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Monday, February 6, 2023

This Year Seems To Be Successful For BJ’s Wholesale Club (BJ) Stock, Rose 69%

Shares of U.S. regional club retailer BJ’s Wholesale Club Holdings Inc. (BJ) have increased more than 63 percent, to $37.15 in trading on December 16, since the beginning of the year. High demand for consumer goods in recent quarters has been the driver of growth. BJ’s Wholesale Club has recently presented positive results for the third quarter.

Comparable sales grew 19% year-on-year in the third quarter, slightly higher than growth at other major U.S. club stores. This indicates that in the face of the pandemic, BJ’s Wholesale Club was able to create a sustainable competitive advantage. According to management, the business also increased its market share in the past quarter and showed record profitability. Moreover the retailer was able to significantly improve its e-commerce segment’s performance, which was also facilitated by restrictions on social activity in the United States.

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BJ was therefore forced to increase costs in the first quarter of the pandemic, which had a negative impact on profits. The decline ended, however in the third quarter, and higher selling prices helped offset the cost increase.

In the third quarter, the operating profit of the company rose to $190 million, representing about 5 percent of revenue. This led to an increase in adjusted earnings of 120 percent, to $0.88 per share.

The cash flow of the discount store firm was also strong, rising to over $800 million during the first three quarters of the year.

Throughout the pre-holiday season, the company expects strong sales to continue. The firm does not however, give specific forecasts for the entire quarter.

Nevertheless it is obvious BJ’s Wholesale Club Holdings Inc. (BJ) is becoming a more serious competitor to national chains such as Costco or Walmart’s Sam’s Club, although it remains in the position of a regional leader in warehouse club.

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