BJ Q1 2026: Digital sales surge 35% YoY
- Aggressive Expansion and Real Estate Strategy: Management is ramping up club openings (targeting 25-30 clubs in the next 2 years) and pursuing store relocations to optimize market positions, signaling strong growth prospects and increased market share.
- Rising Premium Membership Penetration: Q&A responses highlighted a sequential increase of over 100 basis points in higher-tier membership, with targets to exceed 50% penetration, which supports stronger membership loyalty and higher spending per member.
- Digital and Fresh 2.0 Initiatives Driving Sales Growth: The executives noted impressive performance in digital channels with digitally enabled comp sales up 35% YoY, alongside Fresh 2.0 initiatives in produce and meat generating high single-digit to low double-digit growth, boosting customer engagement and overall comp sales.
- Macro uncertainty and tariff risks: The management highlighted that evolving tariff rates and inflation are creating an unpredictable cost environment that could compress margins, as they continue to hedge against potential adverse pricing pressures and supply chain challenges.
- Potential comp sales deceleration: The company noted that first-quarter comparable sales, particularly excluding gas, are expected to be a high watermark for the year. This raises concerns that sales performance may decelerate in the latter half, adversely affecting growth.
- Margin pressure from heavy investments: Significant spending on new club openings, digital and fresh initiatives, and other margin investments could stress operating margins if these initiatives do not deliver the expected incremental returns in a challenging economic backdrop.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 4.8% increase ( ) | Total revenue grew from $4,918.5 million in Q1 2025 to $5,153.5 million in Q1 2026, reflecting overall sales growth that builds on prior period momentum with stable net sales performance ( ). |
Net Sales | 4.7% increase ( ) | Net sales increased from $4,807.1 million to $5,033.1 million, driven by improved traffic and unit sales that continued the growth seen in previous periods ( ). |
Membership Fee Income | Approximately 8% increase ( ) | Membership fee income rose from $111.4 million to $120.4 million in Q1 2026, likely reflecting strong membership retention and acquisition, building on growth in prior periods and benefits from new club openings ( ). |
Operating Income | 26.7% increase ( ) | Operating income surged from $160,755 thousand to $203,645 thousand due to improved operational efficiencies and more effective cost management compared to the previous period, amplifying profitability beyond modest revenue growth ( ). |
Net Income | 35% increase ( ) | Net income improved from $111,019 thousand to $149,768 thousand as a result of higher operating income and revenue gains, with the improvement building on better performance seen in earlier reports ( ). |
Net Interest Expense | 20% decrease ( ) | Net interest expense fell from $13,951 thousand to $11,099 thousand, driven by a reduction in outstanding borrowings and beneficial interest rate conditions, which follows the trend of improving financing costs noted in previous periods ( ). |
Basic EPS | 35.7% increase ( ) | Basic EPS increased from $0.84 to $1.14, largely due to the significant improvement in net income and a favorable shift in the weighted-average shares outstanding, enhancing per-share profitability over the prior period ( ). |
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Margin Guidance
Q: Margin strength and guidance range?
A: Management highlighted strong merchandise margins in Q1, noting that while investments may pressure margins later, the guidance remains unchanged amid uncertainty. -
Cost/Tariff Risks
Q: How are tariffs affecting costs?
A: They indicated that tariff impacts were built into guidance, with BJ’s less affected than competitors; sourcing shifts and pricing strategies help blunt cost pressures. -
Margin Investment
Q: What drives margin investments?
A: Investments in initiatives like Fresh 2.0 and meat reflow are being made for long-term growth, with labor costs in perishables balanced by increased sales opportunities. -
Digital & GM
Q: Digital impact on margins and GM outlook?
A: Digital sales are growing robustly—though they yield slightly lower contribution margins, they boost overall engagement and compensatory sales in both BOPIC and curbside channels. -
Fresh Performance
Q: What growth is seen in Fresh 2.0?
A: Produce deliveries have recorded high single-digit to low double-digit growth, and early results in meat are comparable, suggesting sizable long-term opportunities. -
Membership & Share
Q: How are share and membership trends evolving?
A: Membership continues to perform well, with higher tier penetration recently exceeding 40% and expectations to reach above 50%, alongside share gains in nonfood and fuel segments. -
Long-Term Algorithm
Q: Any changes to the long-term algorithm?
A: The approach to boosting member engagement and premium membership remains unchanged, with management staying focused on long-term activation. -
Real Estate Strategy
Q: How will club opening strategy evolve?
A: Accelerated club openings are planned in both new and existing markets, as evidenced by recent launches on Staten Island and in the Carolinas. -
Store Relocations
Q: Are store relocations part of expansion?
A: Relocations are pursued opportunistically to better serve communities, supplementing the overall strategy for new openings. -
Real Estate Costs
Q: How do construction costs affect new stores?
A: Despite rising construction costs impacting new builds like the DC center, management remains confident in long-term investments and efficient project execution. -
Sales Trend
Q: How strong are current May sales?
A: Management refrained from commenting on May trends but reaffirmed a strong Q1 performance with 3.9% comp growth reflecting robust membership engagement.