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BJ's Guidance Suggests You Join the Club


Wholesaler posts excellent earnings report.

On Wednesday, BJ's Wholesale Club (BJ) reported second-quarter earnings of approximately $36.5 million or $0.61 per share, up from the roughly $36.3 million or $0.55 per share it earned in the comparable period last year. Its EPS -- even excluding $0.03 from a state income tax audit settlement -- was still north of the $0.57 per share the Street had been expecting.
Its revenue number came in at approximately $2.65 billion, just shy of the $2.67 billion analysts had forecasted.
In conjunction with its earnings release, the company said it "purchased approximately 1.4 million shares of BJ's common stock at an average cost of $37.45 per share, or approximately $54 million in the aggregate." It also said its board approved an additional $200 million for buybacks, and indicated that it expects to earn in a range of $2.10 to $2.20 per share in fiscal year 2008. That's up from the $2.04 to $2.14 a share it had previously expected.

If you follow my column, you know I tend to get excited when a company buys back its stock. BJ's could spend its money on advertising, or on stocking its shelves; the fact that it's spending big bucks on its stock suggests to me that its board might think the shares are worth more.
Including sales of gas, BJ's comparable club sales were up a hefty 15.5% - quite frankly, an awesome number. It really suggests that strapped consumers are buying in bulk - and they're doing it at BJ's. Of course, this stunning number could cut both ways, in that comparisons going forward will be more difficult.
Though management increased its guidance, the Street is still at $2.14 a share, and I'm not expecting the sell side to make any dramatic moves. I think the consensus number might inch up a penny or two, but no more.
And while I'm optimistic about the company's fortunes this year, the environment remains highly competitive. There's no guarantee that folks will continue gravitating to BJ's during these tough times - though they're certainly doing so now.

BJ's closed at $37.71, down $2.97 or 7.3%.
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No positions in stocks mentioned.

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