|
|
 | | | |
- close
- close
- close
- close
BJ's Wholesale Club (BJ) |
| Revision as of 22:53, December 30, 2007 (edit) Kantheti - Sr. Director (Talk | contribs) m ← Previous diff |
Revision as of 20:31, January 2, 2008 (edit) (undo) 151.118.7.9 (Talk) Next diff → |
||
| Line 1: | Line 1: | ||
| - | [[image:BJlogo.gif|left|100px|thumb]]'''BJ's Wholesale Club, Inc.''' (NYSE:BJ) is a warehouse club operator in the eastern United States. | + | [[image:BJlogo.gif|left|100px|thumb]]'''BJ's Wholesale Club, Inc.''' (NYSE:BJ) is the third largest warehouse club operator, behind [[Costco Wholesale (COST)|Costco]] and [[Wal-Mart Stores (WMT)|Sam's Club]]. BJ's stores are concentrated in the Eastern United States, which allows the company to streamline distribution and marketing. However, by having many stores in the same geographic area, one store may cannibalize the sales of another store. Furthermore, BJs doesn't have quite the [[Economy of scale]|economies of scale] that its competitors enjoy. Scale is very important in the warehouse business, because margins are extremely thin, and low costs and high volumes are necessary for staying profitable. Also, while [[Costco Wholesale (COST)|Costco]] and [[Wal-Mart Stores (WMT)|Sam's Club]] focus on small-business customers, BJ's focuses on retail shoppers, by offering more grocery items and smaller packaged goods. |
| ==Business Overview== | ==Business Overview== | ||
| - | BJ's introduced the warehouse club concept to New England in 1984 and has expanded throughout the eastern United States. At the beginning of 2007, BJ’s operated 172 warehouse clubs in 16 states. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 2]</ref> | ||
| - | |||
| - | [[image:BJRegion.PNG]] | ||
| - | |||
| BJ's makes money by selling a wide range of food and general merchandise items, gasoline (at select BJ's locations) and from membership fees. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 13]</ref> | BJ's makes money by selling a wide range of food and general merchandise items, gasoline (at select BJ's locations) and from membership fees. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 13]</ref> | ||
| * '''Food''' accounted for approximately 60% of BJ’s total food and general merchandise sales in 2006. Food categories at BJ’s include frozen foods, fresh meat and dairy products, beverages, dry grocery items, fresh produce and flowers, canned goods and household paper products. | * '''Food''' accounted for approximately 60% of BJ’s total food and general merchandise sales in 2006. Food categories at BJ’s include frozen foods, fresh meat and dairy products, beverages, dry grocery items, fresh produce and flowers, canned goods and household paper products. | ||
| - | * '''General merchandise''', the remaining 40%, includes consumer electronics, small appliances, tires, jewelry, health and beauty aids, household needs, computer software, books, greeting cards, apparel, furniture, toys and seasonal items. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 4]</ref> | + | * '''General merchandise''', which accounted for the remaining 40%, includes consumer electronics, small appliances, tires, jewelry, health and beauty aids, household needs, computer software, books, greeting cards, apparel, furniture, toys and seasonal items. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 4]</ref> |
| * '''Membership Fees:''' BJ's had approximately 8.7 million BJ’s members (including supplemental cardholders) at the beginning of 2007. These members generally pay a $45 annual membership fee to be able to shop at BJ's. BJ’s also offers an $80 Rewards Membership program for high-frequency/high-volume members, which offers a 2% rebate, capped at $500 per year, on all purchases. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 5]</ref> | * '''Membership Fees:''' BJ's had approximately 8.7 million BJ’s members (including supplemental cardholders) at the beginning of 2007. These members generally pay a $45 annual membership fee to be able to shop at BJ's. BJ’s also offers an $80 Rewards Membership program for high-frequency/high-volume members, which offers a 2% rebate, capped at $500 per year, on all purchases. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 5]</ref> | ||
| - | [[image:BJRev.PNG]] | + | BJ's earnings for 2006 were negatively impacted by lower sales and margins, especially in higher margin departments such as jewelry and furniture. The company also had more holiday markdowns in 2006, compared to 2005. |
| + | |||
| + | [[image:BJRev.PNG|600px|center|BJ 2006 Annual Report<ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 12]</ref>|thumb]] | ||
| + | |||
| + | BJ's introduced the warehouse club concept to New England in 1984 and has expanded throughout the Eastern United States. At the beginning of 2007, BJ’s operated 172 warehouse clubs in 16 states. <ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 2]</ref> | ||
| + | |||
| + | [[image:BJRegion.PNG|600px|center|BJ 2006 Annual Report<ref>[http://www.sec.gov/Archives/edgar/data/1037461/000119312507074575/d10k.htm BJ 10k 2006, Pg 2]</ref>|thumb]] | ||
| + | |||
| ==Key Trends and Forces== | ==Key Trends and Forces== | ||
Revision as of 20:31, January 2, 2008
Contents |
Business Overview
BJ's makes money by selling a wide range of food and general merchandise items, gasoline (at select BJ's locations) and from membership fees. [1]
- Food accounted for approximately 60% of BJ’s total food and general merchandise sales in 2006. Food categories at BJ’s include frozen foods, fresh meat and dairy products, beverages, dry grocery items, fresh produce and flowers, canned goods and household paper products.
- General merchandise, which accounted for the remaining 40%, includes consumer electronics, small appliances, tires, jewelry, health and beauty aids, household needs, computer software, books, greeting cards, apparel, furniture, toys and seasonal items. [2]
- Membership Fees: BJ's had approximately 8.7 million BJ’s members (including supplemental cardholders) at the beginning of 2007. These members generally pay a $45 annual membership fee to be able to shop at BJ's. BJ’s also offers an $80 Rewards Membership program for high-frequency/high-volume members, which offers a 2% rebate, capped at $500 per year, on all purchases. [3]
BJ's earnings for 2006 were negatively impacted by lower sales and margins, especially in higher margin departments such as jewelry and furniture. The company also had more holiday markdowns in 2006, compared to 2005.
BJ's introduced the warehouse club concept to New England in 1984 and has expanded throughout the Eastern United States. At the beginning of 2007, BJ’s operated 172 warehouse clubs in 16 states. [5]
Key Trends and Forces
Private Label
BJ’s private brand consumer products are generally are priced well below the top branded competing product. At the end of 2006, BJ's private brand products had achieved a sales penetration of approximately 13% of food and general merchandise sales on an annualized basis. The company expects its private brand products to continue to represent an increasing percentage of sales over time.
Market Share
Competition
The wholesale club market is fiercely competitive and margins are thin. BJ's main competition is Sam's Club and Costco Wholesale (COST). Costco has taken away market share from Sam's Club by opening new clubs throughout the Midwest and the South over the past years, which was previously dominated by Sam's Club.
| Retailer | 2006 Sales (millions) | Membership Fees | Membership Sales (Mil) | # of Clubs |
|---|---|---|---|---|
| Costco | $58,963 | $50 | $1,188 | 504 |
| Sam's Club | $41,582 | $40 | $940 | 579 |
| BJ's | $8,303 | $45 | $176 | 172 |
Reference
| |||||||
