BJ's Wholesale Club posts strong Q4, fiscal 2022 results

The retailer surpassed $1 billion in adjusted EBITDA for the first time in the company’s history.

3/8/2023

Continued club growth, comparable club sales and all-time high renewal rates contributed to BJ’s Wholesale Club’s strong Q4 and fiscal 2022 results, which the warehouse club retailer announced.

“2022 was a record year, having surpassed $1 billion in adjusted EBITDA for the first time in the company’s history,” said Bob Eddy, president and CEO of BJ’s Wholesale Club. “Our membership base is stronger than ever with our tenured renewal rate reaching an all-time high of 90%. Our continued focus on value has driven traffic and market share gains all year. Our digital business is growing and we’re successfully expanding our footprint. The investments we continue to make in our company position us well for long-term growth and sustainable value creation.”

BJ’s total comparable club sales increased by 9.8% in the quarter compared to the same period in 2021. Excluding the impact of gasoline sales, comparable club sales increased by 8.7% in the quarter compared to the same period in 2021. Comparable club sales increased by 13.4% in fiscal 2022 compared to fiscal 2021. Excluding the impact of gasoline sales, comparable club sales increased by 6.5% in fiscal 2022 compared to fiscal 2021.

BJ’s gross profit increased to $903.2 million in the quarter from $797.2 million in the same quarter of 2021. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by 30 basis points over the fourth quarter of 2021. Gross profit increased to $3.43 billion in fiscal 2022 from $3.08 billion in fiscal 2021. Merchandise gross margin rate decreased by approximately 20 basis points over 2021. The quarter-to-date merchandise margin rate benefited as a result of improved inventory management. On a year-to-date basis, merchandise margin was impacted by increased supply chain costs as well as investments in inflationary categories and markdowns in general merchandise inventory, the company said.

BJ’s operating income increased to $192.8 million, or 3.9% of total revenues, in the fourth quarter compared to $157.1 million, or 3.6% of total revenues, in the fourth quarter of fiscal 2021. Operating income increased to $738.0 million, or 3.8% of total revenues, in fiscal 2022 compared to $617.3 million, or 3.7% of total revenues, in fiscal 2021.

Income from continuing operations increased to $129.4 million in the quarter compared to $107.6 million in the same period in 2021. Year-to-date income from continuing operations increased to $514.3 million in fiscal 2022 from $426.8 million in fiscal 2021. Net income increased to $129.8 million in the quarter compared to $107.6 million in the quarter of the prior year. Year-to-date net income increased to $513.2 million in fiscal 2022 compared to $426.7 million in fiscal 2021.

The retailer's adjusted EBITDA increased 18.7% to $271.3 million in Q4, compared to $228.6 million in Q4 of the prior year. Adjusted EBITDA increased 18% to $1.04 billion in fiscal 2022 compared to $879.6 million in fiscal 2021.

“We remain confident that our advantaged business model, continued focus on executing our strategic priorities and commitment to delivering great value to our members will continue to drive strong results for our business,” said Laura Felice, executive vice president, chief financial officer of BJ’s Wholesale Club. “We look ahead to fiscal 2023 with the understanding that there is still significant uncertainty in the macroeconomic backdrop as well as its influence on the U.S. consumer.”

BJ's provided the following guidance for fiscal 2023:

Comparable club sales, excluding the impact of gasoline sales, to increase 4% to 5% year-over-year;
Membership fee income to increase 5% to 6% year-over-year;
Merchandise gross margins to improve approximately 40 basis points year-over-year;
EPS to remain approximately flat year-over-year, including the 53rd week benefit of low-teens cents per share; and
Capital expenditures of approximately $450 million.

BJ's also provided its long-term financial targets for annual growth, on average:

Comparable club sales growth of low-to-mid single digit percent, excluding the impact of gasoline sales;
Total revenue growth of mid-single digit percent; and
EPS growth of high-single to low-double digit percent.

“As we reflect on the past five years, we have transformed our company, delivering significant growth across virtually every aspect of our business,” Eddy said. “Looking ahead, we are excited to continue this momentum, which is powered by a world-class team and a culture of operational excellence. We are laser-focused on improving member loyalty, driving an unbeatable member experience, delivering value conveniently through our digital offerings and expanding our footprint. Furthermore, we remain committed to maximizing shareholder value through prudent capital allocation.”

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