BJ’s Wholesale grows across categories in Q4
Pandemic consumers mobbed BJ's Wholesale Club during the fourth quarter looking for fresh meat, frozen meals, fresh produce, beverages and salty snacks.
Those categories led 18% comp growth in the grocery division, according to BJ's Chief Administrative Officer Bob Eddy, who detailed the retailer's fourth quarter sales report in an earnings call on March 4.
"We saw robust comps across all categories, most notably in perishables, where we saw strong growth in fresh meat, frozen meals, and fresh produce," Eddy said. "In edible grocery, beverages and salty snacks grew nicely, and in our nonedible grocery division, paper products, cleaning supplies, and wellness solutions led the way."
During the period ended Jan. 30, same-store sales, excluding gasoline sales, increased by 15.9% at BJ's, including digitally enabled sales growth of 168% and physical store comps of 13%.
"We continue to invest behind digital platforms, particularly in BOPIC, curbside pickup, and same-day delivery, which together drove more than 80% of our digital growth during the fourth quarter," Eddy said. "With digital, our economics are advantaged versus many of our peers, and the concentration of digital orders being fulfilled by our clubs furthers that thought. We operate a limited SKU warehouse environment with higher average ticket, allowing us to be more efficient. BOPIC and curbside sales tend to skew toward bigger baskets, and same-day delivery sales have the same margins as traditional sales in our clubs."
Operating income at BJ's increased to $144.7 million, or 3.7% of total revenues in the fourth quarter, compared to $81.8 million, or 2.4% of total revenues in the fourth quarter of fiscal 2019. Operating income in the fourth quarter of fiscal 2019 included charges associated with club closing and impairment charges, gains on sales leaseback transactions, and severance costs that, in the aggregate and as applicable, reduced operating income by $16.8 million for the fourth quarter of fiscal 2019. Operating income increased to $642.4 million, or 4.2% of total revenues in fiscal 2020, compared to $352.2 million, or 2.7% of total revenues in fiscal 2019. Operating income in fiscal 2019 included charges associated with offering costs, club closing and impairment charges, gains on sales leaseback transactions, and severance costs that, in the aggregate and as applicable, reduced operating income by $18.7 million for fiscal 2019.
Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased approximately 50 basis points over the fourth quarter of fiscal 2019. Income from continuing operations increased 127.3% year-over-year to $95.9 million. Adjusted EBITDA increased 36.1% year-over-year to $204.5 million, for the fourth quarter of fiscal 2020. Earnings per diluted share of 69 cents reflected 130% year-over-year growth.
"We are not the same company we were 12 months ago," said Lee Delaney, president and CEO of BJ’s Wholesale Club, during the earnings call. "Our underlying growth rate will accelerate as we benefit from long-term trends and continue to accelerate on our strategic initiatives. While the short-term COVID-related uncertainties may create headwinds that temporarily mask these long-term gains, we will reset at a higher base and faster growth rate. Our team members continue to execute at the highest level, enabling us to take advantage of the opportunities ahead and positioning the company for long-term success."
During the earnings call, BJ's said it would begin accepting EBT payments for SNAP eligible items on BJs.com for in-club pickup and curbside pickup orders in Florida and North Carolina.
BJ’s members in these states can now seamlessly shop for their groceries on BJs.com for in-club pickup or contactless curbside pickup and use their EBT card for SNAP eligible items at checkout. The retailer’s easy two-step checkout process for online EBT payment also includes the option to check card balance and the ability to use multiple payment options.
“We’re committed to providing our members with essential products and fresh food for their families at an incredible value,” said Monica Schwartz, SVP, chief digital officer, BJ’s Wholesale Club. “It’s never been more important to offer our members convenient shopping options and we’re thrilled to launch online EBT payment to give our members more flexibility to shop their way.”
BJ’s partnered with the USDA’s Food and Nutrition Services and Worldpay from FIS, a leading provider of financial technology solutions for merchants, to add SNAP EBT to BJs.com for in-club pickup and curbside pickup orders as part of the SNAP Online Purchasing Pilot. BJ’s plans to roll out online EBT payments for in-club pickup and curbside pickup orders by spring 2021 to all locations in states participating in the SNAP Online Purchasing Pilot.
“As we look ahead, we are confident our business will continue to thrive over the long-term given structural shifts in consumer behavior, the progress we made over the last year and our continued investments,” said Delaney.
Westborough, Massachusetts-based BJ's Wholesale Club operates 221 clubs and 148 BJ's Gas locations in 17 states.