BJ's Wholesale Club, Inc. (NYSE: BJ) today reported net income for the second quarter ended July 30, 2011 of $45.7 million, or $0.84 per diluted share. These results significantly exceeded the Company's guidance for net income in the range of $40.5 to $42.5 million and earnings in the range of $0.74 to $0.78 per diluted share. For the second quarter of 2010, the Company reported net income of $35.8 million, or $0.67 per diluted share.

For the first half of 2011, net income was $79.4 million, or $1.47 per diluted share. For the first half of 2010, net income was $61.9 million, or $1.16 per diluted share.

Laura Sen, BJ's president and chief executive officer, said, "BJ's outperformance of 10% versus our guidance reflected favorable merchandise margins, higher gas profitability and expense savings that exceeded plan. We are very excited about our positive sales momentum for the second quarter and first half of 2011. It is clear that our members are doing more of their weekly food shopping with us. And I believe that we have tremendous opportunities to further grow our business."

As previously announced, net sales for the second quarter of 2011 increased by 11.0% to $2.98 billion and comparable club sales increased by 7.8%, including a contribution from sales of gasoline of 4.0%. Excluding the impact of gasoline, merchandise comparable club sales increased by 3.8%.

The Company provided the following additional information regarding comparable club sales for the second quarter (all comparisons are to the comparable, prior year period):

  • Comparative Club Sales by Geographic Region
  Thirteen Weeks Ended July 30, 2011

Comparable
Club Sales

 

Impact of
Gasoline Sales

 

Merchandise
Comparable Club
Sales

New England 7.8% 4.9% 2.9%
Upstate New York 10.9% 6.2% 4.7%
Metro New York 4.8% 1.3% 3.5%
Mid Atlantic 7.2% 3.7% 3.5%
Southeast 11.4% 5.9% 5.5%
Total chain 7.8% 4.0% 3.8%
  • Competition and cannibalization had an estimated negative impact of approximately 1.6%.
  • Excluding the impact of gasoline, member traffic was approximately flat, following a 4% increase in last year's second quarter. The average transaction amount increased by approximately 3% following a 1% decline in last year's second quarter.
  • Sales of food increased by approximately 5% for the second year in a row, driven primarily by an 8% increase in perishable foods. On a two-year stacked basis, comparable club sales of perishable foods increased by approximately 16%. General merchandise sales increased by approximately 1% for the second quarter, following a slight decrease in last year's second quarter.
  • Departments with the strongest comparable club sales increases included beauty care, computer equipment, coffee, cookies, dairy, deli, lawn & garden, meat, prepared foods, produce, salty snacks and summer seasonal. Departments with weaker sales versus last year included books, televisions, toys and video games.

Other Information

BJ's management is not conducting a conference call in connection with its Q-2 earnings announcement. As announced on June 29, 2011, BJ's Wholesale Club has entered into a definitive agreement to be acquired by Leonard Green & Partners and CVC Capital Partners.

About BJ's Wholesale Club

BJ's introduced the wholesale club concept to New England in 1984, and has since expanded to become a leading warehouse chain in the eastern United States. The Company currently operates 190 BJ's Wholesale Clubs in 15 states. BJ's press releases and filings with the SEC are available on the Internet at www.bjsinvestor.com.

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
             
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
 
Thirteen Weeks Ended Twenty-Six Weeks Ended
 
July 30, July 31, July 30, July 31,
2011 2010 2011 2010
 
 
Net sales $ 2,984,726 $ 2,689,005 $ 5,753,996 $ 5,205,381
Membership fees 51,824 47,503 102,264 93,896
Other revenues 11,865   11,819   21,129   20,868  
Total revenues 3,048,415 2,748,327 5,877,389 5,320,145
Cost of sales, including buying and occupancy costs 2,719,533 2,450,900 5,254,613 4,749,055
Selling, general and administrative expenses 250,837 232,736 487,748 458,915
Preopening expenses 333   2,970   343   4,924  
Operating income 77,712 61,721 134,685 107,251
Interest expense, net (388 ) (372 ) (783 ) (599 )
Income from continuing operations before income taxes 77,324 61,349 133,902 106,652
Provision for income taxes 31,043   24,710   53,416   43,149  
Income from continuing operations 46,281 36,639 80,486 63,503
Loss from discontinued operations, net of income taxes (568 ) (859 ) (1,107 ) (1,634 )
Net income $ 45,713   $ 35,780   $ 79,379   $ 61,869  
 
Basic earnings per common share:
Income from continuing operations $ 0.86 $ 0.70 $ 1.51 $ 1.21
Loss from discontinued operations (0.01 ) (0.02 ) (0.02 ) (0.03 )
Net income $ 0.85   $ 0.68   $ 1.49   $ 1.18  
 
Diluted earnings per common share:
Income from continuing operations $ 0.85 $ 0.68 $ 1.49 $ 1.19
Loss from discontinued operations (0.01 ) (0.01 ) (0.02 ) (0.03 )
Net income $ 0.84   $ 0.67   $ 1.47   $ 1.16  
 
 
Number of common shares for earnings
per share computations:
Basic 53,482,324 52,684,819 53,290,934 52,334,684
Diluted 54,195,680 53,673,063 54,124,056 53,519,954
 
 
 
BJ's clubs in operation - end of period 190 189

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
     
CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
 
July 30, July 31,
2011 2010
 
ASSETS
Current assets:
Cash and cash equivalents $ 286,026 $ 85,065
Accounts receivable 148,227 132,114
Merchandise inventories 969,448 924,226
Current deferred income taxes 17,169 16,902
Prepaid expenses 44,354 34,660
Total current assets 1,465,224 1,192,967
Property, net of depreciation 999,741 977,989
Deferred income taxes - 10,185
Other assets 22,914 25,363
TOTAL ASSETS $ 2,487,879 $ 2,206,504
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 220 $ 630
Accounts payable 709,293 660,281
Closed store obligations 6,677 1,664
Accrued expenses and other current liabilities 323,988 293,260
Total current liabilities 1,040,178 955,835
Long-term debt, less portion due within one year - 220
Noncurrent closed store obligations 28,787 7,620
Deferred income taxes 23,332 -
Other noncurrent liabilities 157,810 140,393
Stockholders' equity 1,237,772 1,102,436
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,487,879 $ 2,206,504

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
       
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
 
Twenty-Six Weeks Ended
 
July 30, July 31,
2011 2010
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 79,379 $ 61,869
Provision for closing and impairment costs 2,418 2,324
Depreciation and amortization 66,940 61,298
Stock-based compensation expense 8,764 10,039
Deferred income taxes 16,124 1,927
Decrease in merchandise inventories, net
of accounts payable 68,545 6,374
Decrease in closed store obligations (13,026 ) (956 )
Other 14,517   (40,099 )
Net cash provided by operating activities 243,661 102,776
 
CASH FLOWS FROM INVESTING ACTIVITIES
Property additions (63,109 ) (76,439 )
Property disposals 105 43
Purchase of marketable securities - (898 )
Sale of marketable securities -   1,159  
Net cash used in investing activities (63,004 ) (76,135 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Excess tax benefit from stock-based awards 2,194 1,469
Purchase of treasury stock (6,820 ) (18,857 )
Proceeds from stock options exercised 8,965 17,358
Repayment of long-term debt (320 ) (298 )
Net cash provided by (used in) financing activities 4,019   (328 )
 
Net increase in cash and cash equivalents $ 184,676   $ 26,313  

BJ?s Wholesale Club, Inc.
Cathy Maloney, 774-512-6650
VP Investor Relations
cmaloney@bjs.com