Shares of the warehouse retailer dipped on weak guidance.
Shares of BJ’s Wholesale Club (BJ -6.80%) were sliding today in response to news of an underwhelming second-quarter earnings report from the warehouse club chain.
While the company topped estimates for the quarter past, guidance called for full-year earnings per share (EPS) to come at the lower end of this guidance.
As a result, the stock was down 6.5% as of 12:46 p.m. ET.
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BJ’s edges out expectations
The warehouse club chain, which competes with Sam’s Club and Costco Wholesale, posted solid results in its fiscal second quarter, ended Aug. 3, with comparable sales excluding gas up 2.4% and a 9.1% increase in membership fee income to $113.1 million.
As a result, revenue rose 4.9% to $5.21 billion, which topped expectations at $5.15 billion. Margins were mostly steady, and on the bottom line, adjusted earnings per share increased 10% to $1.09, beating expectations at $1.
CEO Bob Eddy said, “Our second quarter was marked by robust membership, accelerating traffic and unit growth, and a fast-tracking digital business, which led to a strong performance in the quarter.”
Guidance was underwhelming
BJ’s sees comparable sales, excluding gas, up 1% to 2% for the year, driven by traffic and unit growth, as well as a strong perishables business.
It also said it was targeting adjusted earnings per share of $3.75 to $4, though it expected long-term investments to push its EPS toward the low end of that range. That compares to the analyst consensus of $3.93.
While that guidance is a mild disappointment, BJ’s has held its own against larger rivals like Costco and Sam’s Club, and the stock still looks to be in position to deliver steady growth.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.