BJ's increases 4Q profits by 15%

NATICK, MA -Bucking a soft economy and a spotty retail environment, BJ's Wholesale Club drove fourth-quarter profits up a heady 15.0 percent, to $54.8 million from $47.7 million last year, building on stronger same-store sales, new club openings and rapidly expanding membership.

Sales in the make-or-break Christmas quarter shot up by 18.1 percent, to $1.5 billion from $1.3 billion last year, getting a big lift from 11 new units opened over the past 12 months, bringing the chain's total to 118 warehouse clubs. Same-store sales advanced by 3.2 percent.

In another big lift to the bottom line, the chain continued to draw new paying members to its no-frills format. Revenues from membership fees jumped up by 13.8 percent, to $27.6 million from $24.2 million the prior year. Indeed, membership fees are so important to the operation that they added up to slightly more than half of the company's earnings in the quarter, 50.3 percent of $54.8 million in net income.

In another prop to the bottom line, the retailer slashed its pre-opening expenses by 29.0 percent, to $1.7 million from $2.4 million the prior year.

Average gross margin held steady at 10.8 percent, while costs ticked up a modest 20 basis points, to 6.7 percent from 6.5 percent of sales.

Jack Nugent, president and ceo, commented, "BJ's financial performance reflects continued strong sales in both our new and comp clubs, growing membership, which was up 13.5 percent for the year, and continued attention to expense control throughout our operations. We note with pride that last year was BJ's tenth consecutive year of improved profitability."

For all of last year, BJ's sales climbed higher by 17.3 percent, to $4.8 billion from $4.1 billion last year. Membership fees and miscellaneous revenues were up by 14.8 percent, to $103.8 million from $90.4 million. Same-store sales advanced a hefty 5.1 percent.

Average gross margin dipped by 10 basis points for all of 2000, to 9.4 percent from 9.5 percent, offsetting modestly lower costs. Operating expenses weakened by 10 basis points, to 7.0 percent from 7.1 percent the prior year.

BJ's Wholesale Club Inc.


Qtr. 2/3 (x000) 2001 2000 %CHG

Sales

$1,478,441a

$1,251,387a

18.1

Oper. income (EBIT)

87,138

75,914

14.8

Net income

54,796

47,661

15.0

Per share (diluted)

0.74

0.63

17.5

Average gross margin

10.8%

10.8%

-

SG & A expenses

6.7%

6.5%

-

12 months

2001

2000

%CHG

Sales

4,828,273a

4,115,825a

17.3

Oper. income (EBIT)

207,868

177,535

17.1

Net income

131,501

111,149

18.3

Per share (diluted)

1.77

1.47

20.4

Average gross margin

9.4%

9.5%

-

SG & A expenses

7.0%

7.1%

-


a-Net retail sales, excluding membership fees and other revenues. Membership fees in the fourth quarter rose by 13.8 percent, to $27.6 million from $24.2 million. 12-month revenues from membership fees increased by 14.8 percent, to $103.8 million from $90.4 million.

Chris Gigley | Contributing Writer, Casual Living

Chris Gigley has covered the home furnishings industry for more than 20 years as an editor and contributing writer.

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