BJ's Wholesale Q2 Earnings Beat, Membership Hits 8M, Outlook Raised

BJ’s Wholesale Club Holdings, Inc. BJ reported mixed results for the second quarter of fiscal 2025. While revenues came in below the Zacks Consensus Estimate, earnings exceeded expectations. Both figures improved year over year, supported by robust membership growth and traffic gains. Management raised its fiscal 2025 earnings guidance.BJ’s Second-Quarter InsightsBJ’s Wholesale Club reported adjusted earnings of $1.14 per share, which came ahead of the Zacks Consensus Estimate of $1.10 and increased from $1.09 reported in the year-ago period. This operator of membership warehouse clubs generated total revenues of $5,380.2 million, which rose 3.4% from the year-ago quarter’s level but missed the consensus mark of $5,463 million. Net sales increased 3.2% to $5,256.9 million, while membership fee income jumped 9% to $123.3 million. BJ reached a milestone of 8 million members in the quarter, supported by a 90% renewal rate and higher-tier penetration. Total comparable club sales during the quarter decreased 0.3% year over year due to lower fuel retail prices. Excluding the impact of gasoline sales, comparable club sales jumped 2.3%, led by robust traffic, but came below our estimate of a 3.2% increase. Digital initiatives continued to pay off, with digitally enabled comparable sales jumping 34%, building on a two-year stack of 56% growth.BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise BJ's Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ's Wholesale Club Holdings, Inc. QuoteTaking a Look at BJ’s MarginsGross profit increased to $1,006.2 million from $956.6 million in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 10 basis points from the year-ago quarter’s level. Operating income jumped 6.3% year over year to $216.5 million, while the operating margin, as a percentage of total revenues, expanded 10 basis points to 4%. We note that adjusted EBITDA increased 8% to $303.9 million during the quarter, while the adjusted EBITDA margin increased 20 basis points to 5.6%. We anticipated 10 basis points of expansion in EBITDA margins.Selling, general and administrative (SG&A) expenses rose 4.8% from the year-ago quarter to $786.4 million. This reflects higher labor and occupancy costs stemming from the new club and gas station openings. As a percentage of total revenues, SG&A expenses deleveraged 20 basis points to 14.6%. We anticipated a deleverage of 10 basis points.BJ’s Wholesale Financial SnapshotBJ’s Wholesale Club ended the quarter with cash and cash equivalents of $47.3 million. The long-term debt was $399 million, while stockholders’ equity was $2,099.1 million.Net cash provided by operating activities and adjusted free cash flow totaled $249.9 million and $87.3 million, respectively, for the 13 weeks ended on Aug. 2, 2025. As part of its share repurchase program, the company bought back 375,000 shares worth $41.2 million in the quarter, with $952.6 million still available under its buyback authorization.Here’s What BJ GuidedBJ’s Wholesale Club continues to expect fiscal 2025 comparable club sales, excluding gasoline sales, to increase between 2% and 3.5% year over year. Management raised its adjusted earnings forecast to $4.20 to $4.35 per share compared with the prior view of $4.10-$4.30. The company reported earnings of $4.05 in fiscal 2024. The company continues to foresee capital expenditures of about $800 million for fiscal 2025, with the target to open 25 to 30 new clubs over the next two fiscal years.Shares of this Zacks Rank #3 (Hold) company rose 28.3% in the past year against the industry’s decline of 7%.Don’t Miss These Solid BetsPost Holdings POST, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.POST delivered a trailing four-quarter earnings surprise of 21.4%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings implies growth of 3.1% and 10.9%, respectively, from the year-ago reported numbers.Grocery Outlet GO, an extreme value retailer of quality, name-brand consumables and fresh products, carries a Zacks Rank #2 (Buy) at present. GO delivered a trailing four-quarter earnings surprise of 28.2%, on average.The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales indicates growth of around 8.3% from the year-ago reported numbers.Ollie's Bargain Outlet Holdings OLLI is a value retailer of brand-name merchandise at drastically reduced prices and currently carries a Zacks Rank #2. OLLI delivered a trailing four-quarter earnings surprise of 2%, on average.The Zacks Consensus Estimate for Ollie's current fiscal-year sales and earnings implies growth of 14.3% and 14%, respectively, from the year-ago reported numbers.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. 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