BJ's Wholesale Club Holdings Stock

BJ's Wholesale Club Holdings, Inc. is a leading warehouse club operator concentrated primarily on the eastern half of the United States. The company delivers significant value to its members, consistently offering 25% or more savings on a representative basket of manufacturer-branded groceries. The company provides a curated assortment focused on perishable products, continuously refreshed general merchandise, gasoline and other ancillary services, coupon books, and promotions to deliver a differentiated shopping experience that is further enhanced by its digital capabilities.

In its New England markets, which have high population density and generate a disproportionate part of U.S. gross domestic product (GDP), the company operates more than three times the number of clubs compared to the next largest warehouse club competitor. In addition to shopping in its clubs, members are able to shop when and how they want through its website, bjs.com, and its highly rated mobile app, which allows them to use its buy-online-pickup-in-club (BOPIC) service, curbside delivery, same-day home delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces where members receive preferential pricing by linking their membership. The company also launched Same-Day Select in the first quarter of fiscal year 2022, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day grocery deliveries over a one-year period.

The company has more than six and a half million members paying annual fees to gain access to savings on groceries and general merchandise and services.

Clubs

The company designs its smaller format clubs to serve markets whose population is not sufficient to support a larger club or that are in locations, such as urban areas, where there is inadequate real estate space for a larger club. Including space for parking, the amount of land required for a BJ’s club generally ranges from ten acres to approximately fourteen acres. The company’s clubs are located in both free-standing locations and shopping centers.

The company’s ability to achieve profitable operations depends upon high sales volumes and the efficient operation of its warehouse clubs. The company buys most of its merchandise directly from manufacturers and route it to cross-docking consolidation points (distribution centers) or directly to its clubs. The company-operated distribution centers receive large shipments from manufacturers and quickly ship these goods to individual clubs, generally within 24 hours.

Merchandising

The company services its existing members and attract new members by providing a broad range of high quality, brand name and private label merchandise at prices that are consistently lower than the prices of traditional retailers, including discount retailers, supermarkets, supercenters and specialty retail operations.

The company groups its merchandise offerings into two divisions: grocery and general merchandise and services.

Grocery: Consists of the company’s meat, produce, dairy, bakery, deli and frozen products, packaged foods, beverages, detergents, disinfectants, paper products, beauty care, adult and baby care and pet foods, which constituted approximately 85% of its merchandise sales for fiscal year 2022.

General Merchandise and Services: Consists of optical, tires, small appliances, televisions, electronics, seasonal goods, gift cards, and apparel, which constituted approximately 15% of the company’s merchandise sales for fiscal year 2022.

BJ’s consumer-focused private label products, sold under Wellsley Farms and Berkley Jensen brands, comprised approximately 24% of the company’s total net sales, excluding gasoline, in fiscal year 2022. The company also offers a number of specialty services that are designed to enable members to complete more of their shopping at its clubs and to encourage more frequent trips to the clubs. Many of these services are provided by outside operators under license from the company. Specialty services include full-service optical centers; tire installation services; a propane tank filling service; home improvement services; travel services; cell phone kiosks; and product protection plans.

Omnichannel Offerings

The company has built a robust omnichannel portfolio which consists of BJs.com, BerkleyJensen.com, Wellsleyfarms.com, as well as the BJ’s mobile app. The company has made it easier for members to purchase, review products, digitally add coupons to their membership card and view annual member savings. BJs.com showcases its club assortment available to members along with review ratings and coupons for added savings. The above omnichannel portfolio offers the company’s members convenient ways to shop, including its BOPIC service, curbside delivery, same-day home delivery or traditional ship-to-home service. The company’s app delivers personalized promotions, improved shopping experiences, and an efficient gateway to its fulfillment options. The company’s members appreciate the convenience of the BJ’s mobile app, as evidenced by millions of downloads since fiscal year 2019, as well as ExpressPay, which allows members to skip checkout lines when they shop in club by paying with their phones. In the fourth quarter of fiscal year 2022, the company announced the launch of its retail media program, BJ’s Media Edge, using Microsoft PromoteIQ. The program offers brands a comprehensive advertising solution to connect with BJ’s members.

Membership

The company has a large base of more than six and a half million paid memberships as of January 28, 2023. The company targets customers care about value, quality and convenience and shop at warehouse clubs for their family needs. The company offers two core types of memberships: Inner Circle memberships and business memberships.

The company is rebranding its higher tier membership from BJ’s Perks Rewards to Club+, which offers members the opportunity to earn 2% cash back on most in-club and bjs.com purchases and 5-cent per gallon discount on gasoline. The company are also launching its new BJ's One and BJ's One+ Mastercard credit cards. These cards provide members with the opportunity to earn up to 5% cash back on purchases made at its clubs or online at bjs.com and up to a 15-cent per gallon discount on gasoline when paying with a BJ's One or BJ's One+ Mastercard at its BJ’s Gas locations.

Advertising and Public Relations

The company promotes customer awareness of its clubs primarily through social media, direct mail, public relations efforts, radio advertising, community involvement, new club marketing programs and various publications sent to its members periodically throughout the year. These methods result in lower marketing expenses compared to typical retailers.

Competition

The company competes with a wide range of national, regional and local retailers and wholesalers selling food and/or general merchandise in its markets, including supermarkets, supercenters, general merchandise chains, specialty chains, gasoline stations and other warehouse clubs, some of which have significantly greater financial and marketing resources than BJ’s. Major competitors that operate warehouse clubs include Costco Wholesale Corporation and Sam’s Clubs (a division of Wal-Mart Stores, Inc.), both of which operate on a multi-national basis.

Intellectual Property

The company has invested significantly in the development and protection of its well-recognized brands, including its private label brands, Wellsley Farms and Berkley Jensen. BJ’s Wholesale Club, BJ’s, Wellsley Farms, Berkley Jensen, My BJ’s Perks, BJ’s Easy Renewal, BJ’s Gas, BJ’s Perks Elite, BJ’s Perks Plus, Inner Circle, ExpressPay, and BJ’s Perks Rewards, are all registered trademarks of the company.

Government Regulation

The company’s operations, including the manufacturing, processing, formulating, packaging, labeling and advertising of products are subject to regulation by various federal agencies, including the Food and Drug Administration (the FDA), the Federal Trade Commission (the FTC), the U.S. Department of Agriculture (the USDA), the Consumer Product Safety Commission and the Environmental Protection Agency.

Seasonality

The company’s business is moderately seasonal in nature. Historically, the company’s business has generally realized a slightly higher portion of net sales, operating income and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively. The company’s quarterly results have been and will continue to be affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, the company’s financial results for any single quarter or for periods of less than a year (year ended January 28, 2023) are not necessarily indicative of the results that may be achieved for a full fiscal year.

History

The company was founded in 1984. The company was incorporated in 2011. The company was formerly known as Beacon Holding Inc. and changed its name to BJ's Wholesale Club Holdings, Inc. in 2018.