Exhibit 99.1
BJ’s Wholesale Club News
BJ’s Wholesale Club, Inc | One Mercer Road | P.O. Box 9601 | Natick, MA 01760 |
| FOR IMMEDIATE RELEASE | Contact: | Cathy Maloney | ||
| VP, Investor Relations | ||||
| 508-651-6650 | ||||
| cmaloney@bjs.com |
BJ’S WHOLESALE CLUB REPORTS FIRST QUARTER RESULTS
May 18, 2004, Natick, MA—BJ’s Wholesale Club, Inc. (BJ: NYSE)today reported net income of $16.1 million, or $.23 per diluted share, for its first quarter ended May 1, 2004, compared to income before the cumulative effect of accounting principle changes of $12.5 million, or $.18 per diluted share, for last year’s first quarter. Including the cumulative effect of accounting principle changes, net income for last year’s first quarter was $11.3 million, or $.16 per diluted share. Results for the quarter ended May 3, 2003, included a post-tax gain of $0.7 million, or $.01 per diluted share, as a result of reducing the Company’s reserves for House2Home lease obligations. (See notes to attached statements.)
Net sales for the first quarter increased by 12.1% to $1.6 billion, and comparable club sales increased by 6.6%, including a contribution from sales of gasoline of 0.4%.
President and CEO Mike Wedge commented, “Our results for the first quarter reflect significant investments to become a truly member-centric organization. Based on our Member Insight findings, we re-merchandised approximately 75% of the aisles in our clubs during the first quarter. On a comparable club sales basis, food increased by approximately 9% and general merchandise increased by approximately 4% during the first quarter.”
The Company also announced that it repurchased approximately 317,000 shares of BJ’s common stock during the first quarter at an average price of $25.10 per share, for a total of approximately $8.0 million.
First Quarter Results/Conference Call
As previously announced, BJ’s plans to hold a conference call today at 8:30 a.m. Eastern Time to discuss the first quarter results and outlook for the remainder of 2004. To access the webcast (including financial and other statistical information being presented, as well as reconciliation information with respect to any non-GAAP financial measures being presented), visitwww.bjsinvestor.com/medialist.cfm to hear the call live or to listen to an archive of the call, which will be available for approximately ninety days following the call.
BJ’s introduced the wholesale club concept to New England in 1984 and has since expanded to become a leading warehouse chain in the eastern United States. The Company currently operates 150 clubs and 78 gas stations compared with 143 clubs and 71 gas stations one year ago. BJ’s press releases and filings with the SEC are available on the Internet atwww.bjs.com
-See Financial Tables-
BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
| Thirteen Weeks Ended | ||||||||
May 1, 2004 | May 3, 2003 | |||||||
Net sales | $ | 1,610,958 | $ | 1,437,549 | ||||
Membership fees and other | 36,666 | 33,572 | ||||||
Total revenues | 1,647,624 | 1,471,121 | ||||||
Cost of sales, including buying and occupancy costs | 1,497,600 | 1,333,423 | ||||||
Selling, general and administrative expenses | 123,200 | 113,916 | ||||||
Preopening expenses | 219 | 3,989 | ||||||
Operating income | 26,605 | 19,793 | ||||||
Interest expense, net | (111 | ) | (68 | ) | ||||
Gain (loss) on contingent lease obligations | (73 | ) | 814 | |||||
Income from continuing operations before income taxes and cumulative effect of accounting principle changes | 26,421 | 20,539 | ||||||
Provision for income taxes | 10,171 | 7,870 | ||||||
Income from continuing operations before cumulative effect of accounting principle changes | 16,250 | 12,669 | ||||||
Loss from discontinued operations, net of income tax benefit | (132 | ) | (149 | ) | ||||
Income before cumulative effect of accounting principle changes | 16,118 | 12,520 | ||||||
Cumulative effect of accounting principle changes | — | (1,253 | ) | |||||
Net income | $ | 16,118 | $ | 11,267 | ||||
Basic and diluted earnings per common share: | ||||||||
Income from continuing operations before cumulative effect of accounting principle changes | $ | 0.23 | $ | 0.18 | ||||
Loss from discontinued operations | — | — | ||||||
Cumulative effect of accounting principle changes | — | (0.02 | ) | |||||
Net income | $ | 0.23 | $ | 0.16 | ||||
Number of common shares for earnings per share computations: | ||||||||
Basic | 69,809,300 | 69,288,640 | ||||||
Diluted | 70,362,007 | 69,396,765 | ||||||
Pro forma amounts assuming accounting principle changes are applied retroactively: | ||||||||
Net income | $ | 16,118 | $ | 12,520 | ||||
Basic and diluted earnings per common share | $ | 0.23 | $ | 0.18 | ||||
Clubs in operation - end of period | 150 | 143 | ||||||
BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
May 1, 2004 | May 3, 2003 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 75,954 | $ | 42,100 | ||
Accounts receivable | 63,332 | 57,100 | ||||
Merchandise inventories | 707,651 | 659,046 | ||||
Current deferred income taxes | 18,998 | 19,280 | ||||
Prepaid expenses | 19,465 | 17,253 | ||||
Total current assets | 885,400 | 794,779 | ||||
Property, net of depreciation | 778,345 | 720,700 | ||||
Other assets | 23,016 | 23,292 | ||||
TOTAL ASSETS | $ | 1,686,761 | $ | 1,538,771 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Short-term debt | $ | — | $ | 40,000 | ||
Current installments of long-term debt | 407 | — | ||||
Accounts payable | 488,944 | 442,279 | ||||
Closed store lease obligations | 8,428 | 21,214 | ||||
Accrued expenses and other current liabilities | 214,935 | 190,569 | ||||
Total current liabilities | 712,714 | 694,062 | ||||
Long-term debt, less portion due within one year | 3,521 | — | ||||
Noncurrent closed store lease obligations | 11,055 | 21,663 | ||||
Other noncurrent liabilities | 61,468 | 52,894 | ||||
Deferred income taxes | 35,429 | 18,008 | ||||
Stockholders’ equity | 862,574 | 752,144 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,686,761 | $ | 1,538,771 | ||
BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
| Thirteen Weeks Ended | ||||||||
May 1, 2004 | May 3, 2003 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 16,118 | $ | 11,267 | ||||
(Gain) loss on contingent lease obligations | 73 | (814 | ) | |||||
Provision for store closing costs | 220 | 248 | ||||||
Cumulative effect of accounting principle changes | — | 1,253 | ||||||
Depreciation and amortization | 24,413 | 20,256 | ||||||
Deferred income taxes | 1,589 | 6,803 | ||||||
Increase in merchandise inventories, net of accounts payable | (10,347 | ) | (7,543 | ) | ||||
Decrease in closed store lease obligations | (2,728 | ) | (14,890 | ) | ||||
Other | 10,044 | 6,634 | ||||||
Net cash provided by operating activities | 39,382 | 23,214 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Property additions | (30,446 | ) | (55,636 | ) | ||||
Property disposals | 390 | 15 | ||||||
Net cash used in investing activities | (30,056 | ) | (55,621 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Borrowing of short-term debt, net | — | 40,000 | ||||||
Purchase of treasury stock | (7,960 | ) | — | |||||
Proceeds from issuance of common stock | 1,951 | 51 | ||||||
Changes in book overdrafts | (5,986 | ) | 1,773 | |||||
Repayment of long-term debt | (97 | ) | — | |||||
Net cash provided by (used in) financing activities | (12,092 | ) | 41,824 | |||||
Net increase (decrease) in cash and cash equivalents | $ | (2,766 | ) | $ | 9,417 | |||
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
| 1. | Last year’s first quarter gain on contingent lease obligations included a pretax credit of $1.2 million ($0.7 million after tax) to reduce the Company’s House2Home lease obligations. |
| 2. | During last year’s first quarter ended May 3, 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). The Company recorded a post-tax charge of $1,253,000, or $.02 per diluted share, to reflect the cumulative effect of adopting this accounting principle change as of the beginning of the fiscal year. |
| 3. | During this year’s first quarter ended May 1, 2004, the Company adopted the provisions of Emerging Issues Task Force Issue 03-10, “Application of EITF Issue No. 02-16 by Resellers to Sales Incentives Offered to Consumers by Manufacturers” (“EITF 03-10”). This pronouncement provides guidance for the reporting of vendor consideration received by a reseller as it relates to manufacturers’ incentives (such as rebates or coupons) tendered by consumers. Vendor consideration may be included in revenues only if defined criteria are met. Otherwise, such consideration is recorded as a decrease in cost of sales. The provisions of EITF 03-10 became effective as of the beginning of 2004. Implementation of EITF 03-10 has no effect on gross margin dollars, net income or cash flows, but certain vendor coupons or rebates which had been recorded in sales in the past are being recorded as a reduction of cost of sales in this year’s first quarter. This resulted in decreases in both sales and cost of sales of $10.3 million in this year’s first quarter versus $4.1 million in last year’s first quarter. As permitted by the transition provisions of EITF 03-10, sales and cost of sales in last year’s statement of income have been recast to conform with this year’s presentation. |
| 4. | Certain amounts in the prior year’s financial statements have been reclassified for comparative purposes. |
