :----------------------------------------- | :------------ | :------------- | | ASSETS | | | | Cash and cash equivalents (Thousands) | $35,094 | $23,387 | | Accounts receivable, net (Thousands) | $225,199 | $217,866 | | Merchandise inventories (Thousands) | $1,533,310 | $1,532,006 | | Prepaid expense and other current assets (Thousands) | $85,048 | $69,048 | | Total current assets (Thousands) | $1,878,651 | $1,842,307 | | Operating lease right-of-use assets, net (Thousands) | $2,159,955 | $2,124,621 | | Property and equipment, net (Thousands) | $1,620,255 | $1,364,815 | | Goodwill (Thousands) | $1,008,816 | $1,008,816 | | Intangibles, net (Thousands) | $106,001 | $113,536 | | Deferred income taxes (Thousands) | $2,693 | $6,728 | | Other assets (Thousands) | $48,356 | $33,672 | | Total assets (Thousands) | $6,824,727 | $6,494,495 | | LIABILITIES | | | | Short-term debt (Thousands) | $270,000 | $400,000 | | Current portion of operating lease liabilities (Thousands) | $156,914 | $178,939 | | Accounts payable (Thousands) | $1,264,873 | $1,281,676 | | Accrued expenses and other current liabilities (Thousands) | $834,053 | $758,724 | | Total current liabilities (Thousands) | $2,525,840 | $2,619,339 | | Long-term operating lease liabilities (Thousands) | $2,069,587 | $2,037,844 | | Long-term debt (Thousands) | $398,509 | $448,004 | | Deferred income taxes (Thousands) | $74,804 | $66,699 | | Other non-current liabilities (Thousands) | $228,567 | $190,883 | | STOCKHOLDERS' EQUITY (Thousands) | $1,527,420 | $1,131,726 | | Total liabilities and stockholders' equity (Thousands) | $6,824,727 | $6,494,495 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased due to inventory and accounts payable changes, while net cash used in investing and financing activities also rose Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :-------------------------------------------------------------------------------- | :------------------------- | :-------------------------- | | Net income (Thousands) | $111,019 | $116,077 | | Depreciation and amortization (Thousands) | $63,422 | $54,190 | | Stock-based compensation expense (Thousands) | $8,590 | $10,007 | | Deferred income tax provision (Thousands) | $1,409 | $14,445 | | Merchandise inventories (change) (Thousands) | $(78,488) | $(153,455) | | Accounts payable (change) (Thousands) | $81,592 | $85,979 | | Net cash provided by operating activities (Thousands) | $200,847 | $119,132 | | Additions to property and equipment, net of disposals (Thousands) | $(105,741) | $(92,084) | | Net cash used in investing activities (Thousands) | $(105,741) | $(92,084) | | Proceeds from revolving lines of credit (Thousands) | $193,000 | $149,000 | | Payments on revolving lines of credit (Thousands) | $(242,000) | $(154,000) | | Acquisition of treasury stock (Thousands) | $(57,256) | $(42,369) | | Net cash used in financing activities (Thousands) | $(96,061) | $(37,576) | | Cash and cash equivalents at end of period (Thousands) | $35,094 | $23,387 | Non-GAAP Financial Measures This section defines and reconciles various non-GAAP financial measures used by BJ's Wholesale Club to provide supplemental insights into its operating performance and liquidity Note Regarding Non-GAAP Financial Information The company utilizes various non-GAAP measures for supplemental analysis of operating performance and liquidity, acknowledging their limitations and the difficulty in providing forward-looking reconciliations - Non-GAAP measures include adjusted net income, adjusted EPS, adjusted EBITDA, adjusted free cash flow, net debt, and net debt to LTM adjusted EBITDA[58] - These measures assist investors and analysts in comparing operating performance across reporting periods by excluding non-core items[50] - Adjusted EBITDA is used for annual incentive compensation[63] - Adjusted free cash flow is used to evaluate liquidity, and net debt/net debt to LTM adjusted EBITDA for borrowing capacity[31] - Definitions: - Adjusted EBITDA: Income from continuing operations before interest, taxes, depreciation, and amortization, adjusted for stock-based compensation, restructuring, and other items[4][28] - Adjusted Net Income: Net income adjusted for non-recurring, infrequent, or unusual changes, net of tax impact[48] - Adjusted EPS: Adjusted net income divided by weighted-average diluted shares outstanding[29] - Adjusted Free Cash Flow: Net cash provided by operating activities less additions to property and equipment, net of disposals, plus proceeds from sale-leaseback transactions[49] - Net Debt: Total debt outstanding less cash and cash equivalents[30] - Net Debt to LTM Adjusted EBITDA: Net debt at balance sheet date divided by adjusted EBITDA for the trailing twelve-month period[4] - The company does not provide forward-looking reconciliations for non-GAAP estimates due to the inherent difficulty of forecasting timing and amounts of reconciling items[52] - Non-GAAP measures should not be considered alternatives to GAAP and may not be comparable to similarly titled measures used by other companies[7][32] Reconciliation of GAAP to Non-GAAP Financial Information This section provides detailed reconciliations of GAAP financial measures to their corresponding non-GAAP counterparts for Adjusted EBITDA, Net Income, EPS, Net Debt, and Free Cash Flow Reconciliation to Adjusted EBITDA This subsection details the reconciliation of income from continuing operations to Adjusted EBITDA, outlining specific adjustments made for non-GAAP reporting purposes Reconciliation to Adjusted EBITDA (Amounts in thousands) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :----------------------------------- | :------------------------- | :-------------------------- | | Income from continuing operations (Thousands) | $111,019 | $115,988 | | Interest expense, net (Thousands) | $13,951 | $14,690 | | Provision for income taxes (Thousands) | $35,785 | $56,092 | | Depreciation and amortization (Thousands) | $63,422 | $54,190 | | Stock-based compensation expense (Thousands) | $8,590 | $10,007 | | Restructuring (Thousands) | $3,307 | — | | Other adjustments (Thousands) | $312 | $571 | | Adjusted EBITDA (Thousands) | $236,386 | $251,538 | Reconciliation to Adjusted Net Income and Adjusted EPS This subsection presents the reconciliation from reported net income to adjusted net income and adjusted EPS, detailing the impact of various adjustments Reconciliation to Adjusted Net Income and Adjusted EPS (Amounts in thousands, except per share amounts) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :---------------------------------------- | :------------------------- | :-------------------------- | | Net income as reported (Thousands) | $111,019 | $116,077 | | Adjustments: Restructuring (Thousands) | $3,307 | — | | Other adjustments (Thousands) | — | $(601) | | Tax impact of adjustments to net income (Thousands) | $(918) | $170 | | Adjusted net income (Thousands) | $113,408 | $115,646 | | Weighted-average diluted shares outstanding (Thousands) | 134,111 | 135,902 | | Adjusted EPS ($) | $0.85 | $0.85 | - Restructuring charges relate to corporate function restructuring, including costs for severance, retention, outplacement, and consulting fees[54][5] Reconciliation of Net Debt and Net Debt to LTM Adjusted EBITDA This subsection provides the reconciliation for net debt and the calculation of net debt to last twelve months (LTM) adjusted EBITDA Reconciliation of Net Debt and Net Debt to LTM Adjusted EBITDA (Amounts in thousands) | Metric | May 4, 2024 | | :-------------------------------- | :------------ | | Total debt (Thousands) | $668,509 | | Less: Cash and cash equivalents (Thousands) | $35,094 | | Net debt (Thousands) | $633,415 | | Income from continuing operations (Thousands) | $518,683 | | Interest expense, net (Thousands) | $63,788 | | Provision for income taxes (Thousands) | $191,933 | | Depreciation and amortization (Thousands) | $236,928 | | Stock-based compensation expense (Thousands) | $37,604 | | Restructuring (Thousands) | $17,247 | | Other adjustments (Thousands) | $794 | | Adjusted EBITDA (LTM) (Thousands) | $1,066,977 | | Net debt to LTM adjusted EBITDA (x) | 0.6x | Reconciliation to Adjusted Free Cash Flow This subsection reconciles net cash provided by operating activities to adjusted free cash flow, detailing capital expenditures and sale-leaseback transactions Reconciliation to Adjusted Free Cash Flow (Amounts in thousands) | Metric | 13 Weeks Ended May 4, 2024 | 13 Weeks Ended April 29, 2023 | | :---------------------------------------------------------- | :------------------------- | :-------------------------- | | Net cash provided by operating activities (Thousands) | $200,847 | $119,132 | | Less: Additions to property and equipment, net of disposals (Thousands) | $(105,741) | $(92,084) | | Plus: Proceeds from sale-leaseback transactions (Thousands) | — | — | | Adjusted free cash flow (Thousands) | $95,106 | $27,048 | Legal & Administrative Information This section includes important legal disclaimers regarding forward-looking statements, details for the investor conference call, and contact information for investor relations and media Forward-Looking Statements This section provides a disclaimer on forward-looking statements, outlining inherent risks and uncertainties that could impact actual results, and clarifies the company's non-obligation to update them - All statements not relating to historical fact are considered forward-looking[3] - Statements are based on management's current expectations and involve known and unknown risks and uncertainties[3] - Risk factors include financial market uncertainties, consumer spending, dependence on membership, economic conditions (inflation, exchange rates), merchandise procurement, competition, vendor dependence, security breaches, real estate conditions, capital spending, labor costs, geopolitical conditions, product mix changes, omnichannel experience, growth strategy, e-commerce, and the BJ's One Mastercard® program[3] - The company disclaims any obligation to update forward-looking statements unless required by law[3] Conference Call Details This section provides details for the first quarter fiscal 2024 financial results conference call, including schedule, webcast access, and dial-in information - Conference call scheduled for May 23, 2024, at 8:30 A.M. Eastern Time[21] - Live audio webcast accessible via the Company's investor relations website: https://investors.bjs.com[21](index=21&type=chunk) - Dial-in numbers: (833) 470-1428 (U.S.) or +1 (929) 526-1599 (outside U.S.), Conference ID: 968183[21] Contacts This section provides contact information for investor relations and media inquiries - Investor Contact: Catherine Park, Vice President, Investor Relations, cpark@bjs.com, 774-512-6744[36] - Media Contact: Kirk Saville, Head of Corporate Communications, ksaville@bjs.com, 774-512-5597[56]