BJ's Wholesale Club Holdings, Inc. BJ, a prominent player in the membership warehouse club sector, has solidified its industry position through a compelling customer value proposition and a robust business model. The company’s ongoing initiatives to expand its membership base, streamline product offerings, enhance digital capabilities and accelerate club openings have driven sales growth. Furthermore, BJ’s continues to focus on strengthening its omnichannel operations and expanding delivery services.

Membership Signups & Renewals Aid BJ

BJ's Wholesale Club has achieved remarkable success by focusing on improving its marketing and merchandising strategies, alongside strategically expanding into high-demand product categories and diversifying its own-brand offerings. These forward-thinking efforts have been crucial in driving a significant boost in membership signups and renewals, leading to a notable increase in membership fee revenue.

In the third quarter of fiscal 2024, membership fee income witnessed a year-over-year increase of 8.4%, driven by strong renewal rates and successful membership acquisition. We foresee a sustained improvement in membership fee income as new club openings ramp up. The company expects to operate more than 250 clubs by the end of fiscal 2024.

BJ’s Wholesale Club announced its first membership fee increase in seven years, set to take effect on Jan. 1, 2025. The annual fee for the Club membership will rise by $5 to $60, while the Club+ membership will see a $10 increase to $120. The company also introduced a new perk for Club+ members, including BJ’s One+ Mastercard cardholders. Starting Jan. 1, 2025, these members will receive two free same-day deliveries on eligible orders of $50 or more during each membership year.

Shares of this Zacks Rank #3 (Hold) company have advanced 13.3% against the industry’s decline of 1.2%.

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Digitization: A Key Tailwind for BJ

BJ's Wholesale Club has been directing resources toward expanding digital capabilities to better engage with members and provide them with a convenient way to shop, including same-day delivery, curbside pick-up, and buy online, pick up in-club. It has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com and BJ’s mobile app. These enable members to buy, review products and digitally add coupons to their membership cards. Members can track their annual savings as well.

BJ's Wholesale Club has also teamed up with DoorDash, Instacart and Roadie to provide on-demand delivery from its stores. The company has also rolled out Same-Day Select, through which members, on payment of an upfront fee, can avail of either unlimited or 12 same-day grocery deliveries delivered over a year. This offering enhances the convenience and flexibility for members, making it easier for them to receive their groceries quickly.

Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only. Digitally enabled comparable sales rose 30% in the third quarter of fiscal 2024. Clubs fulfill more than 90% of digitally enabled sales.

Final Thoughts on BJ

We believe that BJ's Wholesale Club’s growth strategies, better price management, decent membership trends and digitization should keep supporting comparable sales trends. As part of its long-term financial targets, BJ’s Wholesale Club guided total revenue growth of a mid-single-digit percentage. The company also projected a low-to-mid single-digit percentage increase in comparable club sales, excluding the impact of gasoline sales. It expects a high-single to low-double-digit percentage increase in earnings per share in the long run.

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