BJ's Wholesale Club Holdings, Inc. has recently released its 10-Q report, revealing key financial and operational insights. The company operates warehouse clubs on the eastern half of the United States, offering groceries, general merchandise, gasoline, and ancillary services through various online platforms. In the second quarter of fiscal year 2024, net sales increased by 4.8% to $5.1 billion, driven primarily by growth in the grocery and perishable division, an increase in club count, and gasoline sales at gas stations. Additionally, membership fee income grew by 9.1% to $113.1 million, attributed to strength in membership acquisition and retention.
Comparable club sales, a crucial performance indicator, increased by 3.1% in the second quarter, driven by higher sales of groceries, general merchandise, and services. Merchandise comparable club sales increased by 2.4%, primarily led by growth in fresh produce, nutrition, beverages, and fresh beef in the grocery division. However, general merchandise and services saw a decrease due to lower consumer spending in certain seasonal categories.
Cost of sales was $4.2 billion, representing 83.4% of net sales, in the second quarter of fiscal year 2024, with a 10 basis points increase in merchandise gross margin rate compared to the prior year period. Selling, general, and administrative expenses (SG&A) increased by 8.0% to $750.3 million, mainly driven by increased labor and occupancy costs due to new club and gas station openings.
Membership fee income grew by 9.1% to $113.1 million in the second quarter, primarily due to strength in membership acquisition and retention across both new and existing clubs. The company's adjusted net income for the second quarter was $146.3 million, reflecting a 9.3% increase from the prior year, while adjusted EBITDA was $281.3 million, representing 5.5% of net sales.
In the first six months of fiscal year 2024, net sales increased by 4.4% to $9.9 billion, with membership fee income growing by 8.9% to $224.5 million. Adjusted net income for the first six months was $259.7 million, a 4.2% increase from the prior year, while adjusted EBITDA was $517.7 million, representing 5.2% of net sales.
The company's effective income tax rate decreased for both comparative periods, primarily driven by higher tax benefits from stock-based compensation in the current period. BJ's Wholesale Club Holdings, Inc. also provided non-GAAP financial measures, including adjusted net income and adjusted EBITDA, to present more accurate year-over-year comparisons for net income and core operating performance. Following these announcements, the company's shares moved 0.8%, and are now trading at a price of $79.93. For the full picture, make sure to review BJ's Wholesale Club's 10-Q report.
