BJ’s Wholesale Club Holdings, Inc. Announces First Quarter and Fiscal 2021 Results

Rhea-AI Summary

BJ’s Wholesale Club reported its financial results for the first quarter of fiscal 2021, ending May 1, 2021. Net sales reached $3.78 billion, marking a 1.7% increase year-over-year. Membership fee income rose 8.6% to $86.39 million, while total revenues grew 1.9% to $3.87 billion. However, operating income fell 12.2% to $126.25 million, and net income decreased 14.8% to $81.58 million, resulting in an EPS of $0.59. The company refrained from offering detailed guidance for fiscal 2021 due to uncertainty in the market.

Positive

• Membership fee income increased by 8.6% to $86.39 million.
• Adjusted EPS rose by 4.3% to $0.72.

Negative

• Operating income decreased by 12.2% to $126.25 million.
• Net income fell by 14.8% to $81.58 million.
• Comparable club sales, excluding gasoline, dropped by 5.0%.

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks ended May 1, 2021.

"Our team members continue to execute at the highest levels and I’m proud of their hard work and dedication amid a difficult environment. We are pleased to start the year with strong first quarter results, powered by solid execution, market share retention and a continuation of elevated consumer spending," said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club. "As we look ahead, we are confident our business will continue to thrive over the long-term given structural shifts in consumer behavior, the progress we made over the last year and our continued investments in our strategic priorities."

Key Measures for the Thirteen Weeks Ended May 1, 2021 (First Quarter of Fiscal 2021):

BJ'S WHOLESALE CLUB HOLDINGS, INC.

(Amounts in thousands, except per share amounts)

		13 Weeks Ended				13 Weeks Ended
		May 1, 2021				May 2, 2020				% Growth
Net sales		$	3,781,834			$	3,718,040				1.7	%
Membership fee income			86,388				79,565				8.6	%
Total revenues			3,868,222				3,797,605				1.9	%
Operating income			126,254				143,750				(12.2	)%
Income from continuing operations			81,586				95,742				(14.8	)%
Adjusted EBITDA (a)			202,410				193,915				4.4	%
Net income			81,579				95,734				(14.8	)%
EPS (b)			0.59				0.69				(14.5	)%
Adjusted net income (a)			99,694				95,734				4.1	%
Adjusted EPS (a)			0.72				0.69				4.3	%
Basic weighted average shares outstanding			135,709				136,090				(0.3	)%
Diluted weighted average shares outstanding			138,662				138,428				0.2	%

	(a)		See “Note Regarding Non-GAAP Financial Information.”
	(b)		EPS represents earnings per diluted share.

Additional Highlights:

• Comparable club sales for the first quarter of fiscal 2021 increased 0.3% compared to the first quarter of fiscal 2020. Comparable club sales, excluding the impact of gasoline sales, for the first quarter of fiscal 2021 decreased 5.0% compared to the first quarter of fiscal 2020.
• Gross profit decreased to $726.7 million in the first quarter of fiscal 2021 from $736.7 million in the first quarter of fiscal 2020. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased approximately 80 basis points over the first quarter of fiscal 2020. This increase was driven by the mix of our general merchandise sales and continued execution of our category profitability improvement initiative.
• Selling, general and administrative expenses ("SG&A") increased to $599.9 million in the first quarter of fiscal 2021 compared to $590.4 million in the first quarter of fiscal 2020. SG&A included $17.5 million of stock-based compensation expense related to the acceleration of stock awards associated with the passing of Lee Delaney ("acceleration of stock awards"). In addition, SG&A included $2.3 million of severance charges associated with labor reductions that resulted from the realignment of our field operations ("severance charges").
• Operating income decreased to $126.3 million, or 3.3% of total revenues in the first quarter of fiscal 2021, compared to $143.8 million, or 3.8% of total revenues in the first quarter of fiscal 2020. Operating income included $17.5 million of stock-based compensation expense related to the acceleration of stock awards. In addition, operating income included $2.3 million of severance charges.
• Interest expense, net, decreased to $19.3 million in the first quarter of fiscal 2021 compared to $21.8 million in the first quarter of fiscal 2020. Interest expense in the first quarter of fiscal 2021 included $4.7 million write-off of accumulated other comprehensive income and $0.7 million write-off of deferred financing costs associated with the partial paydown of the Company’s First Lien Term Loan. The decrease in interest expense was driven by continued de-levering.
• Income tax expense was $25.4 million in the first quarter of fiscal 2021 compared to income tax expense of $26.2 million in the first quarter of fiscal 2020. The first quarter of fiscal 2021 included a benefit of $3.1 million from excess tax benefits related to stock-based compensation compared to $4.5 million in the first quarter of fiscal 2020.
• Under our share repurchase program, we repurchased 315,000 shares of common stock, totaling $14.0 million in the first quarter of fiscal 2021.

Fiscal 2021 Ending January 29, 2022 Outlook

"Given the level of uncertainty associated with the evolution of the pandemic and consumer behavior, fiscal 2021 remains difficult to forecast," said Laura Felice, Executive Vice President, Chief Financial Officer, BJ's Wholesale Club. "As a result, we will continue to refrain from offering formal detailed guidance."

Conference Call Details

A conference call to discuss the first quarter of fiscal 2021 financial results is scheduled for today, May 20, 2021, at 8:30 A.M. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-274-0290 (international callers please dial 647-689-5405) approximately 10 minutes prior to the start of the call and to reference conference ID 7581445. A live audio webcast of the conference call will be available online at https://investors.bjs.com.

A recorded replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online at https://investors.bjs.com and by dialing 416-621-4642 and entering the access code 7581445. The recorded replay will be available until May 28, 2021 and an online archive of the webcast will be available for one year.

About BJ’s Wholesale Club Holdings, Inc.

Headquartered in Westborough, Massachusetts, BJ's Wholesale Club Holdings, Inc. is a leading operator of membership warehouse clubs in the Eastern United States. The company currently operates 221 clubs and 151 BJ's Gas® locations in 17 states.

Non-GAAP Financial Measures

We refer to certain financial measures that are not recognized under United States generally accepted accounting principles (“GAAP”). Please see “Note Regarding Non-GAAP Financial Information" and “Reconciliation of GAAP to Non-GAAP Financial Information” below for additional information and a reconciliation of the Non-GAAP financial measures to the most comparable GAAP financial measures.

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

		13 Weeks Ended				13 Weeks Ended
		May 1, 2021				May 2, 2020
Net sales		$	3,781,834			$	3,718,040
Membership fee income			86,388				79,565
Total revenues			3,868,222				3,797,605
Cost of sales			3,141,497				3,060,893
Selling, general and administrative expenses			599,910				590,361
Pre-opening expense			561				2,601
Operating income			126,254				143,750
Interest expense, net			19,285				21,844
Income from continuing operations before income taxes			106,969				121,906
Provision for income taxes			25,383				26,164
Income from continuing operations			81,586				95,742
Loss from discontinued operations, net of income taxes			(7	)			(8	)
Net income		$	81,579			$	95,734
Income per share attributable to common stockholders - basic:
Income from continuing operations		$	0.60			$	0.70
Loss from discontinued operations			—				—
Net income		$	0.60			$	0.70
Income per share attributable to common stockholders - diluted:
Income from continuing operations		$	0.59			$	0.69
Loss from discontinued operations			—				—
Net income		$	0.59			$	0.69
Weighted average number of shares outstanding:
Basic			135,709				136,090
Diluted			138,662				138,428

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

		May 1, 2021				May 2, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	62,954			$	132,915
Accounts receivable, net			197,991				193,884
Merchandise inventories			1,120,334				1,024,937
Prepaid expense and other current assets			54,258				46,631
Total current assets			1,435,537				1,398,367
Operating lease right-of-use assets, net			2,119,629				2,087,902
Property and equipment, net			815,303				753,297
Goodwill			924,134				924,134
Intangibles, net			132,502				144,019
Deferred taxes			3,349				—
Other assets			18,752				20,350
Total assets		$	5,449,206			$	5,328,069
LIABILITIES
Current liabilities:
Current portion of long-term debt		$	210,000			$	15,377
Current portion of operating lease liabilities			132,869				125,976
Accounts payable			1,023,140				990,420
Accrued expenses and other current liabilities			669,924				588,431
Total current liabilities			2,035,933				1,720,204
Long-term lease liabilities			2,050,950				2,016,206
Long-term debt			747,311				1,334,795
Deferred income taxes			45,529				42,369
Other noncurrent liabilities			155,959				181,998
STOCKHOLDERS' EQUITY			413,524				32,497
Total liabilities and stockholders' equity		$	5,449,206			$	5,328,069

FAQ

What were BJ's Wholesale Club's earnings results for Q1 2021?

BJ's Wholesale Club reported net sales of $3.78 billion, with an EPS of $0.59 for Q1 2021.

How did BJ's membership fee income change in Q1 2021?

Membership fee income increased by 8.6% to $86.39 million in Q1 2021 compared to the previous year.

What challenges did BJ's Wholesale Club face in Q1 2021?

BJ's faced a decrease in operating income and net income, with the company unable to provide detailed guidance for fiscal 2021 due to market uncertainty.