BJ’s Wholesale Club Holdings (BJ) stock hit a new 52-week high of $97.53 on November 22, on news of a membership fee hike. The operator of the membership-only warehouse club chain is increasing its fees for the first time in seven years, following a solid Q3 FY24 earnings beat. The fee hike will become effective from January 1, 2025. BJ shares closed up by 4.3% on Friday.
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New Membership Fees for BJ’s Club Members
Importantly, BJ’s membership base grew to a massive 7.5 million members at the end of the third quarter. According to the revised fees, a new annual Club membership will cost $60, up from $55 earlier. Similarly, a new Club+ membership will become pricier by $10, costing $120 annually. Also, Club+ members will be eligible for two free same-day deliveries on minimum orders of $50.
During the earnings call, CEO Robert Eddy said that the increased fee would be used to expand the delivery business and improve staffing, while the company aims to sell more fresh produce. Rival Costco Wholesale (COST) also raised its membership fees in September, though Walmart’s (WMT) Sam’s Club hasn’t followed its peers yet.
BJ’s Mixed Q3 Results and Raised Guidance
Adjusted earnings per share (EPS) of $1.18 exceeded the consensus of $0.94 and also came in much higher than the prior-year figure of $1.00. BJ stock jumped 8.3% on the news on November 21.
Revenue rose 3.5% year-over-year to $5.10 billion but came in marginally lower than the consensus of $5.12 billion. Comparable club sales grew 1.5%, while excluding gasoline the figure was up 3.8% compared to Q3 FY23 figures. Interestingly, BJ’s efforts in digitizing its online offerings are reaping fruits, since digitally-enabled comparable sales jumped 30% year-over-year.
Based on the continued business momentum, BJ’s lifted its full year Fiscal 2024 adjusted EPS outlook. For FY24, BJ’s now forecasts adjusted EPS in the range of $3.90 to $4.00, up from $3.75 to $4.00 guided earlier. Comparable club sales growth, excluding gas, is pegged between 2.3% and 2.4%.
For Q4, BJ’s expects adjusted EPS in the range of $0.78 to $0.88, lower than the consensus of $0.98. Comparable club sales growth, excluding gas, is projected between 2.5% and 3.0%. By the end of Fiscal 2024, BJ’s targets to operate more than 250 clubs.
Is BJ Wholesale a Good Stock to Buy?
Following the strong Q3 print, 14 analysts revisited their BJ stock recommendations. Of these, eight reiterated a Buy rating while six gave a Hold rating on the stock. Remarkably, ten analysts lifted their price targets on BJ stock.
Overall, BJ stock has a Moderate Buy consensus rating on TipRanks. This is based on nine Buys and seven Hold ratings. Also, the average BJ’s Wholesale Club Holdings price target of $97.31 implies that shares are almost fully valued at current levels. Year-to-date, BJ’s shares have gained 45.1%.
