BJ Q2 Deep Dive: Membership Growth and Digital Gains Offset Consumer Caution

Membership-only discount retailer BJ’s Wholesale Club (NYSE:BJ) missed Wall Street’s revenue expectations in Q2 CY2025 as sales rose 3.4% year on year to $5.38 billion. Its non-GAAP profit of $1.14 per share was 4.4% above analysts’ consensus estimates.

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StockStory’s Take

BJ’s Wholesale Club’s second quarter was met with a negative market reaction as revenue fell short of Wall Street’s expectations, despite non-GAAP earnings per share exceeding analyst forecasts. Management attributed the quarter’s performance to weather-related softness early in the period and ongoing consumer caution across all income segments. CEO Robert Eddy highlighted that discretionary categories, such as recreation and lawn and garden, underperformed due to unseasonably cold and wet conditions, but strong results in perishables and continued digital growth partially offset these trends. Eddy commented, “We saw our business accelerate as the weather improved.”

Looking ahead, BJ’s guidance is shaped by expectations for continued membership growth, digital expansion, and disciplined inventory management amid a volatile economic backdrop. Management noted that tariff-related uncertainty and cautious consumer behavior remain headwinds, but they believe investments in value and convenience will drive member loyalty. CFO Laura Felice stated, “We will potentially make short-term investments, but that is important for the long-term health of the business and for our membership.” The company’s strategy centers on balancing aggressive market share gains with prudent cost controls as it navigates a dynamic retail environment.

Key Insights from Management’s Remarks

Management cited robust growth in perishables, digital adoption, and record membership milestones as key drivers, while highlighting discretionary softness and inventory discipline.

• Membership milestone reached: BJ’s surpassed 8 million members, a 55% increase since its IPO, with growth stemming from both new club openings and legacy locations. Management emphasized a focus on higher-tier memberships, which reached a record 41% penetration.
• Digital business accelerating: Digital sales grew 34% year over year, driven by increased app usage, buy online-pickup in club (BOPIC), and same-day delivery. Over half of active members now regularly use the BJ’s app, which management sees as a generational opportunity to enhance convenience and value.
• Perishables and Fresh 2.0 success: The Fresh 2.0 initiative in groceries and perishables led to healthy comp growth, with perishables categories like dairy, meat, and produce outperforming. Management is expanding this data-driven approach to meat and seafood, reporting early sales improvements.
• Discretionary categories pressured: General merchandise, especially weather-sensitive products such as lawn and garden, faced double-digit declines. Management responded with tighter inventory controls and markdowns, resulting in a leaner and more flexible inventory position.
• Tariffs and macro volatility: The company proactively adjusted sourcing and ordering in tariff-impacted categories, particularly holiday décor, to mitigate risk. Management acknowledged that these decisions could limit upside if consumer sentiment improves, but prioritized risk management and value for members.

Drivers of Future Performance

BJ’s expects membership growth, digital adoption, and cautious inventory management to shape performance amid macro uncertainty and tariff risks.

• Membership and digital focus: Management believes continued growth in membership—especially higher-tier signups—and expanding digital engagement will underpin traffic and spending, even if consumers remain cautious. The digital channel’s role in convenience and value is expected to deepen member loyalty and drive recurring revenue.
• Selective investment and cost discipline: The company plans to make short-term margin investments, such as sharper pricing and promotional activity, to reinforce its value proposition. Management views these actions as necessary to defend and grow market share during periods of consumer stress, balancing them with ongoing cost controls.
• Tariff and discretionary headwinds: Management highlighted tariff volatility and consumer reluctance to spend on discretionary items as ongoing risks. The company’s response includes reducing exposure in tariff-heavy categories and adapting sourcing, but acknowledges these measures may cap near-term sales growth if the macro environment improves unexpectedly.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will track (1) the pace of higher-tier membership penetration and digital sales growth, (2) improvements or setbacks in discretionary general merchandise categories as the company refines its assortment, and (3) the execution of inventory and sourcing strategies amid ongoing tariff uncertainty. Additionally, the rollout of new club openings and the company’s ability to drive member engagement through digital channels will be important signposts for sustained growth.

BJ's currently trades at $96.90, down from $106.21 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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