BJ's Wholesale Posts Strong Results, Driven by Member-Centric Model and Strategic Initiatives
At a Glance
- BJ's Wholesale Club showcased its strong performance and continued growth in Q1 FY2023
- BJ's Wholesale Club's dedication to improving membership quality and size was evident, with a 5% year-over-year increase in member count
- First-quarter net sales of $4.6 billion represented a 5% rise over the same period last year
- Digital growth continued to be a significant highlight for the company, with digitally enabled comp sales rising by 19% in the first quarter
In the first quarter of fiscal 2023, BJ's Wholesale Club showcased its strong performance and continued growth, underscoring the success of its member-centric model and strategic initiatives. The launch of the co-brand credit card program, aimed at driving higher member lifetime values and market share gains, played a significant role in achieving these milestones.
BJ's Wholesale Club's dedication to improving membership quality and size was evident, with a 5% year-over-year increase in member count. The launch of the new co-brand credit card program in collaboration with Capital One exceeded expectations, as more than three-quarters of the 1.5 million transitioned accounts were activated, and more than 115,000 new credit card members were added since the launch. The program's benefits extended to Club Plus members, offering them a $0.05 per gallon gas discount, further enhancing the value proposition for higher-tier memberships.
First-quarter net sales of $4.6 billion represented a 5% rise over the same period last year. The company reported a record first quarter in adjusted EBITDA, fueled by a 5.7% increase in merchandise comparable club sales and a robust 8% growth in the food and sundries businesses. Delivering an unbeatable shopping experience remained a priority for BJ's Wholesale Club, with a steadfast focus on value and strategic pricing investments.
“We recognize that in today’s environment, consumers remain live in their shopping behavior, and members are more conscious as they continue to work to stretch their dollars,” said BJ’s Wholesale’s President and CEO, Bob Eddy. “Additionally, unfavorable weather trends dampened seasonal demand in the first quarter. As a result, our general merchandise and services comp was down 8% year-over-year.”
Despite unfavorable weather trends and a decline in general merchandise and services sales, the company's merchandise gross margins improved significantly due to favorable supply chain dynamics and declining costs. BJ's Wholesale Club gained market share in its core business and gasoline segment, with comp gallons increasing year-over-year.
Digital growth continued to be a significant highlight for the company, with digitally enabled comp sales rising by 19% in the first quarter. Members who engaged with BJ's Wholesale Club through digital channels spent nearly 70% more and exhibited higher loyalty. The convenience of features like “buy online, pick up in-club” (BOPIC), curbside pickup, and same-day delivery contributed to this growth.
“We see a consumer that is continuing to visit and spend in our stores. On the margin, while they are spending more with us, they are also being more choosy with their dollars and allocating those dollars in favor of necessities,” said BJ’s Wholesale’s CFO, Laura Felice. “That said, I have also previously expressed our confidence in our advantaged business model, execution of strategic priorities, and commitment to delivering value, which should all contribute to continued growth in our core business.”
Looking ahead, BJ's Wholesale Club expressed confidence in its longer-term growth prospects. The company emphasized its strategic priorities, including improving member loyalty, delivering an exceptional shopping experience, providing convenient digital services, and expanding its footprint. With plans to open approximately 11 new clubs in fiscal 2023 and the upcoming arrival of new general merchandise assortments, BJ's Wholesale Club aims to sustain its growth trajectory and strengthen its position in the market.