BJ’s Wholesale Club (BJ) Rises High on Strategies: Apt to Hold
BJ’s Wholesale Club Holdings, Inc. BJ appears well positioned for growth, thanks to its robust business strategies and strong fundamentals. Strong membership trends, assortment initiatives, enhanced digital capabilities, and a strong real estate pipeline consistently contribute to its performance. These factors have been contributing to BJ’s same-store sales growth for some time.
Shares of this Westborough, MA-based player have appreciated 42.6% in one year compared to the industrydown 28.6%. An expected long-term earnings growth rate of 10% coupled with a VGM score of A for this player currently Zacks Rank #3 (Hold) says it all.
For fiscal year 2022, Zacks consensus estimate for BJ’s sales and earnings per share (EPS) suggests growth of 6.4% and 7%, respectively, over the corresponding figures for the fiscal period. ‘last year.
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Detail growth strategies
To drive overall growth, BJ’s Wholesale Club is constantly simplifying assortments, building marketing and merchandising capabilities, expanding into high-demand categories and developing a portfolio of own brands. Private label penetration increased to 23% of merchandise sales in the third quarter of fiscal 2021.
Additionally, management is focused on improving omnichannel capabilities and scaling up delivery services. We note that BJ has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and its mobile app. This allows members to purchase, review products, and digitally add coupons to their membership card.
BJ’s Wholesale Club has directed its resources toward expanding digital capabilities to better engage with members and provide them with a convenient way to shop, including same-day delivery, curbside pickup and online shopping. online, club pickup.
We note that digital sales jumped 44% in the third fiscal quarter, benefiting from BOPIC and curbside pickup services. On a two-year cumulative basis, digital sales have soared 244%. The same drove nearly two percentage points of the commodity mix.
BJ’s Wholesale also holds an exclusive three-year agreement with CommerceHub, a leading e-commerce platform enabling online order fulfillment and delivery solutions. BJ’s partnership with Citizens Pay to provide online financing solutions for large purchases also bodes well.
Despite the aforementioned sustained efforts, BJ’s Wholesale Club is not immune to continued supply chain bottlenecks, including delivery delays and higher transportation costs. Additionally, deleveraged SG&A spending is a concern.
Defying these headwinds, BJ’s strong strategic efforts consistently contribute to growth in membership registrations and renewals, resulting in increased dues revenue, average increase in members per club, and decent growth in sales. comparable clubs. Membership fees jumped 7.7% to $91.5 million in the third quarter of the fiscal year.
3 stocks to consider
Some higher ranked stocks are Central garden and pet HUNDRED, Kroger KR and Costco COST.
Central Garden & Pet, a leader in the pet supplies and lawn and garden supply space, currently has a Zacks Rank #2 (Buy). CENT delivered a four-quarter earnings surprise of 46.1% on average. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks consensus estimate for Central Garden & Pet’s current year sales and EPS suggests growth of 6% and 6.5%, respectively, over corresponding readings for the time of year former.
Kroger, a well-known grocery retailer, currently has a Zacks rank of 2. KR has a four-quarter earnings surprise of 20.3% on average.
Zacks’ consensus estimate for Kroger’s fiscal 2022 sales suggests growth of 1.8% from the corresponding figure released a year ago. KR has an expected EPS growth rate of 8.4% over three to five years.
Costco, a general merchandise retailer, currently carries a No. 2 Zacks rank. COST has a trailing four-quarter earnings surprise of 8.3% on average.
Zacks’ consensus estimate for Costco’s fiscal 2022 sales and EPS suggests growth of 10.9% and 14%, respectively, over the corresponding figures for the prior year. COST forecasts an EPS growth rate of 8.8% over three to five years.
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