What happened

BJ's Wholesale Club (NYSE:BJ) shareholders beat a declining market last month. Shares gained 13% in January compared to a 1% drop in the S&P 500, according to data provided by S&P Global Market Intelligence.

That rally added on to recent positive returns after the retailer gained over 60% in 2020.

A man shops in a warehouse retailing store.

Image source: Getty Images.

So what

BJ's didn't issue any operating updates last month but reports by its peers pointed to a healthy retailing industry. Costco Wholesale said in early January that sales gains sped back up into double-digit territory in December, for example, and Target announced surging growth for the holiday period. Through most of 2020, BJ's had achieved strong sales and earnings gains comparable to these successful stocks, so it's no surprise that investors pushed its stock higher in anticipation of continued positive momentum.

Now what

The wholesale club will announce its fourth-quarter earnings results in early March, and investors are looking for sales to rise by around 14% to $3.9 billion. BJ's challenge from there will be to use its growing membership base and rising cash flow to build a stronger business that branches out from its regional focus in the eastern United States.

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