BJ's Wholesale (NYSE:BJ) has been a huge beneficiary of COVID-19-related changes in shopper behavior. The warehouse retailing giant is enjoying its best sales growth on record and appears to be winning market share from rivals like Walmart (NYSE:WMT) and Costco (NASDAQ:COST).

In a conference call with Wall Street investors, executives credited sweeping changes they made to the business in recent months, including racing into the online fulfillment game and adopting new sourcing strategies in areas like food and apparel.

Management couldn't provide an outlook for the next few months, but it did predict more aggressive adjustments to the business that could deliver solid returns for investors.

Let's take a closer look.

Customers consolidating their trips

We had significantly more members shopping our clubs, consolidating their trips, and growing their baskets. These trends were relatively consistent across all of our geographies.
-- CFO Bob Eddy

BJ's benefited from the same trends that have lifted most big-box consumer staples retailers since the start of the pandemic. People are looking to make fewer shopping trips and are patronizing stores that have a convenient connection between the online and in-store experience.

A grocery shopper pushes a cart through an aisle.

Image source: Getty Images.

The retailer is doing better than its rivals in some key growth areas, though. Comparable-store sales rose by over 20% in each month of the quarter. Walmart just announced a 9% increase for its latest quarter and Costco expanded by 16% in the U.S. market in July.

BJ's credits its nimble sourcing approach, which included the quick addition of new suppliers across popular categories like general merchandise, groceries, and apparel. These moves allowed it to avoid many of the out-of-stock challenges that pressured its peers.

A transformational period of cash flow

Over $600 million in free cash flow has enabled us to repay nearly $500 million in debt, repurchase nearly $40 million in shares, and accumulate nearly $170 million in cash on our balance sheet. This has been truly transformational.
-- Eddy

Operating income is up 81% through the first six months of the fiscal year, and those gushing earnings have put the business on a much sounder financial footing. Executives are using the resources to invest in growth initiatives while paying down debt and reducing the outstanding share count. The good news is that these improvements should support earnings even if the industry endures a pullback related to the current recession. "What we do know is that our business has strengthened significantly," Eddy explained.

A different retailer

We are not the company we were six months ago, six quarters ago, or six years ago. We have added more members and are accelerating investments to improve all facets of our business. Although we benefited from increased [unemployment] and stimulus benefits in the last six months, we have built an underlying strength in the business that will be sustained in the future even after [unemployment] and stimulus benefits are behind us.
-- Eddy

Management didn't issue an official outlook for the rest of 2020, but executives did say they expect strong sales growth to continue, given that comp growth is still running at over 20% into early August. Gross profit margin might contract slightly as BJ's invests in higher wages and price cuts.

Those lower prices are the best tool the retailer has as it tries to convince most of its newest members to stay loyal even after the COVID-19 threat abates. Combined with its merchandising wins, that asset could allow BJ's to begin a new era of steady market share growth. Rivals like Costco won't take those losses in stride, and so investors will want to watch the next few earnings reports for signs of a clear winner in this battle.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.