BJ's Wholesale CEO Promises Sales Growth Will Come After IPO
(Bloomberg) -- BJ’s Wholesale Club Holdings Inc. decided to go public without a proven track record of growth. But investors shouldn’t worry because now the retailer is focused on boosting the top line, its chief executive officer says.
“We took full advantage of being private, and over the last couple of years we’ve reset our revenue base,” Chris Baldwin said in an interview. “We’re really encouraged by our progress.”
On its first day of trading, investors showed faith that Baldwin will make good on his promises as the shares rose as much as 30 percent. The surge came after the company, which was taken private in 2011 by CVC Capital Partners and Leonard Green & Partners, raised $637.5 million in an initial public offering at the top of its targeted range.
Same-store sales, a key metric for retail growth, declined in two of the past three years, with only 2017 eking out a gain of 0.8 percent. During that same period Costco Wholesale Corp., its larger rival, averaged gains of about 5 percent.
And when sales of gasoline are excluded -- a data point that analysts often prefer because it eliminates the volatility of fuel prices -- revenue at BJ’s fell last year, too. Baldwin pointed out that same-store sales rose 2 percent in the first quarter.
“Over the last year, we’ve started to invest in our growth and the response the business has had has been very encouraging,” Baldwin said.
The company also plans to boost sales by opening stores. BJ’s is currently saturated on the east coast of the U.S., with more than half its 215 locations in New York, Massachusetts, New Jersey, Pennsylvania and Connecticut. That leaves plenty of room to expand, and Baldwin didn’t rule out expanding to other regions.
But that would mean entering markets where BJ’s has little name recognition and facing off with Costco. When asked why consumers would choose BJ’s over Costco, Baldwin said because it focuses on value, fresh food and convenience, without giving any specific examples.
“We want to be the best BJ’s Wholesale Club we can be,” Baldwin said.
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