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BJ’s Sales Rise 9.8% In Q1

5/17/2005 08:43:00 AM Eastern

Natick, Mass. — Citing business fundamentals, “member insight” and real estate initiatives as catalysts for future growth, BJ’s Wholesale Club kept its positive quarterly financials pumping with a 9.8 percent rise in its fiscal first-quarter sales and a climb in comparable club sales of 5.8 percent.

Revenue for the three months, ended April 30, rose to $1.8 billion, including membership fees, compared with $1.6 billion in the year-ago period, also including the fees. Comp-club results include a contribution of about three quarters of a percentage point from gasoline sales.

Net income for the first quarter increased to $18.6 million, up from a year-earlier $16.1 million.

“We delivered a healthy 5.8 percent comp-sales increase, exceeded our merchandise margin expectations and continued to drive down product cost through our global sourcing and e-sourcing initiatives,” said Mike Wedge, president/CEO.

However, operating income in the first three months dropped to $25 million from a year-ago $26.6 million, as the retailer posted higher costs and expenses in this year’s first quarter.

Results for the first quarter included $2.9 million of post-tax income resulting from a recovery of certain claims, and $1.8 million of post-tax expense to increase the company’s reserve for claims by various credit-card issuing banks. The net total of these two items was $1.1 million.

The $3 million charge (pretax) to increase the company’s credit-card reserve was driven primarily by an increase in BJ’s estimate of legal expenses to be incurred. The retailer is “vigorously” contesting all claims and said it will continue to explore all possible defenses and all possible claims against others.

At the end of the first quarter, BJ’s had 158 clubs in operation, up from 150 at the end of the same three months last year.

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