BJ’s Sales Gain as Consumer Shopping Habits Stay Consistent

Shoppers across all income levels are weary of higher prices and searching for deals, but purchasing habits have remained stable, BJ’s Wholesale Club said.

The warehouse club’s members leaned into promotions and traded down to cheaper, private-brand products during the recent quarter. Overall, though, consumers were resilient and purchasing habits have stayed consistent, Chief Executive Bob Eddy said on a call with analysts Friday.

He noted the pause in federal government funding for the Supplemental Nutrition Assistance Program caused a meaningful disruption to sales early on in the fourth quarter, though trends have stabilized since the government reopened.

Currently, medium- and high-income shoppers are faring better than low-income consumers, who pulled back on some spending near the end of the recent quarter amid macroeconomic uncertainty and the SNAP pause.

“Many of our members are dealing with a considerable level of unpredictability in their everyday lives,” Eddy said.

Shares initially edged about 4% higher in premarket trading, after BJ’s posted higher revenue and better-than-expected earnings in its fiscal third quarter. But the stock later pared those gains and was recently trading roughly flat, at $90.42.

In keeping up with current trends, BJ’s said it will lean into private-brand products, launching in-house offerings ranging from tortilla and potato chips, to protein shakes and coffee pots. These products, on average, cost about 30% less than comparable name-brand goods, Eddy said. They also carry higher margins for the company.

The Marlborough, Mass., company said comparable-club sales, or those from stores and digital channels open for at least a year, climbed 1.1% during its quarter ended Nov. 1. Excluding gasoline, same-store sales were up 1.8%.

Comparable sales came in below the 2.4% gain that analysts polled by FactSet expected. However, William Blair analysts noted the miss was largely expected and not as steep as some had feared.

Third-quarter revenue rose nearly 5% to $5.35 billion. BJ’s said the increase was driven in part by higher membership fees, which continue to benefit from a price increase that went into effect early this year.

The company’s profit slipped to $152.1 million from $155.7 million a year ago. Stripping out one-time costs, quarterly earnings came in at $1.16 a share, ahead of Wall Street models for $1.09 a share.