BJ's Wholesale Q1 Earnings Beat, Comparable Club Sales Rise 1.6%

BJ’s Wholesale Club Holdings, Inc. BJ reported mixed results for the first quarter of fiscal 2025. While revenues came in below the Zacks Consensus Estimate, earnings exceeded expectations. Both figures improved year over year, supported by modest growth in comparable club sales.

BJ’s First-Quarter Insights

BJ’s Wholesale Club reported adjusted earnings of $1.14 per share, which came ahead of the Zacks Consensus Estimate of 91 cents and increased from 85 cents reported in the year-ago period. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

This operator of membership warehouse clubs generated total revenues of $5,153.5 million, which rose 4.8% from the year-ago quarter’s level but missed the consensus mark of $5,179 million. Net sales increased 4.7% to $5,033.1 million, while membership fee income jumped 8.1% to $120.4 million.

Total comparable club sales during the quarter under discussion rose 1.6% year over year. Excluding the impact of gasoline sales, comparable club sales jumped 3.9%, led by robust traffic, and fared better than our estimate of a 3.7% increase. Robust traffic boosted comparable sales by 2.5 percentage points, marking the 13th consecutive quarter of growth. Markedly, digitally enabled comparable sales advanced 35% during the quarter. 

BJ's Wholesale continued expanding, adding five new clubs and four new gas stations. The company targets 25 to 30 new club openings over the next two fiscal years.

Shares of this Zacks Rank #3 (Hold) company rose 17.8% in the past six months against the industry’s decline of 4.4%.

BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

BJ's Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ's Wholesale Club Holdings, Inc. Quote

A Look at BJ’s Margins

Gross profit increased to $969.5 million from $883.4 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 30 basis points from the year-ago quarter’s level. 

Operating income jumped 26.7% year over year to $203.6 million, while the operating margin, as a percentage of total revenues, expanded 70 basis points to 4%. We note that adjusted EBITDA increased 20.9% to $285.8 million during the quarter, while the adjusted EBITDA margin expanded 70 basis points to 5.5%. We had anticipated 10 basis points of expansion in both operating and EBITDA margins, respectively.

Selling, general and administrative (SG&A) expenses rose 5.4% from the year-ago quarter to $760.9 million. This reflects higher labor and occupancy costs stemming from the new club and gas station openings.

BJ’s Wholesale Financial Snapshot

BJ’s Wholesale Club ended the quarter with cash and cash equivalents of $39.5 million. The long-term debt was $398.9 million, while stockholders’ equity was $1,971.6 million.

Net cash provided by operating activities and adjusted free cash flow totaled $208.1 million and $67.6 million, respectively, for the 13 weeks ended on May 3, 2025. As part of its share repurchase program, the company bought back 55,000 shares worth $6.2 million in the quarter.

Here’s What BJ Guided

BJ’s Wholesale Club continues to expect fiscal 2025 comparable club sales, excluding gasoline sales, to increase between 2% and 3.5% year over year. Management guided adjusted earnings per share between $4.10 and $4.30 compared with $4.05 reported for fiscal 2024. The company foresees capital expenditures of about $800 million for fiscal 2025.

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This article originally published on Zacks Investment Research (zacks.com).

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