BJ's, Costco Report Surge in Profits

March 5, 2008— -- BOSTON (AP) -- BJ's Wholesale Club Inc. on Wednesday said its fourth-quarter profit increased fourfold, beating Wall Street expectations, as the nation's third-biggest warehouse club benefited from a retail environment that's favoring discount stores.

BJ's said that strong January sales, favorable profit margins and lower-than-expected expenses lifted its net income to $50.2 million, or 80 cents per share, in the three months ended Feb. 2. That is up from a profit of $11.9 million, or 18 cents per share, in the fourth quarter a year earlier -- a result that was hurt by one-time charges and income that combined to shave 40 cents per share off earnings.

The latest quarter's profit beat the consensus forecast of 74 cents a share by analysts surveyed by Thomson Financial.

Revenue rose 2 percent to $2.48 billion, from $2.43 billion in the previous year's fourth quarter. Analysts had expected revenue of $2.46 billion in the latest period.

Natick, Mass.-based BJ's operates 177 warehouse clubs in 16 Eastern states, from Maine to Florida. BJ's is dwarfed by larger rivals Costco Wholesale Corp. and Wal-Mart Inc.'s Sam's Club.

Earlier Wednesday, Costco said its fiscal second-quarter earnings rose 31 percent on a 12 percent sales increase.

BJ's said in its earnings report that sales at stores open at least a year rose 5.9 percent in February, with gasoline sales contributing to almost half that gain. The biggest sale gains were in upstate New York, with the smallest in New England.

Warehouse clubs have benefited in the economic slowdown as more cost-conscious consumers buy goods in bulk in response to the weak housing and credit markets and higher food and gas prices.

BJ's February same-store sales gain of 5.9 percent follows an increase of 7.8 percent in January, 3 percent in December, and 7.7 percent in November. Same-store sales is a key gauge of a retailers performance because it measures growth from existing stores rather than newly opened ones.

BJ's said it expects same-store sales to increase 4 percent to 6 percent in this year's first quarter, excluding the impact from gasoline sales.