B.J.’s raises its outlook, domestics still dragging

Natick, Mass. – As several other chain retailers have done recently, B.J.’s Wholesale Club reported lower earnings for the second quarter but still managed to beat Wall Street’s expectations. The company also raised its earnings guidance for the balance of the year.

B.J.’s net income for the quarter ended Aug. 1 fell 3.9% to $35.1 million, or 64 cents per share. Merchandise margins were up 46 basis points compared to last year’s second quarter.

Total revenues fell 5.2% to $2.5 billion, with comps down 7.7%. Excluding the negative impact of lower gasoline prices compared to 2008, comps rose 2.9%.

Domestics was among the weaker performing categories during the quarter, executives said during the company’s quarterly conference call.

For the first half, profit rose 10.7% to $59.4 million, or $1.09 per share.

Total revenues declined 2.6% to $4.88 billion. The company did not provide first half comps.

For the full fiscal year, B.J.’s now expects net income of $134 million to $140 million and EPS of $2.46 to $2.56. In May, the company had estimated earnings would be in the range of $132.7 million to #138.2 million, with EPS from $2.44 to $2.54.

The warehouse club expects a full-year sales increase of 0.5% to 1.5% and a comp decrease of 1% to 3%, including a negative impact from gasoline sales of 6% to 8%. Merchandise comps excluding gas are expected to rise 4% to 6%. Previously, the company expected merchandise comps for the year of 5% to 7%.

The company plans to open a smaller, 85,000-square-foot prototype in Pennsylvania to test the water in middle-sized markets.

“Chain expansion is key to our growth strategy,” said Laura Sen, ceo.

The company is opening seven new clubs this year. In 2008, it opened four.



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