What happened
Shares of BJ's Wholesale Club (BJ 0.63%), a membership-based warehouse retailer, fell dramatically in early trading on March 3, losing roughly 16% of their value in the first hour or so of trading. As of 11:52 a.m. ET, shares were down 12.5%. The big news was the company's fiscal fourth-quarter 2021 earnings update, which was actually pretty strong. However, that was the past and Wall Street looks to the future, which is much less certain right now.
So what
The fourth quarter of fiscal 2021 was filled with good numbers for BJ's Wholesale Club, as comparable-store sales increased 8.8% including gasoline. Excluding gasoline, that number was a more modest 0.9%, but it was still higher year over year and up 16.8% compared with 2019. Digitally enabled sales grew 19%. Overall revenue increased 10.4%, with product sales increasing 10.4% and revenue from membership fees up 9.5%. Adjusted earnings came in at $0.80 per share in the fourth quarter, up 14.3% from the prior year. The company also announced an acquisition to solidify its perishable supply chain. It's hard to complain too much here, noting that Wall Street was calling for adjusted earnings of $0.75 per share. That said, analysts had been looking for stronger same-store results, so there was a slight negative to worry about.
Image source: Getty Images.
Missing an analyst projection, even if a company beats others, often gets investors into a bad mood, but there was more going on here than just that today. Looking forward, BJ's Wholesale Club highlighted "unknowns that make for significant variability" with regard to performance in 2022. That list notably includes the economic stimulus that happened in 2021, which isn't likely to recur in 2022 -- and, of course, inflationary pressures that are higher than they have been in several decades, according to management. Although the retailer's outlook isn't terrible on the sales front, it expects earnings to be flat year over year. That clearly wasn't what investors were hoping to hear, and inflation is a hot-button issue today, too.
Now what
BJ's Wholesale Club reported that 2021 was the best year in its history. And given the difficult backdrop, it's hard to be too downbeat about the fact that it might "only" match that high-water mark in 2022. Still, investors are a mercurial bunch, and today they appear to have chosen to dwell on the negatives.
