Weekly Issue: The Changing Mood of the Market

Weekly Issue: The Changing Mood of the Market

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Cashing in on the Cash-Strapped Consumer theme, BJ’s Wholesale Club going public (again) but it’s no Costco

We’d like to think the above headline sums it, it only partially does. Yes, given several data points that show consumers have taken on more debt and its sapping their disposable income, our Cash-strapped Consumer investing theme remains intact. The wind up of this theme is consumers are foregoing certian spending or saving, in some cases trading down in their purchases or looking to stretch the disposable income they do have. This has been a boon for Costco Wholesale (COST), a resident of the Tematica Investing Select List, which is also benefitting from high margin membership fee income growth as it opens additional locations.

BJ’s Wholesale Club’s business model is similar to Costco’s as it too is a club style warehouse retailer that collects membership fees. But given the finanical metrics below, that’s about where the comparison ends once again showing that Costco is a best in class company.

One of the key items to watch as BJ’s becomes a pbulic company  is what are BJ’s plans to grow its warehouse base vs. the current 215 East Coast locations? The other is how willing the company is to expand its digital offering, something Costco continues to do.

 

BJ’s said Thursday that it filed a Form S-1 with the U.S. Securities and Exchange Commission for an initial public offering. The company, which operates 215 wholesale membership warehouses on the East Coast, didn’t say how many shares it would offer or what the price range might be. The offering is expected this year.

In its fiscal year ended Feb. 3, BJ’s earned net income of $50.3 million. On a continuing operations basis, earnings per share rose to $3.94 from $3.45. Total revenue totaled $12.75 billion, including $258.6 million in membership fee income.

Sales in stores open at least 13 months — a key metric of a retailer’s health — rose 0.8 percent. Excluding gasoline sales, they declined 0.9 percent.

Source: BJ’s Wholesale Club is going public, again, with IPO later this year