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BJ's Wholesale Club (BJ +9%) is trading nicely higher to a new all-time high after reporting Q3 (Oct) earnings results this morning. This warehouse club chain beat on EPS, its largest EPS upside in nine quarters. Revenue rose 3.5% yr/yr to $5.10 bln, which was in-line. However, it did report downside adjusted EPS guidance for Q4 (Jan) at $0.78-0.88. BJ expects Q4 comps (ex-fuel) to be +2.5-3.0%. Its board also approved a new $1 bln share repurchase program.

• BJ reported Q3 comps (ex-fuel) at +3.8%, which was a notable improvement from +2.4% in Q2 and +0.6% in Q1 and higher than BJ had anticipated. Its business was once again fueled by robust traffic, unit volumes and market share growth inside its clubs and at the gas pumps.
• Importantly, BJ benefitted from the East coast port strike and two hurricanes in Q3 as members stocked up on items ahead of these events. However, even excluding these events, comps (ex-fuel) still slightly beat expectations. Digitally enabled comps were also a bright spot as it grew +30.0%, reflecting two-year stacked comp growth of 47.0%.
• Traffic accelerated once again in Q3, this was its 11th consecutive quarter of traffic growth. BJ gained grocery market share in both units and dollars in the quarter. Grocery and sundries posted +4% comps with broad based strength across all divisions. Perishables led the way, boosted by a strong showing in dairy, meat and produce.
• Its general merchandise and services comps were approximately flat. BJ says its assortment and presentation in home and apparel categories are improving each quarter. Notably, seasonal GM categories delivered positive comps for the first time in nine quarters. Members have increasingly taken notice of its elevated assortment in areas like toys and books.
• BJ also continues to drive strong membership growth with an 8% increase in membership fee income. BJ hit a milestone of 7.5 mln members in Q3. Since FY18, BJ has grown its member base by 40%. It has also more than doubled the number of members in its premium tiers. BJ also announced its first membership fee increase in seven years. Effective January 1, 2025, its Club membership fee will increase by $5 to $60 a year and its Club+ fee will increase by $10 to $120 a year.

Overall, there is a lot to like in this report, including big EPS upside and strong comp growth. Granted, maybe the port strike and hurricanes pulled sales into Q3 from Q4, but we'll have to see how Q4 goes. BJ has also done a great job improving its grocery assortment and it's gaining share there. And the $1 bln share buyback is a lot for a $12.3 bln market cap company. On a final note, we think it's notable that this report has propelled BJ above its $78-90 multi-month trading range. We always like to see a stock move above a consolidation pattern.