Retailer BJ's Wholesale Club (NYSE: BJ) stepped into the earnings spotlight this morning, reporting second-quarter earnings of 64 cents per diluted share. A year ago, BJ reported net income of 61 cents per diluted share, including three cents per share from favorable state income tax audit settlements. During the first half of 2009, BJ raked in $1.09 per diluted share compared to 90 cents per diluted share a year ago. Quarterly sales slipped slightly more than 5% to $2.5 billion on a year-over-year basis, but the bulk retailer did forecast full-year sales to increase 0.5% to 1.5%. On the forecast front, BJ now expects full-year earnings between $2.46 and $2.56, which is higher than the previously forecast $2.44 to $2.54.
With the market set to open lower, BJ could get caught up in the initial weakness. Nevertheless, the stock could enjoy a bit of a rally thanks to this news. The problem the shares face is long-term resistance from their 10-, 20-, and 50-month moving averages.
Fundamentally, BJ is in a good position as bulk retailers should do well in this retail environment thanks to the perception that the consumer is getting more for their money. With both back-to-school and Christmas shopping seasons ahead, watch for retail sales to receive a bit of a bump across the board -- especially at the value retailers.
It certainly appears that BJ expects sales to come in stronger, evidenced by the company's expectations for sales to increase in the full year.
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