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SEATTLE — BJ's Wholesale Club Inc. is scheduled to report earnings for its fiscal second quarter Wednesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: BJ's is the nation's third-biggest warehouse club, with a heavier emphasis on food and consumable items than some of its competitors.
This approach has helped BJ's perform well during the recession as consumers regularly turned sought lower prices on items they use every day, and that offset softer sales of the company's discretionary offerings like furniture and electronics.
But that balance may not be as profitable for Natick, Mass.-based BJ's. Food prices have fallen, and consumers are continuing to keep tight control of their spending, making frugality the new normal.
BJ's same-store sales, or sales at stores open at least a year, have fallen in recent months compared with a year earlier. Same-store sales are considered a key indicator of a retailer's health as they measure continued performance at stores, excluding the influence of new stores.
The company's results suffer by comparison with last year because gasoline prices were much higher then.
BY THE NUMBERS: Analysts polled by Thomson Reuters expect the company to earn 62 cents per share on revenue of $2.56 billion for the quarter, which ended Aug 1. In the same period a year ago, BJ's earned $34.60 million, or 58 cents per share, on revenue of $2.67 billion.
ANALYST TAKE: J.P. Morgan analyst Charles Grom on Friday downgraded shares of the retailer to "neutral" from "overweight" saying falling food prices may be a hurdle the company cannot overcome. He expects BJ's same-store sales to suffer in the second half of the year. But he noted that customer traffic is gaining solidly, and BJ's is growing its club base, which should fuel a growth in membership.
Jefferies and Co. analyst Daniel Binder said falling food prices could hinder the retailer. He lowered his price target on BJ's shares to $30 to $32 from a previous range of $35 to $38. He maintained a hold rating but lowered his second-quarter earnings estimate.
STOCK PERFORMANCE: Shares of BJ's were relatively flat during the quarter, rising less than 1 percent. They closed Monday at $30.55, toward the low end of its 52-week range of $27.26 to 43.39.
