09/17/2020

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BJ’s Wholesale Club Beats Amazon and Costco



Shares of BJ’s Rise 70%

There’s an undercover name in the membership-based bulk goods sector that analysts have their eyes on. BJ’s Wholesale Club has seen its shares rise by 70% so far this year, beating Costco (COST), Walmart (WMT) (which owns Sam’s Club), and even Amazon (AMZN).

BJ’s operates over 200 self-service warehouse locations. Its stores are prominent in regions like the Northeast and Florida, which have been hit particularly hard by COVID-19. People looking to eat at home and trying to make as few trips to the grocery store as possible have been flocking to BJ’s. The chain charges $55 for an annual membership and added a record breaking 500,000 new members so far this year.

Differences and Similarities Between Costco and BJ’s

BJ’s shares some characteristics with its larger rival, Costco. Its business model and prices are similar, but BJ’s tends to be in markets that are not as high-income as Costco.

BJ’s also carries a wider array of items than Costco, offering about 7,200 items compared to Costco, which has about 3,200 items. BJ’s offers more fresh food items than Costco, which come in larger portions than at a typical grocery store, but smaller portions than most Costco products.

Looking Ahead

Analysts are now wondering if BJ’s will be able to keep up its soaring growth. The company’s business model depends on new membership fees, which made up about half of its adjusted earnings last year. After the pandemic-induced spike in membership signups, there could be a plateau.

Additionally, as stimulus checks and enhanced unemployment benefits end and some restaurants begin to reopen, BJ’s could see its traffic dwindle. So far this month, the company’s stock is down 8% as investors wonder about the future for BJ’s. Though the road ahead is uncertain, the company has still had a very impressive year so far.


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