Attention, big-box shoppers. Next up in the earnings parade: BJ's Wholesale Club
What analysts say:
- Buy, sell, or waffle? Seventeen analysts follow BJ's, which garners five buy ratings, 10 holds, and a pair of sells.
- Revenues. On average, they expect to see sales grow 5% to $2.03 billion.
- Earnings. Profits are predicted to be flat at $0.20 per share.
What management says:
After a Q4 2006 in which BJ's reported positive same-store sales gains (1.5%) and strong growth in revenues overall (13.4%, thanks in large part to having 14 weeks of sales to work with, as opposed to Q4 2005's 13 weeks), BJ's hit a slump early this year. In an 8-K filing with the SEC posted earlier this month, BJ's joined a string of retailers stretching from American Eagle
BJ's comps were down 2.1% for the month, although the steadily expanding store base meant that total sales for the chain were up 1.9%. Looking forward to tomorrow's news, though, management advised that the full first quarter was better than its ending.
What management does:
Don't get too excited, though. If BJ's continues to follow the trend it's posted over the last year, it will be earning markedly lower profits on those growing revenues. For four straight quarters, we've watched the warehouse vendor's rolling gross, operating, and net margins march downward.
|
10/05 |
1/06 |
4/06 |
7/06 |
10/06 |
2/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
10.4% |
10.5% |
10.4% |
10.3% |
10.3% |
10.1% |
|
Operating |
2.4% |
2.7% |
2.5% |
2.5% |
2.3% |
2.1% |
|
Net |
1.6% |
1.6% |
1.6% |
1.5% |
1.4% |
0.8% |
The Fool says:
Get ready for a deja vu moment, Fools. It wasn't so long ago that we were seeing U.S. retailers spend nearly as much of their time explaining away lousy results as they spent trying to move product. Back then, it was sometimes difficult to tell whether we were getting our earnings reports from a wholesaler or a weatherman. Those days seem set to return, as BJ's blamed everything from a lack of pharmacy sales to a shift in the calendar year to "unseasonably cold and wet weather across most of the chain" for its declining April comps.
Does the "wet weather" hypothesis hold water? If you're willing to buy the explanation, then bully for you -- you're a PR flack's best friend. Personally, I take the view that because weather lies outside of management's control, BJ's should spend less time complaining about it, and more time improving the things it can fix: namely, lousy customer service, food displays in disarray, and unmanned checkout stands. Crazy idea, I know. But in this Fool's view, those items probably have an effect on sales, too.
What was BJ's stocking last quarter? Find out in:
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Fool contributor Rich Smith owns shares of American Eagle Outfitters. The Fool has a disclosure policy.
