BJ’s CEO Says She Doubts Chain’s Customers Will Be Early 3D TV Adopters
Most BJ’s Wholesale Club customers probably won’t be among the first buyers of 3D TVs, CEO Laura Sen said Wednesday on an earnings call. “Our members are not early adopters, so I think it really rests on how popular new technology becomes and how widely accepted and desirable it becomes,” she said. “Do they really want 3D this year?” Sen asked. “I kind of doubt it.” They may want a 3D TV, but they won’t be willing to pay extra for one yet, she said. On the other hand, she said, LED and “Blu-ray will do very well.”
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Sen said she “would be hard-pressed to make a call on how fourth quarter is going to look in electronics” sales. CE was among the weaker categories for BJ’s in Q1 ended May 1, Chief Financial Officer Frank Forward said. TVs “faced difficult comparisons to last year’s digital TV conversion,” when many customers bought new sets, he said.
But weak CE results failed to offset growth in other product categories. BJ’s Q1 profit increased to $26.1 million, 49 cents per share, from $24.3 million, 45 cents, a year earlier. Revenue jumped 12.9 percent to $2.55 billion, and comparable-club sales increased 7.8 percent. The number of BJ’s rewards members jumped 33 percent from a year earlier, to 6.3 percent of eligible members at the end of Q1, up from 5 percent, Forward said. Spending by rewards members “increased significantly,” Sen said. Traffic increased 4 percent year-to-year after growing 7 percent in Q1 2009 , she said.
E-commerce sales “continued to run very strong” in Q1, increasing 60 percent from a year earlier, Forward said. The company’s planned relaunch online is “on schedule,” and “we expect a new storefront to be up and running around September,” he said. Key upgrades include “an improved search engine, better cross-selling functionality, enhanced visibility to external search engines, better product reviews and an easier checkout” experience, he said.
Sen said she hopes for a turnaround in TV sales in the second half. Of consumer discretionary spending in general, Sen said she’s “cautiously optimistic.” The spending has been picking up recently except on TVs, she said.
BJ’s boosted its results forecast for the fiscal year ending Jan. 29, saying it now expects to post a profit of $136.9 million to $141.9 million, or earnings per share of $2.58 to $2.68, up from its prior estimate of $133.1 million to $138.1 million, $2.54 to $2.64 per share.
The company plans seven new clubs this year, Sen said: Two in Q2, one in Massachusetts and a relocation in Rhode Island, one each in Maryland and Virginia in Q3 and three in Q4, Sen said. BJ’s has no plans to expand to other markets. For the next three to five years, it sees “ample opportunities in our current geographies,” Sen said.