Dive Brief:

• BJ’s Wholesale Club posted a 4.1% year-over-year gain in comparable store sales, excluding gasoline, in the first quarter of 2022 and saw net income and earnings per share both rise nearly 40% during the period, the membership-based retail chain announced Thursday.
• The club retailer’s sales were led by strong shopper interest in its grocery and perishable categories, with “significant gains” in traffic and market share also playing a key role in driving the company’s results, BJ’s President and CEO Bob Eddy said during an earnings call.
• BJ’s has been benefiting from the recent surge in gasoline prices, with many people who visited the retailer’s locations in search of lower fuel costs during Q1 also heading inside to make other purchases, Eddy said.

Dive Insight:

Even as punishingly high energy prices and other inflationary pressures have battered retailers like Target and Walmart, BJ’s has strengthened its financial performance despite the obstacles facing the economy.

The strong performance during the latest quarter, which ended April 30, follows BJ’s weak results during the fourth quarter of 2021, when it saw comp store sales rise by just 0.9%.

The retailer’s membership base rose by 5% during Q1, passing 6.5 million members, with strong renewals and new stores both helping to draw in new customers, Eddy said during the earnings call. BJ’s has been increasing its member roles faster than it had expected and saw the penetration of higher-tier members — who also tend to spend more than other shoppers — rise to 36% during the quarter, according to Eddy.

Eddy added that BJ’s has been concentrating on attracting shoppers by offering highly competitive gas prices and striving to keep prices for groceries and other products down. BJ's comp store sales with gasoline included rose 14.5% in Q1.

“I don't particularly care if we make a ton of money in the gas business in any week or day or a quarter or a year. I care that we use that as an avenue to get people into our buildings,” Eddy said. “People understand what a good gas price is and what a bad one is. We try and put good ones up there every single day.”

BJ’s currently operates 229 clubs and 159 gas stations in 17 states. The company has opened three new locations so far in 2022, and intends to debut a total of 11 stores during the year, Eddy said, adding that BJ’s also expects to open 10 new stores in 2023.

The retailer is also taking steps to build its private label business as it works to offer value for shoppers in its warehouses. Penetration of the company’s own brands, which include the Wellsley Farms food line and Berkley Jensen collection of household goods, rose 2% during Q1 to reach an all-time high of 24%, Eddy said.

BJ’s is also seeing its e-commerce operation grow at a rapid clip. Digital sales rose 26% during Q1 compared with the same period last year, and 400% relative to the first quarter of 2019, Executive Vice President and Chief Financial Officer Laura Felice said during the earnings call. The company fulfills about 80% of its online sales at its stores, Felice said.

On May 2, BJ’s completed its purchase of four refrigerated distribution centers and a private transportation fleet from Burris Logistics, which Eddy said gives the retailer full control of its perishable supply and offers long-term growth potential for its fresh food business.