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BJ's Takes Market Share Away from Competitors in Consumables in Q4, Fiscal ‘10

WESTBOROUGH, MASS. - In its first earnings conference call since shutting down five underperforming sites in January and restructuring its home office and certain field operations, BJ's Wholesale Club reported results last week for its fourth quarter and fiscal 2010 that reflected the recent changes in its business.
     "These initiatives are vital to our competitiveness, future growth and profitability," explained Laura Sen, president and ceo, during the presentation this morning.
    Net income came in at $10.2 million, or $0.19 per diluted share, for the quarter ended Jan. 29, compared to $54.5 million in the year-ago period. These results include post-tax expense of $41.1 million for the five club closures, restructuring activities and asset impairment charges.
     Excluding the post-tax expense of $41.1 million, adjusted non-GAAP net income was $51.3 million, or 95 cents per diluted share.
    Quarterly net sales increased by 7.4% to $2.90 billion, and comparable club sales increased by 3.8%, including a contribution from sales of gasoline of 2.1%. Excluding the impact of gasoline sales, merchandise comparable club sales increased by 1.7%.
     Consumables were a highlight in the quarter, when departments with the strongest comparable club sales increases versus last year included bakery, cheese, dairy, deli, frozen, health and wellness, meat, milk, prepared foods, produce, small appliances, summer seasonal, video games and winter supplies. By comparison, weaker departments included apparel, baby food, books, cigarettes, diapers, plates & utensils, paper products, prerecorded video, televisions and water.
      For the year ended, BJ's reported net income of $95.0 million, or $1.77 per diluted share.
     Excluding the post-tax expense of $41.1 million, adjusted non- GAAP net income for fiscal 2010 was $136.1 million, or $2.53 per diluted share.
     Net sales rose by 8.3% to $10.63 billion and comparable club sales increased by 4.4%, including a contribution from sales of gasoline of 2.0%. Excluding the impact of gasoline sales, merchandise comparable club sales increased by 2.4% for the full year.
     "Consistent growth in member visits, membership renewals and sales of perishable food demonstrate that BJ's is continuing to capture market share from other retail channels," said Sen, who added that the company this year has plans to expand its food business as it continues to grow its share of the market at the expense of its competition, which includes both other warehouse clubs and grocery stores.
     BJ's offered its earnings guidance for the first quarter and fiscal year, ending January 28, 2012. The company expects to report GAAP net income in the range of $144 million to $154 million, and earnings per diluted share in the range of $2.62 to $2.82. For the first quarter of fiscal 2011, BJ's expects to report GAAP net income in the range of $29.5 million to $31.5 million, and earnings per diluted share in the range of 54 cents to 58 cents.

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