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BJ's Wholesale Club Pops Over 16% Thursday Morning After Q2 Earnings Top Estimates

By Daniel Miller – Aug 22, 2019 at 11:31AM

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There was more to BJ's solid second quarter than its earnings beat.

What happened

Shares of BJ's Wholesale Club (BJ -2.52%), a membership-based wholesale operator that aims to deliver discounted groceries compared to traditional grocery chains, jumped more than 16% Thursday morning after delivering better-than-expected fiscal second-quarter profits.

So what

While the retailer posted better-than-expected profits, its top line fell just shy of estimates. BJ's revenue increased 1.2% to $3.35 billion, just short of analysts' estimates calling for $3.39 billion. On the bright side, membership fee income increased 6% to $74.7 million, and same-store sales, excluding gasoline sales, increased 1.6% -- the latter figure meeting analysts' estimates. On the bottom line, adjusted earnings per share jumped to $0.39, better than the prior year's $0.31 per share and ahead of analysts' estimates calling for $0.37 per share.

"Second quarter results for sales and earnings were in line with our expectations," said Christopher J. Baldwin, chairman and chief executive officer, in a press release. "We delivered improved margins and continued to grow earnings as we executed against our strategic priorities."

Front of a BJ's store in Florida.

BJ's Wholesale Club store front in Clearwater, FL. Image source: BJ's Wholesale Club.

Now what

It was a solid second quarter, and management affirmed its full-year 2019 guidance for sales of $12.9 billion to $13.2 billion and earnings per share between $1.42 and $1.50.

Beyond the company's top- and bottom-line results, there were a couple of other factors to note. Sales were stronger in the second half of the second quarter when weather improved, and that momentum could lead to a strong start to the third quarter. Another positive takeaway was the company's 6% growth in membership fee income, which management has previously noted will be a growth catalyst for the company.

Management will now focus on driving store traffic with general merchandise such as TVs (which have been noticeably effective at driving traffic), apparel, and housewares sales and on expanding its store count.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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BJ's Wholesale Club Holdings, Inc. Stock Quote
BJ's Wholesale Club Holdings, Inc.
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