BJ’s Wholesale (BJ) posted Q1 EPS of $0.29, beating the consensus of $0.28. Revenue was $2.26 billion, in-line with consensus of $2.27 billion. Comparable store sales increased by 9.6%.
As many retailers are being slammed by high gas prices, sales of gasoline at BJ’s accounted for 3.9% of the revenue increase. Despite the uncertain US economic outlook, the company also raised earnings guidance for 2008 to the range of $2.04 to $2.14, an increase of $0.06 versus prior guidance of $1.98 to $2.08. In a recession, it clearly pays to be a discounter.
JP Morgan liked the Q1 numbers, but were hardly blown away. They had expected the EPS of $0.29 and thought BJ’s Q1 upside was “well-advertised”. BJ’s price is ~19x JP’s 2008 EPS and therefore they see limited upside. Maintain NEUTRAL.