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Earnings: BJ’s Wholesale Club Q2 profit exceeds expectations; revenues miss

Picture Courtesy: Mike Mozart (flickr)

BJ’s Wholesale Club Holdings (NYSE: BJ), which operates membership warehouse clubs, reported stronger than expected earnings for the second quarter of 2019. Revenues increased modestly but came in below the forecast. The company’s stock made strong gains immediately after the announcement early Thursday.

Earnings, on an adjusted basis, increased to $0.39 per share from $0.31 per share in the second quarter of 2018. Analysts had forecast slower growth. On an unadjusted basis, the company reported net income of $54.5 million or $0.39 per share for the July-quarter, compared to a loss of $5.6 million or $0.05 per share last year.

The Topline

At $3.35 billion, revenues were up %1.2 year-over-year but below the market’s expectation. Comparable club sales, excluding gasoline sales, increased 1.6% annually. Total comparable store sales were up 0.6%.

Also read: Costco reports Q3 earnings beat; US sales miss estimates

“Second quarter results for sales and earnings were in line with our expectations. We delivered improved margins and continued to grow earnings as we executed against our strategic priorities. Our sales were particularly strong in the second half of the quarter as weather improved, and we ended with strong momentum,” said CEO Christopher Baldwin.

Outlook

Looking ahead, the management expects net sales to be in the range of $12.9 billion to $13.2 billion in the whole of 2019 when merchandise comparable store sales are seen growing in the 1.5-2.5% range.

The company is looking for full-year net income between $200 million or $1.42 per share and $212 million or $1.50 per share. The estimate for adjusted EBITDA is $590 – $600 million. The outlook is in line with the guidance provided earlier.

Related: BJ’s Wholesale Club Q1 2019 Earnings Call Transcript

During the second quarter, the management repurchased around 2.5 million shares at a public offering at $25.41 per share. In June, CVC Beacon LP exited its position in BJ’s Wholesale by selling around 10 million shares of the company at a public offering.

Stock Performance

BJ’s shares are currently trading at the levels seen at the beginning of the year. The stock has lost 22% in the past twelve months. The stock rose sharply during Thursday’s premarket session, after closing the previous session higher.

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