BJ's Wholesale Club (BJ, Financial) is trading modestly higher today after revealing that a director purchased 2,455 shares at $81.26, totaling approximately $199K. This follows some sales by its CEO in early September. Though not a large purchase, it indicates confidence in the stock's value after its Q2 (Jul) report last month.
- BJ's beat EPS estimates in Q2, marking its largest EPS upside in five quarters. Revenue increased by 4.9% year-over-year to $5.21 billion, also surpassing expectations. The company reaffirmed its full-year EPS guidance at $3.75-4.00, but noted that long-term investments might push EPS toward the lower end of that range.
- The company plans to invest heavily for future growth, particularly in its real estate pipeline, which is expanding faster than it has in years. BJ's recently announced a new store opening in Palm Coast, Florida.
- BJ is set to open 11 new clubs over the next six months, a significant expansion given its current 244 locations. New clubs opened since its IPO have shown comp sales growth more than three times the chain's average for the second quarter.
- Regarding consumer health, BJ reports that its members remain focused on value, with healthy spending at higher income levels and improvement at lower levels. Q2 saw increased trip frequency and overall spending growth across all income segments, highlighting the company's value proposition.
- BJ has positioned itself as a hybrid between warehouse clubs and grocery stores, offering bulk savings along with a wider assortment of perishable and grocery products. This strategy is paying off as more people eat at home and prioritize necessities over discretionary items.
Overall, while short-term investments may impact margins and EPS, management is confident that these expenditures will pay off in the long run. With the stock down 12% from its July highs, at least one director sees value in the current price.
