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.