BJ's Wholesale Club Holdings, Inc. Q1 FY2025 earnings call

• Strong first quarter with net sales growth of nearly 5%, operating income up 27%, and net income up 35%.
• Membership continues to grow nicely, with higher tier membership penetration surpassing 40% for the first time.
• Merchandising improvements: Fresh 2.0 initiative in produce driving high single-digit to low double-digit comps, and expanding to meat and seafood with optimized assortment and presentation.
• Digital conveniences driving double-digit growth in digitally enabled comp sales each year for the past four years, with 35% growth in the first quarter.
• Accelerating club openings, with 5 new clubs opened in the first quarter, and plans to open 25-30 new clubs over the next two years.

Net sales for the first quarter were $5 billion, increasing 4.7% year over year. Merchandise comp sales excluding gas sales grew 3.9% year over year, led by traffic and units. Perishables, grocery, and sundries division had over 4% comp growth. General merchandise and services division had slight comp decrease, but strong in apparel, toys, consumer electronics; impacted by unfavorable weather and discretionary categories. Membership fee income (MFI) grew 8.1% to approximately $120.4 million in the first quarter. Digitally enabled comp sales in the quarter grew 35% year over year. Total comparable club sales including gas sales grew 1.6% year over year, with lower retail gas prices partially offsetting market share gains at pumps.

Kept initial full-year guidance unchanged: 2% to 3.5% comp sales growth excluding gas and $4.10 to $4.30 in adjusted earnings per share. Expected first half comps ex gas to be better than the back half of the year. Will continue to evaluate guidance as the year progresses.

• Uncertain economic environment impacting consumer spending patterns.
• Tariffs and cost pressures that could impact margins and pricing.
• Dynamic market conditions that make it challenging to predict future performance.

Q: Can you remind us how you think about locations as you accelerate club openings?

A: Bob Eddy and Bill Werner discussed aggressive real estate strategy, with strong share gains opening up opportunities, new clubs performing well, and pipeline of club openings in new and existing markets.

Q: Is there anything to consider about the longer-term membership algorithm?

A: Bob Eddy and Laura Felice mentioned continued strong membership growth, focusing on activating and engaging members, but no immediate changes to the economic algorithm.

Q: How to think about margin investments and comp cadence?

A: Laura Felice said value is the North Star, and first half comps ex gas expected to be stronger than the second half, with Fresh 2.0 and other initiatives driving engagement.