BJ's posts Q3 report, stock drops

Posted Nov 18th 2009 5:30PM by Steven Mallas
Filed under: Earnings Reports, Wal-Mart (WMT), Costco Wholesale (COST)

BJ's Wholesale Club (BJ), whose competitive colleagues include Costco Wholesale Corporation (COST) and Wal-Mart Stores, Inc. (WMT), issued Q3 results earlier today. According to TheStreet.com, adjusted earnings of 45 cents per share met expectations.

And apparently that wasn't good enough for the traders. As of this writing, shares of BJ's were trading down 3% on above-average volume. Was the BJ's story that bad?

Well, yes and no. It wasn't a total disaster, but it wasn't the sort of investing news that made you want to run out and load up on shares, either. Same-store sales, without the effect of fuel transactions, increased 3.9%, which unfortunately was below the nine-month comps increase of 4.7%.

On the other hand, cash flow from operating activities over the last three quarters did go up 55%. It's too bad, though, that property additions had to go up substantially, as well. This put a limit on the impact of free cash flow.

If you go back to that article from TheStreet.com, you'll notice that BJ's is providing a good outlook for the fiscal year. I do have some concerns about Christmas, however. No one really knows how that's going to turn out, and how much discounting will be necessary. Nevertheless, many shoppers will probably opt for BJ's since there is the perception that you can get some great deals at the place.

BJ's could be one to consider on a pullback. Its stock hasn't performed as well as others, but longer term, this warehouse club should eventually bounce back. I would not be buying shares for a short-term move.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: BJ, bjs, COST, costco, inthenews, retail, Wal-Mart, WMT

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Reader Comments (Page 1 of 1)

11-18-2009 @ 7:37PM

al coholic said...

I suppose you could make an argument that stores like Costco, Sams and BJ's may have a better Christmas than the upscale stores because of the weak economy. In my town we had all three until recently when BJ's closed up shop here. I have been a memeber at all three at one time or another and it does seem that BJ's was the least well run, but that was only my casual observation.

I suspect that many people will be very careful to spend within their means this holiday season and I think that may be a good thing in the long run.