BJ’s Wholesale Club Inc. (BJ), a leading warehouse club operator in the United States, recently posted healthy sales results for the four-week period ended October 30, 2010.

After registering a growth of 1.5% in September 2010, BJ’s experienced comparable club sales growth of 3.7% in October. For the third quarter of 2010, comps climbed 2.5%. Rising gasoline prices positively impacted the comparable club sales by 1.5% during the reported month and by 1% in the quarter.

The company witnessed increased comparable club sales in all the four weeks, with minimum growth in the third week and maximum growth in the fourth week. Excluding gasoline sales, BJ’s merchandise comparable club sales for October climbed 2.2% and for the third-quarter rose 1.5%.

Net sales for October jumped 6.3% to $812.7 million from $764.7 million in the same month last year. In the third quarter, sales climbed 4.8% to $2,569 million from $2,450.4 million posted in the same period last year.

Traffic (excluding gasoline sales) rose by about 2% in October 2010 and for the third quarter. The average transaction amount remained flat with the same month last year but dropped 1% for the quarter.

Heavy job losses and the recent economic downturn have changed the way consumers used to shop. BJ’s hinted that food sales grew 5% for October, and 4% for the quarter, which contributed to the growth of comparable club sales. Sales of general merchandise slid 3% for both the month and the quarter.

By categories, dairy, deli, frozen, juices, meat, milk, prepared foods, produce, small appliances and sugar reported robust sales. On the contrary, apparel, automotive, baby food, diapers, household chemicals, pre-recorded video, televisions and toys delivered sluggish sales.

BJ’s, which faces stiff competition from Costco Wholesale Corporation (COST), currently operates 190 clubs in 15 states.

Currently, we have an Underperform rating on BJ’s. Moreover, the company has a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating.

 
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