What happened
BJs Wholesale Club (BJ 1.22%) stock underperformed the market this week, falling 11% compared to a 0.5% drop in the S&P 500 through Thursday trading, according to data provided by S&P Global Market Intelligence.
The warehouse retailer announced strong holiday season growth results on Thursday but warned of a tough selling environment over the next few quarters.
So what
Comparable-store sales jumped 9% in the Q4 selling period that ended in late January, management said in a press release. That boost translates into a two-year gain of 22% and stacks up well against rivals like Walmart and Costco.
Sure, most of the Q4 growth was powered by swings in fuel prices. Yet BJs still expanded sales by 1% after adjusting for those moves. "2021 was the best year in the company's history," CEO Bob Eddy said. Investors were a bit more focused on the company's soft outlook for the coming year.
Image source: Getty Images.
Now what
Net revenue gains will slow to the mid-single digit range, executives said, compared to 8% last year and 14% in 2020. Two of the biggest pressures on growth are soaring inflation and the fact that government stimulus money lifted spending through the first half of 2021 in ways that won't repeat this year. This situation sets up a cloudy short-term outlook for the retailer. "There continue to be several unknowns that make for significant variability as we look to frame guidance for the coming year," CFO Laura Felice said.
This challenge doesn't dim BJ's long-term targets, which still involve steady store growth, a rising membership base, and increasing sales and profits. "We will retain the market share gains that we have captured," in areas like gasoline, management said in a conference call. But the company is likely to report some weak sales numbers in the first half of 2022.
