There's nothing like well-timed chatter about a buyout to keep an otherwise mediocre story afloat.
I speak here of BJ's Wholesale Club
In plenty of respects, this quarter was worse than the one before it. Revenue was up just 5%, comp-store sales were up just 1.7%, and gasoline sales contributed more than half of that. In fact, look at the underlying trends and you see traffic (ex-gasoline) down 3% and the average ticket up 4%. Clearly, that can't go on forever, unless the company hopes to have a thousand shoppers spending about $2 million apiece each quarter.
It's also a bit discouraging to see that some underlying trends haven't changed much -- namely that food is doing all right (up 4%) and merchandise isn't (down 3%). On a slightly more positive note, though, private label brands are continuing to grow as a percentage of total sales, and that's good for margins.
I can't say that I'm terribly impressed with management's grand plan to boost traffic. OK, adding better merchandise (like higher thread-count sheets) is nice, but that's not the answer. Likewise, the company's efforts to stimulate foot traffic through advertising aren't likely to make a lasting difference.
Want to know what I think BJ's should do? Try cleaning the stores -- shopping at my local BJ's (and I've been to all three near me) is like stepping into a dungeon compared with the local Costco
The goods news here for the stock is that BJ's has attracted a lot of attention as a potential buyout. Maybe Costco would like to kick-start its expansion. Maybe a foreign retailer like Loblaw or Tesco would like to build a beachhead in America. Or maybe it's possible that somebody will come into the picture a la Sears
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).