BJ's (NYSE:BJ) Q1: Beats On Revenue

Radek Strnad /
2024/05/23 6:55 am EDT

Membership-only discount retailer BJ’s Wholesale Club (NYSE:BJ) announced better-than-expected results in Q1 CY2024, with revenue up 4.1% year on year to $4.92 billion. Its non-GAAP profit of $0.85 per share was flat year on year.

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BJ's (BJ) Q1 CY2024 Highlights:

  • Revenue: $4.92 billion vs analyst estimates of $4.87 billion (small beat)
  • Adjusted EBITDA: $236.4 million vs analyst estimates of $238.1 million (slight miss)
  • EPS (non-GAAP): $0.85 vs analyst estimates of $0.83 (2.5% beat)
  • Gross Margin (GAAP): 18%, down from 18.6% in the same quarter last year
  • Free Cash Flow of $95.11 million, up from $27.05 million in the same quarter last year
  • Same-Store Sales were up 1.6% year on year (beat vs. expectations of up 0.2% year on year)
  • Store Locations: 244 at quarter end, increasing by 7 over the last 12 months
  • Market Capitalization: $10.72 billion

“During the first quarter, we delivered strong increases in membership, traffic and unit volumes. This resulted in revenue growth and market share gains in our clubs and at our gas stations. Our merchandising improvements and digital conveniences, grounded in delivering compelling value, are resonating with our members. We are also growing our footprint and remain on track for 12 new club openings this year,” said Bob Eddy, Chairman and Chief Executive Officer, BJ’s Wholesale Club.

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Large-format Grocery & General Merchandise Retailer

Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.

Sales Growth

BJ's is one of the larger companies in the consumer retail industry and benefits from economies of scale, enabling it to gain more leverage on fixed costs and offer consumers lower prices.

As you can see below, the company's annualized revenue growth rate of 9% over the last five years was mediocre as it opened new stores and grew sales at existing, established stores.

BJ's Total Revenue

This quarter, BJ's grew its revenue by 4.1% year on year, and its $4.92 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.9% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.

BJ's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 3.9% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, BJ's is reaching more customers and growing sales.

BJ's Year On Year Same Store Sales Growth

In the latest quarter, BJ's same-store sales rose 1.6% year on year. By the company's standards, this growth was a meaningful deceleration from the 5.7% year-on-year increase it posted 12 months ago. We'll be watching BJ's closely to see if it can reaccelerate growth.

Key Takeaways from BJ's Q1 Results

It was good to see BJ's beat analysts' revenue expectations this quarter on better-than-expected same-store sales. On the other hand, its gross margin missed analysts' expectations, leading to a slight miss on the adjusted EBITDA line. Overall, this was a mixed quarter for BJ's. The stock is flat after reporting and currently trades at $79.84 per share.

BJ's may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.