Minus Charge, BJ's Numbers Please Street

By Don Hogsett -- Home Textiles Today, 3/7/2005 12:00:00 AM

Natick, Mass. — —

Natick, Mass. —Nicked by a $7.2 million non-cash charge to correct errors in the way it accounted for leases, BJ's Wholesale Club saw a 4.4 percent dip in fourth quarter profits, to $47 million from $49.2 million last year.

But stripping out one-time items, the no-frills retailer said its earnings in the period actually advanced 12.3 percent, helped by rising sales and stronger margins, to 73 cents per fully diluted share, up from 65 cents per share during the same period a year ago.

Wall Street was wowed, and sent the retailer's share price rocketing up 8.9 percent, or $2.73 a share, to $33.30 in heavy mid-day trading on Tuesday, March 1, the day the news was released.

Overall sales, including membership fees, advanced 7 percent, to $2.1 billion from $1.9 billion last year. Same-store sales improved 3.4 percent, including a contribution from gasoline sales of about 1.2 percent. For all of last year, sales jumped 10.2 percent, to $7.4 billion from $6.7 billion, while same-store sales jumped 6 percent, including a 1.1 percent contribution from gasoline sales.

Giving a lift to the bottom line, in addition to stronger sales, were widening margins, which improved 50 basis points, or one-half of a percentage point, to 10 percent from 9.5 percent a year ago. But acting as a partial offset, costs climbed as well, rising 40 basis points, or four-tenths of a percentage point, to 7.8 percent of sales from 7.4 percent.

BJ's Wholesale Club Inc.