BJ's first-quarter earnings top estimates. Consumers still 'discerning' in their spending, says CEO.

By Ciara Linnane and James Rogers

BJ's profit, revenue and same-store sales exceeded expectations and it backed full-year guidance

BJ's Wholesale Club Holdings Inc.'s stock rose 2.6% Thursday morning as the company's fiscal first-quarter earnings exceeded expectations and it backed its full-year guidance.

Marlborough, Mass.-based BJ's (BJ) reported net income of $111.0 million, or 83 cents a share, for the quarter to May 4, down from $115.9 million, or 85 cents a share, in the year-earlier period. Adjusted per-share earnings came to 85 cents, ahead of the 83-cent FactSet consensus.

"The first quarter was marked by continuing strong growth," said Chief Executive Bob Eddy during a conference call to discuss the results. BJ's expected the first quarter to be a "tough lap" on the same period last year, he added.

Related: BJ's delivers Q4 earnings beat but guidance impacted by 'macro-driven uncertainty'

The CEO also said that customers are showing a degree of caution, particularly when it comes to some big-ticket items. "Consumers remain discerning in their purchasing," he said, explaining that customers are waiting to buy patio sets exactly when the weather turns, rather than purchasing them in advance.

However, BJ's is seeing share gains among lower-income customers, according to Eddy. "They have been spending more of their non-government benefit wallet with us," he said.

Revenue rose 4.1% to $4.919 billion from $4.621 billion a year ago, also ahead of the $4.855 billion FactSet consensus.

Related: 'We know consumers are feeling pressured': Target to cut prices on 5,000 items ahead of Memorial Day weekend

Same-store sales rose 1.6%, while FactSet was expecting a 0.2% rise. Excluding gasoline, same-store sales rose 0.6%.

Digitally enabled same-store sales grew 21%, and membership-fee income rose 8.6% to $111.4 million. The FactSet consensus was for a membership-fee income of $108.7 million.

"During the first quarter, we delivered strong increases in membership, traffic and unit volumes," Eddy said in prepared remarks. "This resulted in revenue growth and market share gains in our clubs and at our gas stations."

Related: Target, Aldi cut prices on staples like chicken, diapers and pet food as shoppers rack up grocery debt

Chief Financial Officer Laura Felice said the company's outlook for fiscal 2024 remains unchanged.

The company said in March when it released fourth-quarter earnings that it expected same-store sales to rise 1% to 2% and for adjusted EPS to range from $3.75 to $4.00.

During the conference call, Eddy was asked about pricing actions by competitors. Rival Target Corp. (TGT) announced lower prices on about 5,000 popular items earlier this week, with plans to cut prices for thousands more items during the summer.

Related: Walmart's stock surges to record after a grand-slam earnings report

"We will just keep sticking to our knitting," the BJ's CEO replied.

The stock has gained 24.1% in the year to date, while the S&P 500 has gained 11.7%.

-Ciara Linnane -James Rogers

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05-23-24 0939ET

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