BJ's Wholesale Club Holdings (NYSE:BJ) notched record adjusted EBITDA of $165.4 million in its fiscal fourth-quarter results, issued on Wednesday. After removing the effect of an extra week in the comparable fiscal fourth quarter of 2017, revenue rose 2.8% to $3.3 billion, and comparable-club sales excluding gasoline improved by 2.9%. In the company's earnings conference call, CEO Chris Baldwin discussed success factors behind the robust quarter. Below, we'll walk through three of his comments from the call that provide detail behind the company's recent momentum.

1. Membership is currently a growth catalyst

We ended the year with all-time highs for paid members and record highs for renewal rates and membership fee income. We also achieved record enrollment and easy renewal, and in our highest year memberships.  

-- Baldwin

BJ's business model is currently benefiting from a surge in membership growth. Baldwin noted that nearly a quarter of its customers are enrolled in premium memberships, and over half are enrolled in the company's "easy renewal" program, in which renewal fees are automatically charged to members' designated debit or credit cards.

Membership now exceeds 5.5 million, and the record renewal rate Baldwin refers to hit an impressive 87% in the just-concluded quarter. Management is bent on attracting younger members, and has invested in digital assets to reach these potential customers while facilitating renewals from existing customers. Baldwin said that in fiscal 2018, BJ's doubled the number of members it acquired through digital channels.  

Woman shopping in the freezer section of a warehouse club store.

Image source: Getty Images.

2. General merchandise continues to drive traffic

I mentioned before that our current performance is the result of investments we began making several years ago. Nowhere is this more true than in our general merchandise business, where we started our assortment transformation. [General merchandise comps] were up 5% in the quarter, a continuation of our strong third-quarter performance. 

-- Baldwin

BJ's retail store footprints follow four sales categories that are structured around basic club shopper needs: perishables (meat, dairy, produce, frozen foods, and bakery products); nonedible grocery (household products, beauty, adult and baby care, and pet food); edible grocery (packaged foods); and general merchandise (small appliances, lighting, electronics, televisions, apparel, etc.).

In the fourth quarter, general merchandise proved the most effective traffic driver of the four categories. The 5% year-over-year comps gain in general merchandise well outpaced the company's remaining sales categories. 

General merchandise revenue was led by TV, apparel, and houseware sales. Baldwin singled out TV sales as a particularly effective traffic generator. He noted that the company has recently invested in improving TV signals throughout its locations, which has allowed it to better showcase high-definition sets.

It's perhaps counterintuitive that big-ticket items can be as influential on traffic patterns as weekly grocery necessities, but the lure of significant discounts in the minds of club shoppers is apparently quite strong in a moderately expanding economy.

Check out the latest earnings call transcript for BJ's Wholesale Club Holdings.

3. Unit growth is ramping up

... [W]e plan to expand our strategic footprint. We are set to open our new club in Clearwater, Florida, in just a few weeks and we're very pleased with our membership acquisition work so far. ... We're also making progress in Eastern Michigan. They are on track to open two clubs there later this year. We see this region as a great fit for us given that our target is the smart saving family, and we continue to actively look for additional growth opportunities in this region.

-- Baldwin

After conducting a successful initial public offering in June of 2018, B.J.'s is set to ramp up the pace of its store expansion to meet a goal of adding 15 to 20 new clubs over the next five years on a base of 216 stores.

This year, the company plans to add four to five new clubs and eight to 10 new gas stations (on a base of approximately 140 existing gas stations). The locations Baldwin discusses above are both significant in that they represent a widening of the company's geographical breadth away from its dense concentration in the Northeast.

BJ's now has a number of locations in Florida anchored by distribution centers in Jacksonville and Orlando. The company has recently used a more data-driven approach to club expansion, and the choice of densely populated Eastern Michigan as a bridge to westward expansion seems sensible. 

Thus, the steady widening of BJ's regional footprint should enhance a model that is already benefiting from record membership revenue and appreciable comps growth.