Top Ten
Year's Best
Features
Sector Reports
1. Analogic Corp.
2. State Street Corp.
3. BJ's Wholesale Club
4. Charles River Labs
5. Yankee Candle
6. Staples
7. Gillette
8. TJX Cos.
9. Kronos
10. Investors Fin. Svcs.
2003 Globe 100
Company of year
Comeback of the year
Economy still sputters
Bulls and Bears
Employment
Globe 100 rookies
Globe 100 CEO survey
15 years of Globe 100
Banking
Biotech
Financial Services
Medical devices
Retail
Technology
Telecom
The 2003 Globe 100
All the charts
|
|
|
3. B J ' S W H O L E S A L E C L U B
Low-cost chain faces industrial-size rivals
|
f its stores weren't so no-frills, a BJ's Wholesale Club (BJ) might be mistaken for a supermarket specializing in extra-large sizes. By BJ's own estimate, 70 percent of the items in its roughly 140 stores can be found at a traditional supermarket.
By keeping costs low, carrying narrower assortments, and charging annual dues of about $40 to many of its customers, Natick-based BJ's can underprice grocery-store competition. BJ's targets two groups: small businesses and suburban families.
BJ's business model works fine when BJ's is the only club store in town. In the Northeast, that was often the case until recently. Now BJ's faces the double whammy of a weak economy and more competition from giant rivals -- Costco Wholesale Corp. and Sam's Clubs, a division of Wal-Mart Stores Inc. Under chief executive Michael T. Wedge, BJ's aims to set itself apart by focusing on the consumer segment of its customers, particularly women, and by getting existing club members to spend more. In 2002, BJ's sales rose to $5.73 billion from $5.1 billion. Net income jumped 59.1 percent to $130.9 million from $82.3 million.
But the numbers don't tell the complete story. Before it was spun off as an independent business in 1997, BJ's had a corporate parent that ran another retail chain, now out of business. BJ's is liable for some of that chain's leases. The reserve that BJ's established to cover potential liabilities has had a major influence on its bottom line. Money set aside for the reserve pulled down BJ's net income in 2001. A year later, BJs re-evaluated its reserve and some money was added back to the bottom line. When items related to the lease reserve were excluded, BJ's had net income from continuing operations of $133.8 million in 2002, vs. $146.8 million in 2001.
CHRIS REIDY
© Copyright 2003 New York Times Company |