With a strong focus on digital innovation and an expanding membership base, BJ's Wholesale Club Holdings, Inc. BJ is well-positioned to sustain its growth momentum. By continuously enhancing its value proposition, streamlining operations and adapting to evolving consumer trends, the company is reinforcing its competitive edge in the membership warehouse club industry.

BJ’s Leverages Digitization to Enhance Customer Experience

BJ's Wholesale Club has made substantial investments in its digital infrastructure to enhance member connectivity and streamline the shopping experience. Key initiatives include same-day delivery, curbside pickup and buy-online, pick-up-in-club services. The company has developed a robust digital ecosystem encompassing platforms such as BJs.com, BerkleyJensen.com, WellsleyFarms.com and BJ’s mobile app. These platforms enable members to browse and purchase products, utilize digital coupons and monitor annual savings.

To enhance convenience, BJ's Wholesale Club has partnered with DoorDash, Instacart and Roadie for on-demand delivery. The company also introduced the Same-Day Select program, allowing members to pay an upfront fee for unlimited or 12 same-day grocery deliveries per year, offering added flexibility and convenience. 

Management has observed that digitally engaged members tend to shop more frequently and have higher average purchase values than those who shop exclusively in-club. In the third quarter of fiscal 2024, digitally enabled comparable sales surged 30%, with more than 90% of these sales fulfilled through club locations.

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BJ’s Membership Model: A Strong Revenue Driver

BJ's Wholesale Club has achieved impressive growth by refining its marketing and merchandising strategies while diversifying its private-label offerings and expanding into high-demand product categories. These strategic moves have significantly increased membership signups and renewals, driving a notable rise in membership fee revenues.

In the third quarter of fiscal 2024, BJ’s reported an 8.4% year-over-year increase in membership fee income, fueled by strong renewal rates and successful membership acquisition efforts. As the company continues to open new clubs, it anticipates sustained growth in membership revenues. BJ’s first membership fee increase in seven years went into effect on Jan. 1, 2025.

Final Words 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. 

Shares of this Zacks Rank #3 (Hold) company have advanced 16.6% in the past three months against the industry’s decline of 0.5%.

Don’t Miss These Solid Bets

United Natural Foods UNFI, which, together with its subsidiaries, distributes natural, organic, specialty, produce, and conventional grocery and non-food products in the United States and Canada, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for United Natural Foods’ current financial-year sales and earnings calls for growth of 0.3% and 442.9%, respectively, from the year-ago reported numbers. UNFI has a trailing four-quarter earnings surprise of 553.1%, on average.

US Foods Holding USFD, which is engaged in the marketing, sale and distribution of fresh, frozen, and dry food and non-food products, currently carries a Zacks Rank #2 (Buy). 

The Zacks Consensus Estimate for US Foods’ current financial-year sales and earnings suggests growth of 6.4% and 18.6%, respectively, from the year-ago reported numbers.

Costco COST, which operates membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 2%, on average. 

The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings indicates an increase of 7.4% and 11.9%, respectively, from the prior-year reported levels.

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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report

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