BJ's Flyer

We've been getting a lot of emails requesting to put the flyer up on the site...We're in the process of creating a new one but feel free to print these out at your homes!

BJ's Wholesale Club: Buyout Rumors Still Buzzing

Taken from the Motley Fool: http://www.fool.com/investing/general/2007/01/09/bjs-wholesale-club-buyout-rumors-still-buzzing.aspx

BJ's Wholesale Club (NYSE: BJ) has been a popular target for buyout rumors. And with good reason, since the company has the kind of things that private equity firms look for: strong cash flows, minimal long-term debt, and valuable assets, such as its real estate holdings.

Well, last week, investors got more information to trade on. In fact, the last few months have been busy for the company. So let's see how the events might affect a potential buyout.

Perhaps the most encouraging piece of information was the resignation of the CEO in November (yes, investors can be harsh). Basically, the board is open to new approaches, which likely means evaluating a buyout transaction.

Interestingly enough, BJ's continued its management shakeup last week. Laura Sen is the company's new executive vice president of merchandising and logistics, whereas Ed Gillooly has been appointed the senior vice president of marketing and membership. The company's CFO, Frank Forward, has also agreed to stay with the company for another three years.

Next, the company is still showing weakness in sales. In December, same-store sales were a measly 0.06%. Moreover, the forecast is 1% to 3% growth in January.

So how does this play into the buyout analysis? It means that the company will need to take some tough actions, which may be more easily done as a private company.

We're not finished yet. BJ's is going to shut down two ProFoods Restaurant Supply locations, as well as 46 in-club pharmacies. As a result, there will be a restructuring charge of $0.42 to $0.48 per share. This means a fourth-quarter earnings forecast of $0.17 to $0.25 per share.

There's no doubt that BJ's needs to find ways to compete effectively against its much larger and more powerful competitors, Wal-Mart (NYSE: WMT) and Costco (Nasdaq: COST). For example, the company is looking to price merchandise more aggressively, as well as improve the merchandising mix. And these recent changes may provide new ideas to do so.

Might these changes scare away potential buyers? I don't think they will. Private equity firms have bought a variety of smaller retailers, such as The Sports Authority, Good Guys, and Brookstone. Even Toys R Us was able to do a buyout despite the intense competition from Wal-Mart.

So even with the recent operational and management changes, the rumors should not go away. However, betting on a buyout can be particularly dangerous for Foolish investors. If anything, management may want some time to restructure the company before selling out.

Further Foolishness:

• Costco's Sales Delight
• BJ's in a Funk: Fool by Numbers
• BJ's: Not a Bargain Yet

BJ's Wholesale Club upgraded to "buy"

NEW YORK, January 16 (newratings.com) - In a research note published yesterday, analysts at FTN Midwest upgrade BJ's Wholesale Club Inc (BJ.NYS) from "neutral" to "buy."

What is next for our company???

Rumors concerning the sale of BJ's

We hear rumors everyday about the sale of BJ's, but TheStreet.com contributor Scott Rothbort has an interesting articles discussing 5 business hookup we might see. He gives reasons why the deals make sense and also reasons why they my not happen. Link

1. Sears Holdings (Nasdaq: SHLD) to buy BJ's Wholesale Club (NYSE: BJ)
2. Morgan Stanley (NYSE: MS) to acquire Legg Mason (NYSE: LM) orT Rowe Price (Nasdaq: TROW)
3. Hewlett-Packard (NYSE: HPQ) to acquire Palm (Nasdaq: PALM)
4. General Electric (NYSE: GE) to acquire Alcoa (NYSE: AA)
5. Boeing (NYSE: BA) to merger with Ford (NYSE: F)

Heres what Scott Rothbort had to say about BJ's....
All too often, the media and investors merely speculate about potential takeovers and start rumors. I, on the other hand, prefer to contemplate what would make a nice corporate match in a Yenta the Matchmaker-type way.

Here is my list of five mergers and acquisitions that make sense to me -- with the reasons why, and the reasons why they might not happen:

1. Sears Holdings (SHLD - commentary - Cramer's Take - Rating) to acquire warehouse retailer BJ's Wholesale Club (BJ - commentary - Cramer's Take - Rating).

Why it makes sense: Sears still has underperforming stories -- or Kmart-Sears stores that are cannabilizing one another -- and it's in the process of transforming them into new concepts or selling off their real estate. BJ is dwarfed by Costco (COST - commentary - Cramer's Take - Rating). Sears can buy BJ and expand BJ, utilizing those superfluous Kmart-and-Sears stores to capture more of the fast-growing warehouse business from Costco and Wal-Mart's (WMT - commentary - Cramer's Take - Rating) Sam's Club. Currently, BJ's market cap is just under $2 billion. Sears has the cash and stock currency to easily pay a 20% premium to BJ shareholders and still make an accretive acquisition.

Why it might not happen: Sears' Eddie Lampert is focused on improving the merchandising in existing Sears stores and continues to experiment with new concepts such as in the Gwinnett Place Mall.

Analysts: "There's a very legitimate case for it being sold -- they're not big enough to compete with the Sam's and Costcos,"

BJ's Getting Out of Pharmacy Biz

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By George Anderson

BJ's Wholesale Club has decided to close all of its pharmacies.

The decision to get out of the pharmacy business was made, according to interim CEO Herb Zarkin, for a number of reasons. These included the company getting into pharmacy at a later stage (2002) than its primary competitors and not having conveniently located stores (46 of BJ's 171 stores have a pharmacy) to make it easier for consumers to pick up their prescription medicines.

"We haven't seen the [prescriptions] grow on a regular basis," Zarkin said. "It just didn't make a lot of sense for us to keep on putting the investment in."

BJ's has also felt the effect of increased price competition, which started when Wal-Mart began pricing some older generics at $4, as well as dealing with reduced reimbursement rates from Medicare.

The announcement BJ's is shuttering its pharmacies is likely to increase speculation of a company sale.

"There's a very legitimate case for it being sold -- they're not big enough to compete with the Sam's and Costcos," David Strasser, an analyst with Bank of America Securities, told the Boston Globe.

A BJ's spokeswoman said the company would not comment on the decision to disband the pharmacy. But in a conference call with investors last week, interim CEO Herb Zarkin said BJ's prescription business wasn't growing.

"It just didn't make a lot of sense for us to keep putting the investment in," he said.

Zarkin replaced Michael Wedge, the architect of BJ's plan to build pharmaceutical sales by offering a variety of medications at prices up to 20 percent lower than drug stores.

BJ's also entered the e-commerce fray in December, allowing nonmembers to shop online for such goods as plasma televisions and electronics. BJ's publicized the effort by offering a 41-carat diamond necklace, priced at $250,000.

But jewelry sales failed to dazzle in the fourth quarter, which Zarkin attributed to poor staff training.

"You just can't put a body there," he said. "You have to train them."

BJ's operates 171 stores in 17 states, 46 of them with pharmacies. In addition to Deptford and Voorhees, the retailer also operates stores in Maple Shade, Mays Landing and Vineland. We don't know what's exactly in store for BJ's, but we do know that the workers should keep their eyes and ears open for anything, this is a very trying time for BJ's Wholesale Club...

BJ's Wholesale Club to public: Expect Changes

BJ'S Wholesale Club has been all over the news lately, nationally and internationally... Here are many of their miscues from last week alone that you the workers may not be aware about... New interim CEO Herb Zarkin said yesterday that the company lost market share to both Kroger and Wal-Mart "by not offering the right products at the right price." If the prescription drug business had anything to do with that, then the picture could get worse for BJ's in 2007... "The situation is a mess..." said one manager when asked about the pharmacies being cut and the future "simply I just don't know what is going to happen..." Keep coming back to find out more on this "mess" of a situation BJ's is in.

BJ's Wholesale Cuts Profit Outlook
Houston Chronicle - Houston,TX,USA
BOSTON — BJ's Wholesale Club Inc. on Thursday cut its profit forecast amid sluggish sales and said it will close 46 in-store pharmacies and two restaurant ...

BJ's Wholesale cuts profit outlook, will ...
Boston Online - BOSTON -- BJ's Wholesale Club Inc. on Thursday cut its profit forecast amid sluggish sales and said it will close 46 in-store pharmacies and two restaurant supply locations, moves announced less than two months after the ...

Warehouse club BJ's Wholesale cuts profit outlook, will close 46 ...
BOSTON: BJ's Wholesale Club Inc. on Thursday cut its profit forecast amid sluggish sales and said it will close 46 in-store pharmacies and two restaurant ...

Sector Snap: Big Box Retailers
Houston Chronicle - Houston,TX,USA
NEW YORK — Shares of BJ's Wholesale Club Inc. sank Thursday under slow same-store sales in December, but other big box retailers got a boost from an ...

BJ's Wholesale Club makes management shifts
Worcester Business Journal - Worcester,MA,USA
Forward was part of the original team that formed BJ's Wholesale Club as a development stage business in 1984. Forward previously served as executive vice ...

BJ's Wholesale Club will attempt to regroup - Orlando Sentinel
BJ's Wholesale Club Inc., the third-largest US warehouse retailer, ... Warehouse club BJ's Wholesale cuts profit outlook, will close 46 … International Herald Tribune BJ’s Wholesale Club Reports December Sales Results; Announces … ...

BJ's Wholesale, on the rebound again...

Kroger and Wal-Mart beat up on BJ's Wholesale

BJ's Wholesale(NYSE:BJ), the nation's third-largest wholesale store chain behind leaders Costco Wholesale Corp. (NASDAQ:COST) and Sam's Club, has not had anything enlightening to say in prior quarters. It continues to lose sales to competitor Wal-Mart, Inc. (NYSE:WMT),which runs Sam's Clubs, and to even the nation's largest retail (not wholesale) grocery retailer Kroger (NYSE:K).

BJ's Wholesale even cut its profit forecast after lower-than-expected holiday sales were announced. The company will be closing 46 in-store pharmacies and two restaurant-supply locations. 46 pharmacies, you say? Has the recent move by Wal-Mart into the prescription drug "discount bin" pricing approach that was just launched in the last calendar quarter of 2006 had anything to do with this move by BJ's Wholesale?

In response to Wal-Mart's move into the $4 prescription drug business, both competitors Target Corporation (NYSE:TGT) and Kroger said they would respond with the same pricing in an effort to not lose customers to Wal-Mart. But retail drug chains like CVS (NYSE:CVS) and Walgreens (NYSE:WAG) did not follow suit (nor could they).

BJ's interim CEO Herb Zarkin said yesterday that the company lost market share to both Kroger and Wal-Mart "by not offering the right products at the right price." If the prescription drug business had anything to do with that, then the picture could get worse for BJ's in 2007.

BJ’s to Shut Pharmacies, ProFoods

BJ’s to Shut Pharmacies, ProFoods

January 5th, 2007

NATICK, Mass. — BJ’s Wholesale Club here said yesterday it would close all 46 of its in-store pharmacies, as well as its two ProFoods restaurant supply stores, as part of a restructuring under interim Chief Executive Officer Herb Zarkin. Citing “self-inflicted” struggles for sales and membership growth, Zarkin said BJ’s would reduce SKU selection, sharpen pricing, curb new club growth, and improve marketing and merchandising. The announcements, which also included the return of former executives Laura Sen, named executive vice president of merchandising and logistics, and Ed Gillooly, senior vice president of marketing and membership, came after BJ’s said tepid sales of general merchandise and winter gear slowed comparable sales in December to 0.6%, including a 1% gain from gasoline sales. Charges related to closure costs, as well as the effect of lower-than-expected sales, will result in quarterly earnings of 17- 25 cents a share, down from previous estimates of 83-87 cents per share, the retailer said.

Did your store let you know??? What other changes will the interim CEO Herb Zarkin make??!? This is an important time for BJ's Workers to come together and stand up for their rights.