BJ's Wholesale Club Holdings, Inc. (BJ) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate a positive outlook. Despite a slight drop in adjusted EPS due to a legal settlement, the company shows strong growth in digital sales, membership, and inventory management. The strategic expansion into new markets and focus on value and convenience suggest optimism. The Q&A reveals confidence in future growth, although some responses lacked detail. Given the positive guidance and strategic initiatives, the stock price is likely to rise in the short term.
Key Financial Performance
Net Sales Net sales for the quarter were approximately $5.2 billion, growing 4.8% over the prior year. The growth was attributed to increased traffic and units sold.
Total Comparable Club Sales Increased 1.1% year-over-year, including gas sales. The average price of gas declined mid-single digits year-over-year, impacting the overall growth.
Merchandise Comparable Sales Increased by 1.8% year-over-year and by 5.5% on a 2-year stack. Growth was driven by investments in Fresh 2.0 and category management processes.
Digitally Enabled Comparable Sales Grew 30% year-over-year and 61% on a 2-year stack. Growth was driven by strength in BOPIC, same-day delivery, and ExpressPay.
Membership Fee Income (MFI) Grew 9.8% to approximately $126.3 million in the third quarter. Growth was driven by strong membership acquisition, retention, and a fee increase.
Merchandise Gross Margin Rate Flat year-over-year as investments were made in the business and members.
SG&A Expenses Approximately $788.2 million, deleveraged slightly as a percentage of net sales year-over-year. Adjusted for a legal settlement benefit last year, SG&A as a percentage of net sales was about flat year-over-year.
Comp Gallons in Gas Business Grew 2% year-over-year, significantly outpacing the industry, which declined low single digits.
Adjusted EBITDA Down about 2% year-over-year to $301.4 million, largely due to lapping the benefit of a legal settlement last year. Adjusted EBITDA grew approximately 5% year-over-year when normalized for the settlement.
Adjusted Earnings Per Share $1.16, decreased approximately 2% year-over-year due to the legal settlement. Adjusted earnings per share grew approximately 8% year-over-year when normalized for the settlement.
Inventory Levels Total and per club inventory levels were down 1.5% and 5% year-over-year, respectively, while in-stock levels increased by 90 basis points. This was achieved despite operating 9 more clubs compared to a year ago.
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Operating Highlights
New Owned Brands Products: BJ's launched new owned brands products aimed at improving member experience with excellent quality at unbeatable prices. Examples include Wellsley Farms branded tortilla and potato chips, protein shakes, frozen poultry, and coffee pods. These products are priced about 30% below national brands while offering comparable quality.
New Club Openings: BJ's opened new clubs in Warner Robins, Georgia, and Sevierville, Tennessee, with membership counts 25% ahead of plan. Plans for 14 new clubs this year include locations in Massachusetts, South Carolina, Florida, Tennessee, North Carolina, and Texas. The company aims to add 25-30 new clubs in 2 years.
Digital Growth: Digital sales grew 30% year-over-year and 61% on a 2-year stack, driven by BOPIC, same-day delivery, and ExpressPay. AI tools like an AI shopping assistant and personalized shopping lists are being beta tested.
Inventory Management: Inventory levels per club decreased by 5% year-over-year while in-stock levels increased by 90 basis points. This was achieved through reduced inventory buys, improving operational efficiency.
Membership Growth and Retention: Membership fee income grew nearly 10%, driven by strong member counts, mix benefits, and a recent fee increase. Higher-tier membership penetration reached a new record, improving by 50 basis points sequentially.
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Risk or Challenges
Consumer Confidence and Discretionary Spending: Low consumer confidence and reduced discretionary spending are impacting demand in categories like home and seasonal products. This is further exacerbated by cautious consumer behavior, including higher sensitivity to promotions and trade-downs to lower-cost items.
Macroeconomic Environment: The challenging macroeconomic environment, including inflation and economic uncertainty, is influencing consumer behavior and creating unpredictability in sales trends.
Inventory Management: Decisions to tighten inventories in anticipation of tariff impacts have constrained general merchandise sales, potentially limiting growth in the short term.
Membership Base Sensitivity: Value-sensitive members are more exposed to macroeconomic pressures, which could impact membership retention and spending patterns.
Regulatory and Legal Risks: The company faces risks related to regulatory compliance and potential legal settlements, as highlighted by the mention of a prior legal settlement impacting financial results.
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Guidance & Outlook
Full Year Merchandise Comparable Sales: Guidance narrowed to a range of 2% to 3% for the full year.
Adjusted Earnings Per Share: Guidance increased to a range of $4.30 to $4.40 for the full year.
New Club Openings: Plan to open 14 new clubs for the year, the most in many years, with a pipeline of 25 to 30 new clubs over the next two years.
Digital Growth: Continued investment in digital capabilities, including AI-driven tools like personalized shopping lists and an AI shopping assistant, to enhance member experience and drive growth.
Membership Fee Income: Expected to show further improvement into the fourth quarter, with a 90% tenured renewal rate for the full year.
Owned Brands Expansion: Plans to launch new owned brand products aimed at improving member experience and driving loyalty.
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Shareholder Return Plan
Share Buyback Program: In Q3, BJ's Wholesale Holdings repurchased approximately 905,000 shares for $87.3 million. The company has approximately $866 million remaining under its recently renewed repurchase authorization. Share buybacks are highlighted as a key component of their capital allocation framework, and the company plans to continue a disciplined and balanced approach to deploying capital to maximize shareholder value.
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Key Q&A
Q:What is the company's exposure to the SNAP program and income demographics?
A:The company observed stable purchasing habits among low-income consumers despite inflation pressures. There was a slight disruption in Q3 and a more meaningful disruption in early Q4 due to the SNAP program and government shutdown, but recovery is underway. The administration's tariff reductions are expected to benefit low-income consumers. Membership acquisition remains strong across all income cohorts.
Q:Do you believe the long-term same-store sales growth for the business is in the 3% to 4% range?
A:The company is optimistic about achieving long-term growth through four pillars: stickier membership, improved merchandising, enhanced digital convenience, and real estate expansion. Despite external economic challenges and competition, the company is confident in its ability to grow by focusing on value and convenience for members.
Q:What has been the competitive response in new markets like Dallas?
A:The company has seen success in new markets, including Dallas, with strong preopening membership and community engagement. The 2025 class of new clubs is expected to be the best yet, with 14 clubs opening this year and strong performance in new markets.
Q:How is the company managing inventory for the fourth quarter?
A:The company has taken a conservative approach to general merchandise inventory to limit markdowns and fund investments in member value. Inventory levels are well-managed, with improved in-stock rates and efficient allocation. Fresh 2.0 initiatives in produce, meat, and seafood continue to drive traffic and sales.
Q:What are the category assumptions for the fourth quarter and the outlook for general merchandise?
A:The company is cautiously optimistic about Q4 performance, with strong holiday preparations and promotions like the Free Turkey program. General merchandise inventory has been tightened, focusing on the best assortments. Seasonal merchandise was bought conservatively due to earlier tariff uncertainties.
Q:What is the company's approach to digital business and retail media?
A:The digital business has grown significantly, now accounting for 17% of sales. Most digital sales are fulfilled by clubs, making it efficient and profitable. The retail media program is growing, and AI is being used for predictive shopping lists, inventory accuracy, and operational efficiency. Robotics like Tally are enhancing store operations and member experience.
Q:What is the company's strategy for general merchandise improvement?
A:The company is focusing on simplifying assortments, introducing better brands, and offering compelling values. While consumer electronics and apparel have performed well, home and seasonal categories need further improvement. Investments in general merchandise are crucial for driving membership renewal and incremental trips.
Q:What is contributing to the success of the 2025 class of new clubs?
A:The success is attributed to a strong culture within the new club program, extensive experience, and a focus on making each opening the best. The company is confident in its ability to succeed in new markets like Dallas and Foley, Alabama, due to its proven track record.
Q:How is the company balancing investments in price and gross margins?
A:The company has widened price gaps versus competition while maintaining flat merchandise margins by leveraging efficiencies in distribution, retail media, and other areas. Investments in member value remain a priority.
Q:What is the company's outlook on SG&A per square foot and investments in technology?
A:The company has maintained tight SG&A per square foot levels and plans to continue investing in technology and remodeling older clubs. Relocation programs for older clubs are also being implemented to ensure long-term success.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the long-term same-store sales growth target of 3% to 4%, the competitive response in Dallas, and the general merchandise outlook for 2026. Responses were optimistic but lacked concrete data or clarity on specific strategies.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
BJ Wholesale
Carolina
Mesquite
Prairie
SGA percentage
South
Tennessee
Texas
acceleration
action
agenda
backdrop
beef
brand product
club opening
commitment
comp basis
consumer confidence
controllables
core
decision inventory
flywheel
footprint expansion
lifetime value
list
member experience
member mix
merchandise comp
percentage sale
point comp
port strike
position
purchasing
sale share
settlement benefit
share settlement
stack basis
term objective
value BJ
BJ Transcript
BJ's Wholesale Club Holdings, Inc. (BJ) Q1 2026 Earnings Call Transcript
Neutral5-22
BJ's Wholesale Club Holdings, Inc. (BJ) Q4 2025 Earnings Call Transcript
Unknown3-5
The earnings call reveals mixed signals: a slight decline in merchandise margins and SG&A deleverage, but a steady EPS increase and strong membership growth. The Q&A section highlights management's optimism about new club openings and digital growth, but lacks specific timelines and detailed plans for long-term growth. The company's ability to sustain club expansion and manage digital fulfillment is positive, but uncertainties in merchandise margins and SG&A investments temper expectations. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
BJ's Wholesale Club Holdings, Inc. (BJ) Q3 2025 Earnings Call Transcript
Positive1-8
Despite a slight decrease in adjusted EBITDA and EPS due to a past legal settlement, the company showed strong digital sales growth, efficient inventory management, and optimistic guidance. The Q&A highlighted stable consumer behavior, successful market expansion, and strategic investments in digital and AI, which are positive indicators. However, management's vague responses on certain metrics and external economic pressures slightly temper the outlook. Overall, the positive aspects, including improved guidance and digital growth, suggest a positive stock price movement in the short term.
BJ's Wholesale Club Holdings, Inc. (BJ) Q3 2026 Earnings Call Transcript
Positive11-21
The earnings call summary and Q&A indicate a positive outlook. Despite a slight drop in adjusted EPS due to a legal settlement, the company shows strong growth in digital sales, membership, and inventory management. The strategic expansion into new markets and focus on value and convenience suggest optimism. The Q&A reveals confidence in future growth, although some responses lacked detail. Given the positive guidance and strategic initiatives, the stock price is likely to rise in the short term.
BJ Slides
BJ Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
