Discount Club Retailers Results Reflect Emphasis On Pricing
2009年3月5日 - 6:39AM
Dow Jones News
Discount club retailers BJ's Wholesale Club Inc. (BJ) and Costco
Wholesale Corp. (COST) showed Wednesday they're willing to
sacrifice some profits in order to secure more business with
thrifty shoppers during the economic downturn.
Results from both companies in the latest quarter reflected
price cutting - in some cases even before their own costs have come
down commensurately.
BJ's Chief Financial Officer Frank Forward said the main
difference between the company's fiscal 2009 earnings guidance
Wednesday and its November view lies in the margin.
BJ's expects merchandise margin to be flat for the year rather
than modestly higher as it expected in November, he said. Margin
benefits BJ's may get in its growing perishables business, for
example, can be used to lower prices or offset inflation in other
products.
BJ's doesn't intend to be on the offensive with its pricing
strategy, Chief Executive Laura Sen said. "Our goal is to be
competitive and make sure our value proposition overall is there
for our members," she said.
And while Costco has stopped providing earnings guidance, Chief
Financial Officer Richard Galanti made clear his priority.
"We're prepared to sacrifice margin if comps are going in the
wrong direction," he said.
Costco said it believes earlier moves to keep prices competitive
have helped keep membership renewal rates at an all-time high. And
it is also increasing the frequency with which its members visit
stores.
"While our members are buying a little less each visit, they're
coming in more frequently," he said.
For the quarter ended Feb. 15, Costco posted net income of
$239.7 million, or 55 cents a diluted share, down from $327.9
million, or 74 cents a share, a year earlier. Costco's revenue
declined to $16.84 billion from $16.96 billion a year earlier as
same-store sales fell 3%. Excluding gasoline price deflation and
foreign currency effects, same-store sales would have increased
about 5%, Galanti said.
Costco cut prices on milk, cheese, butter and other products
when it saw commodity prices were coming down quickly but before
its suppliers has passed along savings. "I'm sure someone can show
if we didn't lower our prices we could've made extra dollars, but
when I see the frequency, loyalty and underlying sales growth, we
think that's the right thing to do," he said. "We're trying to
lower prices and raise margins."
BJ's emphasis in stores on basic grocery and perishable food
items seems to be giving it somewhat of an advantage over Costco's
more wants-based and bigger-ticket merchandise lineup, which
includes items such as furniture and $900 signed, original
artwork.
"Costco appears to be playing catch-up from the perspectives of
merchandise prices and general merchandise content, which is
unwelcome in a volatile retail environment," said Wall Street
Strategies analyst Brian Sozzi, who has a sell rating on Costco
shares.
BJ's, which operates 180 stores in 15 states, posted a 5%
increase in fiscal fourth-quarter net income as same-store sales
rose 6.4% excluding gasoline and 1.7% overall.
Food items posted an 11% comparable-sales increase, and the
strong growth in perishables also helped offset weaker sales in
more discretionary items like apparel and jewelry.
It expects full year earnings of $2.26 to $2.36 a share on a
same-store sales increase of 5% to 7% excluding gasoline. BJ's in
November estimated full-year earnings of between $2.27 and $2.39 a
share.
Shares of BJ's recently traded up 8.3% at $29.70 and are down
13.4% so far this year. Costco shares recently were unchanged at
$40.69 but are down 22.5% for the year. The S&P 500 has lost
20.4% so far in 2009.
BJ's February trends were also better than Costco's.
Excluding gasoline, BJ's February sales at comparable stores
increased 8.2%, with food sales up 10% and general merchandise sale
improving 4%. The company said breakfast foods, candy, deli, frozen
foods, health and beauty aids, household chemicals, meat, paper,
produce, television and video games were among strongest
departments. Weaker departments included apparel, jewelry and
sporting goods.
Costco said February U.S. same-store sales excluding gasoline
were up 4%. International sales were up 6% on a same-store basis,
excluding the negative impact of foreign exchange. Companywide
same-store sales fell 3% including gasoline and foreign exchange
effects.
Grocery, dry goods and televisions were strong categories
recently, Costco said.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com