BJ's Wholesale Club (NYSE: BJ) reported Q4 EPS of $0.44, $0.08 better than the analyst estimate of $0.36. Revenue for the quarter came in at $3.42 billion versus the consensus estimate of $3.39 billion.

• Comparable club sales excluding gasoline sales increased 2.9% for the quarter and 2.2% for the full year
• Income from continuing operations of $63.7 million for the quarter and $127.1 million for the full year
• Record fourth quarter Adjusted EBITDA of $165.4 million and $578.4 million for the full year
• Net income of $64.3 million, or $0.46 per diluted share, and Adjusted net income of $62.1 million, or $0.44 per diluted share, for the quarter
• Net income of $127.3 million, or $1.05 per diluted share, and Adjusted net income of $186.2 million, or $1.33 per diluted share, for the full year
• Provides outlook for fiscal 2019

“We’re pleased with our fourth quarter and full year performance, which exceeded our expectations for sales and earnings,” said Christopher J. Baldwin, Chairman and Chief Executive Officer, BJ’s Wholesale Club. “We ended the year with all-time high renewal rates and membership fee income. We delivered strong fourth quarter merchandise comp sales, supported by a successful holiday season and continued momentum through January. Looking ahead, we intend to continue to invest in our strategic priorities and look forward to driving further improvement in our business in 2019 and beyond.”

• Comparable club sales for the fourth quarter of fiscal 2018 increased 2.8% compared to the fourth quarter of fiscal 2017. Excluding the impact of gasoline sales, merchandise comparable sales increased 2.9%, representing the sixth consecutive quarter of positive merchandise comparable sales. For fiscal 2018, comparable sales increased 3.7% compared to fiscal 2017. Excluding the impact of gasoline sales, merchandise comparable sales for fiscal 2018 increased 2.2% compared to fiscal 2017.
• Gross profit increased to $628.9 million in the fourth quarter of fiscal 2018 from $621.3 million in the fourth quarter of fiscal 2017. For the full year gross profit increased to $2.36 billion from $2.24 billion in fiscal 2017. Excluding the impact of gasoline sales and membership fee income, merchandise gross margin rate increased by approximately 10 basis points over the fourth quarter of fiscal 2017 and by approximately 60 basis points over the full year of fiscal 2017. The improvement was primarily driven by continued progress in our category profitability improvement program.
• Selling, general and administrative expenses ("SG&A") were $517.0 million in the fourth quarter of fiscal 2018 compared to $527.7 million in the fourth quarter of fiscal 2017 and were $2.05 billion in fiscal 2018 compared to $2.02 billion in fiscal 2017. SG&A, excluding charges associated with stock-based compensation related to our initial public offering (“IPO”), costs related to our IPO and the registered offering by selling stockholders (the "offering costs"), club asset impairment charges, voluntary retirement severance costs, management fees and compensatory payments related to stock options, was $516.3 million in the fourth quarter of fiscal 2018 compared to $516.7 million in the fourth quarter of fiscal 2017 and was $2.0 billion in fiscal 2018 compared to $1.9 billion in fiscal 2017. The increase in SG&A reflects continued investments to drive the Company’s strategic priorities.
• Operating income increased to $109.9 million, or 3.2% of total revenue in the fourth quarter of fiscal 2018 compared to $92.7 million, or 2.6% of total revenue in the fourth quarter of fiscal 2017. Excluding the voluntary retirement severance costs and management fees, operating income was $103.8 million, or 2.9% of total revenues, in the fourth quarter of fiscal 2017. In fiscal 2018, operating income increased to $303.5 million from $220.3 million in the prior year. Excluding charges associated with stock-based compensation related to our IPO, costs related to our IPO and the secondary offering, club asset impairment charges, voluntary retirement severance costs, management fees and compensatory payments related to stock options, operating income increased to $363.5 million in fiscal 2018 from $336.4 million in the prior year.
• Interest expense, net, decreased to $26.7 million in the fourth quarter of fiscal 2018 compared to $46.5 million in the fourth quarter of fiscal 2017. Excluding interest expense incurred on our second lien term loan prior to the paydown, interest expense, net, would have been $31.1 million in the fourth quarter of fiscal 2017. Interest expense, net, decreased to $164.5 million in fiscal 2018 from $196.7 million in fiscal 2017. Excluding expenses associated with the 2018 repricing of our outstanding borrowings, expenses associated with the paydown of our second lien term loan in the second quarter of 2018 and interest expense incurred on our second lien term loan prior to this paydown, interest expense, net, would have been $114.8 million in fiscal 2018 compared to $139.5 million in fiscal 2017. The decline in interest expense reflects the pay down of debt and the benefit of repricing our first lien term loan and ABL facilities in the third quarter of fiscal 2018.
• Income tax expense was $19.4 million in the fourth quarter of fiscal 2018 compared to an income tax benefit of $21.9 million in the fourth quarter of fiscal 2017. The fourth quarter of fiscal 2018 included a benefit of $2.7 million from windfall tax benefits related to exercised stock options. The fourth quarter of fiscal 2017 included a benefit of approximately $32.1 million, associated with re-measurement of net deferred tax liabilities resulting from the Tax Cuts and Jobs Act of 2017. For fiscal 2018, income tax expense was $11.8 million compared to a benefit of $28.4 million in fiscal 2017.

GUIDANCE:

BJ's Wholesale Club sees FY2019 EPS of $1.42-$1.50, versus the consensus of $1.47. BJ's Wholesale Club sees FY2019 revenue of $12.9-13.2 billion, versus the consensus of $13.37 billion.

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