BJ - Earnings call transcript Q2 2021 | BJ's Wholesale Club Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the BJ’s Wholesale Club’s Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. Instructions]. [Operator like Faten conference Freiha. now your over hand today, speaker to would call the to I Thank you. ahead. go Please

Faten Freiha

of Federal Good within morning, and during Eddy, may everyone. second Thank Executive remember cause Chief Laws. based you from with of for the joining that Bill uncertainties. our to and Securities and section this on the XXXX Executive statements These Laura forward-looking on a the Werner, conference make the Factors our those Financial for and risks SEC materially and Chief Please Officer; Risk quarter President, on of BJ’s current are XX-K we risks earnings call. are and Form this involve most Bob Strategy meaning call, call. XX-Q President uncertainties Vice Officer; expectations statements Felice, the Form Development description fiscal Please our Wholesale differ actual filed Club’s and expectations described that call. see could results recent

in GAAP. accordance Investors over call financial accordance measures in the I’ll release section with to Bob. a prepared please provide press GAAP. a considered financial we of financial intended that, the Please with believe presented information be that not we refer or non-GAAP these investors. isolation that refer measures comparable turn of on to the certain to will for non-GAAP posted is Finally, today’s information presentation to will of today’s reconciliation our website on to The With substitute most this for for the in as measures useful call, information note

Robert W. Eddy

for you thank us. joining and morning Good

take opportunity dedication team thank chain our their throughout I'd period. dynamic quarter like and impressive The second to another quarter for a challenging execution this for and the to during our was company.

changed. not has safety on stance Our

continues members. be our highest members well-being Our of and the team safety to priority and

a our the COVID our vaccine the including the have we change support and of of field resurgence protocols introduction virus response home teams. to office As the a around mandate result, heightened in for

manner is with year will I membership our our physical footprint the team the all the of In clear gains half, We me results going outstanding investments against we getting in we making proposition members success. We've members, our value our our last the priorities thing right that has through we and strong reflect continue fly wages it drove for that team strategic When faster members. and to doing market to clear the over the is on and on into this focus and in year performance a agile invested it elevated in progress membership, our members our bonuses. of value half name an infrastructure, business. wheel enabled progress. share our are our our of our on operate digital and meaningful and to first Furthermore, gasoline particularly team

help ensure are team members our driving can business. and that our will to the motivate they thrive Our talents best forward these attract, us investments retain, and help strategy and in central

the of cash delivered leverage as and a $XXX years sales result adjusted stacked adjusted the XX%, of ratio results. those $XXX a following we second During times. of of million, EBITDA with we $X.XX, of great of quarter the very flow cash EPS strong quarter ended Two free million, comp flows X.X

external a our availability inflation, challenges. these face of three business; fast terrific and influencing in delivered factors paced inventory labor market, team results Our the

each to managing Let our how team a those to me seeing are the our of strong continue power business. we about talk momentum is in bit

Historically deep increases in be many is Managed categories on leading inflationary some price this broad. gaps inflation our widened grocery, horizon. the inflation of pressures inflation with inflation. to both trade-off and price works gains through the to can are have significantly. growth. the at industry. is and appropriately, start its is business. business. quarter relative value impacted way come of Let's in meaningful and more which willing the line share This does The as We a our It market They've top initial we're experience to in good and a pressure as our increases for make days will paramount investing margins cost value

our in has diligently while margins where impact outstanding investing Our results mitigate worked to price on our to team members. maintain necessary to

industry Next, like labor our many others. challenges are impacting

we a chosen backed ensure get significant serve we've financial in a team long-time market growing a that our by to forces different and membership. for a our our the great we Recently have of market. For investment performance better calls ahead labor path, chased path that

have Specifically, largest wages starting in history. in the our hourly we made increases

we with work to and and get commitment hard addition, larger as we one-time investors and rewarded this through distribution these In are appreciation our center team our QX of expect These we members. the material a members year. to club investments go in bonus recognition their continued quarter serving to

in to hourly above across will wage so talent footprint. our well now can average continue we Our retain teams that per invest top our and hour we is $XX recruit and

are pressure there in days widespread challenges the the global merchandise Finally, XX was limited chain. certain categories. to supply general ago,

meeting juice like trouble entirely and some categories, pet many domestic are poultry, demand. having Now food,

to We chain continue sourcing the expect for challenges foreseeable supply future. and

convenience pandemic and stay optimized our strength and challenging footprint. four on focused our in with of to intently assortment, delivering at the height growing in members, expanding executing pillars; around We strategy validated centered with environments. and year last retaining strategically our our and our by to strength and digital, improving the ability capabilities performance value an the thrive of execution remain the team's demonstrates capacity Our of stock

an our relative In XX% compared quality our prior each. Membership business membership is foundation by QX and enhance continue base. the grew provide the of on X% we to update XXXX. we of me the year Let membership to and our to size and

record primarily by renewals. this quarter growth Our was driven

renewal the of on ever rates largest highest class we've the members experience to continue of We attracted.

renewals levels. time historic rate year and first Our renewal are at on

seeing we this and year quarter, than with generally last on focused are renewals we timely renewal noted continue We're member. renewal year average both high valuable first more that we because all time intently will the are renewal believe we finish renewing year new rates. these members to As and an incremental more

is we results continues as participation all tier a continue be and strong and ultimately these point reported the improvement of reminder, facts disclosed penetration In Membership a representing differences. our strongest could quality penetration and loyal to renewal and As most prior we This prior renewal easy to XX% rates group basis relative such tier quarter. behavior evidence this consists value. are members higher in of for XXX year. rates lifetime Those in the to renewal increases several Higher influence highest present at same second factors year-end, quality. as improve. the quarter rates renewal quarters the of have with still timing at

XX% of members more enrolled in than easy addition, In our now renewal. are

As the membership, team the a our we per incremental seeing improvement evidence that MFI continued in member. value are to notable improve of

help our making growth in has future outpaced member results. members our in growth the the elevated we're will the value chain of size MFI terms should lifetime and of has The Our for progress and power across the quality and continue half. quarters membership last back in two that

focused key services members of the to products to deliver optimization on demands. best curating to evolving and to We unbeatable Assortment remains our meet remain continuing assortment members. value our

we can inventory rate. high and the clarity new grocery year, also like to an existing the This is simplify, were categories. expand through goal accelerate we allowing inflationary certain to limit such use pressures while demand at sold environment for simplification benefits new Last has able Our we simplification initiatives the as into store provided better center into year improved addition inflationary high as for impetus simplify of offering to and categories. expanding of snacks ensure of to a

drive Our various changes plan to initiatives. is through these CPI

strong area our assortment that our maintain note we to brands order categories to as value through Own of in in and prior be dairy, to initiatives and penetration other to sales compared well increased recreation, members by home made XX% our frozen, Private to This members. in aggressive seasonal, simplification improvement this year. essential should and suppliers great will driven providing perishables. growth profit merchandise efforts. related this progress the our great was We for as category value increase label remains quarter. great Our through XX% summer in

on progress further member loyalty, build this own over expand the improve and to continue portfolio will will which our our and margins. brands increase We strengthen long-term value,

grow services where intend our business the important Our we competitors. our lines to along the club of one is business of areas

offer our easily tremendous travel, market businesses and and our the of value outstanding enhancing by and in such portfolio improvement, value membership. of to growth We to savings a a optical, cost core have are where scaling elevate deliver comparable phones cellular we the the home and services. This includes opportunity our as the members membership of

near-term existing in to growth. focus is the line these stronger drive Our top businesses scale to

For expect of we and rate be to in services line bolstered services telehealth margin meaningful to capabilities will build perspective. and which clubs. are growth top our live example, XX now with a we've be optical from long-term a source This the a

for share where gains. BJ’s when shop shopping gasoline business, likely increasingly the around much our significant were purchases additional as best key corner, ahead we and And seeing drives and of very keep us gas show club, briefly robust the business Since pair performance comp value. it quarter loyalty. it's drives with up of our market their item, signs club. member gas renew a Members XX% of this in me believe tremendous We're is to on gasoline us Let Gallons easy are who we engagement. the we of higher every in the rates market. the for touch example with pleased gasoline mind the it at gasoline are trips value price for outstanding business top clubs

access our continue allow us provide to offer day. to we tremendous platforms digital the Our value to every resonate convenient members with and

X% times, delivered Engagement it of among use this More our driven curbside half curbside our the by is year growth X members third by increased through strong grew a app, use growth of sales and over this the enabled offering. our million a was digitally were to our our stacked Our on BOPIC most BOPIC Digital of quarter. prior approximately sales and members has XXX% relative and basis. than past downloaded quarter orders regularly. which over been evident

addition, Digitally trips make app In in shop per industry members average baskets receive than only. engaged who continues our club year ratings. higher members leading have and more to

months. few pickup, our and digital use pending EBT Finally, nine pickup to state eligible the payments now is in-club plan for BJs.com in payment states remains live capability EBT members additional same-day curbside to delivery, expect This locations all in in and become on next we on track. ship-to-home, enable to approval when shopping available

Our our expand efforts to progress. footprint to continue

quarter This in we one opened New Seabrook, Hampshire. club new

new still a in Lansing, Pittsburgh, expected membership While new fourth the clubs of remainder very clubs our trends. Pennsylvania, to in New Charlotte, The with for sales early, the is we're Commack, quarter, open including it's which locations delighted initial York; response us. are two and Port market Florida; and Michigan; in XXXX

We continue XX more clubs to many new or as as open expect XXXX. to in

gas a stations this gas driving the more tying addition, which great open even In earlier XXXX. investment nine going flywheel quarters of of or three by getting expect year, into gasoline to stations end by back my continued This on we followed have the membership. our comments is gas faster means in clubs to stations will XXXX, example of a dozen

we're our results. first about performance We particularly our by our Michigan well excited Overall, proud rates brand clubs, in renewal where the our are and we're In averages. the and are is and Florida We of above is new incredibly our current record very a strong results. chain markets new environment year clubs in seeing resonating. capitalized Pensacola, delivered on expansion wide underpinned confidence

across all the our Our this key in confidence of plans increasing performance year. exceeded metrics, our balance internal

plans retain food highest to While The home high there to keep virus the ability levels. on and continues go uncertainty, members been continue execute to longer. effects the strong, at market of we will likely amount of resulting resurgence be work and has to tremendous our a for back at and to share consumption

uncertainty We that mix government expected the continued our also has inventory assistance, are availability funding. and child all inflation of the tax back When around tailwinds expect trend in and tailwind unemployment as improved to such decreases in the together, current QX. inflation by sales of would we credit. from we view half offset those what along the outlook increasing sales will it from make costs, such for with thought and be end proud their at team The our and margin investments as are freight in expenses safety. considerable pressures be we stronger Offsetting from

these do clear, are well extremely far impact that from all and we further positioned business While for factors is growth. know poised our of the and benefit

year execution. expected for that first to estate assortment membership pipeline better our Our continue We initiatives, growth. power real top our results trends, than will algorithm capabilities, confident of digital remain this enhanced validate the half mid-single-digit that and line includes strategy and a long-term robust

Let a more our over bit results me color our Laura Laura. turn the call of and to view the give to future. on

Laura Felice

Thank morning, good you, And Bob. everyone.

Let me continued midst start hard team distribution challenging thanking office environment. home for centers, clubs, our of sustained, and our a members their the work by in and

against and We another strong are by report to significant strategic performance progress great excited anchored quarter our priorities.

positive sales, a which the XX% quarter. year for sales Net me QX, our turn internal stacked $X.X gasoline comp and billion. comp, were two of for sales our Let reflected Merchandised outpaced excludes expectations. to second now results

every points and sales are as geographies. enabled we our very X% with quarter the we exceeded on and well of pickup, where by because nature across have particularly fulfillment Digitally market a four basis, two seeing performance BOPIC is on of we our basis, share and day throughout approximately delivery. the XX% same centered all this habits our exceeded the economics. pleased stacked Our strong methods and of XXX% our we curbside as were gains advantaged in channels, a spending percentage expectations and results important The quarter, across Membership expectations. year drove categories trends stacked month of digital as merchandise and robust it's saw stacked well comp. are consumer growth the growth grew as On for about our

and curbside operate us warehouse of traditional ticket, towards in delivery a a and be know, to skew limited you the bigger sales efficient. sales clubs. our enabling with sales BOPIC more to tend day number same in a same and baskets higher we environment As as have skews margins average

our Comps have As make more were trips Bob who negative likely perishables are in the shops member basis, certain XX% members in stacked comps than in engaged particularly prior year and And they the spends, growth we On to household we X% XX% and robust year. with as before to clubs. the Despite for noted, a all members where two-year we division, delivered relevance across in our stock stacked quarter more a average the XX% strong baskets comp higher digitally renew. and the reflecting our the said generally, shop our a per have continued comp were range. food a XX% performance, more the only saw and grocery stack divisions, which members. categories, a grocery challenges team in and in in experienced other demonstrates current

comp for services divisions reflecting in XX% quarter stacked, Our were X% the negative and the merchandise year. and a general comped XX% comp a prior current

as electronics. home related patio note this to that such categories. seasonal and furniture portfolio strong quarter such availability consumer prior categories, as Our It's sales a was by apparel, in in important sets, categories We growth comp doubled driven seasonal basis stacked on a inventory sales sales impacted our general our by growth year. were to strong where relative merchandise services saw across certain and

to investments to by represent to core small continue significantly our quarter gallon clubs services growth second our sold a offerings approximately in comp and In gain our invest Gallons market expect business, we XX%, growth. Although fuel outpacing portion we continue business, will in strong the at and these performance. gasoline scaling grew share. currently of overall see future

relative plans. fee the Membership the grew in the MFI business X% year, certainly exceeded to performance to gasoline by internal prior the margins or second in our million. of While $XX quarter business contracted

primarily Our MFI growth driven member was membership improved by mix. strong renewals and

rates remain members renewal time historical for first renewals Our year and on highs. at

than members members with of easy pleased tier our enrolled progress membership renewal. in XX% improving quality now are the of in and Higher We of making the more we're our represent base. members are XX%

move gross Let's now margins. to

general mix SG&A million as gross in our million, business, penetration were sales. basis of by distribution gasoline by price, well and costs. investment merchandise prior margin and label to These the rate $XXX $XXX for were in the year. expenses improved by Excluding XX and private merchandise as increases our compared quarter partially the driven increased offset points tailwinds freight

incurred quarter, approximately Bob team $X This that to earlier. bonus we expense the million of related member recognition mentioned

year As recall, period. we you of may million incurred the in $XX prior COVID costs approximately

we our seen quarter, to line this have as invest in our SG&A in We some business deleverage team and elected members.

said, footprint. team top to and important are retain our forward, it attract our central to us strategy Bob talent and for As driving our is members across

Our share $XXX related was $XX growth net a for the quarter cost and per was or continued in reflects charge and basis. management. down. margin million a reflected share, $XXX million, Interest $X.XX $X paid X% adjusted X% year-on-year non-cash per to expansion Adjusted a disciplined on debt the EBITDA and to and grew by included quarter expense million million income second

Our our and sheet. reduced continue earnings interest as we the to highlights balance growth our enhance strength business of expense

solid As total we $XXX quarter million a of a our result performance, of generated free for of the flow million during year-to-date. $XXX cash

debt times in further We future. down debt, and half this In invest shares million addition, of funded continue worth $XX the first with we to paid in bought ended of our flexibility the leverage. year. we quarter this the million of back With increased a have X.X reduced $XXX approximately in level to

perspective for Let me this algorithm. on our year some now outlook provide and on long-term touch our

notably food high I the at level of behavior our from the we number today. share consumer with away to view in to given timing being guidance That shift refrain as from said, will best our difficult of forecast you home. XXXX and remains of size most continue will said press we've release, providing as As formal the uncertainties, in

our be fiscal stacked the year. at for the low full line, mid expect to on negative and to for two-year in would the top comps current in the teens our we of high comp Looking based to a assumptions, year remainder implying mid-single-digits, the

slightly and be a flat ahead MFI Our for than quarter. to penetration. membership results, we tier expect expectations assumptions prior the member growth improving the standpoint, are compared based growth. and our home strong in our end renewals, at for at better year total continue to the count during on to expected From to growth primarily XXXX of higher when first of expectations trend consumption member membership and outpace MFI to due is stronger or the food

labor We and expect market as will the we significant expenses. as related These to drive and safety anticipate they the geographic million. of will pressure our incremental an have an could margin expect freight and and invest in will year, escalate million well $XX Freight been particularly $XX burden continued in digital, We team, sanitation continue and members COVID we investments in best in worth sanitation conditions our price costs investments will always do to labor approximately and increases Know membership, incremental changed. and team that half in safe distribution the we safety, be costs keep increasing throughout of business costs distribution, second and SG&A incremental our if that expansion. year. in and and our of

trends, large in enhanced uncertain. top our in initiatives are Bob XXXX any noisy growth health to quarters that of of to reinforce algorithm that pandemic of plans the improvements this our and be future. our comp few be The through our in long-term remains remains the likely that point, the to pipeline, mid-single-digit our important for hand to line results, While strong. are a back confident it's business performance assortment better that will ahead as our very real historical next close. trajectory continues much estate will At and the external to factors near-term confidence impacting and includes lead I'll But it we membership digital, our our Bob.

Robert W. Eddy

Thanks, messages. Laura. you few I'd like key a to leave with

and levels. strategic a continues and continues at executing expectations, our adjusted peers strong world and including operational, scale are and financial, exceeding is Our our on and be the with elevated growth, basis renewals be highest quality relevant of Membership members. our our performance growing team of ahead robust trends, resonating members, to is business digital class to

efforts growth. comp remain and Our accelerated future fuel on expansion geographic track will

continue making sheet, opportunity cash the Our we operator possible. turn in fast resulting nearly markets And to resonating and spin proud team, last for strong over we'll flow quarters. balance renewals. them. thankful of invest the to and the brand growth is Q&A our use in membership free new now And to I'll as of $X lead see flywheel and to I'm transformed We've we flexibility the billion our generated five over the and the session. begin as call back to our incredibly

Operator

[Operator Instructions].

comes Kelly Our from Edward line Fargo. first of Wells the with question

Edward Kelly

to good the the I Thanks food the Bob, for comments of around some morning. taking inflation to just wanted Hi, price question. on back and go side. costs

from thinking acceptable pastor level is pass what kind sort you inflation market from what others, much so kind cost a from inflation? tell to you're of pastors of to the level like accommodative it pressure how of you're of that, of what seeing standpoint, half, you're I'm how about what of have can is curious, now, back as just as the going the we of some is control you like think Just seems through gross expectation to curious managing the all and through business over margin about in

Robert W. Eddy

team is extensive going as an been probably outstanding inventory seen of suppliers make certainly of remarks, the toolkit It's us. increases, our environments. suppliers, simply to through We managing has that toolkit our into outstanding the impressive inflation increase value a from half rate And the financial it Listen, managing been second we and margin aggressive our was cost year first I'm quite in with we the sure this provide everybody about my a members And team negotiating entire truly at to we've a so most continue. it I it, and items, topic look, our here. manage And said buying worth for have time. view but gone for we Yeah, to half done of will the a the to the that process thanks. career the value was most with enormous, in I we've seen do we comp, all really we thing the wasn't big here can to and go quarter topic our it we to point all continue a Ed. value future That as provide invest really job ahead we a certainly things big. of had. very continue And, as we're company. forward put our as in think use into an and all members the invest of got We've we've this to morning and sorts changing that about. class a cost pack has our the well business. Good it's inflation that manage care to that that freedom toolkit biggest big in includes the will continue world to do in ever business prepared is we've statements. is running very, cutting the sizes, on both price different sure

will objective we so and members And invest exceed to continue my and members happy first we expectations. first to will to so our it, continue keeping my hopefully manage those is continue

Edward Kelly

labor half. the the the on $XX million and follow-up particularly a just then side in and back Okay,

of million of one in more into as I'm to bit sort seemed which versus curious carry million You the what time-ish more of like time a future? should in kind one we XX much forward, is how QX, the X had bonus,

Robert W. Eddy

into that XX the question. great Most is a million it's carry Yeah, future. forward of

we've Wages I said script, of long-term. strong I So, get field our a for are every team you sort manage in you're believe component run And some only P&L. trying big team every another. are the paid for the as labor that. -- need really on greater a to while is dynamic chased And the to your and we industry us to or for has the business year not best labor degree market team as of what context as of the I shortage suffering incredibly day. our been one the we an as a pay the this market and

So, maintaining the recruit will team continuing people, really I'm to in team our service to is we going to and invest great forward. we continue what after members have, continuing our here

As competitors don't think one change. going I of about yesterday, is my talked this to

I think labor pressure continue, invest to pressure the will we'll the continue, put continue can. to on will we team and that best field wage

Edward Kelly

Thank you. Great.

Robert W. Eddy

Thanks Yeah. Ed.

Operator

will from line with Robbie BofA Your the Ohmes next question of come Securities.

Robert Ohmes

Thanks models? out seeing for just think you two Bob. in you Hey, as And that availability share try figure back and are you good grocery had you little inventory the morning. would up I second, play grocery One market about should right holiday more and half? thinking questions. now we guys general what about there you be, and and on can the how we as thinking about a anything talk out for set our share merchandise is that you're are how for this year market

Robert W. Eddy

Robbie. morning, good Yes,

me strong first us. for second. been has pretty take let Grocery So on

the the and business If member our team with is a old that of business comp look put quarter. positive through quarter at lens, grocery our you by It led of division team here together wonderful and great led for four the that's a the business. indicative strength

that strength think continues. I

stuff the that's I a in and right price at putting think grocery, share right and we've great categories, giving not if our the on members market able key shelf the in maintain been grow to experience.

it's been a So a daily challenge, battle. that availability Inventory business running well. is very has very,

of Some few mentioned to categories are them. hand mouth. a I

problems continuing things are them of Some apparel, coming electronics China. out like consumer of and

are new. them of Some

our doing doing it's uncertain, members, our job are stock We great but and in right. keeping for best a

timeframe on We shipping so reduced in supplier we're that we those not and in are, to categories the meaning the the shipments. the that of inventory key of visibility, doesn't all receiving like certain allocation we electronics notice get consumer like commit us competitors have of ordering one or the normally our on every categories we're some

it's So than standpoint. in the level that throughout has or change key into bit would from work, battle done our don't competitors. team at our heading the of XX stock better why again, last that But a really holiday. keeping months daily a And I see --

school doing, think sure I'm in we shipments, the because the supply our forward competitors are set really back trying will earlier. earlier, accelerating for that I bringing into next things stuff to continue the to we're year crunch We're we're doing holiday think So foreseeable same future.

as and can date leaning So, as up as to go. keep forward we'll just as it and everybody we aggressively manage we

Robert Ohmes

helpful. really That's in question, so due just variant last any behavior one to far? seen quick change customer’s the you've that your And

Robert W. Eddy

I would performance and and has we've the and we've great been growth the slightly. say great Certainly driven memberships mortar. seen brick Yes, in that performance in see and the digital the by year throughout

instance You variant the in change would going can driving dollars the a perspective child coming stimulus see thing material business from wouldn't flows. a on, more so the [ph] of delta impact bit say EBT but for and the business. so tax I in of credit there's I a it's argue the

I membership it's mentioned factors great think the great that results, execution, other and I

Robert Ohmes

really you, helpful. Got Bob. Thanks,

Operator

Christopher Horvers come Your from the next Morgan. of with question line J.P.

Christopher Horvers

good Thanks morning. and

a high at starting maybe level. So,

was and flowing being the gross line? If forward flattish half relatively message roughly driving you're margin of through minus about driving that and at operating base, top side. think last year, this the plus on Is bottom your and or the going the with a puts year of is SG&A those dollars to you really the operating is look you saying this flattish about first margins membership that versus bunch look, takes and can line,

Robert W. Eddy

saying. cost on crunch and precisely encouraged We're the plans, line invest what a around put we is be pretty part but us of will Part by of field. in outperforming Chris. see about at is is our is run. actually that really best we is freight outperform the labor. QX. and the every opportunity in what becoming to Yeah, The the to care labor supply of stuff for the obviously business, expensive we team the good we're more the business That's freight We're the the on track But top bit and around taking is where and morning, long during as metric but cost, COVID were look bullish big the as it versus QX. really

get as will as go. that probably we so said, And more I and expensive continue

So, are long-term trend business trend choosing is we that the the and the because in be make through investments investments choosing think think less and to may we membership we improving sales improving a bottom our value. bit and the health team little in to line of make

Christopher Horvers

the for It makes the long-term. thing right total sense and

balance up think second about, a story stepped other you you if part you to obviously, you the quarter. balance the I here EBITDA, As to look of the at sheet, continue buyback in the deleverage think sheet, your grow you is the bit continue

really bit there balance outlook talk the the point where shareholder about little of just sheet, So EBITDA reinvesting growth enhance we leverage, sort and to can add strategy the that to to first in terms maybe dollar accelerating is a but repurchase you obviously to is you capital are long-term zone allocation, a leveraging understand classic also share new the about new, of the business in growth do talk start be and auto you priority CAPEX in able of compound returns?

Robert W. Eddy

Sure. chime Maybe some make Laura then comments I'll can in. and

so first said, cash. put grow the company, our our place you to As that's to job is

-- us an will you talk So, heard gas about of to allocating That's towards growth. in and script example see continuing the grow stations. cash real you estate

from remodels do things us some standpoint and see that probably You more too.

real we think With from said, flow bit it's it's membership, to that whether come before in QX that else. buyback use invest estate, in whether what So be all or a anything it's a things as of digital, our team, cash whether to provides of hint little whether cash perspective. I those it do plan business, will we the to a

the the amped our future. how have and on capital active anything for can Laura significantly on and is this our quarter buyback Board tag we up the to an Maybe We there. topic team allocate with during with

Laura Felice

Yes.

that, right we've only see lean continue buyback, that into think future the into you'll when as we you head clearer I'd the got will Like business. I a it forward. I'd invested Bob the to And after and in on priority back the plan half in it to expect meaningfully thing add said have there us broader. as the into priority share be going what we'll we'll have the that we we're certainly certainly that's be able the on doing long-term.

Robert W. Eddy

And to is put the a fine buy the back ramping point to stock an obvious point, we're because believe up undervalued. we

now, in is have much future, think that stronger. of will pre-pandemic come different the going view Given was we very we will the the happen and our what believe a company we and the strength much that this that company, flywheel it out we of

and that drives desire so to along even way. grow And further back the buy shares our to

Christopher Horvers

Thanks much. luck. Best of very

Robert W. Eddy

Thanks, Chris.

Operator

the from Chuck Grom of come Gordon will line question next Your Haskett. of

John Parke

what guys. you guess new on you with Chuck. from morning, members? can is It tell will, like for the renewal about good and spend I seems Parke you're frequency seeing standpoint the guys rates from John for if very these the are cohort pleased Hey, This COVID

Robert W. Eddy

Sure.

seeing be saw continued strength we terms maybe counts total to in and negative then We year has size this in flat members the are even continue plan of member end we were and here absolutely back pleased point at get that to membership with be membership. grow quality QX in as can into talked the ahead tracking We we little. what from premiums the causes renewal come including stuff doing, MFI membership I here leap and throughout easy them good are of a with said up, cohort. the as seeing really COVID points When into clubs on grow the perspective in particularly the We're members per take the QX. as at quality and going the across bullish. up cohorts basis strong us XXX new to that member nicely. that is habits XX% what you the the flat bit rest or We're little and to a QX growing The in hopefully and The as of QX towards year of we a of we're spending that see to about. in

a we're for They're We've the well. visiting in membership track So on all spending strong often, they're are as we results first high renewal us of all said acting a with the very in time we buying more little gasoline whole very They're as our strong digital lot as a interacting in lot when they bit well. talked they're about show cohorts up. script. years. I properties and way a rates And believe seen

by in So, what we see our behavior. we're member’s encouraged

John Parke

That's business, the guess of the in perfect. members new percentage you and I some have curbside the just about of drive switching kind this talk at And I of actually what like gears you point think a little then up business these ramp guess can bit. your tried services?

Robert W. Eddy

BOPIC here Look, last we've a seen sort orders the launched this we curbside is side of of on QX of into There's a XX% pandemic. it's in shoe very our quarter. the delivered adoption encouraging. this service Remember, teeth string year were the

taking the So to little gone really of year members. our advertise advantage bit that and we've really perfecting to through starting as it a last

very, team we well We've of seeing and get they an every works, great you members servicing execute we're when -- in members come to know doing we're our time retail done back experience levels And respect. they've somebody cars. you members order how they wonderful once should our for of it. our a it are do And service and reuse how again. So, a huge portion our it set teams robust a that somebody's job And do it. give pretty members fast very it our try seeing

encouraged no more Those They is we're see most see. us are curbside bigger. engaged, the us members, we are members baskets digitally by they right. what best are come different, to side, interact that their So often, our with

what very we're in from a perspective we're seeing so digital And with particularly pleased curbside. and

John Parke

of guys. Best luck Awesome.

Robert W. Eddy

John. you, Thank

Operator

Parekh will from question Oppenheimer. come with next Rakesh Your the line of

Rakesh Parekh

my Thanks taking question. for morning. Good

think think the first on half XX%. I starting a you guess, half? and commentary tier think what on [ph] your versus half QX? how just some way Laura first your Is half about margin SG&A. for of to you the on margins basis to guess what was can any And just saw we versus I XX% more that then Is provide course in with there I in to in merchandise merchandised about the there back to frame So clarity of back out SG&A, the in how growth SG&A saw

Laura Felice

Good your Yes. thanks morning and question. for

manage margin all from through half. little the already great a but it that. think uncertainties merch things back will I about first continue So to the a do team we've in the bit There's we half, a that lot of talked standpoint, the has to done

from on rise. will pressure they'll and that. a to We There continuing some expect be we distribution that it, which in called the continue out remarks freight prepared do to costs

will that I that an to we think accordingly. So From manage remarks to framed SG&A in real, it but best will continue prepared be we standpoint, well. as do the our

those quantified into that investments year. We expect in team certainly really in next as a and million half our continue that made that We SG&A drag on will think the important. members. we've from We are the back $XX about

that's a forward. rate think we everything continue we manage meaningful. that, can Again, going really to talked do we'll already to going run And accordingly the despite forward. So that business we'll full drag think on have I important and Bob for to SG&A our

Rakesh Parekh

growth one Great. the in store all follow-up think seeing And growth that cost just labor you I going that challenges guys at Does there. you the pressures of impact about are question, out given then are that maybe just availability of pace just some the thinking forward? on store

Laura Felice

about daily is our think something any we to forward. team store The simple going core think it that will have impact business, certainly answer to It's a but our growth on basis. a no. It's we on all as don't

Robert W. Eddy

with a going maybe like to Bill and brought highlight. from since pleased so I'll on we'd something some give perspective to We're Rakesh it up comments. Yes, real what’s estate ask you very

William Werner

New and here city Seabrook talked investors Hey, have Rakesh right. had we've it [ph] Listen, the Island analysts, great clubs, about our maturation latest Long into We've then far. great to results so as really is Bill. new with leaned of the clubs we've this, the been

existing we're making footprint. look we new Our we'll both as gas to for XX-month the decisions continue new rollout a the terms window today grow and is step to club of beyond the and on and markets where XXXX in

to We're how on into think in. lean are play really we about growth, don't the we the store and pressures we'll the transitory on performance, near-term any So bullish bullish continue long-term.

Rakesh Parekh

Great. Thank you.

Operator

Your Cerankosky question of line Chuck Research. will from Northcoast the come next with

Chuck Cerankosky

pressures, supplier when in I logistics I from these supplier’s three and wage nice it timing or inflation, and in the about Bob, through Good one morning quarter. do then looking thereof? inflation you everyone, passing it guess inflationary them put and think at of how you're buckets, the terms

Robert W. Eddy

guess, to tell you Yeah, that’s tell it and to we I'll good win. play is I question, the what Chuck. need a team I

investing for them being that So it's as means aggressive survive the our environment inflation. With and against great battling with can do every inventory, battling that thrive. to we our providing members, and day as and we team suppliers

is sort with are perhaps great the has we thing primary detrimental need in show key it to or value. the out. allowed you price in But good grocery. do we one. to our what take to does Inflation isn't or the it for your its win the perishable Typically, So, our things will widen we And product And gaps isn't do about is that selling short-term inflationary its bad to for increases company for towels us question long-term. thing And some on our a that against our memberships. price food, way paper time that sell membership industry.

we that environment, we environment So in particularly was inflationary means an value today. that And key items true true an every we In XXXX, last go. and try inflationary as had to time pricing probably on do lag single that we day. it's

make We that in it's us That's that great margin in day. just will great see rate our tough from perspective items a for near to always probably long-term. lag key value term, every the sure value single the members

continue don't and balancing rate value, growth, a saw stories product quarter to choose in show hero items don't a don't invest pick to same in super question, it. and great We from as where merchandise you inflation every the to core the invest there at every product category net have your really to is we there, We rate to as moving we And where in think as we And do a so and merchants there's category. value product that of drag think of different much that. it thousand it's fast on And key probably category. or invest can great But important. we'll job important stuff our and margin lots right. this to items. We did categories was to

thing to go So do we'll our we members for the and right forward. continue team our members as

Chuck Cerankosky

you. Thank

Robert W. Eddy

Sure. Thanks, Chuck.

Operator

will question of from with Citigroup. come Your the Paul line next

Unidentified Analyst

that. is this I everyone, Hey on want just for on Brian Cheedam taking Thanks question. for our [ph] to Paul. follow-up

at investing level to you before pricing in smooth competitor of actively look or and your is look that do shock make customer increases? you to you at maintained at sure As price, trying that just price any is any really price kind out to gaps would a certain and that the allocate

Robert W. Eddy

our of We tracking spend competitors energy time and Thanks, a do. Yeah. ton what Brian.

competitor expect I a spent looking the time our We doing we just as do, have at in that like would industry is what with a whole. spend of lot time data of a they stores. lot So

we price every month. every week, monitor day, So every our gaps

right. out pretty other business. on figuring it's have what right spend enhanced right on lag important. or not the we're data is and checks long key there the every becomes response analyzing right aren't lot key. environment, and like the an as the and that We time that not as what's and do. of value that In pricing members that our we a order to week something now of as in same, out question, our to longer XX,XXX a to would set water price Chuck’s doing a got thing surveillance pricing I sure of inflationary We lag going bananas things said robust bottled And product on more We've for on thing item a for make

happy it's day, but all So us. anchored are every outstanding everything has its value own so our story, that providing members with in

Unidentified Analyst

wondering label it you that like and is new kind product Got Can you and in the takes launches and store about for categories, just Is where a whole puts as you do are the outpacing about talk product just wondering it. I'm new one progression? or there. private think taking share just mix, the me. more And driven by of

Robert W. Eddy

innings Yes, one on the been middle in a playing perspective label label of comp pretty somebody I private you terms in trade label well. we're because and from the although it's come say judicious it's good win about business and about of private would team the talked We've bit does a goods. loyalty past private pressure we've the to probably as I've from best the it the how grown to a for of thing with to a branded when in margins, things

given the not judicious comp penetration were comping past, the comps private about we penalizing all the of grow and tomorrow. in So trying that we label to business much. that when rethink our label low of in were strong knock pretty help can little while I've we're today be bit private strong singles, because challenged strength us and that team the to a

quarter, during will products. And so penetrations That improving products continue. we and meaning existing saw both of the that things categories you launches new referenced in this and past of

and a goal is private few to will value penetration margins get for to very paramount years in again But on showing which to driving better, us of important label loyalty do to so. take Our going our that members, it's is terms long-term. XX% or

Unidentified Analyst

Got profitability? a it. improved Be it comp overall but

Robert W. Eddy

a we get of I but private you somebody when bit what points Totally, pressure the branded mean, from on basis a it's label, absolutely to margin. comp order of That's thousand more little right. trade

Unidentified Analyst

Good Thanks. luck. That's helpful.

Robert W. Eddy

you. Thank

Operator

of will from Simeon Your next Gutman Morgan line question with come Stanley. the

Michael Kessler

This ask to guys. us in rates. for first My I renewal Simeon. here. Michael year about wanted Hey for the Kessler Thanks question, is on squeezing first

are of COVID levels how historic renew? they exactly historic that you and sense they higher than had more more of months members those joined much as have now mentioned a move not to that as into kind levels. COVID are and of renew to at we since several guess I year elected trended Can that's You cohort, give us how first or

Robert W. Eddy

It is Michael. great Hey, Yeah. a question.

renewal earlier, As the I metrics, we're our with pleased very said rates. membership including first year

COVID it cohort. about renewal the the early into talked very have the we of quarter it As first in was

that were farther at we than much are today that We through point.

were curves XX renewal on a or the expecting But were it the got was membership In ever cohort. the one about. come QX talked best right. bridge. better We year as seen was. early higher. XX we We to would year we've what on truly renewal. renewal any renewal to that rates back more We more running got unbundle was think cohort years much about and fact first towards first or to we've this time, and incremental mind incremental we've rate that's didn't when set trying know bit seen. a them and we've seen just in rest large if cohort on we've So never as was And data time it a on whether And water more more of of little see under there it

faster. door the shopping that's seen. That's in bit that gets a renewals. So, renewal, importantly, incremental us we've shopping more But it Obviously, gets people cash we're and little frequently, time are what engaged more. little more membership And more drives and seeing a typically exactly people on great.

track well. ever cohorts So first few have higher are for than COVID because the obviously first I higher highest totally seen. how the year through as get on want don't we've much to we again, and into go renewal we age that's year this curve rates But a wonderful that. cohorts months previous to for has more stayed to still

Michael Kessler

sense? this or the guess second Thank see how I post-COVID great. are any normalized than to margins a need better is you. and that which retained in in to something of remain there, step when higher higher to pressures guess, on several expecting going for outlook than pre-COVID much the to -- Okay, your real do given do is be That how margin row facing a world and And it point a how or managing much is the your prior inflationary in the follow-up helpful. sales is business, need the margins a to you're year that I was different maybe you're to be My that in sales margin change be the kind given profile. your over years,

Robert W. Eddy

particular. hires last more margin, really in over and broader it much seven profitability The that past has business five the or -- has taken an to because two too. view, gotten profitable gross six the has in But You're time grown years the right. we've made scaled years over that's changes so even in

volume do So take don't what's have the business, I noisy talked be happen, through to think I take off thought the the you the but we've next about. view as perfect we simple think few periods are. you will more better on can the going can that We a

While the next we will we that sales might bit new expect post-COVID drive a few be noisy, more the economic and algorithm shares. is periods we sort have that do if back higher higher particularly buy profitability, of

business on the bullish long-term the line. we're state and and the of on So the line bottom top

Michael Kessler

Great, you thank guys.

Operator

Mr. any no time is more we questions. Do closing there remarks allotted for this, At Eddy. have

Robert W. Eddy

time you thank appreciate and for Christy, We interest for support company. our hosting. of your Everybody No. listening. in you thank

future. up the and -- up forward finished great QX We are a to finishing looking

we speak So QX. will you. shortly Thank in

Operator

you in time, At may disconnect. and Ladies conference for gentlemen, Bj's XXXX earnings participating QX you Club this call. Wholesale today's thank

BJ's Wholesale Club (BJ) 19 Aug 212021 Q2 Earnings call transcript