BJ's Wholesale Club Holdings, Inc. has recently released its 10-K report, providing an in-depth look into its financial condition and operations. The company operates warehouse clubs on the eastern half of the United States, offering groceries, general merchandise, gasoline, and other ancillary services. In fiscal year 2024, BJ's reported net sales of $20.0 billion, marking a 2.5% increase from the previous year. The growth was primarily driven by strength in the perishables, grocery, and sundries division, increased gasoline sales, and the opening of seven new clubs.
Comparable club sales, a key performance indicator, increased by 2.5% in fiscal year 2024, with merchandise comparable club sales rising by 2.8%. The growth in merchandise sales was propelled by increased sales of perishables, such as fresh produce and dairy, as well as general merchandise and services, including toys, electronics, and apparel. Additionally, membership fee income saw an 8.5% increase, reaching $456.5 million, driven by strength in membership acquisition, retention, and higher tier membership penetration.
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, influenced by the sales mix 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, primarily due to increased labor and occupancy costs resulting from new club and gas station openings. Pre-opening expenses for new clubs and distribution centers also rose to $28.3 million in fiscal year 2024.
The company's interest expense, net decreased to $51.4 million in fiscal year 2024 from $64.5 million in the previous year, primarily due to a reduction in average outstanding borrowings and fluctuations in interest rates. BJ's effective income tax rate from continuing operations was 25.9% for fiscal year 2024, down from 28.8% in fiscal year 2023.
BJ's Wholesale Club also provides non-GAAP financial measures, including adjusted net income, adjusted EPS, adjusted EBITDA, and adjusted free cash flow, as management believes these metrics are useful to investors and analysts by excluding items that are not indicative of the company's core operating 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 had $28.3 million in cash and cash equivalents and $1.0 billion of unused capacity under its ABL Revolving Facility.
Following these announcements, the company's shares moved 1.0%, and are now trading at a price of $109.07. For more information, read the company's full 10-K submission here.
