Soft Home Rebounding at BJ's

By Cecile B. Corral -- Home Textiles Today, 11/27/2006 12:00:00 AM

Natick, Mass. —

BJ's Wholesale Club boasted that its fashion departments — including soft home — recently experienced a rebirth in comp sales — while noting that last year's economy was slowed by already high fuel costs and hurricanes.

"Based on the cycling of last year's fuel spike in the third quarter, we predicted improving trends for this business, and that turned out to be the case," said Michael Wedge, president and ceo, said during BJ's third-quarter earnings conference call.

While comp sales for the fashion departments were negative 12% for the first two quarters, during the third quarter comp sales improved from minus-15% in August to minus-9% in September to minus-2% in October — yielding an upward 13 percentage point trend change in a three-month period, Wedge said.

The company reported third-quarter net income of $18.3 million, down 34.2% from $27.8 million for the same period one year ago. Net sales were $1.98 billion, up 2.9% over revenues of $1.92 billion a year ago. Comp-store sales were virtually flat, up just 0.1%.

BJ's fashion departments — soft home, apparel and jewelry — represent the 170-unit warehouse club chain's "most discretionary" segment of business.

Fashion goods aren't the only businesses titling up during these better economic times. High-end and luxury goods — including better sheets — are becoming more important at BJ's, too.

"In the past we were too clustered around the middle," he said. "So we've made improvements where we are offering kind of super, premium-type items across the board." Wedge said the merchandise team "hasn't fully redefined the pricing architecture of the whole assortment yet, but we are seeing things — whether it is in the sheet department or the coffee-maker department — where stretch items, the high-end items, are becoming the best selling items in those categories."

BJ's fourth-quarter holiday strategy will test the limits of that idea. For example in December, the company is adding a $250,000, 41-karat platinum necklace to its www.bjs.com website.

The internet will be key this holiday for BJ's, the company said. After launching a transactional website in September, it is ramping up the site with 700 additional items by the end of this month, bringing the total count to 2,000 online offerings — many of which are consumer electronics. Soon, it will offer direct shipping.

On the real estate front, five new clubs are wscheduled to open during the fourth quarter — one in Virginia, two in New York and two in Florida.