BJ's sees 24% rise in profit in period

Gas, staple sales lift club's results

Shoppers in the BJ's Wholesale Club store in Salem, N.H., yesterday. BJ's also raised its full-year profit forecast to $2.20 to $2.30, up from an earlier view of $2.10 to $2.20. (Charles Krupa/Associated Press)

NEW YORK - BJ's Wholesale Club Inc. posted a 24 percent rise in quarterly profit yesterday, helped by an increase in shoppers coming to its stores and stronger-than-expected results from its gasoline stations.

The number three US warehouse club operator forecast earnings for the current quarter, which includes the crucial holiday season, that could beat current Wall Street estimates.

The Natick, Mass., company expects shoppers to continue to flock to its clubs for low prices on staples like fresh food, prepared meals, and paper towels. BJ's also raised its full-year profit forecast, based on strong results from the just-completed third quarter.

The results come as other retailers, including Target Corp. and Ross Stores Inc., have forecast fourth-quarter earnings that could miss Wall Street estimates.

"BJ's continues to remain one of the few bright spots in retail as consumers continue to trade down, consolidate trips, and look to maximize dollars spent through the warehouse club channel," JPMorgan analyst Charles Grom wrote in a note.

Shoppers pay an annual fee to shop at warehouse clubs like BJ's, Costco Wholesale Corp., and Wal-Mart Stores Inc.'s Sam's Club to get discounts on everything from groceries and televisions to bulk-size packages of toilet paper.

Many clubs also operate gas stations, luring shoppers with prices that are typically lower than those of rivals. This year, clubs have been a bright spot in the struggling retail sector as shoppers stretch increasingly limited budgets, especially when it comes to food.

"It is clear that we are capturing a bigger share of our members' grocery budget, and we believe we are benefiting from a decline in casual restaurant dining," president Laura Sen said on a conference call.

BJ's profit for the third quarter ended Nov. 1 rose to $28.2 million, or 48 cents per share, from $22.7 million, or 35 cents per share, a year earlier.

Excluding a charge for closing a club in South Carolina, earnings were 49 cents per share. Analysts on average were expecting 48 cents, according to Reuters Estimates.

The company had forecast earnings of 45 cents to 49 cents per share, up from a previous view of 36 cents to 40 cents, due to strong gas station profits.

Rapid declines in gasoline prices can help BJ's margins because the company replenishes its fuel supplies daily. Traditional gas stations may turn their inventory weekly, meaning they are often selling supplies they bought when prices were higher.

During the quarter, the national average retail price for gasoline fell from roughly $3.80 a gallon to about $2.65, according to data from the Energy Information Administration.

BJ's previously said that third-quarter sales rose 13.4 percent to $2.4 billion, while sales at its clubs open at least at year rose 11.9 percent.

It forecast fourth-quarter same-store sales to rise 4.5 percent to 5.5 percent, and earnings of 86 cents to 90 cents per share for that period. Analysts on average had been expecting 87 cents.

For the full year, BJ's forecast earnings per share of $2.20 to $2.30, up from an earlier view of $2.10 to $2.20. It expects profit of $2.27 to $2.39 per share for the year ending Jan. 30, 2010.