BJ's raised its full-year earnings guidance and left its sales guidance alone, and the chief financial officer says the difference is gasoline
Eleven point nine percent, and then three point one.
Those are the same comparable club sales number for BJ's Wholesale Club in the thirteen weeks to 1 August, before and after gasoline. Net sales were $6.091bn against $5.257bn. Net income was $173.9m against $150.7m, and diluted earnings per share $1.36 against $1.14. The company raised its adjusted earnings guidance for the year to a range of $4.60 to $4.80.
It did not raise the sales guidance. Comparable club sales excluding gasoline are still expected to rise 2.0 to 3.0 percent, exactly where they were.
The chief financial officer, Laura Felice, put the two together in one sentence. The company delivered profitability, grew membership fee income "and outperformed on gas, all of which enabled us to raise our full year adjusted EPS guidance," while "maintaining our full year comp sales guidance." That is the company explaining its own raise, which is worth more than any outside reading of it.
Membership is the part that compounds
Membership fee income rose 9.9 percent to $135.6m, and the member count reached a record 8.5 million. That line is close to pure margin and it moves slowly in both directions, which is why a warehouse club is worth more than its shelf economics suggest. Six-month membership fee income was $268.0m against $243.7m.
The club count is 267, with 206 fuel locations across 22 states. Three clubs and one gas station opened in the quarter, and capital spending for the year is guided at about $800m.
Two things helped and neither is sized
Merchandise gross margin, which excludes gasoline and membership fees, fell about 20 basis points. The company says that reflects continued investment in pricing, "partially offset by tariff refund benefits recognized." No figure for the refunds appears anywhere in the release.
Operating expenses rose to $851.2m from $786.4m on labour, occupancy and depreciation from newly owned clubs. Those increases, the company says, were "partially offset by a gain recognized in connection with a sale-leaseback transaction in the second quarter." That gain is not sized either.
Both disclosures are ordinary and both are real. What they mean together is that the quarter's beat contains two contributions a reader cannot measure and cannot carry into next year.
The share count did some of the work
Net income rose 15.4 percent. Earnings per share rose 19.3 percent. The gap is the buyback: 1,384,278 shares for $124.1m in the quarter, 3,498,278 for $330.7m across six months, with about $422.1m of authorisation left. Diluted shares fell from 132.5m to 127.7m.
Across the first half the picture is flatter than the quarter suggests. Six-month net income was $316.6m against $300.5m, a rise of 5.4 percent.
Filed with the results, in the same 8-K, is the retirement of Paul Cichocki as chief commercial officer, effective the day the numbers came out. He told the company on 19 August. He stays as an executive adviser part-time to 1 October and on call to 1 April, with base salary set at $500,000 and cut to $100,000 on 1 October.
