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Sign of the times: BJ's Wholesale Club now accepting food stamps

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In a distinctly depressing sign of the times, BJ's Wholesale Club, Inc. (NYSE: BJ) announced today that it will begin accepting food stamps as payment at all 180 of its retail locations. Food-stamp payments will be processed through the Electronic Benefit Transfer (EBT) system.

"BJ's recognizes the diverse financial status and changing needs of its members," commented president and CEO Laura Sen in a statement. "We are proud to help members stretch their food budgets by offering savings on a large selection of fresh fruits, vegetables, meats and baked goods, along with name-brand, non-perishable staples."

BJ's also used its time in the spotlight to note that its members already save up to 30% off supermarket prices.

You can't blame BJ's for trying to lure cost-conscious consumers back into its stores. The chain last week reported a 0.1% slip in March same-store sales, defying analysts' expectations for an increase of 2.3%. As a result of the sales disappointment, BJ has since surrendered its foothold atop its 20-week moving average, which could now resume its usual role as resistance.

Prior to the stock's recent drop, short sellers were heading for the hills. Short interest fell by 20% during the past month as investors rushed to limit losses on their losing bets. However, BJ's turn for the worse could put a halt to this short-covering trend, potentially eliminating a reliable source of buying pressure.

At last check, BJ was down 3.7% amid a down day in the equities market. The stock is currently struggling to hold newfound support at its 10-week moving average and the round-number 30 level.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

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Last updated: November 26, 2009: 05:17 AM

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