BJ's Wholesale on solid ground post-IPO

Dive Brief:

BJ's Wholesale Club on Tuesday reported that second quarter net sales rose 4.3% year over year to $3.2 billion, as comparable sales (excluding gasoline) rose 2%, its fourth straight quarter of comp merchandise sales gains.
The membership-based retailer, which went public in June, posted a net loss in the quarter of $5.6 million, down from net income of $19.7 million a year ago, according to a company press release. Operating income in the quarter fell to $38.7 million from to $74.8 million a year ago. However, excluding charges and costs related to its initial public offering, that figure rose to $89.7 million from $78.9 million, the company said.
Membership fee income rose 9.7% to $70.4 million from $64.2 million in the year-ago quarter, about equally thanks to a fee increase and to new memberships, executives said in a conference call with analysts on Tuesday morning.

Dive Insight:

BJ's performance in its second quarter was largely in line with expectations, and it appears to be on solid footing as a public company.

"[BJ's] continued to post favorable results, with the second quarter in line with our expectations," Moody's Lead Retail Analyst Charlie O'Shea said in comments emailed to Retail Dive. "Sales and membership income growth indicate that merchandise and store experience are resonating with its base, and we expect these trends to continue to improve as [BJ's] executes its strategic transition.”

The company now says it expects full fiscal year net sales to range between $12.6 billion and $12.7 billion and merchandise comparable store sales excluding gasoline sales to rise 1.8% to 2.1%.

The company used some of its total net IPO proceeds of $691 million to cut down the $623 million principal amount of its debt, plus $10.2 million of accrued and unpaid interest and prepayment premium under a second lien term loan. The move helped boost its credit ratings with both Moody's and S&P, which now stand at B1 from Moody's (up from B3), and B at S&P, (up from B-), according to the press release.

Executives on the call said they saw a noticeable bump from nearby Sam's Club stores that have closed, a move Walmart made in the new year to boost e-commerce in favor of brick-and-mortar sales for its own membership-based retail unit. Costco has similarly noted a benefit from the Sam's Club closures.