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BJ’s profit drops, but beats forecasts

Budget-conscious shoppers have turned to BJ’s Wholesale Club in the recession, but price deflation is testing the company. Budget-conscious shoppers have turned to BJ’s Wholesale Club in the recession, but price deflation is testing the company. (Charles Krupa/ Associated Press)
Associated Press / August 20, 2009

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PORTLAND, Ore. - BJ’s Wholesale Club says wet weather, food-price deflation, and weak consumer spending hurt its quarterly results, but the warehouse club chain beat analysts’ estimates and raised its full-year profit outlook.

The Natick, Mass., company earned $35.1 million, or 64 cents per share, for the quarter ended Aug. 1, down from $36.5 million, or 61 cents, a year earlier, when results were boosted by a $2 million income-tax settlement that added 3 cents per share.

Revenue fell roughly 5 percent, to $2.5 billion.

Analysts surveyed by Thomson Reuters had forecast profit of 62 cents per share on revenue of $2.56 billion, on average.

Chief executive Laura Sen said low prices continue to be a draw for consumers trying to stretch their budgets. BJ’s also benefited from more cost controls and improved margins during the quarter. Shoppers have turned to warehouse clubs during the economic downturn. But the recession and lower gas prices continued to be a drag on the retailer. BJ’s said sales of discretionary items like electronics and jewelry suffered, while sales of cereal, meat, and household items remained strong.

Same-store sales fell 7.7 percent, due to lower revenue from gasoline. Excluding gasoline, the figure increased 2.9 percent. Such sales (at stores open at least a year) are considered a key indicator of a retailer’s health.

The company said deflation will continue to be a challenge. But BJ’s expects solid margins for the year and raised its full-year earnings guidance to $2.46 to $2.56 per share.