BJ's CEO says retailer's store brands 'are central' for 3 big reasons

BJ’s Wholesale Club CEO Chris Baldwin said Thursday that the retailer’s store brands are central to providing great value to members, to assortment simplification and to category profit improvement efforts.

“We will continue to increase own brand penetration. It's currently above 20% and we remain on track to get to 21% for the full year,” he said.

Baldwin made the remarks during a third-quarter earnings call. For the third quarter ended Nov. 2, the Westborough, Mass.-based club store chain posted its ninth straight quarter of positive comps, with a 1.1% increase. Net sales for the third quarter increased 0.1% to $3.2 billion. Adjusted net income was $56.6 million.

BJ's sells numerous products under its two store brand lines: Berkley-Jensen, which includes food and non-food items; and Wellsley Farms, a premium line of products that includes dairy products, produce, snacks, coffee, wine, juices, heat-and-eat meals and more.

Baldwin also said BJ’s is updating its value proposition to include a “simplified” grocery assortment with more private label products and a sharper focus on general merchandise. He the company is seeing progress on these initiatives but still “has a lot of work to do.”

“We're making a sustained effort to transform and simplify our assortment. We're transforming our edible and non-edible grocery business,” Baldwin noted. “We strongly believe that limiting our assortment will offer better clarity for offering the right opportunities for sourcing savings and freeing up space to drive growth through entry into new categories.”

The company said it expects to reduce grocery SKUs in the “double-digit percentage range through 2020.” Baldwin said BJ’s expects “some short-term pressures on comps” as a result of this strategy, but that shoppers are responding favorably to the simpler assortment in new stores.

“We're taking a very deliberate approach in this area, taking time to make sure we get the simplified assortment right,” he added.

Part of BJ’s Wholesale Club's transformation plan also has been to expand its fresh offering and customize promotions.

“We're particularly pleased with our performance in prepared foods, which we introduced this year,” Baldwin said. “Our new clubs in Michigan were launched with an expanded assortment of prepared foods showing very strong early results. Also, personalized offers are based on members’ personal purchase history, giving us a powerful vehicle to engage members and drive trips and baskets. While this is still in the very early innings, we're confident that our investment in the system will deliver outstanding value to our members, drive trips and enable to us to use our promotional dollars more effectively.”

BJ’s operates more than 217 clubs and 140 BJ's Gas locations in 16 states.