Wholesale Club Holdings Inc. of BJ says that the coronavirus pandemic has added the number of new members participating in the retail trade, especially among the young and digitally savvy.
BJ’s BJ,
says it now has more than six million paid members.
“To put this in perspective, over the past six months, we have acquired and maintained members’ value of about 18 months,” said Lee Delaney, CEO of BJ, in Thursday’s call. ‘This pace, as it continues, should see us experience three years of membership growth in this one transformative year. Not only are new members joining at higher levels, they are moving younger and are more digitally engaged. “
Delaney thinks these customers are probably sitting around. To increase this opportunity, the company says it pays close attention to consumer behavior and invests in marketing to interact with shoppers.
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To meet the new demands driven by both COVID-19 and these new customers, Delaney says BJ’s refurbished and expanded its merchandise range “in real time, selling through old inventory at a rapid pace” into categories that previously did not strongest of the company were. BJs added 32 new suppliers for food, stationery and cleaning, introduced more healthy and organic items and added to the lineup on names like Sony and Puma PUM,
.
Sales digitally enabled went up 300% in the second quarter, and on Friday the retailer launched the sidewalk pickup at all of its clubs. BJs serves 219 clubs and 148 BJs Gas locations in 17 states.
The Massachusetts-only membership-based chain, operating on the East Coast and Ohio and Michigan states, but along with its growing membership roles, BJs is also growing its footprint, with a new Michigan club opening in July, two new clubs planned for New York by the end of the fiscal year, and next year six new clubs.
BJ’s share grew 3.6% in trading on Friday, and has more than doubled, up 102.5% for the year to date. The S&P 500 SPX Index,
is up to 5% for 2020.
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“Over time, we believe these changes will increase the value of a BJ membership and keep the flywheel moving,” UBS analysts wrote in an upbeat note. “The potential in this environment and beyond is vast. We think BJs remain attractive. ”
UBS rates BJ’s stock buy and increases its price target by $ 4 to $ 50.
MKM Partners is much less optimistic, not only about BJs, but also Costco Wholesale Corp. COST,
and others in the retail space.
“The COVID-19 disruption has taken longer than we expected for BJs and the industry, but we still believe it will moderate traffic and reverse store consolidation,” wrote BIll Kirk, an executive director at MKM.
“Specifically for the warehouse / clubs, we consider reducing the need for bulk sales as customers resume more normal daily activities. We believe reduced bulk shopping and geographic exposure to reopening states will combine for an emerging headwind for BJs. ”
MKM also warns that BJs are exposed to competition with Walmart Inc. WMT,
with locations overlapping in some zip codes and in states that have challenged reopening.
MKM rate BJ’s shares sell with a $ 33 price target, up from $ 30.
.
