BJ's Wholesale Club Smashes Q3 Expectations with Record-Breaking Membership Growth and Revenue
Brunswick, ME - November 21st, 2024
BJ's Wholesale Club, a leading membership-based retailer, has announced impressive third-quarter results that exceeded expectations. The company's Chairman and Chief Executive Officer, Bob Eddy, hailed the results as a testament to the power of BJ's model and exceptional execution.
In a call with investors and analysts, Eddy highlighted the company's continued success in driving quarterly comparable sales (comps) and profits higher than anticipated. Robust traffic, unit volumes, and market share growth within its clubs and at gas pumps fueled the business. The company also reported a significant increase in merchandise margins during the quarter.
One of the most striking achievements was the substantial growth in membership, with over 8% year-over-year growth in membership fee income. This milestone marked the company's 7.5 million members, representing a staggering 40% increase since fiscal 2018. The renewal rates have also reached an all-time high within the company.
Furthermore, BJ's has more than doubled its premium-tier membership base and is experiencing a continued increase in higher-tier penetration. As a result, the company announced its first membership fee increase in seven years. Starting from January 1st, the basic annual membership will be raised by $5 to $60, while the plus tier will see an increase of $10 to $120.
The new premium value proposition includes two free same-day deliveries per year, which alone is worth approximately three times the fee increase for plus-tier members. Since the last fee hike in 2018, BJ's has invested heavily in enhancing the membership experience through higher average hourly wages, better rewards and gas benefits, and a new co-brand credit card.
The total rewards to members have surged from $130 million in fiscal 2018 to over $350 million in the past year. The company's efforts have paid off, with its business now delivering significantly more value to its members today. To sustain this momentum, BJ's plans to reinvest the proceeds from the fee increase into labor and better value.
Comparable club sales excluding gas sales grew by 3.8% in the third quarter. While the East Coast port strike and two hurricanes positively impacted comp sales by a bit less than one point, traffic accelerated once again, contributing over four percentage points to the comp. BJ's gained grocery market share in both units and dollars during the quarter.
The company's perishables grocery and sundries division delivered over 4% of comp growth in the third quarter, with broad-based strength across all three divisions. The general merchandise and services division reported flat comps, but the underlying progress made by its teams to sustainably grow this part of the business was a welcome development.
