BJ’s Wholesale Club Streamlines Strategy in Third Quarter Fiscal 2019 Results

BJ’s Wholesale Club Streamlines Strategy in Third Quarter Fiscal 2019 Results



WESTBOROUGH, MA - When the going gets tough, the tough get going, or in the case of our industry, when the retail market gets competitive, the competitive go after the retail market at a new angle. BJ’s Wholesale Club announced a new strategy this week—which will kick off in 2020—and one that sees it downsizing its product offerings while scaling up its retail operations in order to focus and grow on what it does best.

Christopher J. Baldwin, Chairman and CEO, BJ’s Wholesale Club“First, we're making a sustained effort to transform and simplify our assortment, including continuing investments in private label. Our simplification efforts began in general merchandise, which is upon 5 percent on a two-year stack basis as well as for 2019 year-to-date. The work we've done in this area leaves us in a strong position for Q4 and beyond,” Christopher J. Baldwin, Chairman and Chief Executive Officer, said on an earnings call. “We're moving forward with the transformation in our edible and non-edible grocery business with the goal of driving sales growth with a simpler assortment…We're also seeing good results from the clubs where we have this assortment in place…We're taking a very deliberate approach in this area. Taking time to make sure we get the simplified the assortment right.”

Baldwin went on to explain that the retailer’s brands are central to providing great value to its members—another area BJ’s has been investing in and, as a result, reported record MFI driven by increases in paid members and higher-tier memberships. By limiting its assortment of brands, the retailer is hoping to drive growth through entry into new categories. This strategy has already been applied to its latest Michigan expansion.

BJ’s Wholesale Club announced a streamlined strategy for 2020, downsizing its product offerings while scaling up its retail operations

“We plan to expand our strategic footprint. We opened two clubs and gas stations in Eastern Michigan this month. As we've said before, we took a very new approach to marketing to raise awareness in these clubs. We opened these clubs with about 1,000 fewer items than our typical clubs along with new items such as an expanded prepared food assortment, localized apparel, local craft beers, and a snack shop. Though still in the early days, we're very pleased with the initial membership response and our near-term sales trends,” Baldwin continued.

Additional highlights BJ’s reported in its financial report included the following:

  • Net sales for the third quarter of fiscal 2019 increased 0.1 percent to $3.2 billion, compared to the third quarter of fiscal 2018.
  • Comparable club sales excluding gasoline sales increased 1.1 percent for the third quarter of fiscal 2019, compared to the third quarter of fiscal 2018.
  • Income from continuing operations of $55.2 million for the third quarter of fiscal 2019, compared to income from continuing operations of $54.6 million in the third quarter of fiscal 2018.
  • Adjusted EBITDA for the third quarter of fiscal 2019 increased 3.8 percent to $154.1 million, compared to the third quarter of fiscal 2018.
  • Net income was $55.1 million, or $0.40 per diluted share, and adjusted net income was $56.6 million, or $0.41 per diluted share, for the third quarter of fiscal 2019.
  • Net cash provided by operating activities was $221.5 million for the first nine months of fiscal 2019. Free cash flow was $77.1 million for the first nine months of fiscal 2019.
  • Company updates outlook for fiscal 2019.

“We delivered solid margin improvement and continued earnings growth in the third quarter,” said Baldwin in a press release. "We remain focused on executing against our strategic plan and transforming our business to be well positioned for the long-term. The board's decision to authorize a stock repurchase program reflects the strength of our cash flow and confidence in our growth strategy and long-term outlook."

To read BJ’s Wholesale Club's financial report in its entirety, click here. And for more breaking grocery retail news as it affects fresh produce, keep reading AndNowUKnow.

BJ's Wholesale Club