BJ's Wholesale Club Holdings, Inc. has recently released its 10-K report, providing a comprehensive overview of its financial performance and operations. The company operates warehouse clubs on the eastern half of the United States, offering groceries, general merchandise, gasoline, and other services through various online platforms. For the fiscal year 2024, BJ's Wholesale Club reported net sales of $20.0 billion, marking a 2.5% increase from the previous year. This growth was primarily driven by strength in perishables, grocery, and sundries division, an increase in gasoline sales, and the opening of seven new clubs during the fiscal year.
Comparable club sales, a key performance indicator for the company, increased by 2.5% in fiscal year 2024 compared to the previous year. This growth was influenced by increased sales of perishables, general merchandise, and services. Membership fee income also saw a notable increase, reaching $456.5 million in fiscal year 2024, reflecting an 8.5% rise from the previous year. The company attributed this increase to strength in membership acquisition, retention, and higher tier membership penetration across both new and existing clubs.
Cost of sales, which consists primarily of the direct cost of merchandise and gasoline sold at the clubs, accounted for 83.5% of net sales in fiscal year 2024. The merchandise gross margin rate decreased approximately 10 basis points compared to the previous year, impacted by the mix of sales and continued investments in the business.
Selling, general, and administrative expenses (SG&A) increased by 5.0% to $3.0 billion in fiscal year 2024 from the previous year. This increase was primarily driven by higher labor and occupancy costs due to new club and gas station openings, as well as an increase in incentive compensation. Pre-opening expenses for new clubs and distribution centers also saw an increase, amounting to $28.3 million in fiscal year 2024.
Interest expense, net decreased to $51.4 million for fiscal year 2024 compared to $64.5 million for the previous year, primarily due to a reduction in average outstanding borrowings and fluctuations in interest rates. The company's effective income tax rate from continuing operations was 25.9% for fiscal year 2024, showing a decrease from the previous year's rate of 28.8%.
BJ's Wholesale Club also provided non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted EBITDA, and adjusted free cash flow, to present a more accurate comparison of core operating results between periods. These measures are aimed at providing investors and analysts with a clearer understanding of the company's performance.
In terms of liquidity and capital resources, the company's primary sources of liquidity are cash flows generated from club operations and borrowings from its ABL Revolving Facility. As of February 1, 2025, BJ's Wholesale Club had cash and cash equivalents totaling $28.3 million and $1.0 billion of unused capacity under its ABL Revolving Facility.
The market has reacted to these announcements by moving the company's shares 1.0% to a price of $109.07. If you want to know more, read the company's complete 10-K report here.
