BJ's Wholesale Club (BJ) 4 Mar 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the BJ’s Wholesale Club’s Fourth Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Faten Freiha, Vice President, Investor Relations. ahead. go Please

and our Thank call. quarter everyone. from those within laws. current President joining Wholesale call, uncertainties call. Relations, make securities statements Administrative BJ’s CEO; Strategic may the described Factors Vice These our recent for Risk risks Good and we actual remember Planning based on XXXX section description on you the meaning that earnings the and fourth federal and Investor Officer; and Financial and with fiscal most Eddy, on expectations Delaney, statements SEC a Werner, the conference Forms that Club’s results risks are of involve to our this Senior Bob President, cause uncertainties. and the could morning, are Chief XX-K for Bill Please call. see filed of forward-looking and of this differ Please Lee materially expectations during XX-Q

Finally, to that, GAAP. today’s Lee. to most GAAP. with with website measures the the on Please today’s will these comparable release accordance will be isolation a measures for non-GAAP intended we accordance our please this is in note the turn measures in certain investors. for With presented refer not press or that believe information useful the in information section of call on provide substitute to financial that non-GAAP presentation refer financial of financial of to we information considered to The prepared as Investors call, posted for I’ll reconciliation over a

proud are year. our our these XXXX been for key during dedication humbled our I you serving a this immensely and remarkable to members’ of helping you morning thank us. safe. challenging members joining has through and role, times. I our am unprecedented by pandemic and communities and Good healthy hope

the members communities team we of be safety Our and serve. and to our highest priority members, wellbeing our the continues

We maintain environment. a protocols to and extensive safe have implemented healthy

enhanced benefits we $XXX continue team We support measures. XXXX, our million to safety over practices. and investments in in these And bonuses, in members with invested

be the Our hard us circumstances by challenged dedication possible every in without performance unique of would brought almost year team. our and pandemic, on The this work not the dimension.

remained accelerate Our us positioning company our short-term team challenges performance on enabling financial focused for and transformation. the strategic intently deliver meeting and long-term growth, extraordinary to long-term

growth, $X.XX Let EBITDA XX%, including me year, From of flow touch or financial on a and growth comp million results of ratio million perspective, both. X.X of growth, delivered ago. this adjusted compared we XXX% free X.X leverage $XXX of a year a to adjusted sales EPS XXX% XX% year-over-year cash $XXX times times industry-leading reflecting past growth, or of

pillars, our our convenience with and strategic addition In each made transformational namely, our performance, great membership, footprint. the to of with progress digital, value and strategically growing merchandising long-term and delivering retaining on we marketing, improving expanding

standpoint, say key bit across me results a each. seeing great From about Let we membership all metrics. more are a

including we members and XX,XXX in in where the Our new membership approximately quality. third at fourth base levels, record quarter, This net the strengthened members year, to size quarter. added we has attracted relative

larger increase by first retention reflecting increased a to time and XX%, greater basis at Our baskets compared member to relative net rate. all our XX%, we tenured is an year members penetration made with Across on XX.X% to year. and of to tier floats. for seeing high the gains elevated shopping rate even Higher basis year. our levels, a In membership including trips XXX the we prior improved are grew point our renewal prior cohorts, total,

more skew members our younger addition, and engaged. new digitally are In

deliver Assortment to members. our to optimization initiative value remains a key

personal protective meaningfully additional of Our for leverage actions by categories, growth inventory adjusted market including suppliers to profile rapid with where shifts These the demand planning suppliers consumer the grew and led new changing at equipment. relationships in of priority merchants for dozens our demand allocations. receive We adding bulk a relevant met account short-term outsized and food combined X to the to business to times performance, with buy market. rate and increased in need

fire goods, made such longer-term we options. significant reset outdoor We We with memberships. spreads like also categories to services heaters success categories, as where into the value in electronics. new tables fitness, and home BJ’s with simplification to offering progress by food and tableware, and to were of and We driven categories. brands our into under-penetrated Own continued expansion consumer including demand storage. significantly further organic expanded business XX%, the dairy, new We and household basic on select new sporting several grow penetration goods, expanded high increasing elevate historically better-for-you

optical, Specifically, services. financial we offerings upgraded improvement, our in appliances and home major

members just able will consumer we or sale in-club QX purchases for our this by example, simple, and XXXX. Through announced Bank. transparent partnership online pay For to affordable point loans with of financing through of our installment large partnership, Citizens

members and options to are provide this We offer to even conveniently payment thrilled shop more our flexibility at BJ’s.

to be years driver for growth believe significant will to services come. many We a continue

strategy members. Our our app, our strongly which resonate digitally to XXX% by our surpassing this with enabled our sales high recently expectations. grew centerpiece digital continues The is of quarter, upgraded

experiences, regularly options. and delivers fulfillment improved million last our shopping X personalized downloads gateway app year. then million of app XX% roughly Total to year, the efficient compared app with XX% real a Our to compared promotions, membership over our using last little exceeded utility, to including X

scale a engagement appears our competitors, features and new deliver Our our robust app with convenience. receives On of that making digital and app faster. meaningfully we’re a roadmap adjusted ahead of further shopping higher to of peers, basis, a rating many have than as easier many our it enhance we

digital options. fulfillment We continue expand to our

fourth recent began orders QX rollout were curbside the items curbside enable plan payment we this our plan payment our EBT participating the quarter members Online More bjs.com of fulfill option a launch spring curbside. the of we added all BOPIC curbside for Following QX. In available and late on when to Pilot. of XX% our to in-club the through have fresh states to for ability and pickup, use pickup to delivered in in than BOPIC to XXXX, locations SNAP Purchasing multi-phase and pickup. By shopping we weeks,

our expand on footprint to efforts track. Our remain

and more can path We gaining Even our new are in exciting that membership growth. XX clubs, as newest open have more in is performance our strengthened many share This in enabling we we of progress real pace openings. see to four opening to of a considerably, the XXXX. club clubs underpinned plan estate where accelerate to clubs by as the six XXXX. clubs is pipeline After driving XXXX, we us market

the uncertainties opening challenges our Pensacola, share new averages. invest in the So backdrop, redefining we first year retention market. we grow Florida, in proud cracked progress chain-wide rates code expanded notably we this trajectory drive of everything for on two will outside successfully power go-forward two long-term growth, algorithm model. we to XXXX, each. the incredibly changed? above will opened is the of managing into stay lead the clubs have we first we our clubs do membership In all average members the higher have Chesterfield, of And are Let of aggressively club XXXX per have an face What for growth in well suspect and control, overall Overall, our through questions. will the we’ll chain. we XXXX, key And safety. These Michigan while XXXX. Against long-term and business should both investments XXXX? me than Michigan, to scenarios by of to made continue market are half We and most in consumption We and the XX% food of in how stock factors clubs, the and our believe expect health your that prioritizing and address in lead range uncertainties possible environment. a to driven macroeconomic you at-home has

Our to normal membership life the profitability the we in any our plans. historical again. as materially a expectation we but elevated least would driving at and will second health may food-at-home and Should current year, distribution for the public that expands period first ahead change looks is consumption, a of markets, to vaccine fail trends our half our be well situations little scenario, expect our of more Under further. of half improve the expect sales in longer continue sales

We confidence framed will we long-term we considerable anticipate at the which IPO. have our our the in above algorithm, be levels of time well

strategic our is our long-term against shifts trends initiatives. progress grounded Our conviction in to and

We Let uncertainty economic and heightened at me factors. consumption consumers on value. a higher on reset focus will the believe at-home underlying elaborate level has food

benefit. shopping higher quality membership base a has loyal, to and have behaviors changed our We growing their that

power to share with wave the to own in continue services, growth, particularly will and members. upgrade and We of merchandise brands general assortment, of our wallet our grow next

a relevant with growing economics. industry digital meeting yet advantaged levels business engagement have We and of

growth unit business our pushed higher allowing truly by measure. we dramatically have summary, expect year, rates markets units share. we plus tap every and addressable considerably us transformed into We grow expanded to per towards as In XX

XX We ago. are company the same not were months we

we long-term initiatives. accelerate rate strategic on growth underlying Our our and benefit will accelerate from as trends to continue

long-term base and may uncertainties growth create mask temporarily faster that short-term a the gains, will While reset these headwinds COVID-related higher at rate. we

that, the Bob. to continue I’ll success. opportunities to company the Bob? members of team us over positioning advantage to level, enabling and at long-term take highest the the Our With call execute turn ahead for

and great to times. This unprecedented been members Lee, you I’m performance good team thrilled in has, of share history. their through during serving morning, this enabled fiscal these by past the everyone. past by chain, so company’s year Thanks, throughout pride and in results industry-leading most results a proud ways, delivered with communities many their in year our We transformational their terrific year, I’m the the efforts of work today. taking

capitalize challenges have team’s opportunities upon afforded efforts to of by allowed Our us XXXX. the the

than opportunities and challenging our business, relevant a time be omni and stronger growing a much and robust it sheet. provided is this to have balance BJ’s membership, long-term. in pipeline, a the IPO, set year company record the at We in estate of stronger revamped the us even real our was a up

clubs. driven Let’s our the continue are Across excludes food-at-home sales XX% Net of results for our quarter sales, of and and geographies, as traffic. which to investments. turn and November, their continue sales In and we consumer were baskets for comps increasing were gasoline quarter. running see the trends expanding home our the Merchandise ticket members by fourth trips north gain billion. to were weeks comp share, we elevated to three first and by to increased $X.X XX% increased of our their

see In gatherings. holiday and a given This slowdown also experienced to stronger We earlier by the much November, through of large the continued holiday last we followed parties of week relative a shopping. began January. absence December

X about drove digitally by sales and Our points XX% enabled grew of our comp. percentage XXX% approximately merchandise

We the which XX% invest BOPIC, digital curbside pickup growth behind platforms, same-day fourth continue and of particularly more our quarter. than in to drove during delivery, together digital

our as a our digital, clubs. and are more BOPIC with are environment of traditionally. the being of We increasing per our average baskets with towards membership. limited and versus who make sales higher and know, fulfilled margins bigger peers have advantaged our efficient. sales that the you with As our many to Digitally Most to relevance XX% skew allowing average warehouse tend shop year digital growth trips categories, clubs economics the importantly, orders than be on only members average furthers same-day-delivery engaged businesses same thought. members more five that have shop these of by SKU concentration operate us more curbside ticket, baskets and our sales highlights in larger traditional

bodes member Our the the frozen and success growth in way. more generally meat, spends, non-edible categories, the as in a rates in beverages trends and capitalizing edible that wellness produce. In our membership grocery is meals for grocery, division We robust well fresh more saw led division, where nicely. in and products, salty most on And cleaning grew solutions comps strong all perishables, member to XX%. notably we grew in supplies by our snacks these saw paper Comps renew. shops across fresh likely and renewal grocery

our comp general Our small potential is growth services services comp the in growth In by sales full to market of driven X% gasoline rate continue the represents business we for fourth and run gain although appliances division back sales and electronics, saw TVs, approximately its and Gallons progress, indoor although ramping significantly performance. clubs consumer were impacted by strong of great still grew opportunity year. share. we prices great X%, merchandise furniture, by to at made lower sold in new a outpacing market overall business our quarter,

and and year gains driven strong these demonstrate products, our share grew in leading gains, market with were the demand also by were past accelerated Over share merchandising we In execution, that times activities category, pandemic significant the the stock-up where rate course cleaning this of as of associated expansion part we results quarter, delivered three digital the household growth. while such drivers. industry market almost

share we’re and growth including for Our gains new levels categories extremely inventory elevated which gains share market time driven member snacks, Better-For-You were value. rate. in items foods, the we by that which nine of times these at times six strong key same At rate with introduced, the have grew pleased grew market prepared the and demand

we past we strong where In market grow in to gains fast progress our enabling rate. in significant wellness cleaning at us and We continue continue times share and the meals quarter. twice produce this assortment, food. With improving XX to to grew solutions, focus sundries fresh significant baby perishables our market on dairy, gains division, as with make as frozen the

build to during further share of takes quarter $XX and our the here. Our growth. fourth focus is to continue these on gains fee to company The by grew transformation XX% or drive MFI million. root income Membership

prior favorable to membership increasing of of We unprecedented XXX total members, XX% our quarter. a tenured rate renewal new members, growth and saw our all-time by retention relative the new new quality. have for points rates in high rate We retention with mix members and delivered during We member along basis the renewals year. levels membership

enrollment XX%. at renewal increased to and Our easy penetration XX% memberships is tier higher of

know, you in to member lap back the beginning the of heights pandemic March and acquisition new April. we’re As of

engagement look larger first-year renewal at When their While, QX, XX% to discuss early typical baskets digital it’s encouraging. they’re we elevated than obviously their members, these too rates for approximately behavior we in find shopping members. and

renewal members digital at easy programs they’re at higher new members higher into times leveraging new rates. our the are six opting at first-year member our BOPIC, rates. including and same-day-delivery utilizing addition, curbside and our rate historical In tier These app double and of than more services, historical

These merchandise partially our move points of XX Let’s increased costs are by business, gross and COVID costs. labor, increased with safety related by and driven approximately the now for associated mix by $XXX included CPI driven costs. sanitation general distribution our the of sales. primarily the the quarter gross to merchandise basis margin million These expenses were initiatives increased SG&A million pandemic. are total gasoline $XX offset costs rate margins, excluding by and gains

net EBITDA reflecting adjusted expansion. sales Our grew by million XX% Adjusted per XX% fourth growth on million robust to $XXX a a share margin reflected growth and $XX quarter year-over-year in $X.XX share basis. per the income was and or

moment like of the our expense a highlights interest our reduced provided by performance. to take growth earnings balance strength Our business our sheet. I’d transformed to and highlight full-year

and rate in Adjusted comp XX%, $XX by margin with grew During sales. doubled XXXX, performance, costs billion just the EBITDA. of $XXX the growth than strength we the but note adjusted do better of with perspective, just in we It’s of million plan adjusted a significant of $XXX sales EBITDA million, net basis eclipsed points elevated distribution an despite XX%, XX% price hard EPS. we associated fee and to merchandise million that had and for more COVID. started Membership investments income of $XXX of increase over growth this year XX a to overstate

should Our very team be proud.

than million last tremendous flow leverage also our in X.X billion sheet of X.X us a free times cash more with generated free versus allowed year. transform This cash $XXX $X.X to this repay debt. year. We allowed to has This record us cash times flow balance flow funded

flexibility allow can us we our great into this More which with of level reduced future. invest debt will importantly,

investments going As funded cash grow our flexibility. priority we form be this allocate to and overwhelming capital by our our growth real is estate support forward, business, to by will and enabled of flows omni membership, new these plan

and balance Our healthy next already strong our opportunistically priority is sheet. enhance to

government efforts return returned costs and to continue from $XXX repurchasing our far million million to to business XXXX, shares. to evolution associated plan In clear. member The and pandemic shareholders. X.X of behavior, running are by our we stimulus of Finally, associated shareholders capital the approximately we

very XXXX a As to forecast. result is difficult

do we double-digit pandemic these in QX. expect stacked trends consumer demand we formal will expect on and will imply fade would remain We detailed the uncertainties, timelines, vaccination If high-teens guidance. through Given half Based that we offer to progress hope elevated trends pandemic this year. not compared first as when will pre-pandemic year the and through that levels. of shopping the continue, costs current current

life something normal We that like more expect also emerge. currently to looks

to of count happens accurately give sales membership more consumption or to or changes. historical are As But to and the experienced better resulted degree this From point we back be venture to that of judge we that expect home. expect timing people gains at food more flat years. of and people we standpoint, the at in-line in a with growth from as XXXX expect some cannot restaurants, up MFI increased member these a during XXXX be vaccinated,

we quality. than XXXX. we the X the a had year, have more and small, just our this true Lastly, relative vastly at to strong membership million today first business is let is expect membership, in At fiscal company XX% invest This big to at do costs, nearly IPO. digital for our we more a geographic costs we on to much least to about in continue and Wholesale team, a focus to than half the ways these we incur also IPO adjusted better XXXX. but better and Club Despite the achieve particularly expansion. Not but year. will EBITDA and and few. at members, of me more in members, Note BJ’s our continue in only is of related COVID different our expect growth conclusion earnings that

practice our we higher free Most points higher our We XXX than on highest Higher easy to have XXXX. XXX trial points members X,XXX at engaging Tenured offering renewal through intent of penetration better memberships rates both the for towards paid at the basis are members today values those acquiring continually retain investing the lifetime rates basis tenured XX%. IPO. higher discontinued XX%, and heavily importantly, We new with renewal. in members and are is at renewal history. pivoting points in basis renewal members gained are memberships, tier

have going. intent on in tremendous our here keeping We it momentum

current business. our $XXX was our business were IPO, same-day-delivery, not relevant Today’s sales have growing. key up and to pickup it omni is than but we experience and great we growing the more lacked was And BOPIC the and of At We as of big order times as In capabilities XXXX, digitally-enabled is curbside. our and BOPIC a goods. as In and had were IPO. launched approximately such million. orders approximately that ability five curbside our quarter, at fresh picked our the XX% the app usage high twice fourth

four as continue witnessed will only beyond. all per this We’ve XX clubs in five year the past we We year XXXX one Moreover, enable and members access future new and our we In will the in our path they IPO these open to year the XXXX, be successful the ways back half. in we acceleration pipeline. and club, of new six in six see a more we value. opened tremendous the clubs, of to convenient tremendous to are our of offerings invest estate real opened

just business We couldn’t today one two tremendous considered we just this a debt-to-adjusted invest above end return more us EBITDA. years ways in three ago. have we year times times, ourselves flexibility shareholders allows short our capital funded and had transformed we in in have balance at than to sheet. XXXX Finally, find to At

coming noisy hard from a may have to story great the to years’ be While, financial and and a predict, about we momentum growth. results pivoting deleveraged are story

cloud included picture. may while algorithm very Our the top return normal towards line pre-COVID growth, our temporarily low-single digit

and operator the them our expect of concrete in begin my mid-single back now estate real and I’d wait early estate I’ll in turn includes algorithm progress future a should again in have I I’ve thank easy session. future. membership future like conclusion, powerful and results. real our trends growth. top-line team we report power doing that on once signposts the seen our membership over growth unlocks and tenure to best see the pipeline be We to digit revised to In all the to work And call to the Q&A company their to long with can’t the Those

question first comes Baird. from from [Operator Instructions] Benedict Peter Your

Your line is open.

you of the teens I just the guys. of may guess – uncertainty, process, for speak question. all kind thought the stacks of given kind bit first, guess year. the first All maybe a more first the this color little right appreciate Thank for taking kind I high half about quarter, of the I

– kind Just on I lot seeing that a which per XXXX assume extending guess think than the detail maybe around Is but more is add can you’re to of they just was how second helpful, members of we more you right that? seeing as should do in cycling kind versus my any that that you spend of but how the you’re member initial safe average trend question here, what what just be more the I mean just now, that levels, XXXX? you’re assume seeing? there, assume I spending you – really think spent about that’s you of about the color And gave Thanks. then

that Sure. Bob? Do one, want you take to

the for Hey, question. Thanks Peter. Good Sure. morning.

the this QX, math very we last see the there. a XX of to last fourth trends year QX, will remarks, very how really in first from in we you comp is did tell quarter the next we to would fourth are XX and is persist, sort And simply hard if it’s fourth do quarter rollout. take us said just that the the So listen, So can certain incredibly going we of out. prepared saw look on We quarter forecast those comp quarter to pleased in versus None and what we right? simply with like. so and way tried went what a the what you

The encouraged under on point read you And comps the the bring very with do average we’re what up seeing we We’re spend. cycle we’ll see as early is think I the covers. good, but pressure just will understand of is a really to happen, I why on full what tough it about for QX stack and right which we QX. to issue gets And way But beyond any basis. by didn’t results some it’s guidance I amazing a year. think the good think think it that, the

cohorts, up renewals of we renewal XXXX the built we XXX increasing off the that and points, rise of our tried tier new remarks, memberships. basis the continue think levels, all share number XX% but of great we’re all-time levels high membership what to in reflect trade. in sorts taking to shopping XXXX. that larger I prepared members plan sort of throughout on of members, to particularly easy is We the high consolidation, rates, encouraging based both levels amazing. Higher see of trip the all rates members. moderate and renewal and the lot of going tenured quality seeing of tried from all-time elevated classes covers, quality membership baskets, The things, Under in a across

a the little going year. very, next very the It’s muddy We’re to just we this get business. bullish long-term through be bit as about of

were, million think would follow-up expenses, year. $XXX Yes. I totally around think, COVID guess be which this maybe I around the you that. just understood. one Thank I my I for And

you to – a you the COVID quarter, hit much was us the I extend Or XXXX. up Can distribution you know to I like any And stuff to give also you. in much Thank elevated there how said can margin? I expect Just that was guess you you expect think kind how and of some expense? sense what fourth maybe maybe gross you into of, wages there? extend? said

worries. no Yes,

fair as give difficult front think of in do go year, this pinpoint we guidance front of I So a on through less assume we that’s, the to we depends last largely it’s did again, little the a half to year. than on, of it the spend will because bit the half virus. state

priority, bonuses We’ll right? were members caused to team we that we members almost spending do around PPA need are period extra to our Our their the sorts and wages, continue of all paying know, our safety and team of and that first state to our you members disease As in saw safe. spending the the forever, do but in proxy to keeping and degree that what disease. of of moderate think little a But tended about back will the decent the I first difficult that XXXX is this bit again, half. probably vary the on we half versus year. The as state that the a it’s on spending of front half think has to based

Sure.

thanks, it. Listen, Okay. I Bob. appreciate

Peter. Thanks, worries. No

question from Wissink next Your comes Steph Jefferies. from

is line Your open.

new Thanks. market Good question morning, everyone. and growth. unit Lee, I have a for you new on

new year, have just through cracked the six and you’ve walked the cracked think XX us talk XXXX you then or had may And us this said you’ve through Can the the existing versus what market plans your code, in plus greenfield about in have the I those would past the units the beyond. code. are I for Help what you think you weren’t much faster? referenced think up penetration. doing proxy is doing clubs seen new you your clubs much members cohort. differently where than even performance bit within it And you’re stronger, you higher new that maybe little of a sounds opening your like Bob

you. new little about talk So if a Thank you could. clubs, bit

for the Steph, Sure. Thanks, question.

year. excited remarks, of a club we’re At the faster in possibility very for one about opening the the prepared time our expansion. unit much said we were As per IPO, we

we a feel that of time next year XX is this done do right towards So aim getting year, and last just to four we’ve like the of then a we six spent change. and lot that. model year, real And

seeing And a levels little more averages, renewal so year-in terrific at with are a than if that membership chain the above we’re year looked Michigan, you XX% first rates.

I underneath a in the is whole of bunch of there’s team. work by that people think a the lot key

like looks a out the strong analytics site applying do with in some location distances We’ve right how aggressive good figure to demographics. in advanced opened good marketing. we with We’re more ourselves what and place and fairly selection the right the markets, much

assortment have start. got right package right We We’ve from with signage the environment from the the beginning in-store with layout. the right our the new

credit clear more engagement just got We’re in value the renewal. renewal, a really joins new We’ve people everyone easy enrolling with at where club far higher cards a opening with proposition. easy essentially in

that’s all us. so And for really working

very, share. we’re next And time XX this markets. good geographies to opportunity, broader about. will gain setting to we to expansion us six see build a of It we’re sights further a we and locations that’s world we’re there’s story to largely mix estate infill look And much up unlimited but meaningfully as year are us number real on seeing excited a new unit year. it push there we still because the have opportunities our really real be forward, availability takes of that As increasingly that but get exciting little estate there open really getting it of to very open we where for will that our is really potential the be in of country pretty and just existing a portfolio, multi-year retail West, a big so because places

costs this model? construction for on of the we units those anything maybe about be And timing that into should the or CapEx even thinking year,

want you it, a of Yes, take side sure. Do to Bob?

sure. Yes,

bit getting well. a has cost construction up even of by is offset largely steel and to been the perspective, real That’s lumber as much Steph, for the price about instance too think a a lot, not the though cheaper. little from cost of estate So increasing

may And that historic levels your of from so too in per club I have models. you far cost wouldn’t stray the

when chain, open the should on remaining for eight one first open. and come the should just far six so here and to the the done fourth clubs five in starting the months usually in we them Hampshire, of will nine or quarter year, should and half As this the are be into that as probably spring, as in the the takes then those towards New it end get be construction

half weighted. back there’ll So be certainly

in should of year trend same of the following forward As and or hold year. the that the the part get front back where to remainder the I one two we the look year, part in

Very helpful. you much. very Thank

question Your next BoA Securities. Robby from Ohmes comes from

is line open. Your

is, as us to puts I give to scenarios. different of maybe profitability about there or Hey, year? we good Is your your and SG&A margin you think ratio could think morning, talk My most guidance, takes you’re about post-pandemic? and under not EBIT the takes giving question under think going for try been know about cetera, gross maybe – you do some upshift guys. that on forward in of model scenarios how how et but should an Like EBIT margin structural there’s we next margin, scenarios your puts and sort just BJ’s

it’s time. answer than XXXX. Bob. it’s Robby, to because over of members Hey sales. obviously scenario costs. we profitable bit we reasons. as given much fair more statement a gets all way back compare more any under step two company any provides by And you XXXX, in impacted And think assume have you and sales, against our more revamped hard It’s that I One, the Yes. Good do to did think balance the talk It’s morning. good sheet is I the question. would a But about really and I interest that way less make

should interest of what XXXX was. So XXXX be interest probably half almost

everybody profitable get compares sloshing around key the to bit It’s company all time. So over the of And sort through of more the hard remember a should things. against to those I would XXXX. of some unpack things encourage

We take the markdowns instance, then where capped we instance. you out We year. apparel apparel for accrual had business for remember, had And outside So huge stopped a team’s huge QX. the really bonus the management profit. basically bonus in and a as for gas had QX we restarted

as So to the there great are costs. about, out it we Once as the all be be among should and of you leveraging talked and we it when is higher rate should get the sorts we the I think at through this company back all the because quarters, way noisy go think think things we’re increasingly in but more about long-term. story profitable our growing a about period,

changes the some on what’s you When fresh like more in it helpful. on, as success lines? side in maybe forward, Got it merchandising quick XXXX. or insight you. is the on for sounds just side the have follow-up, through for look pipeline move you moving Maybe And to That’s of BJ’s the a merchandising more business, Lee. hard you

bit Robby. It’s of a Thanks, Yes. a mix.

We’re seeing opportunities the across board.

certainly our our tighten food the refine fresh continue in to So shop, and we business, the which is of assortment. heart will

options, members assortment you good natural and And good those we’re becoming it’s really to options. have organic the With results. we’re increasingly directions in seeing, for options, evolving our of relevant seeing younger influx

the more that got higher. past and in competitors meaningfully at merchandise really but in compete. meaningfully of seeing our it’s about not of not than are move our and results. into about competing opportunity was places the the as higher roughly direction general year home, Think obviously equipment as that merchandise equally, business competitors that where up we services. our people know that. by we’re some that We assortment, We’re the all nearest assortment in of XX% the if rest And good general with tightening this pandemic a we’re We timely broader excited fitness

quite underappreciated priority ago, never entirely a of seeing we about company And where in focused merchandising large the services electronics consumer home for competitors until really seasonal on is in that. our think major many team results services, we’re us, services. offering. retooled our been of opportunity some out of year goods the our I excited and It on new roughly a pay enormous excited the this in meaningful call We’ve an year, very of just into appliances entirely way. we’re new construct We cell and home for think And what set a about totally offerings. big in is our phones. And in added build we’re and we’ve about talked the major improvement seeing. new in offering past there We’ve to growth later options. have a an businesses a built and We’re we about where had unset for area upside and gotten assortment good

on to a try by have happening the we wasn’t that pandemic. have would we is driven much come and experiential as our in where during glasses, fair, would in-club lot business in optical and people Now that be of shopping,

growth. been pandemic-related will for the some be infrastructure, out particularly and we of So business building would as well rapidly that poised we’ve restrictions expect stayed

is So, the it really across board.

That Thanks so sounds great. much.

comes from from Edward next Your Wells Kelly question Fargo.

Your line is open.

Hi and renewals guys. Good morning. membership you color Thanks some first ask I retention. to the Obviously, coming up. for wanted today. all about big

about these lot retaining a of optimistic members. You’re

you the just how what to a color more they sort often go that. are investment what doing maybe like sticky? baskets try provide is you remind these mentioned like, and to their are look shopping, that into a about and retention? And of around bit You’ve coming these ensure Can you’re of just telling back store, us lot how members to what about guys are that then

for Sure. Thanks a it. Ed. great question, It’s asking

You’ll year that a declared, time of remember, change this time we at there would national was influx members to It ahead meaningful the it see few was in was see. their tied a of what season, canceled began consumer-related to was normally NBA emergency was the behavior last about and that when we well a now from when pandemic. the meaningful just days

members quite is early to of COVID And fortunate first because we of to look have so really we’re slew us. important And is The data at. metrics encouraging. a that whole cohort

at looks included the encouraging. it’s they’re – tiers in engaged with demographics digitally, they tiers, And with credit membership have higher easy are us So us engaging are across do are much they rate, they they’re board, shop spending, on are renewal, in what we really how promotions, like, look size favorable. are they card, their very their enrolled basket which

members XX%, the both double at and delivery of same-day curbside So normal in the Xx rate. rate about we remarks, at prepared at talked the baskets usage up app on new

And are a shop rate similar engaged world of so would The see consolidation. to kind of members. normally very you trip relatively broader looks in what these

board, stimulus appreciate largely hardened renewal are that there’s period holding are to for these So shopping likely another across government are behaviors numbers footprint, soon. quite coming pandemic-related the be a and our where infusion we in and across of we still due

find what so that But the those bode behavior shopping quite over we’ll the along things two But the promising. of signs are today, sit here like. we months underlying renewal And rates. all few pretty the shortly with strong for as looks out well course would next

a Great. And maybe follow-up on stores. new just

the are very to options far? question like cheap. company-owned city relative new you about how Island new the commentary of just around in seeing the stores cash of really store are of sort so about encouraging. spending your you balancing cash, And Generating shareholders? the stock’s leased? Newburgh to then obviously thinking financing What versus So How sort versus Long the thinking around a returning and you’re there

Sure.

question. to half me the Let turn I’ll second take first it of Bob and for over half that the

It So those weeks. Newburgh opened The is the at quite of of was city very couple in and year. Long of last Island the performance encouraging. end last early clubs

and of York locations, and we’re Long good those. about New infill although They’re a obviously – a Island the But an then more about take excited and of a as more the set for do just more Newburgh. and around city. good little have just we much want results, you them potential bit to in back from the bit really included us, we’re bit opening those further And boroughs Bob, membership kind both into there’s results, the financing? North their We’re year with excited both space of we’ll structuring seeing on this little question progress with half. little of and for momentum markets of And around shopping white

The wanting Sure. noted the all really grow is and the to tone profile things. real everyone’s I way estate we’re Ed, pursuing that the bullish quickly. aggressiveness hope these we’re tone attacking of good here how growth question way. and on

if it’s doing means purchase, any type many The transformed deal own that it’s quickly. that have great, allows fact seeing and sheet open if And to are quickly. a the great. a means great, it balance so newly the that if building, much market fact lease go we the we of opportunities us effectively to so ground are it’s get lease, We that buildings new will a a flexibility and that we

in sense makes that any do we So structure. financial deal any will

think buying buying than end more past. that in realistically building buildings, means we more have and we I up that land buildings the

go. got the be year do then this well. buy that. balance we we little more will CapEx sit, fairly than more the we as as forward But there bit a take go continues a leasing. use balance as flow that the sheet to exclusively using sheet we so And we’ve buildings cash in And up currently as we have, suspect as I meaningful and we

more still in bit to So But the store a is do that that out to faster, that. we’ll makes a we’re if to attracted usually as the little it do us new the middle. lease, margin a makes take accretive way quickest a the developers’ deal little you

Bob? I don’t Did heard if you CapEx give guidance, that.

other it’s We the best the all bit is, chain behind little didn’t investments. get given But give year about I think and think delays guidance clubs because COVID across last to as the of done, sorts a increasing than way uncertain what it actually to two will stuff. investment digital and plus more

view, in it year. So game it’s changer we a more is not last spent but our than spending

Thank you.

Your next Sachs. from McShane from question Kate Goldman comes

is open. line Your

just looks the into double from, like And some any was just where inventory, or of second insights in then based market on up question focused it are just share it gains was seeing for taking digits. those strength My thoughts morning. Thanks first my on on coming that where you. was question. your you’re categories? Thank of Good some question

comes if quarters? you the inventory need it you be, are where to next of when into wondered Just to going couple

for you. the Thanks Sure. Kate question

we’re the it, share On what side we’re of gain excited seeing. by really

from it, industry Maine share leading results the really the that strategic Florida we does on-trend for just of tie And the just year of for to and to and to stores. So every a saw pandemic given think related clearly comp the is gain against we us quarter, into think progress in nature into we in But of almost in every the category. competitor flowing some I buying bulk every pillars. made that all compete we’ve it’s across some our in club market down versus

number high We that really And you gains of membership changes a our new be will at nice gains sticky assortment, had which in a we’ve positioned in the membership well about made categories. think forward. be has in if quality. think us going so, to will We’ve that

that’s drive by hadn’t just helping in we so before. competed share gain competing to And places

we’re it a at year the rate, which openings into where gain. new new even is been is last digital hadn’t places side before And encouraging. of higher club really structural share the we getting With then

lists app there the options, all delivering and we’re utility the picking promotions, to our like of We’ve our shopping with but having is coupons in incredibly fulfillment And the usage And the in there, set of seeing just real the an So app centerpiece, limited is app. engagement we essentially is clubs call, the great. through economics personalized strong advantage in where highlighted the access kind and digital warehouse engagement. rate we’re before to of curbside, ability talked about a SKU. with pay just

We’re monthly talking usage million with effective app. X XX% that of downloads

competitors a If competitors scale we app on on get kind adjusted being with basis, you quite amazing for that that of engagement is have enabled. well compare credit who of to some were the lot of ahead any

too, and that’s think it’s helping to we share our sticky drive And so gain.

progress some dissecting we’ve we’re to across going some two a stay share to initiatives. just share while we to board, factors. think control. And gain tied do of of is those the in on on pandemic can tied just so And focused thing the behaviors, the the is bulk And lot buying what is we tough in clearly of gain made

you were clearly, an in a quite of we year side bit like. the we we where against of inventory build would – that the in the position had never a things inventory On in-stock

smack kind well-positioned. some are repairing know seasonal in really large Asia thoughtful so you we spent also largely about position particularly sure of wanted of end of a fiscal in-stock and the shortages, New And time the we that particular, year and of port shortages, some then of out the just that upcoming some they heard that about of Chinese being businesses were we at Year the containers our with China, to make have sourced

to heavier to and but plug of holes regards in-stock made forward, aggressive that in also position our the call. in little up leaned we ended for – so both of coming the we inventory well buys, bit did in it going inventory, spring being us in which And kind coming we our the up. business a position was up summer the that we support season number season right a And, thought

you. Thank

question next comes Haskett. of from Gordon Grom Your Chuck

Your line open. is

this year. on Hey, different a ask really good little a morning and a to from also wanted question great bit angle. of congrats I

proxy shoppers? what to XXX,XXX happy guys growth, calendar XXXX XXXX. said would guys next up? just MFI look from I for on XXXX so a of you was to back retain around X%. from be year couple members them those, with the we’re dollar I’m you if good guidance in then new Is average of historical, you a to want I just for I If I MFI that think And you growth the curious you sort guess think added guys that talking now, years? long-term frame around percentage of Bob, as I

Sure.

It’s on start membership good Let side. question. the a me

is to really it done I the through renewal XX%, think middle you a renewal reflects taking last we’ve definition rate as of I that XX-year nice progress job remember that the important really about think think year. think I such the rate, improving metric,

six the through thereafter. month renewals of with the at lag looking we’re a midpoint So year

rates. continue so we’ve improved be about IPO our we And make renewal hope per Since basis points to XXX progress year. would a can on

would making higher we’re to continuing our make one progress pretty progress the a be with gains strategic important this we And us will will card with penetration. my relevant be to relevance penetration, increase there. trend. priorities tier very we’re But for the that our able be year demonstrate that making We’re credit all to good hope continue on with to

short will guidance want exactly it because it’s maintaining part? take and did the is that Bob, very look And And of so, like, in hard second kind on to we of focused what very to but that. issuing stop say you weigh we’re

where get to that statement. trying you were centered MFI in you think growth I Chuck historical to years’ Yes, in we

the bullish do think, all reasons but we happen. a hard what out it’s are we little stated, for I again might So just bit figure to

be the said, of prepared for or imply the better. flat membership And something flat X% be count And – expect so to that through a at better, make it, would we basically year next flat we MFI in neighborhood every and to we’re pull it’s to year. membership level string growth remarks try going go this certainly if to and better as better it’s it of

for it. Got really, has up And guys. just really successful you curbside your then to follow been on,

Just wondering comes store, that’s I if curbside, margin in Thanks. compare? could how And somebody does guess somebody how that the that over size purchased the the we basket merchandise evolved the of year? compare

size platforms. basket digital across bigger is Our the

more that’s cost of if economics So curbside bit with BOPIC same-day-delivery us, those baskets in or obviously our for transaction that we anybody they us curbside with. but that, a a or or is for BOPIC to tends is on offset can if more lot little it buy transaction than do there a they, a great

and Got luck it. good Thanks guys.

Baker Your Mike next Davidson. from question comes from DA

is line open. Your

Hi, thanks.

in you after have think just to to right. but after renew sort them, know months against XX so. you’re I Don’t starting to people members to new signed they pandemic, go come XX months, So to those of I use or up the up before get get try really

ago would a that couple have of already. been So months

color has any guys to first these but of as pandemic I who any sort short-term into – you try the near-term, that renew. get the So know during question, progressed how this to signed up

rate really the Yes. really, one-year The renewal mark. happened at

renewal, when the forward easy of on people the enroll month. be And typically bit it can first would of a pull so because in little trigger there

will lead digital visiting is them they or the are that services, rates. we appropriate mark XX understand, variety shopping foster the renewal incentives shop related month their to we’re try clubs, behavior so they of all expanding are are categories. to behaviors to giving not a the as the targeted earlier, to And And renewing of very what our include doing broad are looking we’re using at intently at people to

a the mark is that the their of there’s sure than starts the making that so life through real of at member. shopping engaged real renewal earlier. And the that XX-month focus month mark with constantly shortly people are large But kind monitoring the a earlier XX that we’re rate where cycle on

don’t than indicators, that – quantifiable which window the So we are besides just entering other across results early now quite and lot have a we’re that of the so of board promising. kind is

so but sense. And was ago, In ask I March. of makes you first first Okay. did question, really you That fourth talk I through I’ll think in another your February really a ask I quarter year, week call the accelerate said and low-teen it. to about the of level hate guess up it to last it week the started short-term then year

and think March? I progress sort might that mean, March, through of we as you on high-teen what you February comment the So up can we as talk recycling are that against or more at stacks pace that, of end early with happen about, is

QX that texture gave question February. Mike why guidance you to realizing had Hey, not we ask any that’s and in

within than quarter within forth predictive are week and just to There’s many the quarter. a really quarter the one cover things any to trying one that metric. we are gave too texture with back make that whole reasonably We the week rather sloshing

think high-teens what get as through we we right so see to way is happens it the quarter. about the think stack and the we’ll And

fair really enough. you in. Okay. didn’t answer Well, I’ll that, more one Since slide

stack, adjust what even quarter, quarter? Do somehow you high-teens to you or do comp? cost X%, structure Do – X% a happens to SG&A? your lower in that Can you lower down, X%, lower the in first you If first means negative your hours?

well and that of to Listen, you extraneous you that have structure And we our rest target consider. lapping our cost need certainly the all the we’re to as things try business.

simply this is less more business. have So we would have shopping. put, a heavy We’d slightly cost – we’ve labor labor got fixed more we’re slightly less and if but fairly if shopping,

what say you I it’s as to to would a an well. question is, So give guess I that tough answer bit

questions to the we’ll are think throughout term nimble all that’s to mean learned these nimble do, And we’ll year we short-term and what through As this year, of all be these noise. questions we to you, be I this I last need as don’t short as entirety of well. just go

the of notions, more margin, members, is think we’ll invest be it that focus should people forward transformation more XXXX more this thing and right. the of should those More structurally business. as all behind on sales, I go profitable long-term we versus

a here from our company period team here, we of management grow very little weird we will state a bullish entire bit on in but and here. – We’re is the the how how of will

why but perfect think the And I that be long-term focused which color. sense. the for is the that it’s I Yes, thanks clear better makes pretty on short-term, it. Appreciate should

And Northcoast Research. from your from question Cerankosky final comes Chuck

open. is line Your

growth, you the your what estate of When into Congratulations new a markets staff can little Good point? on And real have increased morning, department? get this bit faster you I talk year. about how everyone. the the club at re-staffed or

Chuck with across it. deal So we’ve the some to organization, capacity added certainly

lift. Herculean clubs to from clubs is six Going not four a

bit this little make to Going invest is we’ll and goal, we progress strategic a certainly more to continue as behind XX important against clubs incredibly that. so

digital, invested much not There’s worry other have we key the our increase things are that to and about the real from estate. structural all membership and to As behind success. a cost behind

– markets be could about you’ll new What for entering, you cities the talk of any specific instance?

that’s year in undoubtedly the should a be probably of is many we market then Lee markets will And forward. into have New year mix as seen getting markets those. a as Hampshire be and first so mentioned remarks you there’ll existing and been new go be and in that. club press, I we the about of talked new so Pittsburgh, Sure, his this this

forward our And into get long a the from there. markets New march to go assortment generally excited time. very It’s be westward be market. We’re lacking more Year, as there’ll that for been new it we and a into Pennsylvania from will

excited. we’re very So

and all sorts all. good keep of seeing team trends across We’re our working is with hard deals our to them up come

Pittsburgh, location that? with immediately are you Michigan when did and about about do new capacity? a more want enter like How market distribution than you then to in how you thinking enter you one And as

market’s like but a big than little one Every more market bit we Chuck, to in love a different certainly would club. Pittsburgh, with enter

– future. not sort of and more clubs a little hopefully in two open get of will year this you distribution where Mississippi the is factor, And is there We outsourced a trouble. now being into capacity right limiting is bit

And distribution so as we do move our new but of all existing of we westward, in we we’re may club have comfortable to consider out needs right that, our how now format. servicing

Thank good XXXX. for And you. luck fiscal

Thanks, Chuck.

Thanks, Chuck.

the further presenters. no the questions I’ll time. back are at There call turn over this to

performance prospects the lap the we related that for you predict to how remain year forward came is shopping COVID may though are Great. during change. the do I Well, everyone of and long-term these of as a your away your and hope year in business. thank all on company. hope today you strong is, you this behaviors times. going some trying and with healthy even last time interest we today I bullish bit tricky My for hope safe incredibly for continued the a sense

the drive a algorithm think between all and things you club long-term new to doing offering, assortment then we’re about As product we’re the assortment digital that membership, growth. different the the

about excited everyone. look not-too-distant you seeing the all the and in to. Take future. for Thanks. Hopefully come forward very all prospects in-person years to our care, We’re

for concludes participating. this conference Ladies you and gentlemen, Thank call. today’s

now You disconnect. may