BJ’s Wholesale Club Inc., the third-
largest U.S. warehouse-club chain, with a number of stores in Rhode Island, said its second-quarter
earnings dropped 39 percent after the company reduced prices and
increased spending to remodel stores.
Net income fell to $22 million, or 32 cents a share, from
$35.9 million, or 50 cents, a year earlier, the company said in a
statement, Revenue in the period ended Aug. 2 climbed
14 percent to $1.67 billion, while sales at stores open at least
a year increased 6.6 percent.
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Profit fell for the third straight quarter as the chain
spent more to renovate the membership stores. BJ’s Wholesale,
based in Natick, Mass., has been reducing prices to
compete with supermarkets and Wal-Mart Stores Inc.’s Sam’s Club
chain.
“BJ’s is reducing the prices of supermarket-type products
and is vulnerable to Sam’s aggressive prices,” said Bill Dreher,
an analyst with Deutsche Bank, who rates BJ’s shares “hold.”
Competition among warehouse clubs, which sell memberships
to customers who buy in bulk, has increased as Wal-Mart seeks to
revive sales and profit at Sam’s Club by focusing on business
customers and cutting prices. No. 1 Costco Wholesale Corp.
earlier this month said profit will fall because of higher
employee-insurance costs and competition from Sam’s Club.
BJ’s Wholesale’s profit matched the average estimate of
analysts surveyed by Thomson Financial.
Shares of BJ’s rose 41 cents to $20.15 yesterday in New York
Stock Exchange composite trading. They have gained
10 percent this year.
Bloomberg News
