BJ's Wholesale Club Holdings, Inc. Q3 FY2025 earnings call

• Business delivered strong results in Q3 with twelfth consecutive quarter of market share growth and fifteenth consecutive quarter of traffic growth. • Took actions like incremental offers for members in need, reduced delivery fees, and 10% discount for team members. • Launched new own brands products to improve member experience. • Digital business grew 30% year over year, with plans to use AI for enhanced shopping experience. • Opened multiple new clubs with strong performance, and expansion strategy is successful with clubs opened over the last five years outperforming chain average.

Merchandise comparable comp sales growth was 1.8% for the quarter with adjusted earnings per share of $1.16. The perishables grocery and sundries division grew comp sales by 1.8%, with a two-year stack accelerating sequentially to 6%. The general merchandise and services business grew 1.8% on a comp basis, with consumer electronics comping in the high single digits, apparel in the low single digits, and home and seasonal impacted by lower discretionary demand. Digital enabled comp sales grew 30% year over year and 61% on a two-year stack. Membership fee income grew nearly 10% driven by strong member accounts, mixed benefits, and recent fee increase, with higher tier membership penetration reaching a new record. Opened clubs in Warner Robins, Georgia and Survivorville, Tennessee, with 14 new clubs planned for 2025 and 25-30 new clubs in two years.

• Narrowed full year merchandise comp sales guidance to a range of 2% to 3%. • Increased expected adjusted earnings per share range to $4.30 to $4.40.

• Macro environment uncertainty impacting consumer confidence. • Tariffs affecting inventory management and general merchandise sales. • Competitive environment posing challenges.

Q: Peter Sloan Benedict asked about income demographics and behavior, including exposure to SNAP program and renewal rates across income demographics.

A: Robert W. Eddy and Laura L. Felice responded that members' performance was resilient, SNAP program had disruptions but is recovering, and membership results are strong across cohorts.

Q: Katharine Amanda McShane asked about long-term same-store sales growth and competitive response in new markets.

A: Robert W. Eddy and William C. Werner discussed confidence in long-term growth pillars and positive reception in new markets.

Q: Robby Ohmes asked about inventory positioning and Fresh 2.0.

A: Robert W. Eddy and Laura L. Felice explained conservative inventory position for general merchandise to invest in member value, and Fresh 2.0 with plans for next iterations in other categories.

Q: Steven Emanuel Zaccone asked about implied fourth quarter same-store sales and category assumptions.

A: Robert W. Eddy and Laura L. Felice talked about cautious optimism, holiday momentum, and inventory impact on general merchandise.

Q: Cathy Park asked about gross margin offsets and Q4 merch margins.

A: Robert W. Eddy mentioned investing in price gaps and using various levers to offset, with focus on member value.

Q: Pedro Gill asked about retail media and AI in e-commerce.

A: Robert W. Eddy and Laura L. Felice discussed growing retail media program, AI use in digital and robotics, and future AI investments.

Q: Chuck Grom asked about SG&A per square foot sustainability and general merchandise improvement.

A: Robert W. Eddy and William C. Werner talked about maintaining SG&A efficiency, remodeling clubs, and continuing work on general merchandise improvement.

Q: Rupesh Dhinoj Parikh asked about significant outperformance in club membership counts.

A: William C. Werner explained success due to strong new club program culture and execution.