Retail is looking like a feast-or-famine game these days. On the famine side, companies selling discretionary items, like Kohl's
First-quarter comp sales leaped forward 9.6%, the best result for the company in recent memory. Sky-high gas prices helped, but even excluding the fuel effect, BJ's notched 5.7% comps. Customer traffic (measured by transaction counts) advanced 3%, the strongest traffic increase in four years.
What were those customers buying? Food, food, and more food; general-merchandise comp sales grew a modest 1%. When consumers are taking it on the chin at the gas pump, more of them seem to be choosing to offset the pain by stocking up in bulk.
The company's cost of sales improved by 13 basis points. While that doesn't sound like much, it makes a real difference for club operators, who rely on razor-thin margins. A stronger mix of perishable food sales drove the improvement, along with an unusually high level of markdowns last year, which the company was able to avoid this time around.
Expenses improved by 19 basis points, thanks to leverage from the company's strong sales. Furthermore, BJ's cut its preopening expense by more than half, thanks to fewer new club openings.
Put it all together, and BJ's first-quarter earnings per share jumped to $0.29, compared to $0.21 for the prior-year period. That's a 38% improvement, and one penny better than consensus analyst estimates.
You could almost see management smiling on the conference call. The company increased full-year EPS guidance by just 3%, noting that the macroeconomic environment is currently uncertain. While that's certainly true, I'm reading between the lines that BJ's leadership expects better results, but wants to leave room for some additional good news later in the year.
Is BJ's becoming a dominant player in the wholesale club business? Its first-quarter comps are about equal to Costco's
Further Foolishness, in bulk: