BJ’s Wholesale Club Plans Public Market Return With IPO Filing
BJ's Wholesale Club filed for an initial public offering with regulators last week to list itself on the New York Stock Exchange, marking its bid to become a public company again. The company, which was taken private in 2011 for $2.8 billion in cash by private equity firms Leonard Green & Partners and CVC Capital Partners, will list under the symbol "BJ", a regulatory filing showed. BJ’s listed the offering size at $100 million in the filing. That figure is a placeholder amount for calculating fees and will likely change. The company posted net income of $50 million for its fiscal 2018 on total revenue of $12.8 billion. That compares with profits of $44 million on $12.4 billion in sales a year earlier. Founded in 1984, BJ's owns 215 warehouse clubs in 16 states, mainly on the U.S. east coast, and competes with Sam's Club and Costco.
Total Retail's Take: Some analysts are scratching their collective heads as to why BJ's decided to list itself now. They're impressed by the progress the company has has made on profitability in the last couple of years through initiatives such as identifying procurement savings and increasing penetration of private-label goods. BJ's membership-renewal rates have been ticking up recently, suggesting it's delivering a satisfying experience to loyal customers. However, there are problems, which make this IPO filing risky. For one, BJ's e-commerce business isn't ready for prime time (unlike the upstart Boxed, for example, which has figured out a way to sell consumer goods in bulk and says it's recording annual sales of greater than $100 million). What's more, BJ’s has just 215 stores and they're heavily concentrated in the Northeast, so it's far smaller than Costco and Sam’s Club. Therefore, it will have a much harder starting point for building an e-commerce business that could have nationwide appeal. And finally, it isn’t a particularly a great time for a traditional brick-and-mortar retailer to pursue a public offering. The industry is brimming with uncertainty right now as shoppers visit malls less and increasingly choose to spend on experiences (e.g., dining, travel) than goods.
