BJ's Wholesale Club (BJ 1.66%) is a more attractive business today than it was before the pandemic struck. The retailer is winning market share in a competitive niche that has it battling with giants like Walmart (WMT 0.10%) and Costco (COST 1.17%). And its latest earnings report shows how BJ's can stand out from these peers even as it works to create its own national footprint.

Let's look at three key highlights from that earnings announcement.

An employee restocks fresh vegetables.

Image source: Getty Images.

1. Two-year sales growth: 21%

BJ's sales declined as compared to last year's surging results, as expected. Comparable-store sales were down 3% after excluding gasoline price shifts, marking only a modest rebound compared to last quarter's 5% drop.

Zoom out a bit and you'll see confirmation of BJ's expanding market share. On a two-year basis, which smooths out the impact of the pandemic surge, comps are up 21%. Walmart (which operates Sam's Clubs as part of its retail holdings) announced earlier in the week that its two-year bounce was 14.5%. BJ's can celebrate having won some ground against even leading retailers like that. "We ... expanded our market share and continued to benefit from elevated consumer spending trends," CEO Bob Eddy said in a press release.

2. Gross profit margin: up 0.3 percentage points

Inflationary times like these tend to pressure earnings for warehouse retailers because low prices are a core reason shoppers visit these big-box giants. Yet BJ's hit the right balance between price leadership and profitability.

Gross profit margin edged higher thanks to a shift toward some of the shopping categories management has targeted, like consumer electronics, fresh food, and home furnishings. That extra demand offsets rising costs across the supply chain. Adjusted net income landed at 2.7% of sales compared to Costco's recent 2.5% rate.

These gains came despite aggressive spending on BJ's growth initiatives. "We have invested into our team members, the value of our membership, our digital infrastructure, and physical footprint to continue to accelerate our growth flywheel," Eddy explained.

3. Membership fee income: up 7.6%

Those improvements have all created a more valuable subscription for BJ's shoppers this year, and investors are starting to see the benefits from that boost. Membership fee income rose nearly 8% this quarter to outpace sales growth. The increase came from several factors, including a growing membership base and improving renewal rates.

BJ's is laying the foundation for additional increases in its annual fee structure, which will flow almost directly toward higher earnings. The retailer is entering the second half of 2021 with lots of cash, too, that executives can direct toward lower prices over the short term. Looking further out, they can target a more aggressive expansion into new markets and more attractive yet competitive neighborhoods.

Management couldn't venture a 2021 fiscal-year outlook this week, citing major risks including new COVID-19 outbreaks and uncertain consumer demand trends. But shareholders have every reason to expect the chain to stay on the offensive when it comes to growth. BJ's customers are telling the chain that they love the expanded merchandise categories and new services like curbside pickup. The company's task now is to keep rolling those offerings out to a selling footprint that reaches beyond its current regional focus.