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Financial, Retail

BJ’s Wholesale Club Records Historic Fourth Quarter and Fiscal 2021, Announces Store Expansion Plans

2021 proved the best year in BJ Wholesale Club's history with strong Q4 and full. year results, as a result the company announced it is continuing its expansion by opening four new clubs.

3/3/2022
WESTBOROUGH, Mass. -- BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and fifty-two weeks ended January 29, 2022.

"2021 was the best year in the company’s history. Our strong financial results were underpinned by continued membership base expansion, a growing digital business and significant progress on key initiatives such as our real estate pipeline,” said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club. “We remain focused on our strategic priorities to drive long-term growth: attracting and retaining high-quality members, delivering value, improving convenience through our digital offerings and expanding our footprint. The future of our company is bright.”

BJ's Wholesale Club also announced its 2022 store expansion plans, read more here.

Fourth Quarter of Fiscal 2021 Highlights

-- Total comparable club sales increased by 8.8%, reflecting two-year stacked comp of 21.8%.

-- Comparable club sales, excluding gasoline sales, increased by 0.9%, reflecting two-year stacked comp of 16.8%.

-- Digitally-enabled sales growth was 19%, reflecting two-year stacked comp growth of 187%.

-- Earnings per diluted share of $0.78 reflects a 13.0% year-over-year increase.

-- Adjusted earnings per diluted share of $0.80 reflects a 14.3% year-over-year increase.

-- Net cash provided by operating activities was $98.5 million.

-- Announced agreement to acquire four distribution centers and related private transportation fleet from Burris Logistics, which is expected to bring end-to-end perishable supply chain in-house.

Additional Highlights

-- Total comparable club sales increased by 8.8% in the fourth quarter of fiscal 2021 compared to the fourth quarter of fiscal 2020. Excluding the impact of gasoline sales, comparable club sales increased by 0.9% in the fourth quarter of fiscal 2021 compared to the fourth quarter of fiscal 2020. Comparable club sales increased by 6.5% in fiscal 2021 compared to fiscal 2020, reflecting a two-year stacked comp increase of 22.4%. Excluding the impact of gasoline sales, comparable club sales decreased by 0.5% in fiscal 2021 compared to fiscal 2020, reflecting a two-year stacked comp increase of 20.8%.

-- Gross profit increased to $797.2 million in the fourth quarter of fiscal 2021 from $742.6 million in the fourth quarter of fiscal 2020. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 10 basis points over the fourth quarter of fiscal 2020. Gross profit increased to $3,078.7 million in fiscal 2021 from $2,979.0 million in fiscal 2020. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by approximately 20 basis points over fiscal 2020. Merchandise margins benefited from the mix of our general merchandise sales, improved private label penetration and continued execution of our category profitability improvement initiatives, partially offset by increased freight costs and price investments in inflationary categories.

-- Selling, general and administrative expenses ("SG&A") increased to $630.5 million in the fourth quarter of fiscal 2021 compared to $593.3 million in the fourth quarter of fiscal 2020. The increase was primarily driven by $13.6 million in investments in club team member wages, depreciation and amortization expense and other expenses related to volume and continued investments to drive strategic priorities. SG&A increased to $2,446.5 million in fiscal 2021 compared to $2,326.8 million in fiscal 2020. The increase was primarily driven by $43.1 million in investments in club team member wages, in addition to $19.3 million in occupancy costs, $17.5 million of accelerated stock-based compensation expense related to a former executive, increased depreciation and amortization and other operating costs related to volume and continued investments to drive strategic priorities.

-- Operating income increased to $157.1 million, or 3.6% of total revenues, in the fourth quarter of fiscal 2021 compared to $144.7 million, or 3.7% of total revenues, in the fourth quarter of fiscal 2020. Operating income decreased to $617.3 million, or 3.7% of total revenues, in fiscal 2021 compared to $642.4 million, or 4.2% of total revenues, in fiscal 2020.
Adjusted EBITDA increased 11.8% to $228.6 million in the fourth quarter of fiscal 2021, compared to $204.5 million in the fourth quarter of fiscal 2020. Adjusted EBITDA increased 2.6% to $879.6 million in fiscal 2021 compared to $857.5 million in fiscal 2020.

-- Income tax expense increased to $37.7 million in the fourth quarter of fiscal 2021 compared to $32.9 million in the fourth quarter of fiscal 2020, primarily due to higher pre-tax book income in the fourth quarter of fiscal 2021. Income tax expense decreased to $131.1 million in fiscal 2021 compared to $136.8 million in fiscal 2020, primarily due to higher excess tax benefits from stock based compensation in fiscal 2021. The increase in excess tax benefits resulted from increased share price and one-time exercises related to a former executive.

-- On November 16, 2021, the Company’s Board of Directors approved a new share repurchase program. The authorization allows the Company to repurchase up to $500.0 million of its outstanding common stock. The Company repurchased 700,967 shares of common stock, totaling $44.2 million, in the fourth quarter of fiscal 2021, including 249,625 shares totaling $15.3 million under the previously approved repurchase program which expired in the fourth quarter of fiscal 2021. In fiscal 2021, the Company repurchased 3,331,956 shares of common stock, totaling $179.2 million, including 2,880,614 shares totaling $150.4 million under the previously approved repurchase program which expired in the fourth quarter of fiscal 2021.

Fiscal 2022 Ending January 28, 2023 Outlook

“There continue to be several unknowns that make for significant variability as we look to frame guidance for the coming year. Among the most significant are headwinds that could materialize as we anniversary unprecedented levels of government aid and stimulus efforts. As an offset on the top line, we’re experiencing some of the highest levels of inflation that we’ve seen in several decades,” said Laura Felice, Executive Vice President, Chief Financial Officer, BJ’s Wholesale Club.

With these uncertainties in mind, the Company offers the following guidance details for fiscal 2022:

-- Merchandise comparable club sales to increase in the low-single digit range

-- Net sales to increase in the mid-single digit range

-- Membership fee income to grow in the mid-single digit range
Merchandise margins to remain flat year over year

-- Excess gas margin of approximately $40 million due to market conditions in 2021 to unwind

-- EPS to remain flat year over year after giving effect to the pending Burris acquisition of assets

-- Burris deal anticipated to close in the second quarter and to yield approximately $0.07 in EPS

-- Capital expenditures of approximately $350 million
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