Why BJ’s Wholesale Stocks Went Down Today

Actions of BJ’s Wholesale Club (BJ -6.37%) fell today in response to news of a disappointing second-quarter earnings report from the warehouse club chain.

While the company beat estimates last quarter, guidance called for full-year earnings per share (EPS) to come in at the lower end of that guidance.

As a result, the stock was down 6.5% at 12:46 a.m. ET.

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BJ exceeds expectations

The warehouse club chain, which competes with Sam’s Club and Costco Wholesaleposted solid results in its fiscal second quarter ended Aug. 3, with comparable sales, excluding gas, up 2.4 percent and a 9.1 percent increase in membership fee revenue to 113.1 million USD.

As a result, revenue rose 4.9% to $5.21 billion, beating expectations for $5.15 billion. Margins were mostly flat, and in the bottom line, adjusted earnings per share rose 10% to $1.09, beating expectations by $1.

CEO Bob Eddy said, “Our second quarter was marked by strong membership, accelerating traffic and unit growth, and a rapidly evolving digital business, which led to a strong performance in the quarter.”

The guidance was disappointing

BJ’s sees comparable sales, excluding gas, up 1% to 2% for the year, driven by increased traffic and units, as well as a strong perishables business.

It also said it is targeting adjusted earnings per share of $3.75 to $4, though it expects long-term investments to push its EPS toward the lower end of that range. This compares to the analyst consensus of $3.93.

While this guidance is a slight disappointment, BJ’s has held its own against larger rivals like Costco and Sam’s Club, and the stock still appears to be in position to deliver steady growth.