Record first quarter net income and adjusted
EBITDA led by strong growth in traffic, market share and
merchandise margin
First Quarter Fiscal 2023 Highlights
- Comparable club sales, excluding gasoline sales, increased by
5.7% year-over-year
- Digitally enabled comparable sales growth was 19.0%
year-over-year
- Membership fee income increased by 6.1% year-over-year to
$102.5 million
- Merchandise gross margin rate increased 100 basis points
year-over-year
- Earnings per diluted share and adjusted earnings per diluted
share of $0.85
- Income from continuing operations increased by 3.1%
year-over-year to $116.0 million
- Adjusted EBITDA increased by 16.4% year-over-year to $257.0
million
- The Company opened two new clubs and three new gas
stations
- The Company successfully launched its co-branded credit card
with Capital One
BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company")
today announced its financial results for the thirteen weeks ended
April 29, 2023.
“We reported a record first quarter in net income and adjusted
EBITDA, demonstrating the power of our business model and the
warehouse club channel,” said Bob Eddy, President and Chief
Executive Officer, BJ’s Wholesale Club. “We drove topline growth
bolstered by robust traffic and share gains. We also made
significant improvements on our merchandise margins largely due to
waning supply chain pressures and moderating inflation. We remain
focused on our strategic priorities and believe that we are
well-positioned to maximize long-term shareholder value.”
Key Measures for the Thirteen Weeks Ended April 29, 2023
(First Quarter Fiscal 2023):
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
(Amounts in thousands, except per share
amounts)
13 Weeks Ended April 29,
2023
13 Weeks Ended April 30,
2022
% Growth
Net sales
$
4,620,620
$
4,399,810
5.0 %
Membership fee income
102,522
96,625
6.1 %
Total revenues
4,723,142
4,496,435
5.0 %
Operating income
186,770
150,317
24.3 %
Income from continuing operations
115,988
112,457
3.1 %
Adjusted EBITDA (a)
256,983
220,801
16.4 %
Net income
116,077
112,450
3.2 %
EPS (b)
0.85
0.82
3.7 %
Adjusted net income (a)
115,646
118,426
(2.3) %
Adjusted EPS (a)
0.85
0.87
(2.3) %
Basic weighted-average shares
outstanding
133,312
134,244
Diluted weighted-average shares
outstanding
135,902
136,702
(a) See “Note Regarding Non-GAAP Financial Information.” (b) EPS
represents net income per diluted share.
Additional Highlights:
- Total comparable club sales increased by 2.0% in the first
quarter of fiscal 2023 compared to the first quarter of fiscal
2022. Excluding the impact of gasoline sales, comparable club sales
increased by 5.7% in the first quarter of fiscal 2023 compared to
the same period in fiscal 2022.
- Gross profit increased to $880.0 million in the first quarter
of fiscal 2023 from $790.6 million in the first quarter of fiscal
2022. Merchandise gross margin rate, which excludes gasoline sales
and membership fee income, increased 100 basis points over the same
quarter of fiscal 2022. Merchandise margins were impacted by
inflation, moderated supply chain costs and improved inventory
management.
- Selling, general and administrative expenses ("SG&A")
increased to $689.3 million in the first quarter of fiscal 2023
compared to $635.4 million in the first quarter of fiscal 2022. The
increase was primarily driven by increased labor and occupancy
costs as a result of new club and gas station openings in addition
to other investments to drive strategic priorities.
- Operating income increased to $186.8 million, or 4.0% of total
revenues, in the first quarter of fiscal 2023 compared to $150.3
million, or 3.3% of total revenues, in the first quarter of fiscal
2022.
- Income from continuing operations before income taxes increased
to $172.1 million in the first quarter of fiscal 2023 compared to
$142.5 million in the first quarter of fiscal 2022.
- The effective tax rate increased to 32.6% in the first quarter
of fiscal 2023 compared to 21.1% in the first quarter of fiscal
2022. Income tax expense increased to $56.1 million in the first
quarter of fiscal 2023 compared to $30.0 million in the first
quarter of fiscal 2022, as a result of higher taxable income as
well as a $21.6 million unexpected tax expense, approximately half
of which should have been applied in prior periods in immaterial
amounts.
- Net income increased to $116.1 million in the first quarter of
fiscal 2023 compared to $112.5 million in the first quarter of
fiscal 2022.
- Adjusted EBITDA increased 16.4% to $257.0 million in the first
quarter of fiscal 2023 compared to $220.8 million in the first
quarter of fiscal 2022.
- Inventory increased $69.9 million to $1.53 billion at the end
of the first quarter of fiscal 2023. Inventory balances at the end
of the first quarter of fiscal 2023 include $147.4 million of
perishable inventory related to the acquisition of four
distribution centers and related private transportation fleet from
Burris Logistics in Q2 of fiscal 2022. Excluding inventory in our
perishable distribution centers, inventory balances declined $77.5
million from Q1 fiscal 2022 to Q1 fiscal 2023.
- Under its existing share repurchase program, the Company
repurchased 204,040 shares of common stock, totaling $15.3 million
in the first quarter of fiscal 2023.
- The Company launched its new credit card program with Capital
One and Mastercard on February 27, 2023, officially named the BJ's
One Mastercard® program. We believe this program will provide a
first-class rewards and customer service experience, delivering
more value back to its members. The program will offer up to 5%
rewards on in-club earnings and up to 2% rewards on out-of-club
earnings as well as up to 15 cents off/gallon at BJ’s Gas.
Fiscal 2023 Ending February 3, 2024 Outlook
“Our fiscal 2023 outlook on our business remains unchanged given
the sustained strength in our grocery business and our gains in
market share,” said Laura Felice, Executive Vice President, Chief
Financial Officer, BJ's Wholesale Club. “We are confident that the
strength of our core business and our intense focus on delivering
value will continue to drive long-term growth.”
Conference Call Details
A conference call to discuss the first quarter of fiscal 2023
financial results is scheduled for today, May 23, 2023, at 8:00
A.M. Eastern Time. The live audio webcast of the call can be
accessed under the “Events & Presentations” section of the
Company’s investor relations website at https://investors.bjs.com
and will remain available for one year. Participants may also dial
(833) 470-1428 within the U.S. or (929) 526-1599 outside the U.S.
and reference conference ID 230611. A telephonic replay will be
available two hours after the conclusion of the call for one week
and can be accessed by dialing (929) 458-6194 or (866) 813-9403 and
referencing conference ID 817043.
About BJ’s Wholesale Club Holdings, Inc.
Headquartered in Marlborough, Massachusetts, BJ’s Wholesale Club
Holdings, Inc. (NYSE: BJ) is a leading operator of membership
warehouse clubs primarily in the Eastern United States focused on
delivering significant value to its members. The Company provides a
curated assortment of grocery, general merchandise, gasoline and
ancillary services to offer a differentiated shopping experience
that is further enhanced by its omnichannel capabilities. The
Company pioneered the warehouse club model in New England in 1984
and currently operates 237 clubs and 167 BJ's Gas® locations in 18
states. For more information, please visit us at www.bjs.com or on
Facebook, Twitter or Instagram.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including, without limitation,
statements regarding our strategic priorities; our anticipated
fiscal 2023 outlook; and our future progress, as well as statements
that include the words “expect,” “intend,” “plan,” “believe,”
“project,” “forecast,” “estimate,” “may,” “should,” “anticipate”
and similar statements of a future or forward-looking nature. These
forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees,
but involve known and unknown risks, uncertainties and other
important factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to:
uncertainties in the financial markets, including, without
limitation, as a result of disruptions and instability in the
banking and financial services industries, consumer and small
business spending patterns and debt levels; our dependence on
having a large and loyal membership; domestic and international
economic conditions, including inflation and exchange rates; our
ability to procure the merchandise we sell at the best possible
prices; the effects of competition and regulation; our dependence
on vendors to supply us with quality merchandise at the right time
and at the right price; breaches of security or privacy of member
or business information; conditions affecting the acquisition,
development, ownership or use of real estate; our capital spending;
actions of vendors; our ability to attract and retain a qualified
management team and other team members; costs associated with
employees (generally including health care costs), energy and
certain commodities, geopolitical conditions (including tariffs);
changes in our product mix or in our revenues from gasoline sales;
our failure to successfully maintain a relevant omnichannel
experience for our members; risks related to our growth strategy to
open new clubs; risks related to our e-commerce business; our
ability to grow our BJ's One Mastercard® program; and other
important factors discussed under the caption “Risk Factors” in our
Form 10-K filed with the U.S. Securities and Exchange Commission
(“SEC”) on March 16, 2023, which is accessible on the SEC’s website
at www.sec.gov. These and other important factors could cause
actual results to differ materially from those indicated by the
forward-looking statements made in this press release. Any such
forward-looking statements represent management’s estimates as of
the date of this press release. While we may elect to update such
forward-looking statements at some point in the future, unless
required by law, we disclaim any obligation to do so, even if
subsequent events cause our views to change. Thus, one should not
assume that our silence over time means that actual events are
bearing out as expressed or implied in such forward-looking
statements. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to the
date of this press release.
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)
Thirteen Weeks Ended
April 29, 2023
Thirteen Weeks Ended
April 30, 2022
Net sales
$
4,620,620
$
4,399,810
Membership fee income
102,522
96,625
Total revenues
4,723,142
4,496,435
Cost of sales
3,843,150
3,705,838
Selling, general and administrative
expenses
689,328
635,380
Pre-opening expense
3,894
4,900
Operating income
186,770
150,317
Interest expense, net
14,690
7,841
Income from continuing operations before
income taxes
172,080
142,476
Provision for income taxes
56,092
30,019
Income from continuing operations
115,988
112,457
Income (loss) from discontinued
operations, net of income taxes
89
(7)
Net income
$
116,077
$
112,450
Income per share attributable to common
stockholders - basic:
Income from continuing operations
$
0.87
$
0.84
Income from discontinued operations
—
—
Net income
$
0.87
$
0.84
Income per share attributable to common
stockholders - diluted:
Income from continuing operations
$
0.85
$
0.82
Income from discontinued operations
—
—
Net income
$
0.85
$
0.82
Weighted-average number of shares
outstanding:
Basic
133,312
134,244
Diluted
135,902
136,702
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Amounts in thousands, except per share
amounts)
(Unaudited)
April 29, 2023
April 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
23,387
$
37,952
Accounts receivable, net
217,866
210,405
Merchandise inventories
1,532,006
1,462,098
Prepaid expense and other current
assets
69,048
58,814
Total current assets
1,842,307
1,769,269
Operating lease right-of-use assets,
net
2,124,621
2,177,777
Property and equipment, net
1,364,815
989,658
Goodwill
1,008,816
924,134
Intangibles, net
113,536
122,332
Deferred taxes
6,728
4,595
Other assets
33,672
22,240
Total assets
$
6,494,495
$
6,010,005
LIABILITIES
Current liabilities:
Short-term debt
$
400,000
$
80,000
Current portion of operating lease
liabilities
178,939
169,423
Accounts payable
1,281,676
1,267,102
Accrued expenses and other current
liabilities
758,724
692,530
Total current liabilities
2,619,339
2,209,055
Long-term operating lease liabilities
2,037,844
2,107,532
Long-term debt
448,004
748,987
Deferred income taxes
66,699
58,511
Other non-current liabilities
190,883
164,578
STOCKHOLDERS' EQUITY
1,131,726
721,342
Total liabilities and stockholders'
equity
$
6,494,495
$
6,010,005
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in thousands, except per share
amounts)
(Unaudited)
Thirteen Weeks Ended April 29,
2023
Thirteen Weeks Ended
April 30, 2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income
$
116,077
$
112,450
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
54,190
47,109
Amortization of debt issuance costs and
accretion of original issue discount
324
832
Stock-based compensation expense
10,007
9,115
Deferred income tax provision
14,445
6,299
Changes in operating leases and other
non-cash items
(750)
29,892
Increase (decrease) in cash due to changes
in:
Accounts receivable
21,871
(36,454)
Merchandise inventories
(153,455)
(219,163)
Accounts payable
85,979
154,319
Accrued expenses and other current
liabilities
(4,977)
(58,780)
Other operating assets and liabilities,
net
(24,579)
(1,311)
Net cash provided by operating
activities
119,132
44,308
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property and equipment, net
of disposals and proceeds from sale leaseback transactions
(92,084)
(90,533)
Net cash used in investing activities
(92,084)
(90,533)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from revolving lines of
credit
149,000
115,000
Payments on revolving lines of credit
(154,000)
(35,000)
Net cash received from stock option
exercises
1,675
2,306
Acquisition of treasury stock
(42,369)
(51,342)
Proceeds from financing obligations
9,104
8,072
Other financing activities
(986)
(295)
Net cash (used in) provided by financing
activities
(37,576)
38,741
Net decrease in cash and cash
equivalents
(10,528)
(7,484)
Cash and cash equivalents at beginning of
period
33,915
45,436
Cash and cash equivalents at end of
period
$
23,387
$
37,952
Note Regarding Non-GAAP Financial Information
This press release includes financial measures that are not
calculated in accordance with GAAP, including adjusted net income,
adjusted net income per diluted share, adjusted EBITDA, free cash
flow, net debt and net debt to last twelve months (“LTM”) adjusted
EBITDA.
We define adjusted net income as net income attributable to
common stockholders adjusted for: acquisition and integration
costs; home office transition costs; other adjustments and the tax
impact of the foregoing adjustments on net income.
We define adjusted net income per diluted share as adjusted net
income divided by the weighted-average diluted shares
outstanding.
We define adjusted EBITDA as income from continuing operations
before interest expense, net, provision for income taxes and
depreciation and amortization, adjusted for the impact of certain
other items, including: stock-based compensation expense;
pre-opening expenses; non-cash rent; acquisition and integration
costs and other adjustments.
We define free cash flow as net cash provided by operating
activities less additions to property and equipment, net of
disposals, plus proceeds from sale leaseback transactions.
We define net debt as total debt outstanding less cash and cash
equivalents.
We define net debt to LTM adjusted EBITDA as net debt at the
balance sheet date divided by adjusted EBITDA for the trailing
twelve-month period.
We present adjusted net income, adjusted net income per diluted
share and adjusted EBITDA, which are not recognized financial
measures under GAAP, because we believe such measures assist
investors and analysts in comparing our operating performance
across reporting periods on a consistent basis by excluding items
that we do not believe are indicative of our core operating
performance. In addition, adjusted EBITDA excludes pre-opening
expenses, because we do not believe these expenses are indicative
of the underlying operating performance of our clubs. The amount
and timing of pre-opening expenses are dependent on, among other
things, the size of new clubs opened and the number of new clubs
opened during any given period.
Management believes that adjusted net income, adjusted net
income per diluted share and adjusted EBITDA are helpful in
highlighting trends in our core operating performance compared to
other measures, which can differ significantly depending on
long-term strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate and capital investments.
We use adjusted net income, adjusted net income per diluted share
and adjusted EBITDA to supplement GAAP measures of performance in
the evaluation of the effectiveness of our business strategies; to
make budgeting decisions; and to compare our performance against
that of other peer companies using similar measures. We also use
adjusted EBITDA in connection with establishing discretionary
annual incentive compensation.
We present free cash flow, which is not a recognized financial
measure under GAAP, because we use it to report to our Board of
Directors and we believe it assists investors and analysts in
evaluating our liquidity. Free cash flow should not be considered
as an alternative to cash flows from operations as a liquidity
measure. We present net debt and net debt to LTM adjusted EBITDA,
which are not recognized as financial measures under GAAP, because
we use them to report to our Board of Directors and we believe they
assist investors and analysts in evaluating our borrowing capacity.
Net debt to LTM adjusted EBITDA is a key financial measure that is
used by management to assess the borrowing capacity of the
Company.
You are encouraged to evaluate these adjustments and the reasons
we consider them appropriate for supplemental analysis. In
evaluating adjusted net income, adjusted net income per diluted
share, adjusted EBITDA and net debt to LTM adjusted EBITDA, you
should be aware that in the future we may incur expenses that are
the same as or like some of the adjustments in our presentation of
these metrics. Our presentation of adjusted net income, adjusted
net income per diluted share, adjusted EBITDA, free cash flow, net
debt and net debt to LTM adjusted EBITDA should not be considered
as alternatives to any other measure derived in accordance with
GAAP and they should not be construed as an inference that the
Company’s future results will be unaffected by unusual or
non-recurring items. There can be no assurance that we will not
modify the presentation of adjusted net income, adjusted net income
per diluted share, adjusted EBITDA or net debt to LTM adjusted
EBITDA in the future, and any such modification may be material. In
addition, adjusted net income, adjusted net income per diluted
share, adjusted EBITDA, free cash flow, net debt and net debt to
LTM adjusted EBITDA may not be comparable to similarly titled
measures used by other companies in our industry or across
different industries. Additionally, adjusted net income, adjusted
net income per diluted share, adjusted EBITDA, free cash flow, net
debt and net debt to LTM adjusted EBITDA have limitations as
analytical tools, and you should not consider them in isolation or
as a substitute for analysis of our results as reported under
GAAP.
Reconciliation of GAAP to Non-GAAP Financial
Information
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
Reconciliation of net income to
adjusted net income and adjusted net income per diluted
share
(Amounts in thousands, except per share
amounts)
(Unaudited)
13 Weeks Ended April
29, 2023
13 Weeks Ended April
30, 2022
Net income as reported
$
116,077
$
112,450
Adjustments:
Acquisition and integration costs (a)
—
7,879
Home office transition costs (b)
—
599
Other adjustments (c)
(601)
(165)
Tax impact of adjustments to net income
(d)
170
(2,337)
Adjusted net income
$
115,646
$
118,426
Weighted-average diluted shares
outstanding
135,902
136,702
Adjusted EPS (e)
$
0.85
$
0.87
(a) Represents costs related to the
acquisition and integration of assets from Burris Logistics,
including due diligence, legal, and other consulting expenses.
(b) Represents incremental rent expense as
the Company transitioned home office locations in fiscal 2022.
(c) Other non-cash items related to the
reclassification into earnings of accumulated other comprehensive
income/ loss associated with the de-designation of hedge accounting
and other adjustments.
(d) Represents the tax effect of the above
adjustments at a statutory tax rate of approximately 28%.
(e) Adjusted EPS is measured using
weighted-average diluted shares outstanding
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
Reconciliation to Adjusted
EBITDA
(Amounts in thousands)
(Unaudited)
13 Weeks Ended April 29,
2023
13 Weeks Ended April 30,
2022
Income from continuing
operations
$
115,988
$
112,457
Interest expense, net
14,690
7,841
Provision for income taxes
56,092
30,019
Depreciation and amortization
54,190
47,109
Stock-based compensation expense
10,007
9,115
Pre-opening expenses (a)
3,894
4,900
Non-cash rent (b)
1,551
846
Acquisition and integration costs (c)
—
7,879
Other adjustments (d)
571
635
Adjusted EBITDA
$
256,983
$
220,801
(a) Represents direct incremental costs of
opening or relocating a facility that are charged to operations as
incurred.
(b) Consists of an adjustment to remove
the non-cash portion of rent expense.
(c) Represents costs related to the
acquisition and integration of assets from Burris Logistics,
including due diligence, legal, and other consulting expenses.
(d) Other non-cash items, including
non-cash accretion on asset retirement obligations, obligations
associated with our post-retirement medical plan and incremental
rent expense as the Company transitioned home office locations in
fiscal 2022.
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
Reconciliation to Free Cash
Flow
(Amounts in thousands)
(Unaudited)
13 Weeks Ended April
29, 2023
13 Weeks Ended April
30, 2022
Net cash provided by operating
activities
$
119,132
$
44,308
Less: Additions to property and equipment,
net of disposals
92,084
90,533
Plus: Proceeds from sale leaseback
transactions
—
—
Free cash flow
$
27,048
$
(46,225)
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
Reconciliation of Net Debt and Net Debt
to LTM adjusted EBITDA
(Amounts in thousands)
(Unaudited)
April 29, 2023
Total debt
$
848,004
Less: Cash and cash equivalents
23,387
Net Debt
$
824,617
Income from continuing operations
$
517,793
Interest expense, net
54,311
Provision for income taxes
202,335
Depreciation and amortization
208,015
Stock-based compensation expense
43,509
Pre-opening expenses
23,927
Non-cash rent
4,696
Acquisition and integration costs
4,445
Home office transition costs
14,706
Other adjustments
578
Adjusted EBITDA
$
1,074,315
Net debt to LTM adjusted EBITDA
0.8x
See descriptions of adjustments in the
“Reconciliation to Adjusted EBITDA (unaudited)” table above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230523005377/en/
Investor Contact: Catherine Park Vice President, Investor
Relations cpark@bjs.com 774-512-6744
Media Contact: Peter Frangie Vice President, Corporate
Communications pfrangie@bjs.com 774-512-6978
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