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PORTLAND — BJ's Wholesale Club said Wednesday that wet weather, food deflation and weak consumer spending hurt its second-quarter results, but the warehouse club chain beat analysts' estimates and raised its full-year profit outlook.
The Natick, Mass.-based company earned $35.1 million, or 64 cents per share, for the quarter ended Aug. 1, down from $36.5 million, or 61 cents per share, a year earlier. The year-ago results were boosted by a $2 million income-tax settlement that added 3 cents per share.
Revenue fell roughly 5 percent to $2.57 billion.
Analysts surveyed by Thomson Reuters had forecast profit of 62 cents per share on revenue of $2.56 billion, on average.
BJ's CEO Laura Sen said low prices continue to be a draw for consumers trying to stretch their budgets. And despite lower prices for meat, milk and other commodity-driven products, the company increased its sales of food and other consumable items.
BJ's also benefited from more cost controls and improved margins during the quarter.
Shoppers have increasingly turned to warehouse clubs like BJ's during the economic downturn for lower prices on food and other items they use every day. But the weight of the recession and lower gas prices continued to be a drag on the retailer as total sales dropped 5 percent to $2.51 billion.
BJ's reported that sales of discretionary items like electronics, jewelry and seasonal items suffered, while sales of cereal, meat and household items remained strong.
Same-store sales fell 7.7 percent during the quarter due to lower revenue from gasoline. Excluding gasoline, the figure increased 2.9 percent.
Same-store sales — sales at stores open at least a year — are considered a key indicator of a retailer's health because they measure sales at existing stores and exclude the effects of expansion.
Stifel Nicolaus & Co. analyst Thomas Shaw said that BJ's margins in its core business remain strong but it's unclear yet if that is due to competitive pricing or failure to maintain proper margin controls in proper years and now just benefiting from the change in approach. Shaw increased profit estimates for the full 2009 fiscal year from $2.43 to $2.58, anticipating continued margin and operating cost improvements.
Looking forward, the company said deflation will continue to be a challenge for the third and fourth quarter and that it anticipates consumers will continue to keep tight controls on their spending through the holiday season. But BJ's said it expects solid margins for the year and raised its full-year earnings guidance to $2.46 to $2.56 per share from $2.44 to $2.54 per share.
Shares of BJ's rose 67 cents, or more than 2 percent, to close at $31.99 Wednesday.
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AP Writers Vinnee Tong and Michelle Chapman contributed to this report from New York.
