BJ’s Misses by a Penny – Analyst Blog

BJ’s Wholesale Club Inc. (BJ) recently reported fourth-quarter 2009 results. The quarterly earnings of 95 cents a share, missed the Zacks Consensus Estimate by a penny, but climbed 6.7% from 89 cents delivered in the prior-year quarter.

 

Management now expects earnings in the range of 40 cents to 45 cents a share for first-quarter 2010, and between $2.54 and $2.64 for fiscal year 2010. The first-quarter earnings guidance remained in line with the current Zacks Consensus Estimate of 43 cents but the fiscal year outlook falls short of the Zacks Consensus Estimate, which currently stands at $2.70.

 

On a reported basis, including one-time items, the quarterly earnings came in at $1.01 per share, up 11% from 91 cents posted in the year-earlier quarter.

 

Total revenue, which includes net sales, membership fees and other revenue, jumped 9.4% year-over-year to $2,797.8 million in the quarter. Net sales for the quarter rose 9.4% year-over-year to $2,738.3 million, membership fee income climbed 3.6% to $46.3 million and other revenue jumped 17.3% to $13.2 million.

 

For first-quarter 2010, BJ’s Wholesale Club expects net sales to jump between 12.6% and 14.6%, whereas for fiscal year 2010, net sales are expected to climb in the range of 8.6% to 12.6%.

 

Comparable club sales grew 4.6% in the quarter, favorably impacted by gasoline sales of 2.3%. Management expects comparable club sales to increase in the range of 6.5% to 8.5% in the first quarter and between 4% and 6% for fiscal 2010.

 

Excluding the positive impact of gasoline sales, merchandise comparable club sales rose 2.3% in the quarter. Merchandise comparable club sales are expected to rise in the range of 3% to 5% in the first quarter and between 2.5% and 4.5% for fiscal 2010.

 

Excluding gasoline sales, traffic rose nearly 4% year-over-year during the quarter, whereas the average transaction amount dropped by approximately 2%.

 

By categories, breakfast foods, candy, cigarettes, computers, frozen, health & beauty aids, household chemicals, houseware, juices, paper products, produce, residential furniture, salty snacks and small appliances reported robust sales. On the contrary, automotive and tools, jewelry, pre-recorded video, sporting goods, televisions, toys and trash bags reported sluggish sales.

 

Heavy job losses and the economic slowdown have changed the way consumers used to shop. Cash-strapped consumers are now prioritizing their purchases. BJ’s Wholesale Club experienced a 3.7% rise in comparable sales of food, whereas sales of general merchandise remained flat compared to last year.

 

BJ’s Wholesale Club recently reported sales for the four-week period ended February 27, 2010. Sales for the month soared 12.8% to $755.2 million.

 

Comparable club sales rose 7.5% for February 2010 versus 0.6% in the same month last year. Gasoline sales positively impacted comparable club sales during the reported month by 3.6%. However, it influenced the prior-year period sales negatively by 7.6%.

 

The company ended fiscal year 2009 with cash and cash equivalents of $58.8 million, total long-term debt of $1.1 million and shareholders equity of $1,033.4 million. Capital expenditure for the year was approximately $176 million. In fiscal 2010, management plans capital expenditure between $215 million and $235 million.

 

BJ’s Wholesale Club repurchased 1.7 million shares during the quarter at an average cost of $33.17, aggregating $57.2 million. During fiscal 2009, the company bought back 4.1 million shares at an average cost of $31.08, totaling $127.5 million. As of January 30, 2010, the company had approximately $81.1 million at its disposal under the existing Board authorization for repurchase.

 

BJ’s Wholesale Club, which currently operates 187 clubs in 15 states, opened seven new clubs in fiscal 2009, up from four opened in 2008.