BJ’s Wholesale Club (BJ) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported impressive first-quarter results with net sales of $3.8 billion and a two-year stacked comp sales growth of 22% [42][18] - Adjusted EBITDA for the quarter was $202 million, reflecting a 4% year-on-year growth, while adjusted EPS was $0.72, also a 4% increase [55][56] - Free cash flow generated during the quarter was $191 million, with a leverage ratio of one times [57][18] Business Line Data and Key Metrics Changes - Membership fee income (MFI) grew by 9% to $86 million, driven by strong member renewals and improved membership mix [50] - The grocery division saw a 23% stacked comp growth, while general merchandise and services division reported a comp growth of 32% [46][48] - Digital sales grew by 31% this quarter and 381% on a two-year stacked basis, contributing significantly to overall sales growth [30][44] Market Data and Key Metrics Changes - The company maintained its market share gains from 2020 and benefited from government stimulus payments [18] - Gallons sold in the gasoline business grew by approximately 29%, significantly outpacing overall market performance [49] Company Strategy and Development Direction - The company plans to continue investing in membership growth, digital initiatives, and geographic expansion, with expectations to open six new clubs in 2021 and up to ten more in 2022 [33][35] - The strategy remains focused on growing and retaining members, delivering value through merchandising and marketing, and improving convenience with digital offerings [19][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term health of the business despite uncertainties in the near term, particularly regarding food at home consumption and macroeconomic factors [36][39] - The company anticipates a potential decline in comp sales as consumer behavior normalizes post-pandemic, but expects membership trends and digital initiatives to drive future growth [60][61] Other Important Information - The company has eliminated trial memberships from its acquisition strategy, focusing on improving the quality of its membership base [24] - The leadership team has undergone changes, with key executives taking on new roles to drive strategic initiatives [15][17] Q&A Session Summary Question: Potential changes in strategy speed - Management indicated that while the overall strategy remains sound, adjustments may be made to the speed of certain actions in response to market conditions [70] Question: Gross margin pressures due to input cost inflation - Management acknowledged the presence of inflation and its potential impact on margins, but emphasized the ability to manage these pressures effectively [72] Question: Expectations for merchandise margins - Management refrained from providing specific margin forecasts but indicated that while inflation may pose challenges, strong sales in general merchandise could offset some of these pressures [75] Question: Impact of stimulus on sales - Management noted that stimulus payments positively influenced sales, particularly in March and April, but it is difficult to quantify the exact impact [77] Question: Member renewal rates - Management reported that renewal rates for new members have exceeded expectations, with the best renewal rates in the company's history observed during the quarter [88]