10:54 AM EDT, 08/22/2024 (MT Newswires) -- BJ's Wholesale Club (BJ) reported better-than-expected fiscal second-quarter results and affirmed its full-year earnings outlook on Thursday while Chief Financial Officer Laura Felice said that the company's long-term investments could drive full-year earnings toward the lower end of the projected range.

Adjusted earnings came in at $1.09 a share for the quarter ended Aug. 3, up from $0.99 the year before, topping the Capital IQ-polled consensus of $1.01. Overall revenue inclined 4.9% year over year to $5.21 billion, ahead of the Street's view for $5.15 billion.

"Our second quarter was marked by robust membership, accelerating traffic and unit growth, and a fast-tracking digital business, which led to strong performance in the quarter," Chief Executive Bob Eddy said in a statement. "This was our tenth consecutive quarter of traffic growth."

Comparable club sales, excluding the impact of gasoline sales, rose 2.4%, above the 1.3% increase modeled by analysts. General merchandise and services comparable sales "increased slightly" in the quarter, with the former "outperforming the rest of the divisions," the CFO said on an earnings call, according to a Capital IQ transcript.

Membership fee income gained 9.1% to $113.1 million, "driven by strong membership acquisition and retention across the chain," Felice said on the call. Merchandise gross margin, excluding gasoline sales and membership fee income, improved by 10 basis points on an annual basis mainly due to improved inventory cost management, according to the company.

For fiscal 2024, BJ's continues to project adjusted EPS of $3.75 to $4, "with investments for the long term potentially driving us towards the lower end of that range," Felice told analysts. The Street is looking for normalized EPS of $3.94. The stock dropped 6% in Thursday trading.

Comparable club sales growth, excluding gasoline, is still expected at 1% to 2% for the fiscal year, "with traffic and unit growth as well as a strong perishables business likely driving us to the higher end of the range," Felice said in the earnings statement. The market view is for same-store sales growth of 1.7%.

The company now anticipates its merchandise gross margin rate to be about flat year over year according to Felice, compared with the previous outlook for an improvement of roughly 20 basis points.

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