BJ's Posts Strong Sales in Food, Softer in Home
Cecile Corral -- Home Textiles Today, June 1, 2009
BJ's Wholesale Club Inc. is counting on its recent and significant uptick in traffic to sustain its otherwise floundering discretionary categories — including home — this year.
The 181-club retailer, with a presence in 15 states, experienced a traffic increase of about 7% — excluding the sale of gasoline — during the first quarter, representing "our strongest result in about five years," said Frank Forward, evp and cfo, during BJ's first-quarter earnings call late last month.
Additionally, the chain also posted a 1% increase in average transaction.
"Pockets of strength in discretionary categories," said Laura Sen, president, have been in areas like computers and TVs.
But she added that in terms of apparel, jewelry and home, "we're probably much better than the world because of our traffic. We have more people passing by and a better chance to sell some of that product."
Later in the call, she said today's trends lean on "anti-luxury."
"It's not in fashion to be conspicuously consuming gold and diamonds," Sen said. Still, she continued, "It's funny — our best-selling patio set is the highest price point that we have on the floor. So it's really a matter of whether they like what they see."
Online, home had better luck. Specifically domestics has enjoyed better results on the company's one-year-old e-commerce site, www.BJs.com, which carries 7,000-sale-items. Online sales for domestics and many other discretionary products like sporting goods and cameras have "increased significantly," Sen said.
Profit climbed 41% to $24.3 million, or 45 cents per diluted share. In the same period last year, the warehouse club reported net income of $17.2 million, or 29 cents per diluted share.
Sales increased by 0.2% to $2.26 billion, and comparable club sales decreased by 1.5%, including the negative impact from sales of gasoline of 9%.
Excluding the impact of gasoline, merchandise comparable club sales increased for the first quarter by 7.5%, compared to 12.3% or $2.25 billion the prior year period.
Comparable club sales increased by 9.6%, including a 3.9% contribution from gasoline sales. Excluding the impact of gasoline, merchandise comparable club sales increased for the first quarter of 2008 by 5.7%.
Food, particularly perishables, led the quarter in merchandise mix. Comp sales of food increased by approximately 9% versus general merchandise, which increased by less than half of that, or about 4%.
Forward said the food increase was driven by a 12% comp increase in perishables — "that was on top of the 10% comp increase last year," he said.
Added Sen: "In perishables, improvement in quality and presentation are driving incremental sales."
Perishables are BJ's highest margin category.
General merchandise margin rates were below last year's due to "an unfavorable sales mix," Sen said.
Sales were strong in low-margin categories such as televisions and computers, but were weak in high-margin categories such as apparel, jewelry and summer seasonal.