Please ensure Javascript is enabled for purposes of website accessibility

Why BJ's Wholesale Club Jumped 64% in the First Half of the Year

By Jeremy Bowman – Jul 9, 2020 at 4:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales at the warehouse club chain boomed during the pandemic.

What happened

Shares of BJ's Wholesale Club (BJ -2.23%) were among the big winners during the first half of the year as the warehouse club chain benefited from consumers stocking up on essentials during the coronavirus pandemic. According to data from S&P Global Market Intelligence, the stock gained 64% over the first six months of the year.

As you can see from the chart below, the stock climbed steadily once the pandemic started and surged on its first-quarter earnings results in May. 

BJ Chart

BJ's data by YCharts.

So what

The first two months of the year were mostly uneventful for BJ's, but the stock started gaining in March as consumers began stocking up on fears about the coronavirus pandemic. Shares got a boost in early March after the company reported fourth-quarter results that were mostly in line with estimates, and noted that its shoppers had begun stocking up on supplies like cleaning products and canned food. The entrance to a BJ's Wholesale Club

Image source: BJ's Wholesale Club.

From that point, the stock climbed steadily through March and April, and it withstood the market crash as investors pinpointed it as a consumer staples play poised to gain on the stocking up behavior while options like restaurants were closed. 

In May the stock jumped 21.7% in a single day after its first-quarter report came out. Comparable sales jumped 27% in the quarter, and adjusted earnings per share surged from $0.26 in the quarter per year ago to $0.69, easily beating estimates at $0.34. Those improvements outperformed peers like Walmart and Costco, showing the company got a strong tailwind from the pandemic.  

Now what

BJ's stock has continued to gain in July as a resurgence in coronavirus cases makes it likely that the company will see elevated demand. Grocery sales have remained high in May and June, rising about 10% from a year ago. 

The pandemic also gives BJ's an opportunity to increase its membership and therefore the efficiency of its warehouses. Membership income growth was much stronger than in the first quarter a year ago, a sign that the crisis is spurring new membership. Growth in its membership base is key as it would provide a long-term benefit to the company, assuming members stay with the club.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

BJ's Wholesale Club Holdings, Inc. Stock Quote
BJ's Wholesale Club Holdings, Inc.
$72.81 (-2.23%) $-1.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.