BJ's Wholesale 1Q Profit Declines
May 22, 2007 - 10:14amAP Business Writer
BOSTON (AP) - BJ's Wholesale Club Inc.'s profit fell 11 percent in the first full quarter since a leadership change returned Herb Zarkin to the retail warehouse club's top job.
Despite the lower profit, Zarkin said he expects his efforts to revamp merchandise and pricing at Natick-based BJ's to yield improved earnings by late this year.
Net income for the three-month period ended May 5 declined to $13.7 million, or 21 cents per share, from $15.4 million, or 23 cents per share, a year ago.
The latest quarter included income of a penny per share from the sale of pharmacy assets following Zarkin's Jan. 4 announcement of plans to close 46 unprofitable in-store pharmacies.
Not counting one-time gains and expenses, the latest quarter's profit would have totaled 20 cents, compared with 22 cents previously, matching the consensus estimate of analysts surveyed by Thomson Financial.
Revenue, including membership fees, grew to $2.06 billion from $1.91 billion last year. Net sales rose 8 percent to $2.01 billion from $1.87 billion a year earlier, as sales at clubs open at least a year increased 2.3 percent, including a contribution from gasoline sales of 1.4 percent.
Shares of BJ's rose $1.09 cents, or 3.1 percent, in morning trading Tuesday to $36.60.
Although the first-quarter profit fell 11 percent, the performance was an improvement from the fourth quarter, when net income plunged 77 percent following slow sales heading into the holiday shopping season _ a trend that led to the abrupt resignation of Mike Wedge on Nov. 22, when Zarkin was named interim chief executive. On March 1, BJ's named Zarkin president and CEO on a permanent basis, and he stayed on as board chairman.
Zarkin told analysts in a conference call that he was "encouraged by the early signs" from his steps to turn around the company, and expects to see the efforts yield profit gains starting late this year.
"We feel we made considerable progress in the first quarter," said Zarkin, despite poor April weather in the Northeast that hurt sales.
Among other things, Zarkin plans to cut the number of brands and sizes BJ's carries to open up shelf space for additional product lines. He also plans to eliminate certain BJ's-branded private label items, offer more competitive pricing, and refocus marketing and merchandise presentation.
BJ's, with more than 20,000 employees, operates 173 warehouse clubs in 16 states, stretching from Maine to Florida, with the heaviest concentration in the Northeast. BJ's is dwarfed by larger rivals Costco Wholesale Corp. and Wal-Mart Inc.'s Sam's Club.
From 1993 to 1997, Zarkin was president and CEO of Waban Inc., which then operated BJ's and well as HomeBase, another warehouse club.
(Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
AP Business Writer
BOSTON (AP) - BJ's Wholesale Club Inc.'s profit fell 11 percent in the first full quarter since a leadership change returned Herb Zarkin to the retail warehouse club's top job.
Despite the lower profit, Zarkin said he expects his efforts to revamp merchandise and pricing at Natick-based BJ's to yield improved earnings by late this year.
Net income for the three-month period ended May 5 declined to $13.7 million, or 21 cents per share, from $15.4 million, or 23 cents per share, a year ago.
The latest quarter included income of a penny per share from the sale of pharmacy assets following Zarkin's Jan. 4 announcement of plans to close 46 unprofitable in-store pharmacies.
Not counting one-time gains and expenses, the latest quarter's profit would have totaled 20 cents, compared with 22 cents previously, matching the consensus estimate of analysts surveyed by Thomson Financial.
Revenue, including membership fees, grew to $2.06 billion from $1.91 billion last year. Net sales rose 8 percent to $2.01 billion from $1.87 billion a year earlier, as sales at clubs open at least a year increased 2.3 percent, including a contribution from gasoline sales of 1.4 percent.
Shares of BJ's rose $1.09 cents, or 3.1 percent, in morning trading Tuesday to $36.60.
Although the first-quarter profit fell 11 percent, the performance was an improvement from the fourth quarter, when net income plunged 77 percent following slow sales heading into the holiday shopping season _ a trend that led to the abrupt resignation of Mike Wedge on Nov. 22, when Zarkin was named interim chief executive. On March 1, BJ's named Zarkin president and CEO on a permanent basis, and he stayed on as board chairman.
Zarkin told analysts in a conference call that he was "encouraged by the early signs" from his steps to turn around the company, and expects to see the efforts yield profit gains starting late this year.
"We feel we made considerable progress in the first quarter," said Zarkin, despite poor April weather in the Northeast that hurt sales.
Among other things, Zarkin plans to cut the number of brands and sizes BJ's carries to open up shelf space for additional product lines. He also plans to eliminate certain BJ's-branded private label items, offer more competitive pricing, and refocus marketing and merchandise presentation.
BJ's, with more than 20,000 employees, operates 173 warehouse clubs in 16 states, stretching from Maine to Florida, with the heaviest concentration in the Northeast. BJ's is dwarfed by larger rivals Costco Wholesale Corp. and Wal-Mart Inc.'s Sam's Club.
From 1993 to 1997, Zarkin was president and CEO of Waban Inc., which then operated BJ's and well as HomeBase, another warehouse club.
(Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
