BJ’s Wholesale Club (BJ) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net sales of $5 billion, an increase of 4.7% year over year [25] - Merchandise comparable sales, excluding gas, increased by 3.9% year over year, driven by traffic and units [25] - First quarter earnings per share were $1.13, with adjusted earnings per share of $1.14 [28] Business Line Data and Key Metrics Changes - The perishables grocery and sundries division achieved over 4% comparable growth in the first quarter, with unit volumes increasing across all divisions [7] - The general merchandise and services division saw a slight decrease in comparable sales, although positive comps were recorded in apparel and toys [8] - Digitally enabled comparable sales grew by 35% year over year, contributing significantly to overall sales growth [26] Market Data and Key Metrics Changes - Total comparable club sales, including gas, grew by 1.6% year over year, with first quarter comp gallons rising about 2% year over year [26] - Membership fee income grew by 8.1% to approximately $120.4 million, benefiting from strong membership acquisition and retention [27] - The company ended the first quarter with inventory levels down 2% on a per club basis, indicating effective inventory management [29] Company Strategy and Development Direction - The company is focused on four strategic priorities: improving member loyalty, enhancing the shopping experience, delivering value conveniently, and expanding its footprint [11] - The company plans to open 25 to 30 new clubs over the next two years, with five new clubs opened in the first quarter [20] - Investments in digital conveniences and merchandising strategies are aimed at driving member engagement and loyalty [18][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the uncertain economic environment while maintaining a focus on delivering value to members [23] - The company anticipates that the current environment will influence costs and consumer spending patterns, which may impact financial performance [31] - Despite uncertainties, management is committed to long-term growth priorities and believes the business model is well-positioned to succeed [31] Other Important Information - The company has seen a significant increase in higher tier membership penetration, surpassing 40% for the first time in its history [13] - The Fresh 2.0 initiative has driven high single-digit to low double-digit growth in produce, with plans to extend similar strategies to meat and seafood [16][70] - The company is actively managing costs and pricing strategies in response to inflation and tariffs, aiming to minimize impacts on members [11][81] Q&A Session Summary Question: Update on real estate strategy and club openings - Management highlighted aggressive real estate strategies and the success of new clubs, with plans to accelerate openings in new and existing markets [41][45] Question: Long-term membership algorithm and customer engagement - Management confirmed strong membership growth and engagement, with no immediate changes to the long-term algorithm expected [49][51] Question: Margin investments and comp sales outlook - Management indicated that margin investments are focused on maintaining value while expecting comp sales to be stronger in the first half of the year [57][58] Question: Impact of tariffs on guidance and pricing strategies - Management acknowledged the complexity of tariff impacts but emphasized a proactive approach to sourcing and pricing to mitigate effects [80][82] Question: Share gains in discretionary categories and higher tier penetration - Management reported positive share gains in both food and non-food categories, with a goal to increase higher tier membership penetration beyond 50% [90][94]