BJ’S WHOLESALE CLUB HOLDINGS, INC.
2021 Annual Financial Report and Shareholder Letter
Dear Fellow Shareholders,
2021 was the best year in the history of our company on many levels. We delivered record net sales,
membership fee income (“MFI”), adjusted EBITDA and EPS driven by the tremendous efforts of our team
members as we continued to navigate dynamic operational and economic circumstances. I remain grateful and
proud of our team’s commitment to our company and steadfast dedication to serving our members. This hard
work not only resulted in record financial performance this year, but also allowed us to successfully execute
on our four long-term strategic priorities:
Growing and retaining our members
Our members are the linchpin to the success of our business. I am pleased to report that our membership has
never been stronger, having ended fiscal 2021 with over six million members, an approximate 15% increase
over the past two years. In addition to member count growth, our relentless focus on improving the quality of
membership has continued to bear fruit. In fiscal 2021, our tenured member renewal rate reached 89%, another
all-time high over last year. Furthermore, 35% of our members are now in higher membership tiers and easy
renewal adoption is at 75%, in each case, exhibiting growth over last year. As a result, we reported 2021 MFI
of $361 million, representing a five-year compounded annual growth rate of approximately 7%.
Delivering value
Our membership strength is a testament to our continual efforts to elevate and showcase the value that we offer
at BJ’s Wholesale Club. In fiscal 2021, we made further progress on our long-term merchandising
improvement work. For example, we simplified certain Sundries categories, for which we collectively made
Stock Keeping Unit (“SKU”) reductions of over 40% to optimize choice and product presentation, and we are
already driving positive results based on this change. We also continued to promote our private label brands,
Wellesley Farms and Berkley Jensen. In fiscal 2021, we grew private label brands penetration by
approximately 200 basis points year-over-year to nearly 23%. We will remain committed to improving our
merchandising capabilities across the business in an effort to drive sustainable and profitable growth over time.
Improving convenience with digital
We are striving to deliver convenient member experiences through our digital capabilities, which have grown
significantly to now comprise almost 8% of our business. Digitally enabled sales surpassed $1 billion for the
first time in fiscal 2021, exhibiting 22% growth year-over-year and over 250% on a two-year stack. In addition
to Buy Online, Pickup in Club, curbside pickup and same-day delivery, we expanded our digital services in
fiscal 2021 with Express Pay – the ability to skip the lines in-store and self-checkout via mobile app. We know
that a digitally engaged member is a more valuable member, and thus will continue to invest in strengthening
our omni-channel offerings in the future.
Expanding our footprint
We are driving tangible growth through our real estate pipeline, having opened four new clubs in fiscal 2020
and five in fiscal 2021. Building on this momentum, we are accelerating the pace of new club openings. We
plan to open 11 clubs in new and existing markets in fiscal 2022, with a path to open 10 more in fiscal 2023.
As our new clubs drive membership, brand and topline growth, we believe they will increasingly serve as a
welcome tailwind to our business.
These four guiding pillars firmly align with our commitment to maximize shareholder value, as our highest
capital return priority remains investing in our business to drive long-term growth. To that end, in January
2022, we announced an agreement to acquire the assets and operations of four distribution centers from our
long-time partner Burris Logistics, bringing our end-to-end perishable supply chain in-house. We believe this
is an investment that will provide us with the necessary tools to drive operational efficiencies, improve value
to our members, and ultimately control our future growth path. As we look to the future, we will continue to
prudently deploy our capital in ways that are designed to amplify our competitive advantages.
In addition to investing in our business, we have proactively worked to strengthen our balance sheet. In fiscal
2021, we reduced our funded net debt to last twelve months adjusted EBITDA ratio to 0.8x. This compares to
five turns in fiscal 2017. We recognize the importance of a fortified balance sheet, which grants us valuable
optionality and financial flexibility.
In fiscal 2021, we also returned cash to shareholders through $179 million of share repurchases, and we will
continue to take an opportunistic approach to share buybacks in the future.
Environmental, Social and Governance (“ESG”)
We continue to make progress on enhancing our approach to ESG. In late 2021, we completed our first formal
ESG materiality assessment and have since formed a cross-functional ESG committee focused on leveraging
its key findings to develop an appropriate social impact and sustainability strategy. Such efforts have the full
support of our Board, which has delegated oversight of the company’s ESG strategy and reporting to the Audit
Committee.
A deep commitment to our communities is part of our heritage. The BJ’s Charitable Foundation is focused on
nourishing communities and helping families thrive. Through the work of our BJ’s Feeding Communities
program, we donated over 14 million pounds of food in 2021, equating to over 11 million meals to feed our
neighbors in need. We’re proud of the positive difference we make in our communities and look forward to
continuing this work in the years to come.
In closing, I extend my deepest gratitude to our 34,000 team members as well as our over six million members
who have consistently placed their trust in our company. Finally, I thank you, our shareholders, for your support
of BJ’s Wholesale Club. I look to the future with great excitement as we continue to take our company to new
heights.
Sincerely,
Bob Eddy
President and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-K
_____________________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 2022 or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from _________ to _________
Commission File No. 001-38559
_____________________________
BJ’S WHOLESALE CLUB HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
_____________________________
Delaware
State or other jurisdiction of
incorporation or organization
25 Research Drive
Westborough, Massachusetts
(Address of principal executive offices)
45-2936287
(I.R.S. Employer
Identification No.)
01581
(Zip Code)
Registrant’s telephone number, including area code: (774) 512-7400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01
Trading symbol (s)
BJ
Name of each exchange on which registered
New York Stock Exchange
_____________________________
Securities registered pursuant to Section 12(g) of the Act: None.
_____________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x
No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Non-accelerated filer
o
Accelerated Filer
Smaller reporting company
Emerging growth company
o
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No x
The aggregate market value of the voting common equity held by non-affiliates as of July 30, 2021, the last business day of the
registrant’s most recently completed second fiscal quarter, was approximately $6,900,000,000. For purposes of this calculation,
the registrant has excluded the market value of all shares of its voting common equity reported as beneficially owned by
the executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any
such person is an affiliate of the registrant. The registrant has no non-voting common equity.
The number of outstanding shares of common stock of the registrant as of March 10, 2022 was 135,289,504.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference portions of the registrant’s Definitive Proxy Statement
for its 2022 Annual Meeting of Shareholders, which the registrant anticipates will be filed with the Securities and Exchange
Commission no later than 120 days after the end of its 2021 fiscal year pursuant to Regulation 14A.
2
Table of Contents
Page No
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PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Item 9B.
Controls and Procedures
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
3
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements. We intend such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933,
as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All statements other than statements of historical facts contained in this Annual Report on Form 10-K should be considered
forward-looking statements, including, without limitation, statements regarding our future results of operations and financial
position, business strategy, transformation, strategic priorities and future progress, including expectations regarding deferred
revenue, lease commencement dates, impact of infrastructure investments on our operating model and selling, general and
administrative expenses, sales of gasoline and gross profit margin rates, and new club and gas station openings, as well as
statements that include terms such as "may", "will", "should", "expect", "plan", "anticipate", "could", "intend", "project",
"believe", "estimate", "predict", "continue", "forecast", "would", or the negative of these terms or other similar expressions. The
forward-looking statements in this Annual Report on Form 10-K are only predictions. We have based these forward-looking
statements largely on our current expectations and projections about future events and financial trends that we believe may
affect our business, financial condition and results of operations. These forward-looking statements involve known and
unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking
statements, including, but not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
uncertainties in the financial markets and the effect of certain economic conditions or events on consumer and
small business spending patterns and debt levels;
risks related to our dependence on having a large and loyal membership;
the effects of competition in, and regulation of, the retail industry;
our dependence on vendors to supply us with quality merchandise at the right time and at the right price;
risks related to our indebtedness;
changes in laws related to, or the governments administration of, the Supplemental Nutrition Assistance Program
or its electronic benefit transfer systems;
the risks and uncertainties related to the impact of the novel coronavirus (COVID-19) pandemic, including the
duration, scope and severity of the pandemic, federal, state and local government actions or restrictive measures
implemented in response to COVID-19, the emergence of new variants, the effectiveness of such measures, as
well as the effect of any relaxation or revocation of current restrictions, and the direct and indirect impact of such
measures;
risks related to climate change and natural disasters;
our ability to identify and respond effectively to consumer trends, including our ability to successfully maintain a
relevant omnichannel experience for our members;
risks related to cybersecurity, which may be heightened due to our e-commerce business, including our ability to
protect the privacy of member or business information and the security of payment card information;
our ability to attract and retain a qualified management team and other team members;
our ability to implement our growth strategy by opening new clubs and gasoline stations; and;
the other risk factors identified in our filings with the Securities and Exchange Commission, including in
particular those set forth under "Risk Factors" in this Annual Report on Form 10-K.
Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by
applicable law, we assume no obligation to update these forward-looking statements, even if new information becomes
available in the future, and you should not rely upon these forward-looking statements after the date of this Annual Report on
Form 10-K.
4
TRADEMARKS
BJ’s Wholesale Club®, BJ’s®, Wellsley Farms®, Berkley Jensen®, My BJ’s Perks®, BJ’s Easy Renewal®, BJ’s Gas®,
BJ’s Perks Elite®, BJ’s Perks Plus®, Inner Circle®, ExpressPay® and BJ’s Perks Rewards® are all registered trademarks of BJ's
Wholesale Club, Inc. Other trademarks, tradenames and service marks appearing in this Annual Report on Form 10-K are the
property of their respective owners. We do not intend our use or display of those other parties’ trademarks, trade names or
service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or
sponsorship of us by, these other parties. Solely for convenience, trademarks, trade names and service marks referred to in this
Annual Report on Form 10-K may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in
any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to
these trademarks, trade names and service marks.
This section contains forward-looking statements. You should refer to the explanation of the qualifications and
limitations on forward-looking statements in the Forward-Looking Statements section above.
MARKET AND INDUSTRY DATA
This Annual Report on Form 10-K includes estimates regarding market and industry data that we prepared based on our
management’s knowledge and experience in the markets in which we operate, together with information obtained from various
sources, including publicly available information, industry reports and publications, surveys, our customers, distributors,
suppliers, trade and business organizations and other contacts in the markets in which we operate.
In this Annual Report on Form 10-K, we make reference to consistently offering 25% or more savings on a
representative basket of manufacturer-branded groceries compared to typical supermarket competitors. The following is how
we verify that we provide our members this value:
•
•
•
•
We periodically identify the four supermarket chains (or banners) most prevalent in our clubs’ primary trade areas
(the "Supermarket Competitors").
We create a "basket" of 100 popular manufacturer-branded grocery food and non-food items, each of which was
among our top-selling national brand items in its category and was also carried, in varying pack sizes, in
supermarkets. We believe this basket is representative of manufacturer-branded grocery items because of their
popular appeal and recognition—as evidenced by both presence and sales volume—in our clubs and at the
Supermarket Competitors.
We hire an independent third-party company to research multiple (a minimum of six) sites for each of the
Supermarket Competitors, which are located in the trade areas of one or more of our clubs, no less frequently than
once every two weeks. The third-party comparison shoppers record the prices of each item in the basket carried by
the Supermarket Competitor, in the closest pack size to the size BJ’s carries, and then they calculate the price on a
unit-price basis. We compare unit prices to ensure a common denominator for price comparisons. We direct the
measurement company to ignore coupons and exclude items that were on promotion by us or by a Supermarket
Competitor, as promotional prices do not represent everyday values in our view.
To calculate the Supermarket Competitors’ average price for the items in the basket, we average the measured
prices of the items at each Supermarket Competitor store sampled, create an average measured unit price for each
item at each Supermarket Competitor, compare those to our chain average unit price, and arrive at a relative
percentage difference for each Supermarket Competitor. We then average these percentage differences for the
Supermarket Competitors. The average difference is consistently more than 25%.
We will only include an item in the basket if it is carried by at least two of the four Supermarket Competitors. This
means that over time we may replace items in the basket with different comparable items, if we are consistently unable to get
prices for comparison on an item, to be sure we continue to offer the same relative savings.
We also use a rolling average of measured prices. At a minimum, we will use an average of two consecutive periodic or
monthly measurements of prices at both BJ’s (using our chain average price) and the Supermarket Competitors. We may use up
to 52 consecutive weeks, or 12 consecutive months, of price data for comparison. We make our savings claim using price data
that are not more than 60 days old, as to the most recent price measurement in the data set.
5
The Supermarket Competitors do not include non-traditional sellers of groceries, such as drugstores, online sellers,
superstores, convenience stores, other membership clubs or mass market retailers.
In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data
and other similar sources and on our knowledge of, and our experience to date in, the markets for the products we distribute.
Market share data is subject to change and may be limited by the availability of raw data, the voluntary nature of the data
gathering process and other limitations inherent in any statistical survey of market shares. In addition, customer preferences are
subject to change. Accordingly, you are cautioned not to place undue reliance on such market share data. References herein to
the markets in which we conduct our business refer to the geographic metropolitan areas in which our clubs are located.
As used in this Annual Report on Form 10-K, unless the context otherwise requires:
DEFINED TERMS
•
•
"The Company", "BJ’s", "we", "us" and "our" mean BJ’s Wholesale Club Holdings, Inc. and, unless the context
otherwise requires, its consolidated subsidiaries; and
"IPO" means our initial public offering of shares of our common stock completed on July 2, 2018.
BASIS OF PRESENTATION
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of January.
Accordingly, references herein to "fiscal year 2022" relate to the 52 weeks ending January 28, 2023, references herein to "fiscal
year 2021" relate to the 52 weeks ended January 29, 2022, references herein to "fiscal year 2020" relate to the 52 weeks
ended January 30, 2021 and references herein to "fiscal year 2019" relate to the 52 weeks ended February 1, 2020. In this
Annual Report on Form 10-K, unless otherwise noted, when we compare a metric (such as comparable club sales) between one
period and a "prior period," we are comparing it to the analogous period from the prior fiscal year.
6
PART I
Item 1. Business
General
BJ’s Wholesale Club is a leading warehouse club operator concentrated primarily on the east coast of the United States.
We deliver significant value to our members, consistently offering 25% or more savings on a representative basket of
manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on
perishable products, continuously refreshed general merchandise, gasoline and other ancillary services to deliver a
differentiated shopping experience that is further enhanced by our omnichannel capabilities.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 226 large-format,
high volume warehouse clubs spanning 17 states. In our core New England markets, which have high population density and
generate a disproportionate part of U.S. gross domestic product ("GDP"), we operate almost three times the number of clubs
compared to the next largest warehouse club competitor. In addition to shopping in our clubs, members are able to shop when
and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our buy-online-
pickup-in-club ("BOPIC") service, curbside delivery, same day home delivery or traditional ship-to-home service.
Our leadership team continues to implement significant cultural and operational changes to our business, including
transforming how we use data to improve member experience, instilling a culture of cost discipline, adopting a more proactive
approach to growing our membership base and building an omnichannel offering oriented towards making shopping at BJ’s
more convenient. These changes continue to delivered results rapidly, evidenced by year-over-year income from continuing
operations growth, consecutive quarter comparable club sales growth over the last three years and adjusted EBITDA growth
over the last three years.
Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We
have more than six million members paying annual fees to gain access to savings on groceries and general merchandise and
services. The annual membership fee for our Inner Circle® membership is $55, and the annual membership fee for our BJ’s
Perks Rewards® membership, which offers additional value-enhancing features, is $110. We believe that members can save
over ten times their $55 Inner Circle membership fee versus what they would otherwise pay at traditional supermarket
competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing
significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also
carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label
brands, Wellsley Farms® and Berkley Jensen®, represent over $3.0 billion in annual sales, and are the largest brands we sell in
terms of volume. Our customers recognize the relevance of our value proposition across economic environments, as
demonstrated by over 20 consecutive years of membership fee income growth. Our membership fee income was $360.9 million
for fiscal year 2021.
Industry Overview
Warehouse clubs offer a relatively narrow assortment of food and general merchandise items within a wide range of
product categories. In order to achieve high sales volumes and rapid inventory turnover, merchandise selections are generally
limited to items that are brand name leaders in their categories alongside an assortment of private label brands. Since warehouse
clubs sell a diversified selection of product categories, they attract customers from a wide range of other wholesale and retail
distribution channels, such as supermarkets, supercenters, internet retailers, gasoline stations, hard discounters, department and
specialty stores and operators selling a narrow range of merchandise. These higher cost distribution channels have traditionally
been unable to match the low prices offered by warehouse clubs over long periods of time.
Warehouse clubs eliminate many of the merchandise handling costs associated with traditional multiple-step distribution
channels by purchasing full truckloads of merchandise directly from manufacturers and by storing merchandise on the sales
floor rather than in central warehouses. By operating no-frills, self-service warehouse facilities, warehouse clubs have fixturing
and operating costs substantially below those of traditional retailers. Because of their higher sales volumes and rapid inventory
turnover, warehouse clubs generate cash from the sale of a large portion of their inventory before they are required to pay
merchandise vendors. As a result, a greater percentage of the inventory is financed through vendor payment terms than by
working capital. Two broad groups of customers, individual households and small businesses, have been attracted to the savings
made possible by the high sales volumes and operating efficiencies achieved by warehouse clubs. Customers at warehouse
clubs are generally limited to members who pay an annual fee.
7
Our Clubs
As of January 29, 2022, we operated 226 clubs ranging in size from 63,000 square feet to 163,000 square feet. We aim to
locate our larger clubs in high density, high traffic locations that are difficult to replicate. We design our smaller format clubs to
serve markets whose population is not sufficient to support a larger club or that are in locations, such as urban areas, where
there is inadequate real estate space for a larger club. Including space for parking, the amount of land required for a BJ’s club
generally ranges from eight acres to approximately fourteen acres. Our clubs are located in both free-standing locations and
shopping centers.
Our ability to achieve profitable operations depends upon high sales volumes and the efficient operation of our warehouse
clubs. We buy most of our merchandise directly from manufacturers and route it to cross-docking consolidation points
(distribution centers) or directly to our clubs. Our company-operated and contracted distribution centers receive large shipments
from manufacturers and quickly ship these goods to individual clubs, generally within 24 hours. This process creates freight
volume and handling efficiencies, eliminating many costs associated with traditional multiple-step distribution channels,
including distributors’ commissions and the cost of storing merchandise in central distribution facilities. We work closely with
manufacturers to minimize the amount of handling required once merchandise is received at a club. Merchandise for sale is
generally displayed on pallets containing large quantities of each item, thereby reducing labor required for handling, stocking
and restocking. Back-up merchandise is generally stored in steel racks above the sales floor.
A summary of our club locations by market as of January 29, 2022 is set forth in the table below:
Market
New York
Florida
Massachusetts
New Jersey
Pennsylvania
Connecticut
Virginia
Maryland
North Carolina
New Hampshire
Ohio
Georgia
Delaware
Michigan
Maine
Rhode Island
South Carolina
Segments
Club Count
46
34
25
23
18
13
13
12
9
7
6
5
4
4
3
3
1
Our retail operations, which include retail club and other sales procured from our clubs and DC’s, represent substantially
all of our consolidated total revenues, are our only reportable segment. All of our identifiable assets are located in the United
States. We do not have significant sales outside the United States, nor does any customer represent more than 10% of total
revenues for any period presented.
Merchandising
We service our existing members and attract new members by providing a broad range of high quality, brand name and
private label merchandise at prices that are consistently lower than the prices of traditional retailers, including discount retailers,
supermarkets, supercenters and specialty retail operations. We limit the items offered in each product line to fast selling styles,
sizes and colors, carrying approximately 7,000 core active stock keeping units ("SKUs"). We may add additional temporary
SKUs from time to time to keep up with demand, such as that created by the COVID-19 pandemic.
8
By contrast, supermarkets normally carry an average of 40,000 SKUs, and supercenters may stock 100,000 SKUs or
more. We work closely with manufacturers to develop packaging and sizes that are best suited for selling through the
warehouse club format in order to minimize handling costs and ensure value to our members.
We group our merchandise offerings into two divisions: grocery and general merchandise and services.
•
•
Grocery: consists of our meat, produce, dairy, bakery, deli and frozen products, packaged foods,
beverages, detergents, disinfectants, paper products, beauty care, adult and baby care and pet foods,
which constituted approximately 83% of our merchandise sales for fiscal year 2021.
General merchandise and services: consist of optical, tires, small appliances, televisions, electronics, seasonal
goods, gift cards, and apparel, which constituted approximately 17% of our merchandise sales for fiscal year
2021.
BJ’s consumer-focused private label products, sold under Wellsley Farms® and Berkley Jensen® brands, comprised
approximately 23% of our total merchandise sales in fiscal year 2021. These products are primarily premium quality and
generally are priced below the branded competing product. We focus both on a group of core private label products that
compete with national brands that have among the highest market share and yield high margins and on differentiated products
that drive member loyalty.
We also offer a number of specialty services that are designed to enable members to complete more of their shopping at
our clubs and to encourage more frequent trips to the clubs. Many of these services are provided by outside operators under
license from us. Specialty services include full-service optical centers; tire installation services; a propane tank filling service;
home improvement services; travel services; cell phone kiosks; and product protection plans.
As of January 29, 2022, we had 157 gasoline stations in operation at or near our clubs. The gas stations are generally self-
service, with some locations accepting cash. We generally maintain our gas prices below the average retail prices in each
market as a means of illustrating a favorable price image to existing and prospective members.
Omnichannel Offering
We have built a robust digital portfolio which consists of BJs.com, BerkleyJensen.com, Wellsleyfarms.com,
Delivery.bjs.com as well as the BJ’s mobile app. We have made it easier for members to purchase, review products, digitally
add coupons to their membership card and view annual member savings. BJs.com showcases our club assortment available to
members along with review ratings and coupons for added savings. The above digital portfolio offers our members convenient
ways to shop, including our BOPIC service, curbside delivery, same day home delivery or traditional ship-to-home service. Our
app delivers personalized promotions, improved shopping experiences, and an efficient gateway to our fulfillment options. Our
members appreciate the convenience of the BJ’s mobile app, as evidenced by millions of downloads since fiscal year 2019. We
have rolled out the ability to use state Electronic Benefit Transfer ("EBT") cards when shopping on BJs.com. In addition, in the
fourth quarter of fiscal year 2021, we launched ExpressPay®, which allows members to skip checkout lines when they shop in
club by paying with their phones.
Membership
Paid membership is an essential element of the warehouse club concept. In addition to providing a source of revenue
which permits us to offer low prices, membership reinforces customer loyalty. We have a large base of more than six million
paid memberships as of January 29, 2022. Our target customers care about value, quality and convenience and shop at
warehouse clubs for their family needs. Our target customers are a price sensitive demographic with large household sizes,
representing the largest segment of warehouse club shoppers in BJ’s trade areas.
We offer two core types of memberships: Inner Circle® memberships and business memberships. We generally charge
$55 per year for a primary Inner Circle membership that includes one additional card for a household member. Primary
members may purchase up to three supplemental memberships for $30 each. A primary business membership costs $55 per
year and includes one free supplemental membership. Business members may purchase up to eight additional supplemental
business memberships at $30 each. U.S. military personnel—active and veteran—who enroll at a BJ’s club location can do so
for a reduced membership fee.
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BJ’s Perks Rewards®, our higher tier of membership, offers members the opportunity to earn 2% cash back on most in-
club and bjs.com purchases. The annual fee for a BJ’s Perks Rewards membership is $110 per year. We also offer our co-
branded My BJ’s Perks® Mastercard® credit cards. These cards provide members with the opportunity to earn up to 5% cash
back on purchases made at our clubs or online at bjs.com and a 10-cent per gallon discount on gasoline when paying with a My
BJ’s Perks Mastercard® at our BJ’s Gas locations. Since fiscal year 2014, we have grown co-branded Mastercard® holders by
over 800%. In fiscal year 2021, BJ’s Perks Rewards members and co-branded Mastercard® members accounted for 35% of
members and 45% of spend, compared to 31% of members and 41% of spend in fiscal year 2020.
Advertising and Public Relations
We promote customer awareness of our clubs primarily through social media, direct mail, public relations efforts, radio
advertising, community involvement, new club marketing programs and various publications sent to our members periodically
throughout the year. These methods result in low marketing expenses compared to typical retailers.
Competition
We compete with a wide range of national, regional and local retailers and wholesalers selling food and/or general
merchandise in our markets, including supermarkets, supercenters, general merchandise chains, specialty chains, gasoline
stations and other warehouse clubs, some of which have significantly greater financial and marketing resources than BJ’s.
Major competitors that operate warehouse clubs include Costco Wholesale Corporation and Sam’s Clubs (a division of Wal-
Mart Stores, Inc.), both of which operate on a multi-national basis.
We believe price is the major competitive factor in the markets in which we compete. Other competitive factors include
club location, merchandise selection, member services and name recognition. We believe our efficient, low-cost form of
distribution gives us a significant competitive advantage over more traditional channels of retail distribution.
Intellectual Property
We believe that, to varying degrees, our trademarks, trade names, copyrights, proprietary processes, trade secrets, patents,
trade dress, domain names and similar intellectual property add significant value to our business and are important to our
success. We have invested significantly in the development and protection of our well-recognized brands, including our private
label brands, Wellsley Farms® and Berkley Jensen®. We believe that products sold under our private label brands are high
quality, offered to our members at prices that are generally lower than those for comparable national brand products and help
lower costs, differentiate our merchandise offerings from other retailers and generally earn higher margins. We expect to
continue to increase the sales penetration of our private label items.
We rely on trademark and copyright laws, trade-secret protection, and confidentiality, license and other agreements with
our suppliers, employees and others to protect our intellectual property rights. However, trademarks are generally valid and may
be renewed indefinitely as long as they are in use and their registrations are properly maintained.
Government Regulation
Compliance with various governmental regulations has an impact on our business, including our capital expenditures,
earnings and competitive position, which can be material. We incur costs to monitor, and take actions to comply with,
governmental regulations that are applicable to our business, which include, among others, federal securities laws and
regulations, applicable to exchange requirements, labor and employment laws, laws governing truth-in-advertising, privacy
laws, environmental laws, safety regulations and other laws, including consumer protection regulations that regulate retailers
and govern the promotion and sale of merchandise and the operation of clubs, warehouses and Company-operated and
contracted distribution center facilities.
Our clubs are also subject to various local, state and federal laws, regulations and administrative practices affecting our
business. We must comply with provisions regulating health and sanitation standards, food labeling, equal employment,
minimum wages, environmental protection, licensing for the sale of food and, in many clubs, licensing for beer and wine or
other alcoholic beverages. Our operations, including the manufacturing, processing, formulating, packaging, labeling and
advertising of products are subject to regulation by various federal agencies, including the Food and Drug Administration (the
"FDA"), the Federal Trade Commission (the "FTC"), the U.S. Department of Agriculture (the "USDA"), the Consumer Product
Safety Commission and the Environmental Protection Agency. We rely on contractual provisions to ensure compliance by our
vendors.
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See "Item 1A. Risk Factors" for a discussion of material risks to us, including, to the extent material, to our competitive
position, relating to governmental regulations, and see "Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations" together with our audited consolidated financial statements and related notes thereto for a discussion
of material information relevant to an assessment of our financial condition and results of operations, including, to the extent
material, the effects that compliance with governmental regulations may have upon our capital expenditures and earnings.
Food
The FDA has comprehensive authority to regulate the safety of food and food ingredients (other than meat, poultry,
catfish and certain egg products), as well as dietary supplements under the Federal Food, Drug, and Cosmetic Act (the
"FDCA"). Similarly, the USDA’s Food Safety Inspection Service is the public health agency responsible for ensuring that the
nation’s commercial supply of meat, poultry, catfish and certain egg products is safe, wholesome and correctly labeled and
packaged under the Federal Meat Inspection Act and the Poultry Products Inspection Act.
Congress amended the FDCA in 2011 through passage of the Food Safety Modernization Act (the "FSMA"), which
greatly expanded the FDA’s regulatory obligations over all actors in the supply chain. Industry actors continue to determine the
best pathways to implement FSMA’s regulatory mandates and the FDA’s promulgating regulations throughout supply chains,
as most requirements are now in effect. Such regulations mandate that risk-based preventive controls be observed by the
majority of food producers. This authority applies to all domestic food facilities and, by way of imported food supplier
verification requirements, to all foreign facilities that supply food products.
The FDA also exercises broad jurisdiction over the labeling and promotion of food. Labeling is a broad concept that,
under certain circumstances, extends to product-related claims and representations made on a company’s website or similar
printed or graphic medium. All foods, including dietary supplements, must bear labeling that provides consumers with essential
information with respect to standards of identity, net quantity, nutrition facts, ingredient statement and allergen disclosures. The
FDA also regulates the use of structure/function claims, health claims and nutrient content claims.
Dietary Supplements
The FDA has comprehensive authority to regulate the safety of dietary supplements, dietary ingredients, labeling and
current good manufacturing practices. Congress amended the FDCA in 1994 through passage of the Dietary Supplement Health
and Education Act (the "DSHEA"), which greatly expanded the FDA’s regulatory authority over dietary supplements. Through
DSHEA, dietary supplements became their own regulated commodity while also allowing structure/function claims on
products. However, no statement on a dietary supplement may expressly or implicitly represent that it will diagnose, cure,
mitigate, treat or prevent a disease.
Food and Dietary Supplement Advertising
The FTC exercises jurisdiction over the advertising of foods and dietary supplements. The FTC has the power to institute
monetary sanctions and the imposition of consent decrees and penalties that can severely limit a company’s business practices.
In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to have
adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims.
Compliance
As is common in our industry, we rely on our suppliers and contract manufacturers, including those of our private label
products, to ensure that the products they manufacture and sell to us comply with all applicable regulatory and legislative
requirements. We do not directly manufacture any goods. In general, we seek certifications of compliance, representations and
warranties, indemnification or insurance from our suppliers and contract manufacturers. However, even with adequate
insurance and indemnification, any claims of non-compliance could significantly damage our reputation and consumer
confidence in products we sell. In addition, the failure of such products to comply with applicable regulatory and legislative
requirements could prevent us from marketing the products or require us to recall or remove such products from our clubs. In
order to comply with applicable statutes and regulations, our suppliers and contract manufacturers have from time to time
reformulated, eliminated or relabeled certain of their products, and we have revised certain provisions of our sales and
marketing program.
We monitor changes in these laws and believe that we are in material compliance with applicable laws.
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Seasonality
Our business is moderately seasonal in nature. Historically, our business has generally realized a slightly higher portion of
net sales, operating income and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the
impact of the summer and year-end holiday season, respectively. Our quarterly results have been and will continue to be
affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, our
financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be
achieved for a full fiscal year.
Employees and Human Capital Resources
As of January 29, 2022, we had approximately 34,000 full-time and part-time employees, whom we refer to as team
members. None of our team members are represented by a union. We consider our relations with our team members to be good.
Team Member Engagement. We provide all team members with the opportunity to share their opinions and feedback on
our culture through a survey that is performed every year. Results of the survey are measured and analyzed to enhance the team
member experience, promote retention of team members, drive change, and leverage the overall success of our Company.
Diversity. We strive to foster a work environment that includes and embraces diversity of background and perspective,
including, but not limited to, with respect to age, gender, race, place of residence and specialized experience. As of the end of
fiscal year 2021, 45% of our total workforce were women and 48% were minorities. During fiscal year 2021, 42% of our new
hires were women and 47% of our new hires were minorities. We have a zero-tolerance policy on discrimination and
harassment and have several systems under which team members can report incidents confidentially or anonymously and
without fear of reprisal. We have an Inclusion & Diversity council which is comprised of a cross-functional team representing
diversity of backgrounds, ethnicity, gender, and self-identification. This council is responsible for identifying and driving
actions and initiatives to advance the Company’s inclusion and diversity mission.
Total Rewards. We believe our team members are the key to our success and we offer competitive programs to meet the
needs of our colleagues and their families. Our programs include annual bonuses, 401(k) plans, stock awards, an employee
stock purchase plan, paid time off, flexible work schedules, family leave, team member assistance programs, and more, based
on eligibility criteria. We take the health and wellness of our team members seriously. We provide our eligible team members
with access to a variety of innovative, flexible and convenient health and wellness programs. Additionally, the Company
provides resources, such as an onsite chiropractor, a health clinic and a fitness center for team members. Such programs are
designed to support team members’ physical and mental health by providing tools and resources to help them improve or
maintain their health status and encourage engagement in healthy behaviors. The Company also provides team members with
comprehensive medical benefits, dental, and behavioral and mental wellness benefits.
Team Member Development. Training and development programs for our team members help retain and advance them
into future roles with the company. We provide online and on-the-job training through innovative delivery tools which are easy
to use and focused on the core skills needed to be successful at BJ’s Wholesale Club. We provide several management and
leadership programs that develop and educate our leaders so they can provide the best work environment and growth
opportunities to all our team members.
The COVID-19 pandemic has further reinforced the importance of a safe and healthy workforce. In response to the
pandemic, the Company implemented safeguards to protect our essential team members, including increased frequency of
cleaning and disinfecting, social distancing practices, face coverings, temperature screening and other measures consistent with
specific regulatory requirements and guidance from health authorities. We also implemented a vaccine mandate for all team
members in the home office and field management and provided vaccine clinics for our team members. Additional safeguards
included travel restrictions and remote work for team members who were able to work from home during fiscal year 2021.
Community Involvement. We have a long and proud history of investing in the communities where we live and work. BJ’s
Charitable Foundation was established with the mission to enrich every community BJ’s Wholesale Club serves. The
Foundation supports nonprofit organizations that primarily benefit the underprivileged in the areas of hunger prevention and
education. Throughout the year, the Foundation makes multiple direct donations from the Company to support food banks and
pantry programs in communities that our clubs serve.
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Corporate Information
Our principal operating subsidiary is BJ’s Wholesale Club, Inc., which was previously an independent publicly traded
corporation until its acquisition on September 30, 2011 by a subsidiary of Beacon Holding Inc., a company incorporated on
June 24, 2011 by investment funds affiliated with or advised by CVC Capital Partners and Leonard Green & Partners, L.P ("the
Sponsors"), for the purpose of the acquisition. BJ’s Wholesale Club Holdings, Inc. changed its name from Beacon Holding Inc.
on February 23, 2018. On July 2, 2018, BJ’s Wholesale Club Holdings, Inc. became a publicly traded entity in connection with
its IPO and listing on the New York Stock Exchange ("NYSE") under the ticker symbol "BJ."
We make available on our website (http://www.bjs.com), or through a link posted on our website, free of charge, our
Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC"). In addition, the
SEC maintains an internet site that contains these reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC (http://www.sec.gov).
The information on our website or that can be accessed through our website is not incorporated by reference and should
not be considered to be a part of this Annual Report on Form 10-K.
Information About our Executive Officers
The following are the executive officers of BJ’s Wholesale Club as of March 17, 2022:
Name
Robert W. Eddy
Laura L. Felice
Age Office and Business Experience
49 Robert W. Eddy has served as President and Chief Executive Officer of the Company and as a
member of our Board of Directors since April 2021. Mr. Eddy joined the Company in 2007 as
Senior Vice President, Finance and was named Executive Vice President and Chief Financial
Officer in 2011 and served as Executive Vice President, Chief Financial and Administrative Officer
from 2018 to April 2021 when he became President and Chief Executive Officer. Prior to joining
BJ’s, Mr. Eddy served retail and consumer products companies as a member of the audit and
business advisory practice of PricewaterhouseCoopers LLP, in Boston and San Francisco. Mr.
Eddy is a graduate of Babson College in Wellesley, Massachusetts, and Phillips Academy in
Andover, Massachusetts.
Mr. Eddy currently serves as a member of the Board of Directors and Executive Committee of the
National Retail Federation. From 2013 to 2017, Mr. Eddy chaired the Financial Executives
Council of the National Retail Federation. He is also a member of the College Advisory Board for
Babson College.
40 Laura L. Felice has served as our Executive Vice President, Chief Financial Officer since April
2021. Prior to that Ms. Felice served as Senior Vice President, Controller since November 2016 and
was responsible for the integrity of our financial records. Prior to joining BJ’s, Ms. Felice worked
at Clarks Americas, Inc., a footwear chain, since 2008 in positions of increasing responsibility,
including most recently as Senior Vice President of Finance from November 2015 to November
2016, where she led all aspects of commercial finance for the Americas region distribution
channels. Additionally, Ms. Felice worked at PricewaterhouseCoopers LLP, a multinational
professional services firm from 2003 to 2008. She is a Certified Public Accountant and currently
serves as a Board member, Vice-Chair and Finance Committee Chair for the Massachusetts Society
of CPAs. She holds a Master of Accounting and a bachelor’s degree with a double major in Finance
and Accounting from Boston College.
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Paul Cichocki
Jeff Desroches
Scott Kessler
Graham N. Luce
52 Paul Cichocki has served as our Executive Vice President, Chief Commercial Officer since April
2021 and oversees merchandising, membership, marketing and analytics. From April 2020 to April
2021, Mr. Cichocki served as Executive Vice President, Membership, Analytics and Business
Transformation and was responsible for the strategy and vision for the Company's membership,
marketing and analytics divisions. Prior to joining BJ’s, Mr. Cichocki most recently served as
Partner at Bain & Company, a management consulting firm, from 2005 to April 2020, where he led
Bain’s scale consulting delivery capabilities and was responsible for integrating and coordinating
Bain’s consulting support and delivery organizations globally. He initially joined Bain & Company
in 1997 as a consultant and spent more than 20 years serving clients across a range of industries,
including retail, consumer products, financial services and food and beverage. Mr. Cichocki was
also a member of Bain & Company’s Global Operating Committee from 2017 to 2020 and
Investment Committee from 2019 to 2020. Prior to Bain & Company, Mr. Cichocki worked as an
Operating Manager at Frito-Lay, a snack manufacturing division of PepsiCo., from 1991 to 1995.
Mr. Cichocki attended Harvard Business School, where he earned a Master of Business
Administration with distinction. He is also a graduate from the University of Massachusetts, where
he received a bachelor’s degree in operations management with high honors.
45 Jeff Desroches joined BJ's in 2001 and has served as our Executive Vice President, Chief
Operations Officer since April 2018. As Executive Vice President, Chief Operations Officer, Mr.
Desroches leads all operations, Club Team Members, Regional Field Staff, and policies and
procedures at all the Company’s clubs and fuel stations as well as omni fulfillment, supply chain
and asset protection. Prior to that, Mr. Desroches held several positions at BJ's, including Regional
Asset Protection Manager for the Metro New York market from 2001 to 2007, Vice President of
Asset Protection from 2007 to 2010 and Senior Vice President of Supply Chain from 2010 until his
promotion to his current role in April 2018. Prior to BJ’s, Mr. Desroches held various operational
and warehousing roles at Service Merchandise Company, Inc., a retail chain, from 1993 to 2000
and Kmart Corporation, a discount department store chain, from 2000 to 2001. He holds a
bachelor’s degree in Criminal Justice and Law Enforcement Administration from American
Intercontinental University.
55 Scott Kessler has served as our Executive Vice President, Chief Information Officer since May
2017 and is responsible for information technology, including ensuring that the Company has the
technology, systems and people in place to support the Company’s transformation. Prior to joining
the Company, he was Executive Vice President, Chief Information Officer at Belk, Inc., a
department store chain, from 2014 to October 2016, where he led efforts to strengthen the
information technology systems, improve system operations and further define the omnichannel
roadmap. Prior to that, Mr. Kessler was Senior Vice President, Products Technology at GSI
Commerce, Inc., a technology and services company, from 2004 to 2013. Mr. Kessler holds a
Master of Business Administration and a bachelor’s degree from Fairleigh Dickinson University.
52 Graham N. Luce has served as our Senior Vice President, General Counsel and Secretary since
April 2015 and provides senior management with strategic advice on Company initiatives, complex
business transactions and litigation, as well as counsel on all corporate governance-related matters.
He also serves as Secretary of the Company. Prior to joining the Company, Mr. Luce worked at
Bain & Company, a management consulting firm, from 2000 to April 2015 and Goodwin Procter
LLP, a global law firm, from 1995 to 2000. He holds a Juris Doctor from Boston University School
of Law and bachelor’s degrees in Political Science and Electrical Engineering from Tufts
University.
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Monica Schwartz
47
Monica Schwartz has served as our Executive Vice President, Chief Digital Officer since October
2021 and is responsible for driving the Company’s vision and strategy for its e-commerce and
omnichannel efforts. She joined the Company in August 2020 and previously served as our Senior
Vice President, Chief Digital Officer from August 2020 to October 2021. Ms. Schwartz most
recently served as Vice President, Online Merchandising at The Home Depot, Inc., a home
improvement retailer, from December 2017 to September 2019 and was responsible for the e-
commerce site and driving innovation. Prior to that, she served as the Executive Vice President of
Digital at Nine West Group, a fashion retailer, from 2015 to 2017. From 2014 to 2015 Ms.
Schwartz served as Chief Global Digital Officer at Stuart Weitzman Holdings, LLC, a women’s
footwear and handbag retailer. From 2012 to 2014, she served as Executive Director, e-commerce
at David Yurman Enterprises, LLC, a jewelry design company. Prior to that she held positions of
increasing responsibility at E-bay, Inc., an e-commerce corporation, from 2007 to 2012. From
2005 to 2007, she held positions with Countrywide Financial Corporation, a financial services
company, and from 1998 to 2001 she held positions with MediaHippo, an interactive media
agency. She holds a Master of Business Administration at the University of California, Los Angeles
Anderson School of Management and a bachelor’s degree in Fine Arts from Miami University.
William C. Werner 44 William C. Werner has served as our Executive Vice President, Strategy and Development since
April 2021 and is responsible for building the Company’s market expansion and key strategic
initiatives. Previously, Mr. Werner served as our Senior Vice President, Strategic Planning and
Investor Relations from November 2016 to April 2021, Senior Vice President, Finance from 2013
to November 2016 and as our Vice President, Accounting and Financial Reporting from 2012 to
2013. Prior to joining the Company, Mr. Werner was a Director in the Deals practice at
PricewaterhouseCoopers LLP, a multinational professional services firm, from 2007 to 2012. He
holds a bachelor’s degree with a double major in Mathematics and Accounting from the College of
the Holy Cross.
Item 1A. Risk Factors
Set forth below are the risks that we believe are material to our investors and they should be carefully considered. These
risks are not all of the risks that we face and other factors not presently known to us or that we currently believe are immaterial
may also affect our business, financial condition, results of operations and/or stock price if they occur. This section contains
forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking
statements in the Forward-Looking Statements section above.
Risks Relating to Our Business
Our business may be affected by issues that affect consumer spending.
Our results of operations are affected by the level of consumer spending and, therefore, by changes in the economic
factors that impact consumer spending. Certain economic conditions or events, such as a contraction in the financial markets;
high rates of inflation or deflation; high unemployment levels; decreases in consumer disposable income; unavailability of
consumer credit; higher consumer debt levels; higher tax rates and other changes in tax laws; higher interest rates; higher fuel,
energy and other commodity costs; weakness in the housing market; higher insurance and health care costs; and product cost
increases resulting from an increase in commodity prices, could reduce or shift consumer spending generally, which could
cause our customers to spend less or to shift their spending to our competitors. Reduced consumer spending may result in
reduced demand for our items and may also require increased selling and promotional expenses. Issues or trends that affect
consumer spending broadly could affect spending by our members disproportionately. A reduction or shift in consumer
spending could negatively impact our business, results of operations and financial condition.
We depend on having a large and loyal membership, and any harm to our relationship with our members could have a
material adverse effect on our business, net sales and results of operations.
We depend on having a large and loyal membership. The extent to which we achieve growth in our membership base and
sustain high renewal rates materially influences our profitability. Further, our net sales are directly affected by the number of
our members, the number of BJ’s Perks Rewards® members and holders of our My BJ’s Perks® Mastercard® credit cards, the
frequency with which our members shop at our clubs and the amount they spend on those trips, which means the loyalty and
enthusiasm of our members directly impacts our net sales and operating income. Accordingly, anything that would harm our
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relationship with our members and lead to lower membership renewal rates or reduced spending by members in our clubs could
materially adversely affect our net sales, membership fee income and results of operations.
Factors that could adversely affect our relationship with our members include: our failure to remain competitive in our
pricing relative to our competitors; our failure to provide the expected quality of merchandise; our failure to offer the mix of
products that our members want to purchase; events that harm our reputation or the reputation of our private brands; our failure
to provide the convenience that our members may expect over time, including with respect to technology, delivery and physical
location of our clubs; increases to our membership fees; and increased competition from stores, clubs or internet retailers that
have a more attractive mix of price, quality and convenience. In addition, we constantly need to attract new members to replace
our members who fail to renew and to grow our membership base. If we fail to attract new members, our membership fee
income and net sales could suffer.
Our business plan and operating results depend on our ability to procure the merchandise we sell at the best possible prices.
Our business plan depends on our ability to procure the merchandise we sell at the best possible prices. Because we price
our merchandise aggressively, the difference between the price at which we sell a given item and the cost at which we purchase
it is often much smaller than it would be for our non-club competitors. Further, it is often not possible for us to reflect increases
in our cost of goods by increasing our prices to members. Accordingly, small changes in the prices at which we purchase our
goods for resale can have a substantial impact on our operating profits. If we are unable to purchase goods at attractive prices
relative to our competitors, our growth could suffer. If the prices we pay for goods increase, our operating profit and results of
operations could suffer, and if we are forced to increase our prices to our members, our member loyalty could suffer.
We depend on vendors to supply us with quality merchandise at the right time and at the right price.
We depend heavily on our ability to purchase merchandise in sufficient quantities at competitive prices. We source our
merchandise from a wide variety of domestic and international vendors. Finding qualified vendors who meet our standards and
acquiring merchandise in a timely and efficient manner are significant challenges, especially with respect to vendors located
and merchandise sourced outside the United States. We have no assurances of continued supply, pricing or access to new
products, and, in general, any vendor could at any time change the terms upon which it sells to us or discontinue selling to us. In
addition, member demand may lead to insufficient in-stock quantities of our merchandise.
Competition may adversely affect our profitability.
The retail industry is highly competitive. We compete primarily against other warehouse club operators and grocery and
general merchandise retailers, including supermarkets and supercenters, and gasoline stations. Given the value and bulk
purchasing orientation of our customer base, we compete to a lesser extent with internet retailers, hard discounters, department
and specialty stores and other operators selling a narrow range of merchandise. Some of these competitors, including two major
warehouse club operators - Sam’s Club (a division of Wal-Mart Stores, Inc.) and Costco Wholesale Corporation - operate on a
multi-national basis and have significantly greater financial and marketing resources than BJ’s. These retailers and wholesalers
compete in a variety of ways, including with respect to price, services offered to customers, distribution strategy, merchandise
selection and availability, location, convenience, store hours and the attractiveness and ease of use of websites and mobile
applications. The evolution of retailing through online and mobile channels has also improved the ability of customers to
comparison shop with digital devices, which has enhanced competition. We cannot guarantee that we will be able to compete
successfully with existing or future competitors. Our inability to respond effectively to competitive factors may have an adverse
effect on our profitability as a result of lost market share, lower sales or increased operating costs, among other things.
Changes in laws related to the Supplemental Nutrition Assistance Program ("SNAP"), to the governmental administration
of SNAP or to SNAP’s EBT systems could adversely impact our results of operations.
Under SNAP, we are currently authorized to accept EBT payments, or food stamps, at our clubs as tender for eligible
items. Changes in state and federal laws governing the SNAP program, including reductions in program benefits, restrictions on
program eligibility, or rules on where and for what EBT cards may be used, could reduce sales at our clubs. For example, in
December 2019, the federal government approved changes in the program’s administration, including limiting the time period
during which certain able-bodied adults without dependents are eligible to receive SNAP benefits to three months in a 36-
month period. Any such program changes or reductions in funding for the SNAP program overall could decrease sales at our
clubs and thereby materially and adversely affect our business, financial condition and results of operations.
The novel coronavirus ("COVID-19"), or any future pandemic, epidemic or outbreak of any other infectious disease, could
have an adverse effect on our business, financial condition and results of operations.
The COVID-19 pandemic, including the emergence of new variants, has caused, and could continue to cause, significant
disruptions to the United States, regional and global economies and has contributed, and may continue to contribute, to
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significant volatility and negative pressure in financial markets. The extent to which the COVID-19 pandemic, or the future
pandemic, epidemic or outbreak of any other highly infectious disease, affects our business, operations and financial condition
will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope,
severity and duration of such pandemic, the emergence of new variants, the actions taken to contain the pandemic or mitigate its
impact, including the adoption, administration and effectiveness of available COVID-19 vaccines, and the direct and indirect
economic effects of the pandemic and containment measures, among others. The rapid development and fluidity of this
situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. Nevertheless, the COVID-19
pandemic, or any future pandemic, epidemic or outbreak of any other highly infection disease, may materially adversely affect
our business, financial condition and results of operations, and may have the effect of heightening many of the risks described
in this "Risk Factors" section, including:
•
•
•
•
•
•
a complete or partial closure of, or a decrease in member traffic at, one or more of our clubs, due to government
restrictions and limitations intended to promote social distancing and contain the spread of COVID-19, which
could adversely affect our net sales and operating results;
any difficulties and delays in obtaining products from our distributors and suppliers, delivering products to our
clubs and adequately staffing our clubs and distribution centers, which have resulted in, and could continue to
result in, an inability to maintain inventory levels and meet our members’ demands and have caused, and may
continue to cause, us to seek alternative and potentially more expensive sources of supply;
a decrease in consumer discretionary spending and confidence or changes in our members’ needs, each of which
could adversely affect member demand for the products we sell, result in shifts in demand to lower priced options
and change the mix of products we sell, result in slower inventory turnover and greater markdowns of inventory,
cause us to lose existing members and/or fail to attract new members, or otherwise materially adversely affect our
net sales and operating results;
any inability to continue to provide our team members with appropriate compensation and protective measures,
which could cause us to be unable to retain current or attract new team members to perform necessary functions
within our clubs and distribution centers;
any spread of COVID-19 among our team members or employees of our distributors or suppliers, within a
particular club, distribution center or geographical area, may necessitate that impacted clubs, distribution centers
or suppliers operate with reduced staffing or be temporarily closed, which could negatively impact our business
and financial condition, as well as our reputation; and
limited access to our management, support staff and professional advisors, which could decrease the effectiveness
of our disclosure controls and procedures and internal controls over financial reporting, increase our susceptibility
to security breaches, or hamper our ability to comply with regulatory obligations, leading to reputational harm and
regulatory issues or fines.
Natural disasters and other incidents beyond our control could negatively affect our business, financial condition and
results of operations.
Our business could be severely impacted by natural disasters, such as hurricanes, typhoons or earthquakes, or other
incidents beyond our control, such as terrorism, riots, acts of violence and other crimes, particularly in locations where our
centralized operating systems and administrative personnel are located. For example, our operations are concentrated primarily
on the east coast of the United States, and any adverse weather event or natural disaster, such as a hurricane or heavy snow
storm, could have a material adverse effect on a substantial portion of our operations. Such natural disasters or other incidents
could result in, among other things, physical damage to one or more of our properties; the temporary closure of one or more of
our clubs, Company-operated or contracted distribution centers or our home office facility; the temporary lack of an adequate
work force in a market; a temporary or long-term disruption in merchandise distribution, including issues with the transport of
goods to or from overseas; the temporary reduction in the availability of products in our clubs and on-line or a reduction in
demand for certain of our products, each of which could have a negative adverse effect on our business, financial condition,
cash flows and results of operations.
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Disruptions in our merchandise distribution, including disruption through a third-party perishables consolidator, could
adversely affect sales and member satisfaction.
We depend on the orderly operation of our merchandise receiving and distribution process, primarily through our
Company-operated and contracted distribution centers. Although we believe that our receiving and distribution process is
efficient, unforeseen disruptions in operations due to fires, tornadoes, hurricanes, earthquakes or other catastrophic events, labor
issues or other shipping problems (which may include, but are not limited to, strikes, slowdowns or work stoppages at the ports
of entry for the merchandise that we import) may result in delays in the delivery of merchandise to our clubs, which could
adversely affect sales and the satisfaction of our members. In addition, increases in distribution costs (including, but not limited
to, trucking and freight costs) could adversely affect our expenses, which could adversely affect our operating profit and results
of operations.
One third-party distributor currently consolidates a substantial majority of our perishables for shipment to our clubs.
While we believe that such a consolidation is in our best interest overall, any disruption in the operations of this distributor
could materially impact our sales and profitability. In addition, a prolonged disruption in the operations of this distributor could
require us to seek alternative perishables distribution arrangements, which may not be on attractive terms and could lead to
delays in the distribution of this merchandise, either of which could have a significant and material adverse effect on our
business, results of operations and financial condition. We have entered into an agreement to acquire four distribution centers
and related private transportation fleet from Burris Logistics. The transaction, which is expected to close in the second quarter
of fiscal year 2022, is expected to bring end-to-end perishable supply chain in-house. However, there is no assurance that the
transaction will be completed on the time frame or the terms that we expect or that, following the closing of the transaction, we
will not experience disruption to our logistics processes that could materially impact sales and profitability for the near term
while we are integrating the assets into our operations.
We may not timely identify or respond effectively to consumer trends, which could negatively affect our relationship with
our members, the demand for our products and services and our market share.
It is difficult to predict consistently and successfully the products and services our members will demand over time. Our
success depends, in part, on our ability to identify and respond to evolving trends in demographics and member preferences.
Failure to timely identify or respond effectively to changing consumer tastes, preferences (including those relating to
environmental, social and governance issues) and spending patterns could lead us to offer our members a mix of products or a
level of pricing that they do not find attractive. This could negatively affect our relationship with our members, leading them to
reduce both their visits to our clubs and the amount they spend, and potentially impacting their decision to renew their
membership. Such a result would adversely affect the demand for our products and services and our market share. If we are not
successful at predicting our sales trends and adjusting accordingly, we may also have excess inventory, which could result in
additional markdowns and reduce our operating performance. This could have an adverse effect on margins and operating
income.
We are subject to payment-related risks, including risks to the security of payment card information.
We accept payments using an increasing variety of methods, including cash, checks, our co-branded credit cards and a
variety of other credit and debit cards, as well as Paypal, Apple Pay®, Google Pay, EBT payments and Buy Now, Pay Later
financed through Citizens Pay™. Our efficient operation, like that of most retailers, requires the transmission of information
permitting cashless payments. As we offer new payment options to our members, we may be subject to additional rules,
regulations and compliance requirements, along with the risk of higher fraud losses. For certain payment methods, we pay
interchange and other related card acceptance fees, along with additional transaction processing fees. We rely on third parties to
provide secure and reliable payment transaction processing services, including the processing of credit and debit cards, and our
co-branded credit card, and it could disrupt our business if these companies become unwilling or unable to provide these
services to us. We are also subject to payment card association and network operating rules, including data security rules,
certification requirements and rules governing electronic funds transfers, which could change over time. For example, we are
subject to Payment Card Industry Data Security Standards, which contain stringent compliance guidelines and standards with
regard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder
data. We are also subject to a consent decree entered by the FTC in 2005 in connection with a complaint alleging that we had
failed to adequately safeguard members’ personal data. Under the consent decree, we are required to maintain a comprehensive
information security program that is reasonably designed to protect the security, confidentiality and integrity of personal
information collected from or about our members. In addition, if our third-party processor systems are breached or
compromised, we may be subject to substantial fines, remediation costs, litigation and higher transaction fees and lose our
ability to accept credit or debit card payments from our members, and our reputation, business and operating results could also
be materially adversely affected.
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Our security measures have been breached in the past and may be undermined in the future due to the actions of outside
parties, including nation-state sponsored actors, team member error, internal or external malfeasance, or otherwise, and, as a
result, an unauthorized party may obtain access to our data systems and misappropriate, alter, or destroy business and personal
information, including payment card information. Such information may also be placed at risk through our use of outside
vendors, which may have data security systems that differ from those that we maintain or which are more vulnerable to breach.
For example, in March 2018, our travel vendor informed us that the personal data of several hundred of our members had been
compromised because of a data breach at Orbitz, which that vendor used as a platform for making online travel bookings.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently
and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques, discover or counter them
in a timely fashion, or implement adequate preventative measures. Any such breach or unauthorized access could result in
significant legal and financial exposure, damage to our reputation and harm to our relationship with our members, any of which
could have an adverse effect on our business.
We rely extensively on information technology to process transactions, compile results and manage our businesses. Failure
or disruption of our primary and back-up systems could adversely affect our businesses.
Given the very high volume of transactions we process each year, it is important that we maintain uninterrupted operation
of our business-critical computer systems. Our systems, including our back-up systems, are subject to damage or interruption
from power outages, computer and telecommunications failures, computer viruses, internal or external security breaches,
including tampering with hardware and breaches of our transaction processing or other systems that could result in the
compromise of confidential customer or team member data, ransomware or other malware attacks, catastrophic events such as
fires, earthquakes, tornadoes and hurricanes and errors by our team members. Phishing attacks have emerged as particularly
pervasive, including as a means for ransomware attacks, which have increased in both frequency and breadth. If our systems are
damaged or cease to function properly, we may have to make significant investments to fix or replace them, and we may suffer
serious interruptions in our operations, which might not be short-lived, in the interim. Any material interruption to these
systems could have a material adverse effect on our business and results of operations. In addition, the cost of securing our
systems against failure or attack is considerable, and increases in these costs, particularly in the wake of a breach or failure,
could be material.
Union attempts to organize our team members could disrupt our business.
In the past, unions have attempted to organize our team members at certain of our clubs and distribution centers. Our
management and team members may be required to devote their time to respond to union activities, which could be distracting
to our operations. Future union activities, including organizing efforts, slow-downs or work stoppages could negatively impact
our business and results of operations. Changes in labor laws or regulations that promote union activity could also adversely
impact our business.
Our comparable club sales and quarterly operating results may fluctuate significantly.
Our comparable club sales may be adversely affected for many reasons, including new club openings by our competitors,
the opening of our own new clubs that may cannibalize existing club sales, cycling against strong sales in the prior year, by new
clubs entering our comparable club base and by price reductions in response to competition.
Our quarterly operating results may be adversely affected by a number of factors including losses in new clubs, price
changes in response to competitors’ prices, increases in operating costs, volatility in gasoline, energy and commodity prices,
increasing penetration of sales of our private label brands (Wellsley Farms® and Berkley Jensen®), federal budgetary and tax
policies, weather conditions, including natural disasters, local economic conditions and the timing of new club openings and
related start-up costs.
Changes in our product mix or in our revenues from gasoline sales could negatively impact our revenue and results of
operations.
Certain of our key performance indicators, including net sales, operating income and comparable club sales, could be
negatively impacted by changes to our product mix or in the price of gasoline. For example, we continue to add private label
products to our assortment of product offerings at our clubs, sold under our Wellsley Farms® and Berkley Jensen® private
labels. We generally price these private label products lower than the manufacturer branded products of comparable quality that
we also offer. Accordingly, a shift in our sales mix in which we sell more units of our private label products and fewer units of
our manufacturer branded products would have an adverse impact on our overall net sales. Also, as we continue to add gas
stations to our club base and increase our sales of gasoline, our profit margins could be adversely affected. Since gasoline
generates lower profit margins than the remainder of our business, we could expect to see our overall gross profit margin rates
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decline as sales of gasoline increase. In addition, gasoline prices have been historically volatile and may fluctuate widely due to
changes in domestic and international supply and demand. Accordingly, significant changes in gasoline prices may
substantially affect our net sales notwithstanding that the profit margin and unit sales for gasoline are largely unchanged, and
this effect may increase as gasoline sales make up a larger portion of our revenue.
Research analysts and shareholders may recognize and react to the foregoing changes to our key performance indicators
and believe that they indicate a decline in our performance, and this could occur regardless of whether or not the underlying
cause has an adverse impact on our profitability. If we suffer an adverse change to our key performance indicators, this could
adversely affect the trading price of our common stock.
Product recalls could adversely affect our sales and results of operations.
If our merchandise offerings, including food and general merchandise products, do not meet applicable safety standards or
our members’ expectations regarding safety, we could experience lost sales and increased costs and be exposed to legal and
reputational risk. The sale of these items involves the risk of health-related illness or injury to our members. Such illnesses or
injuries could result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of
foreign objects, substances, chemicals, other agents, or residues introduced during the growing, manufacturing, storage,
handling and transportation phases, or faulty design. We are dependent on our vendors, including vendors located outside the
United States, to ensure that the products we buy comply with all relevant safety standards. While all our vendors must comply
with applicable product safety laws, it is possible that a vendor will fail to comply with these laws or otherwise fail to ensure
the safety of its products. Further, while our vendors generally must agree to indemnify us in the case of loss, it is possible that
a vendor will fail to fulfill that obligation.
If a recall does occur, we have procedures in place to notify our clubs and, if appropriate, the members who have
purchased the goods in question. We determine the appropriateness of a recall on a case-by-case basis, based, in part, on the
size of the recall, the severity of the potential impact to a member and our ability to contact the purchasers of the products in
question. While we are subject to governmental inspections and regulations, and work to comply in all material respects with
applicable laws and regulations, it is possible that consumption or use of our products could cause a health-related illness or
injury in the future and that we will be subject to claims, lawsuits or government investigations relating to such matters. This
could result in costly product recalls and other liabilities that could adversely affect our business and results of operations. Even
if a product liability claim is unsuccessful or is not fully pursued, negative publicity could adversely affect our reputation with
existing and potential members, as well as our corporate and brand image, including that of our Wellsley Farms® and Berkley
Jensen® private labels, and could have long-term adverse effects on our business.
If we do not successfully maintain a relevant omnichannel experience for our members, our results of operations could be
adversely impacted.
Omnichannel retailing is rapidly evolving, and we must keep pace with changing member expectations and new
developments by our competitors. Our members are increasingly using mobile phones, tablets and other devices to shop and to
interact with us through social media. We continue to make technology investments in our website and mobile application. If
we are unable to make, improve or develop relevant member-facing technology in a timely manner, our ability to compete and
our results of operations could be adversely affected.
We depend on the financial performance of our operations in the New York metropolitan area.
Our financial and operational performance is dependent on our operations in the New York metropolitan area, which
accounted for 23% of net sales in fiscal year 2021. The New York metropolitan area is the city and suburbs of New York City,
which includes Long Island and the Mid- and Lower Hudson Valley in the state of New York. It also includes north and
central New Jersey, three counties in western Connecticut and five counties in northeastern Pennsylvania. We consider 43 of
our clubs to be located in the New York metropolitan area. Any substantial slowing or sustained decline in these operations
could materially adversely affect our business and financial results. Declines in financial performance of our operations in the
New York metropolitan area could arise from, among other things, slower growth or declines in our comparable club sales;
negative trends in operating expenses, including increased labor, healthcare and energy costs; failing to meet targets for club
openings; cannibalization of existing locations by new clubs; shifts in sales mix toward lower gross margin products; changes
or uncertainties in economic conditions in this market, including higher levels of unemployment, depressed home values and
natural disasters; regional economic problems; changes in local regulations; terrorist attacks; and failure to consistently provide
a high quality and well-assorted mix of products to retain our existing member base and attract new members.
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Our growth strategy to open new clubs involves risks.
Our long-term sales and income growth are dependent, to a certain degree, on our ability to open new clubs and gasoline
stations in both existing markets and new markets. Opening new clubs is expensive and involves substantial risks that may
prevent us from receiving an appropriate return on that investment. We may not be successful in opening new clubs and
gasoline stations on the schedule we have planned or at all, and the clubs and gasoline stations we open may not be successful.
Our expansion is dependent on finding suitable locations, which may be affected by local regulations, political opposition,
construction and development costs, and competition from other retailers for particular sites. If prospective landlords find it
difficult to obtain credit, we may need to own more new clubs rather than lease them. Owned locations require more initial
capital than leased locations and therefore, the need to own new locations could constrain our growth. If we are able to secure
new sites and open new locations, these locations may not be profitable for many reasons. For example, we may not be able to
hire, train and retain a suitable work force to staff these locations or to integrate new clubs successfully into our existing
infrastructure, either of which could prevent us from operating the clubs in a profitable manner. In addition, entry into new
markets may bring us into competition with new or existing competitors with a stronger, more well-established market
presence. We may also improperly judge the suitability of a particular site. Any of these factors could cause a site to lose money
or otherwise fail to provide an adequate return on investment. If we fail to open new clubs as quickly as we have planned, our
growth will suffer. If we open sites that we do not or cannot operate profitably, then our financial condition and results from
operations could suffer.
Because we compete to a substantial degree on price, changes affecting the market prices of the goods we sell could
adversely affect our net sales and operating profit.
It is an important part of our business plan that we offer value to our members, including offering prices that are
substantially below certain of our competitors. Accordingly, we carefully monitor the market prices of the goods we sell in
order to maintain our pricing advantage. If our competitors substantially lower their prices, we would be forced to lower our
prices, which could adversely impact our margins and results of operations. In addition, the market price of the goods we sell
can be influenced by general economic conditions. For example, if we experience a general deflation in the prices of the goods
we sell, this would reduce our net sales and potentially adversely affect our operating income.
Any harm to the reputation of our private label brands could have a material adverse effect on our results of operations.
We sell many products under our private label brands, Wellsley Farms® and Berkley Jensen®. Maintaining consistent
product quality, competitive pricing and availability of these products is essential to developing and maintaining member
loyalty to these brands. These products generally carry higher margins than manufacturer branded products of comparable
quality carried in our clubs and represent a growing portion of our overall sales. If our private label brands experience a loss of
member acceptance or confidence, our net sales and operating results could be adversely affected.
We may not be able to protect our intellectual property adequately, which, in turn, could harm the value of our brand and
adversely affect our business.
We rely on our proprietary intellectual property, including trademarks, to market, promote and sell our products in our
clubs. Our ability to implement our business plan successfully depends in part on our ability to build further brand recognition
using our trademarks, service marks, proprietary products and other intellectual property, including our name and logos and the
unique character and atmosphere of our clubs. We monitor and protect against activities that might infringe, dilute or otherwise
violate our trademarks and other intellectual property, and rely on trademark and other laws of the United States.
We may be unable to prevent third parties from using our intellectual property without our authorization. To the extent we
cannot protect our intellectual property, unauthorized use and misuse of our intellectual property could harm our competitive
position and have a material adverse effect on our financial condition, cash flows or results of operations. Additionally,
adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets or other
intellectual property.
Additionally, we cannot be certain that we do not, or will not in the future, infringe on the intellectual property rights of
third parties. From time to time, we have been subject to claims of third parties that we have infringed upon their intellectual
property rights and we face the risk of such claims in the future. Even if we are successful in these proceedings, any intellectual
property infringement claims against us could be costly, time-consuming and harmful to our reputation, and could divert the
time and attention of our management and other personnel, or result in injunctive or other equitable relief that may require us to
make changes to our business, any of which could have a material adverse effect on our financial condition, cash flows or
results of operations. With respect to any third-party intellectual property that we use or wish to use in our business (whether or
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not asserted against us in litigation), we may not be able to enter into licensing or other arrangements with the owner of such
intellectual property at a reasonable cost or on reasonable terms.
Our business is moderately seasonal and weak performance during one of our historically strong seasonal periods could
have a material adverse effect on our operating results for the entire fiscal year.
Our business is moderately seasonal, with a meaningful portion of our sales dedicated to seasonal and holiday
merchandise, resulting in the realization of higher portions of net sales, operating income and cash flows in the second and
fourth fiscal quarters. Due to the importance of our peak sales periods, which include the spring and year-end holiday seasons,
the second and fourth fiscal quarters have historically contributed, and are expected to continue to contribute, significantly to
our operating results for the entire fiscal year. In anticipation of seasonal increases in sales activity during these periods, we
incur significant additional expense prior to and during our peak seasonal periods, which we may finance with additional short-
term borrowings. These expenses may include the acquisition of additional inventory, seasonal staffing needs and other similar
items. As a result, any factors negatively affecting us during these periods, including adverse weather and unfavorable
economic conditions, could have a material adverse effect on our results of operations for the entire fiscal year.
Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated
benefits.
As our business grows, we continue to make significant technology investments both in our operations and in our
administrative functions. The costs, potential problems and interruptions associated with the implementation of technology
initiatives could disrupt or reduce the efficiency of our operations in the near term. They may also require us to divert resources
from our core business to ensure that implementation is successful. In addition, new or upgraded technology might not provide
the anticipated benefits, in part because it might take longer than expected to realize the anticipated benefits, it may cost more
than anticipated, and the technology might fail.
Inventory shrinkage could have a material adverse effect on our business, financial condition and results of operations.
We are subject to the risk of inventory loss and theft. Our inventory shrinkage rates have not been material, or fluctuated
significantly in recent years, although it is possible that rates of inventory loss and theft in the future will exceed our estimates
and that our measures will be ineffective in reducing our inventory shrinkage. Although some level of inventory shrinkage is an
unavoidable cost of doing business, if we experience higher rates of inventory shrinkage or incur increased security costs to
combat inventory theft, for example as a result of increased use of self-checkout technologies, it could have a material adverse
effect on our business, results of operations and financial condition.
We are subject to risks associated with leasing substantial amounts of space.
We lease most of our retail properties, each of our three company-operated distribution centers and our home office. The
profitability of our business is dependent on operating our current club base with favorable margins, opening and operating new
clubs at a reasonable profit, renewing leases for clubs in desirable locations and, if necessary, identifying and closing
underperforming clubs. We enter leases for a significant number of our club locations for varying terms. Typically, a large
portion of a club’s operating expense is the cost associated with leasing the location.
We are typically responsible for taxes, utilities, insurance, repairs and maintenance for our leased retail properties. Our net
lease cost for fiscal years 2021, 2020 and 2019 totaled $340.3 million, $331.8 million and $326.1 million, respectively. Our
future minimum rental commitments for all operating leases in existence as of January 29, 2022 was $337.5 million for fiscal
year 2022 and a total of $3.1 billion in aggregate for fiscal years 2023 through 2042. We expect that many of the new clubs we
open will also be leased to us under operating leases, which will further increase our operating lease expenditures and require
significant capital expenditures. We depend on cash flows from operations to pay our lease expenses and to fulfill our other
cash needs. If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not
otherwise available to us from borrowings under our senior secured asset based revolving credit and term facility (the "ABL
Facility") or other sources, we may not be able to service our lease expenses or fund our other liquidity and capital needs, which
would materially affect our business.
The operating leases for our retail properties, distribution centers and corporate office expire at various dates through
fiscal year 2042. Several leases have renewal options for various periods of time at our discretion. When leases for our clubs
with ongoing operations expire, we may be unable to negotiate renewals, either on commercially acceptable terms, or at all.
Further, if we attempt to relocate a club for which the lease has expired, we may be unable to find a new location for that club
on commercially acceptable terms or at all, and the relocation of a club might not be successful for other reasons. Any of these
factors could cause us to close clubs in desirable locations, which could have an adverse impact on our results of operations.
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Over time, current club locations may not continue to be desirable because of changes in demographics within the
surrounding area or a decline in shopping traffic, including traffic generated by other nearby clubs. We may not be able to
terminate a particular lease if or when we would like to do so. If we decide to close clubs, we are generally required to continue
to pay rent and operating expenses for the balance of the lease term, which could be expensive. Even if we are able to assign or
sublease vacated locations where our lease cannot be terminated, we may remain liable on the lease obligations if the assignee
or sublessee does not perform.
Non-compliance with privacy and information security laws, especially as it relates to maintaining the security of member-
related personal information, may damage our business and reputation with members, or result in our incurring substantial
additional costs and becoming subject to litigation.
The collection, use and processing of individually identifiable data, including personal health information, by our business
is regulated at the federal and state levels. New privacy and information security laws and regulations continue to be passed or
proposed and interpretations of existing laws change. As such, compliance with them may result in cost increases due to
necessary system changes and the development of new administrative processes and may add additional complexity to our
operations, require additional investment of resources in compliance programs, impact our business strategies and the
availability of previously useful data and could result in increased compliance costs and/or changes in business practices and
policies, as well as increase the risk of potential liability. If we fail to comply with these laws and regulations or experience a
data security breach, our reputation could be damaged, possibly resulting in lost future business, and we could be subjected to
additional legal or financial risk, including the imposition of fines or other penalties, as a result of non-compliance.
As most retailers and wholesale club operators do, we and certain of our service providers receive certain individually
identifiable information, including personal health information, about our members. In addition, our online operations at
bjs.com depend upon the secure transmission of confidential information over public networks. A compromise of our security
systems or those of some of our business partners that results in our members’ personal information being obtained by
unauthorized persons could adversely affect our reputation with our members and others, as well as our operations, results of
operations, financial condition and liquidity, and could result in litigation against us or the imposition of penalties. In addition, a
security breach could require that we expend significant additional resources related to the security of information systems and
could result in a disruption of our operations.
Federal, state, regional and local laws and regulations relating to the cleanup, investigation, use, storage, discharge and
disposal of hazardous materials, hazardous and non-hazardous wastes and other environmental matters could adversely
impact our business, financial condition and results of operations.
We are subject to a wide variety of federal, state, regional and local laws and regulations relating to the use, storage,
discharge and disposal of hazardous materials, hazardous and non-hazardous wastes and other environmental matters. Failure to
comply with these laws could result in harm to our members, team members or others; significant costs to satisfy environmental
compliance, remediation or compensatory requirements, private party claims; or the imposition of severe penalties or
restrictions on operations by governmental agencies or courts, all of which could adversely affect our business, financial
condition, cash flows and results of operations. In addition, the risk of substantial costs and liabilities, including for the
investigation and remediation of past or present contamination at our current or former properties (whether or not caused by us),
are inherent in our operations, particularly with respect to our gasoline stations. There can be no assurance that substantial costs
and liabilities for an investigation and remediation of contamination will not be incurred.
Our e-commerce business faces distinct risks, and our failure to successfully manage it could have a negative impact on our
profitability.
As our e-commerce business grows, we increasingly encounter the risks and difficulties that internet-based businesses
face. The successful operation of our e-commerce business, and our ability to provide a positive shopping experience that will
generate orders and drive subsequent visits depend on efficient and uninterrupted operation of our order-taking and fulfillment
operations. Risks associated with our e-commerce business include, but are not limited to: uncertainties associated with our
website, including changes in required technology interfaces, website downtime and other technical failures, costs and technical
issues as we upgrade our website software, inadequate system capacity, computer viruses, human error, security breaches;
disruptions in telecommunications service or power outages; reliance on third parties for computer hardware and software and
delivery of merchandise to our customers; rapid changes in technology; credit or debit card fraud and other payment processing
related issues; changes in applicable federal and state regulations; liability for online content; cybersecurity and consumer
privacy concerns and regulation.
Problems in any of these areas could result in a reduction in sales; increased costs; sanctions or penalties; and damage to
our reputation and brands. Personal information from our members may also be placed at risk through our use of outside
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vendors, which may have data security systems that differ from those that we maintain or are more vulnerable to breach. For
example, in March 2018, our travel vendor informed us that the personal data of several hundred of our members had been
compromised because of a data breach at Orbitz, which that vendor used as a platform for making online travel bookings.
Further, if we invest substantial amounts in developing our e-commerce capabilities, these factors or others could prevent those
investments from being effective.
In addition, we must keep up-to-date with competitive technology trends, including the use of new or improved
technology, which may increase our costs and which may not increase sales or attract customers. If we are unable to allow real-
time and accurate visibility into product availability when customers are ready to purchase, fulfill our customers’ orders quickly
and efficiently use the fulfillment and payment methods they demand, provide a convenient and consistent experience for our
customers regardless of the ultimate sales channel or manage our online sales effectively, our ability to compete and our results
of operations could be adversely affected.
Furthermore, if our e-commerce business successfully grows, it may do so in part by attracting existing customers, rather
than new customers, who choose to purchase products from us online rather than from our physical locations, thereby detracting
from the financial performance of our clubs.
We are subject to a number of risks because we import some of our merchandise.
We imported approximately 4% of our merchandise directly from foreign countries such as China, Vietnam, Bangladesh
and India during fiscal year 2021. In addition, many of our domestic vendors purchase a portion of their products from foreign
sources.
Foreign sourcing subjects us to a number of risks generally associated with doing business abroad, including lead times,
labor issues, shipping and freight constraints, product and raw material issues, political and economic conditions, government
policies, tariffs and restrictions, epidemics and natural disasters.
If any of these or other factors were to cause supply disruptions or delays, our inventory levels may be reduced or the cost
of our products may increase unless and until alternative supply arrangements could be made. We may have limited advance
warning of such a disruption, which could impair our ability to purchase merchandise from alternative sources, or alternative
sources might not be available. Merchandise purchased from alternative sources may be of lesser quality or more expensive
than the merchandise we currently purchase abroad. Any shortages of merchandise (especially seasonal and holiday
merchandise), even if temporary, could result in missed opportunities, reducing our sales and profitability. It could also result in
our customers seeking and obtaining the products in question from our competitors.
In addition, reductions in the value of the U.S. dollar or increases in the value of foreign currencies could ultimately
increase the prices that we pay for our products. We have not hedged our currency risk in the past and do not currently
anticipate doing so in the future. All of our products manufactured overseas and imported into the United States are subject to
duties collected by U.S. Customs and Border Protection. Increases in these duties would increase the prices we pay for these
products, and we may not be able to fully recapture these costs in our pricing to customers. Further, we may be subjected to
additional tariffs or penalties if we or our suppliers are found to be in violation of U.S. laws and regulations applicable to the
importation of our products (including, but not limited to, prohibitions against entering merchandise by means of material
negligently-made false statements or omissions). To the extent that any foreign manufacturers from whom we purchase
products directly or indirectly employ business practices that vary from those commonly accepted in the United States, we
could be hurt by any resulting negative publicity or, in some cases, potential claims of liability.
Because of our international sourcing, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices
Act and similar worldwide anti-bribery and anti-kickback laws.
We sourced approximately 4% of our merchandise abroad during fiscal year 2021. The U.S. Foreign Corrupt Practices
Act and other similar laws and regulations generally prohibit companies and their intermediaries from making improper
payments to non-U.S. officials for the purpose of obtaining or retaining business. While our policies mandate compliance with
these anti-bribery laws, we cannot ensure that we will be successful in preventing our team members or other agents from
taking actions in violation of these laws or regulations. Such violations, or allegations of such violations, could disrupt our
business and result in a material adverse effect on our financial condition, cash flows and results of operations.
Factors associated with climate change could adversely affect our business.
We use natural gas, diesel fuel, gasoline and electricity in our distribution and sale operations. Increased government
regulations to limit carbon dioxide and other greenhouse gas emissions may result in increased compliance costs and legislation
24
or regulation affecting energy inputs, which could materially affect our profitability. Climate change could affect our ability to
procure needed commodities at costs and in the quantities that we currently experience. We also sell a substantial amount of
gasoline, the demand for which could be impacted by concerns about climate change and which could face increased regulation
Additionally, climate change may be associated with extreme weather conditions, such as more intense hurricanes,
thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex
accounting matters could significantly affect our financial condition and results of operations.
We apply accounting principles and related pronouncements, implementation guidelines and interpretations to a wide
range of matters that are relevant to our business, including, but not limited to self-insurance reserves, are highly complex and
involve subjective assumptions, estimates and judgments by our management. Changes in these rules or their interpretation or
changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or
expected financial performance.
Provisions for losses related to self-insured risks are generally based upon independent actuarially determined estimates.
The assumptions underlying the ultimate costs of existing claim losses can be highly unpredictable, which can affect the
liability recorded for such claims. For example, variability in health care cost inflation rates inherent in these claims can affect
the amounts recognized. Similarly, changes in legal trends and interpretations, as well as changes in the nature and method of
how claims are settled can impact ultimate costs. Although our estimates of liabilities incurred do not anticipate significant
changes from historical trends for these variables, any changes could have a considerable effect upon future claim costs and
currently recorded liabilities and could materially impact our consolidated financial statements.
Goodwill and identifiable intangible assets represent a significant portion of our total assets, and any impairment of these
assets could adversely affect our results of operations.
Our goodwill and indefinite-lived intangible assets, which consist of goodwill and our trade name, represented a
significant portion of our total assets as of January 29, 2022. Accounting rules require the evaluation of our goodwill and
indefinite-lived intangible assets for impairment at least annually, or more frequently when events or changes in circumstances
indicate that the carrying value of such assets may not be recoverable. Such indicators are based on market conditions and the
operational performance of our business.
To test goodwill for impairment, we may initially use a qualitative approach to determine whether conditions exist to
indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If our management
concludes, based on its assessment of relevant events, facts and circumstances, that it is more likely than not that a reporting
unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any
impairment. We may initially also elect to perform a quantitative analysis. We estimate the reporting unit’s fair value by
estimating the future cash flows of the reporting units to which the goodwill relates, and then we discount the future cash flows
at a market-participant-derived weighted-average cost of capital. The estimates of fair value of the reporting unit is based on the
best information available as of the date of the assessment. If the carrying value of the reporting unit exceeds its estimated fair
value, then goodwill is impaired and is written down to the implied fair value amount.
To test our other indefinite-lived asset, our trade name, for impairment, we determine the fair value of our trade name
using the relief-from-royalty method, which estimates the present value of royalty income that could be hypothetically earned
by licensing the brand name to a third party over its remaining useful life. If, in conducting an impairment evaluation, we
determine that the carrying value of an asset exceeded its fair value, we would be required to record a non-cash impairment
charge for the difference between the carrying value and the fair value of the asset.
If a significant amount of our goodwill and identifiable intangible assets was deemed to be impaired, our business,
financial condition and results of operations could be materially adversely affected.
We are a holding company with no operations of our own, and we depend on our subsidiaries for cash.
We are a holding company and do not have any material assets or operations other than ownership of the equity interests
of our subsidiaries. Our operations are conducted almost entirely through our subsidiaries, and our ability to generate cash to
meet our obligations or to pay dividends, if any, is highly dependent on the earnings of, and receipt of funds from, our
subsidiaries through dividends or intercompany loans. The ability of our subsidiaries to generate sufficient cash flow from
operations to allow us and them to make scheduled payments on our debt obligations will depend on their future financial
performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of
our control. We cannot assure our shareholders that the cash flow and earnings of our operating subsidiaries will be adequate
25
for our subsidiaries to service their debt obligations. If our subsidiaries do not generate sufficient cash flow from operations to
satisfy corporate obligations, we may have to undertake alternative financing plans (such as refinancing), restructure debt, sell
assets, reduce or delay capital investments, or seek to raise additional capital. We cannot assure our shareholders that any such
alternative refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of
proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional
financing would be permitted under the terms of our various debt instruments then in effect. Our inability to generate sufficient
cash flow to satisfy our obligations, or to refinance our obligations on commercially reasonable terms, could have a material
adverse effect on our business, financial condition and results of operations.
Furthermore, we and our subsidiaries may incur substantial additional indebtedness in the future that may severely restrict
or prohibit our subsidiaries from making distributions, paying dividends, if any, or making loans to us.
Risks Relating to Our Indebtedness
We face risks related to our indebtedness.
As of January 29, 2022, our total outstanding long-term debt was $748.6 million. Our leverage could expose us to interest
rate risk associated with our variable rate debt and prevent us from meeting our obligations under our ABL Facility and senior
secured first lien term loan facility ("First Lien Term Loan"). Our indebtedness could have important consequences to us,
including: limiting our ability to deduct interest in the taxable period in which it is incurred in light of the Tax Cuts and Jobs
Act and exposing us to the risk of increased interest rates as substantially all of our borrowings are at variable rates.
The occurrence of any one of these events could have an adverse effect on our business, financial condition, results of
operations and ability to satisfy our obligations under our indebtedness.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions
contained in the credit agreements governing our ABL Facility and First Lien Term Loan.
The ABL Facility and First Lien Term Loan impose significant operating and financial restrictions on us and our
subsidiaries that may prevent us from pursuing certain business opportunities and restrict our ability to operate our
business.
The credit agreements governing our ABL Facility and First Lien Term Loan contain covenants that restrict our, and our
subsidiaries’ ability to take various actions, such as: incur or guarantee additional indebtedness or issue certain disqualified or
preferred stock; pay dividends or make other distributions on, or redeem or purchase, any equity interests or make other
restricted payments; make certain acquisitions or investments; create or incur liens; transfer or sell assets; incur restrictions on
the payments of dividends or other distributions from our restricted subsidiaries; alter the business that we conduct; enter into
transactions with affiliates; and consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all
or substantially all of our assets.
The restrictions in the credit agreements governing our ABL Facility and First Lien Term Loan also limit our ability to
plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans and adversely
affect our ability to finance our operations, enter into acquisitions or to engage in other business activities that could be in our
interest.
In addition, our ability to borrow under the ABL Facility is limited by the amount of our borrowing base. Any negative
impact on the elements of our borrowing base, such as accounts receivable and inventory could reduce our borrowing capacity
under the ABL Facility.
We may be unable to generate sufficient cash flow to satisfy our debt service obligations, which could have a material
adverse effect on our business, financial condition and results of operations.
Our ability to make principal and interest payments on and to refinance our indebtedness will depend on our ability to
generate cash in the future and is subject to general economic, financial, competitive, legislative, regulatory, tax and other
factors that are beyond our control. If our business does not generate sufficient cash flow from operations, in the amounts
projected or at all, or if future borrowings are not available to us in amounts sufficient to fund our other liquidity needs, our
business financial condition and results of operations could be materially adversely affected. If we cannot generate sufficient
cash flow from operations to make scheduled principal and interest payments in the future, we may need to refinance all or a
portion of our indebtedness on or before maturity, sell assets, delay capital expenditures or seek additional equity. The terms of
our existing or future debt agreements, including the First Lien Term Loan and the ABL Facility, may also restrict us from
affecting any of these alternatives. Further, changes in the credit and capital markets, including market disruptions and interest
26
rate fluctuations, may increase the cost of financing, make it more difficult to obtain favorable terms, or restrict our access to
these sources of future liquidity. Our ABL Facility is scheduled to mature on August 17, 2023 and our First Lien Facility is
scheduled to mature on February 3, 2024. See "Liquidity and Capital Resources." If we are unable to refinance any of our
indebtedness on commercially reasonable terms or at all or to effect any other action relating to our indebtedness on satisfactory
terms or at all, it could have a material adverse effect on our business, financial condition and results of operations.
The discontinuation of LIBOR and the replacement of LIBOR with an alternative reference rate may adversely affect our
borrowing costs and could impact our business and results of operations.
The LIBOR benchmark has been the subject of national, international and other regulatory guidance and proposals for
reform and replacement, with most LIBOR settings not expected to be published after June 30, 2023. In the U.S., the
Alternative Reference Rates Committee ("AARC"), which was convened by the Federal Reserve Board and the Federal Reserve
Bank of New York, has recommended the Secured Overnight Financing Rate ("SOFR") plus a recommended spread adjustment
as its preferred alternative to USD-LIBOR. There are significant differences between LIBOR and SOFR, including that LIBOR
is an unsecured lending rate while SOFR is a secured rate, and that SOFR is an overnight rate whereas LIBOR reflects term
rates at different maturities.
We have contracts that are indexed to LIBOR, including the credit agreements governing our ABL facility and First Lien
Term Loan and our interest rate swap agreements. We expect that all LIBOR settings relevant to us will cease to be published
or will no longer be representative after June 30, 2023. As a result, any of our LIBOR based borrowings that extend beyond
such date will need to be converted into a replacement rate. Certain risks may arise in connection with transitioning contracts to
SOFR or any other alternative variable rate, including any resulting value transfer that may occur. The value of loans, securities
or derivative instruments tied to LIBOR could also be impacted. For some instruments, the method of transitioning to an
alternative rate may be challenging, as they may require substantial negotiation with each respective counterparty. If a contract
is not transitioned to an alternative variable rate and LIBOR is discontinued, the impact is likely to vary by contract. The
discontinuation of LIBOR will not affect our ability to borrow or maintain already outstanding borrowings or swaps, but if our
contracts indexed to LIBOR, including contracts governing our variable rate debt and our interest rate swaps, are converted to
SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in interest costs that
are higher than if LIBOR remained available. Additionally, although SOFR is the AARC’s recommended replacement rate, it is
also possible that lenders may instead choose alternative replacements that may differ from LIBOR in ways similar to SOFR or
in ways that would result in higher interest costs for us. It is not yet possible to predict the magnitude of LIBOR’s end on our
borrowing costs given the remaining uncertainty about which rates will replace LIBOR.
Risks Relating to Ownership of our Common Stock
The market price of our common stock may fluctuate significantly.
The market price of our common stock depends on various factors that may be unrelated to our operating performance or
prospects. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the
future. A number of factors could negatively affect, or result in fluctuations in, the price or trading volume of our common
stock, including: quarterly variations in our operating results compared to market expectations; changes in the preferences of
our customers; low comparable club sales growth compared to market expectations; delays in the planned openings of new
clubs; the failure of securities analysts to cover the Company or changes in financial estimates by the analysts who cover us, our
competitors or the grocery or retail industries in general and the wholesale club segment in particular; economic, legal and
regulatory factors unrelated to our performance; changes in consumer spending or the housing market; or increased competition
or stock price performance of our competitors.
As a result of these factors, you may not be able to resell your shares at or above the price at which you purchased them.
In addition, our stock price may be volatile. The stock market in general has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of companies like us. Accordingly, these broad
market fluctuations, as well as general economic, political and market conditions, such as recessions or interest rate changes,
may significantly reduce the market price of the common stock, regardless of our operating performance. In the past, following
periods of market volatility, shareholders have instituted securities class action litigation. If we were to become involved in
securities litigation, it could result in substantial costs and divert resources and our management’s attention from other business
concerns, regardless of the outcome of such litigation.
Our ability to raise capital in the future may be limited.
Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise
additional funds through the issuance of new equity securities, debt or a combination of both. Additional financing may not be
available on favorable terms, or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our
27
capital requirements. If we issue new debt securities, the debt holders would have rights senior to common shareholders to
make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our
common stock. If we issue additional equity securities, existing shareholders will experience dilution, and the new equity
securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering
will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or
nature of our future offerings. Thus, our shareholders bear the risk of our future securities offerings reducing the market price of
our common stock and diluting their interest.
We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase program or that our
share repurchase program will enhance long-term shareholder value. Share repurchases could also increase the volatility of
the price of our common stock and could diminish our cash reserves.
The timing and amount of repurchases of shares of our common stock, if any, will depend upon several factors, including
market and business conditions, the trading price of our common stock, our cost of capital and the nature of other investment
opportunities. Our share repurchase program may be limited, suspended or discontinued at any time without prior notice. In
addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase
its volatility. The existence of our share repurchase program could cause our stock price to be higher than it would be in the
absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, our share repurchase
program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future
strategic opportunities and acquisitions. There can be no assurance that any share repurchases will enhance shareholder value
because the market price of our common stock may decline below the levels at which we repurchased shares of stock. Although
our share repurchase program is intended to enhance long-term shareholder value, there is no assurance that it will do so and
short-term stock price fluctuations could reduce the effectiveness of the program. Our share repurchase program may be
suspended or terminated at any time without notice.
If securities or industry analysts do not publish or cease publishing research or reports about us, or if they issue unfavorable
commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
The trading market for our common stock depends in part on the research and reports that third-party securities analysts
publish about us and our industry. One or more analysts could downgrade our common stock or issue other negative
commentary about us or our industry. In addition, we may be unable or slow to attract research coverage. Alternatively, if one
or more of these analysts cease coverage of us, we could lose visibility in the market. As a result of one or more of these
factors, the trading price of our common stock could decline.
Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an
acquisition of us by others, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our
shareholders to replace or remove our current management.
Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as
provisions of the Delaware General Corporation Law (the "DGCL"), could make it more difficult for a third party to acquire us
or increase the cost of acquiring us, even if doing so would benefit our shareholders, including transactions in which
shareholders might otherwise receive a premium for their shares. These provisions include: establishing a classified board of
directors such that not all members of the board are elected at one time; allowing the total number of directors to be determined
exclusively (subject to the rights of holders of any series of preferred stock to elect additional directors) by resolution of our
board of directors and granting to our board of directors the sole power to fill any vacancy on the board; limiting the ability of
shareholders to remove directors without cause; authorizing the issuance of "blank check" preferred stock by our board of
directors, without further shareholder approval, to thwart a takeover attempt; prohibiting shareholder action by written consent
(and, thus, requiring that all shareholder actions be taken at a meeting of our shareholders); eliminating the ability of
shareholders to call a special meeting of shareholders; establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted upon at annual shareholder meetings; requiring the approval of
the holders of at least two-thirds of the voting power of all outstanding stock entitled to vote thereon, voting together as a single
class, to amend or repeal our certificate of incorporation or bylaws; and electing not to be governed by Section 203 of the
DGCL.
These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our
Company. These provisions could also discourage proxy contests and make it more difficult for other shareholders to elect
directors of their choosing and cause us to take corporate actions other than those our shareholders desire.
28
We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.
We are required to comply with Section 404 of the Sarbanes-Oxley Act, which requires management assessments of the
effectiveness of internal control over financial reporting and disclosure controls and procedures. If we are unable to maintain
effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report
financial information accurately and to prepare financial statements within required time periods could be adversely affected,
which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses,
negatively affect investor confidence in our financial statements, restrict access to capital markets and adversely impact our
stock price.
We do not currently expect to pay any cash dividends.
We currently anticipate that we will retain future earnings for the operation and expansion of our business and do not
expect to pay any cash dividends on shares of our common stock in the foreseeable future. We are a holding company, and
substantially all of our operations are carried out by our operating subsidiaries. Any inability on the part of our subsidiaries to
make payments to us could have a material adverse effect on our business, financial condition and results of operations. Under
our ABL Facility and First Lien Term Loan, our operating subsidiaries are significantly restricted in their ability to pay
dividends or otherwise transfer assets to us, and we expect these limitations to continue in the future. Our ability to pay
dividends may also be limited by the terms of any future credit agreement or any future debt or preferred equity securities of
ours or of our subsidiaries. Accordingly, realization of a gain on your investment will depend on the appreciation of the price of
our common stock, which may never occur. Shareholders seeking cash dividends in the foreseeable future should not purchase
our common stock.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the
exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability
to obtain a favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be
the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim
of breach of a fiduciary duty owed to us or our shareholders by any of our directors, officers, employees or agents, (iii) any
action asserting a claim against us arising under any provisions of the DGCL, our amended and restated certificate of
incorporation or our amended and restated bylaws, or (iv) any action asserting a claim against us that is governed by the internal
affairs doctrine. This forum selection provision will not apply to any causes of action arising under the Securities Act of 1933,
as amended, or the Exchange Act. As a shareholder in our Company, you are deemed to have notice of and have consented to
the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum
provision in our amended and restated certificate of incorporation may limit your ability to obtain a favorable judicial forum for
disputes with us.
General Risk Factors
Our success depends on our ability to attract and retain a qualified management team and other team members while
controlling our labor costs.
We are dependent upon several key management and other team members. If we were to lose the services of one or more
of our key team members, this could have a material adverse effect on our operations. Our continued success also depends
upon our ability to attract and retain highly qualified team members to meet our future growth needs while controlling related
labor costs. Our ability to control labor costs is subject to numerous external factors, including healthcare costs and prevailing
wage rates, which may be affected by, among other factors, competitive wage pressure, minimum wage laws and general
economic conditions. If we experience competitive labor markets, either regionally or in general, we may have to increase our
wages in order to attract and retain highly qualified team members, which could increase our selling, general and administrative
expenses ("SG&A") and adversely affect our operating income. We compete with other retail and non-retail businesses for
these employees and invest significant resources in training them. There is no assurance that we will be able to attract or retain
highly qualified team members to operate our business.
Insurance claims could adversely impact our results of operations.
We use a combination of insurance and self-insurance plans to provide for potential liability for workers’ compensation,
general liability, property, fiduciary liability and employee and retiree health care. Liabilities associated with the risk retained
by the Company are estimated based on historical claims experience and other actuarial assumptions believed to be reasonable
29
under the circumstances. Our results of operations could be adversely impacted if actual future occurrences and claims differ
from our assumptions and historical trends.
Certain legal proceedings could adversely impact our results of operations.
We are involved in a number of legal proceedings involving employment issues, personal injury, product liability,
consumer matters, intellectual property claims and other litigation. Certain of these lawsuits, if decided adversely to us or
settled by us, may result in material liability. See the notes to our audited financial statements included elsewhere in this
Annual Report on Form 10-K for additional information. Further, we are unable to predict whether unknown claims may be
brought against us that could become material.
We could be subject to additional income tax liabilities.
We compute our income tax provision based on enacted federal and state tax rates. As tax rates vary among jurisdictions,
a change in earnings attributable to the various jurisdictions in which we operate could result in an unfavorable change in our
overall tax provision. Additionally, changes in the enacted tax rates, adverse outcomes in tax audits, including potential future
transfer pricing disputes, or any change in the pronouncements relating to accounting for income taxes could have a material
adverse effect on our financial condition and results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We operated 226 warehouse club locations as of January 29, 2022, of which 192 are leased under long-term leases and
14 are owned. We own the buildings at the remaining 20 locations, which are subject to long-term ground leases. A listing of
the number of Company locations in each state is shown under Part I. "Item 1. Business."
The Company’s leases require long-term rental payments subject to various adjustments. Generally, the Company is
required to pay insurance, real estate taxes and other operating expenses and, in some cases, additional rentals based on a
percentage of sales in excess of certain thresholds, or other factors. Many of the leases require escalating payments during the
lease term. Rent expense for such leases is recognized on a straight-line basis over the lease term. The initial primary term of
the Company’s operating leases ranges from 5 to 44 years, with most of these leases having an initial term of approximately 20
years. The initial primary term of the Company’s three finance leases is 20 years.
Our home office in Westborough, Massachusetts occupies a total of 282,000 square feet. Our lease expires on January 31,
2026. We will be transitioning to a new home office in Marlborough, Massachusetts in fiscal year 2022.
We operate three cross-dock distribution centers for non-perishable items and also have four perishable item distribution
centers operated by a third party, which are expected to be purchased from Burris Logistics in fiscal year 2022. Our cross-dock
distribution centers are leased under lease agreements expiring between 2031 and 2033, and range between 480,000 and
630,000 square feet in size. The third-party perishable distribution centers range between 114,000 and 264,000 square feet in
size.
We operate another cross-dock distribution center for Business-to-Business ("B2B") transactions, which occupies a total
of 100,000 square feet. Our lease agreement for this center expires in 2029.
See Note 4, "Leases" of our consolidated financial statements included in this Annual Report on Form 10-K for additional
information with respect to our leases.
Item 3. Legal Proceedings
We are subject to various litigation, claims and other proceedings that arise from time to time in the ordinary course of
business. We believe these actions are routine and incidental to the business. While the outcome of these actions cannot be
predicted with certainty, management does not believe that any will have a material adverse impact on our business.
Item 4. Mine Safety Disclosures
Not applicable.
30
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock began trading on the NYSE under the symbol "BJ" on June 28, 2018. As of the end of business
on March 10, 2022, the trading price of our common stock closed at $60.23 per share.
Holders
As of March 10, 2022, there were approximately seven record holders of our common stock. This number does not
include beneficial owners whose shares were held in street name.
Dividends
We do not currently expect to pay any cash dividends on our common stock for the foreseeable future. Instead, we intend
to retain future earnings, if any, for the future operation and expansion of our business and the repayment of debt or repurchase
of common stock. Any determination to pay dividends in the future will be at the discretion of our board of directors and will
depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by
applicable laws and other factors that our board of directors may deem relevant.
Performance Graph
The following graph illustrates a comparison of the total cumulative return on our common stock with the total cumulative
return for (i) the S&P 500 Index and (ii) the S&P 500 Retail Index for the period from June 28, 2018 (the date our common
stock commenced trading on the NYSE) through January 29, 2022. The graph assumes an investment of $100 in our common
31
stock and in each index at market close on June 28, 2018 and the reinvestment of all dividends. The comparisons in the table
are not intended to forecast or be indicative of possible future performance of our common stock.
BJ’s Wholesale Club, Inc.
$
100.00 $
120.32 $
93.27 $
191.23 $
263.32
S&P 500
S&P 500 Retail
100.00
100.00
99.64
95.22
118.75
113.80
136.74
159.89
163.16
168.32
June 28,
2018 (1)
February
2, 2019
February
1, 2020
January
30, 2021
January
29, 2022
(1) The Company commenced trading on June 28, 2018 and is presented as the starting point above.
Issuer Purchases of Equity Securities
Period
October 31, 2021 - November 27, 2021
November 28, 2021 - January 1, 2022
January 2, 2022 - January 29, 2022
Total
Total Number of
Shares (or
Units) Purchased
(3)
Average Price
Paid per Share
(or Unit)
251,160 (3) $
230,000
221,342
702,502
$
61.44
65.75
61.88
62.99
Total Number of
Shares (or
Units) Purchased
as Part of
Publicly
Announced
Programs
Maximum Number
(or
Approximate Dollar
Value) of
Shares (or Units)
that May Be
Purchased Under the
Plans of
Programs (1) (2)
249,625 $
230,000
221,342
700,967 $
500,000,000
484,878,539
471,181,442
471,181,442
(1) On December 19, 2019, the Company’s board of directors authorized the repurchase of up to $250.0 million of the
Company’s outstanding common stock from time to time as market conditions warrant. The share repurchase program
was fully exhausted on November 17, 2021.
32
Performance GraphBJ's Wholesale Club, Inc.S&P 500S&P 500 RetailJune 28, 2018February 2, 2019February 1, 2020January 30, 2021January 29, 2022$0.00$50.00$100.00$150.00$200.00$250.00$300.00
(2) On November 16, 2021, the Company’s board of directors approved a new share repurchase program (the "2021
Repurchase Program"), effective immediately, that allows the Company to repurchase up to $500.0 million of its
outstanding common stock. The 2021 Repurchase Program expires in January 2025.
(3)
Includes 1,535 shares of common stock surrendered to the Company by team members between October 31, 2021 and
November 27, 2021 to satisfy their tax withholding obligations in connection with the vesting of restricted stock
awards. See Note 9 "Stock Incentive Plans" in the Notes to Audited Consolidated Financial Statements included in this
Annual Report on Form 10-K.
Recent Sales of Unregistered Securities
None.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of January 29, 2022, regarding our common stock that may be issued under
the BJ’s Wholesale Club Holdings, Inc. 2018 Incentive Award Plan (the "2018 Incentive Award Plan"), the Fourth Amended
and Restated 2011 Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (f/k/a Beacon Holding Inc.), as amended (the
"2011 Stock Option Plan"), the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (f/k/a Beacon Holding
Inc.), as amended (the "2012 Director Stock Option Plan") and the BJ’s Wholesale Club Holdings, Inc. Employee Stock
Purchase Plan (the "ESPP").
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants, and
Rights
(a)
Weighted-
average
Exercise
Price of
Outstanding
Options,
Warrants, and
Rights
(b)
$
2,754,417 (2)
179,141
46,817
—
15.80 (3)
6.87
3.10
Plan category:
Equity compensation plans approved by shareholders
2018 Incentive Award Plan (1)
2011 Stock Option Plan
2012 Director Stock Option Plan
ESPP (4)
Total equity compensation plans approved by
shareholders
Equity compensation plans not approved by shareholders
Total equity compensation plans approved and not
approved by shareholders
2,980,375
—
2,980,375
Number of
Securities
Remaining
Available for
Future Issuance
Under
Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a))
(c)
5,544,648
—
—
1,641,858 (5)
7,186,506
—
7,186,506
(1)
(2)
In connection with our IPO, we adopted the 2018 Incentive Award Plan and will not make future grants or awards
under the 2011 Stock Option Plan or the 2012 Director Stock Option Plan. The shares available for grant under the
2018 Incentive Award Plan includes 985,369 shares of common stock that, as of July 2, 2018, remained available for
issuance, collectively, under the 2011 Stock Option Plan and the 2012 Director Stock Option Plan.
Includes (i) 25,624 shares of common stock issuable pursuant to restricted stock units outstanding, (ii)
2,055,613 shares of common stock issuable upon the exercise of outstanding options, and (iii) 673,180 shares of
common stock issuable pursuant to performance stock units as of January 29, 2022.
(3) Because there is no exercise price associated with the restricted stock units and performance stock units, such units are
not included in the weighted-average exercise price calculation.
(4) Does not include purchase rights accruing under the ESPP because the purchase price (and therefore the number of
shares to be purchased) will not be determined until the end of the purchase period.
33
(5) The aggregate number of shares of common stock reserved for issuance under our ESPP is equal to the sum of (i)
973,014 shares and (ii) an annual increase on the first day of each calendar year beginning in 2019 and ending in 2028
equal to the lesser of (A) 486,507 shares, (B) 0.5% of the shares outstanding (on an as converted basis) on the last day
of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of
directors.
Item 6. Reserved
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to promote understanding of the results of operations and financial
condition of the Company and MD&A is provided as a supplement to, and should be read in conjunction with, our audited
consolidated financial statements and related notes thereto included in Item 8 in this Annual Report on Form 10-K. The
following discussion contains forward-looking statements that reflect our plans, estimates and assumptions. Our actual results
could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are
discussed in "Item 1A. Risk Factors".
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of January.
Accordingly, references herein to "fiscal year 2022", "fiscal year 2021" and "fiscal year 2020" relate to the 52 weeks
ended January 28, 2023, January 29, 2022 and January 30, 2021, respectively.
Overview
BJ’s Wholesale Club is a leading warehouse club operator concentrated primarily on the east coast of the United States.
We deliver significant value to our members, consistently offering 25% or more savings on a representative basket of
manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on
perishable products, continuously refreshed general merchandise, gasoline and other ancillary services to deliver a
differentiated shopping experience that is further enhanced by our omnichannel capabilities.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 226 large-format,
high volume warehouse clubs spanning 17 states. In our core New England markets, which have high population density and
generate a disproportionate part of U.S. GDP, we operate almost three times the number of clubs compared to the next largest
warehouse club competitor. In addition to shopping in our clubs, members are able to shop when and how they want through
our website, bjs.com, and our highly rated mobile app, which allows them to use our BOPIC service, curbside delivery, same
day home delivery or traditional ship-to-home service.
Our leadership team continues to implement significant cultural and operational changes to our business, including
transforming how we use data to improve member experience, instilling a culture of cost discipline, adopting a more proactive
approach to growing our membership base and building an omnichannel offering oriented towards making shopping at BJ’s
more convenient. These changes continue to deliver results rapidly, evidenced by year-over-year income from continuing
operations growth, consecutive quarter comparable club sales growth over the last three years and adjusted EBITDA growth
over the last three years.
Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We
have more than six million members paying annual fees to gain access to savings on groceries and general merchandise and
services. The annual membership fee for our Inner Circle® membership is $55, and the annual membership fee for our BJ’s
Perks Rewards® membership, which offers additional value-enhancing features, is $110. We believe that members can save
over ten times their $55 Inner Circle membership fee versus what they would otherwise pay at traditional supermarket
competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing
significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also
carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label
brands, Wellsley Farms® and Berkley Jensen®, represent over $3.0 billion in annual sales, and are the largest brands we sell in
terms of volume. Our customers recognize the relevance of our value proposition across economic environments, as
demonstrated by over 20 consecutive years of membership fee income growth. Our membership fee income was $360.9 million
for fiscal year 2021.
Our business is moderately seasonal in nature. Historically, our business has generally realized a slightly higher portion of
net sales, operating income and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the
impact of the summer and year-end holiday season, respectively. Our quarterly results have been, and will continue to be,
34
affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, our
financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be
achieved for a full fiscal year.
On January 25, 2022, the Company entered into an agreement to acquire the assets and operations of four distribution
centers and the related private transportation fleet from Burris Logistics, which is expected to bring end-to-end perishable
supply chain in-house. The transaction is expected to close in the second quarter of fiscal year 2022 and the Company expects
to finance the purchase price with a combination of available cash and borrowings under the Company’s revolving credit
facility. However, there is no assurance that the transaction will be completed on the time frame or the terms that we expect or
that, following the closing of the transaction, we will not experience disruption in our logistics processes that could materially
impact sales and profitability for the near term while we integrated the assets into our operations.
Impact of the COVID-19 Pandemic
Despite the ongoing impact and evolution of the COVID-19 pandemic, we have continued to experience strong sales,
growth in membership rates, and acceleration in traffic and ticket. During fiscal year 2021, our grocery division continued to
drive higher sales performance as consumer trends continued with greater at-home food consumption. However, we have
continued to face several operational challenges directly or indirectly related to the pandemic, including supply chain
constraints, inflation, and wage inflation. Refer to "Item 1A. Risk Factors" for additional information.
Effective September 1, 2021, we increased wages for hourly club and warehouse team members. Additionally, we have
continued to invest in health and safety practices, including providing personal protective equipment, enhancing sanitation
measures and implementing social distancing protocols to ensure the safety of our members and team members.
The COVID-19 pandemic is unprecedented and continuously evolving, and the long-term impacts on our financial
condition and results of operations are still uncertain.
Use of Non-GAAP Financial Measures
The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with
generally accepted accounting principles ("GAAP"). In addition to relevant GAAP measures we also provide non-GAAP
measures, including adjusted EBITDA, comparable club sales, free cash flow, adjusted net income and adjusted net income per
diluted share because management believes these metrics are useful to investors and analysts by excluding items that we do not
believe are indicative of our core operating performance. These measures are customary for our industry and commonly used
by competitors. These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any
other performance measure derived in accordance with GAAP and should not be construed as an inference that our future
results will be unaffected by unusual or non-recurring items. In addition, adjusted EBITDA, comparable club sales, free cash
flow, adjusted net income and adjusted net income per diluted share may not be comparable to similarly titled measures used by
other companies in our industry or across different industries.
35
Adjusted EBITDA
Adjusted EBITDA is defined as income from continuing operations before interest expense, net, provision for income
taxes and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation
expense; pre-opening expenses; non-cash rent; strategic consulting; offering costs; club closing and impairment charges;
reduction in force severance; acquisition and integration costs; and other adjustments. The following is a reconciliation of our
income from continuing operations to Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales for the periods
presented:
(In thousands)
Income from continuing operations
Interest expense, net
Provision for income taxes
Depreciation and amortization
Stock-based compensation expense
Pre-opening expenses (1)
Non-cash rent (2)
Acquisition and integration costs (3)
Reduction-in-force severance (4)
Offering costs (5)
Club closing and impairment charges (6)
Strategic consulting (7)
Other adjustments, net (8)
Adjusted EBITDA
Adjusted EBITDA as a percentage of net sales
January 29,
2022
Fiscal Year Ended
January 30,
2021
February 1,
2020
$
$
426,760
59,444
131,119
180,547
53,837
14,902
6,146
3,504
2,300
—
—
—
991
879,550
$
$
421,182
84,385
136,825
167,454
32,150
9,809
4,942
—
—
—
—
—
745
857,492
$
$
187,757
108,230
56,212
157,000
18,796
15,152
8,374
—
3,994
1,928
15,383
11,349
(2,551)
581,624
5.4 %
5.7 %
4.5 %
__________
(1) Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.
(2) Consists of an adjustment to remove the non-cash portion of rent expense, inclusive of incremental rent expense as the
Company transitions from the current home office to a new home office building in fiscal year 2022.
(3) Represents costs related to the anticipated acquisition of assets of Burris Logistics, including due diligence, legal, and
other consulting expenses.
(4) Represents severance charges associated with labor reductions from the realignment of our field operations in fiscal year
2021 and a reduction in workforce announced in January 2020.
(5) Represents costs related to our IPO and the registered offerings by selling shareholders.
(6) Represents primarily closing costs associated with our clubs in Charlotte, N.C. and Geneva, N.Y., which closed in the
fourth quarter of fiscal year 2019.
(7) Represents fees paid to external consultants for strategic initiatives of limited duration.
(8) Other non-cash items, including gains from sale leaseback transactions, non-cash accretion on asset retirement obligations
and obligations associated with our post-retirement medical plan.
Comparable Club Sales and Merchandise Comparable Club Sales
Comparable club sales, also known as same-store sales, includes all clubs that were open for at least 13 months at the
beginning of the period and were in operation during the entirety of both periods being compared, including relocated clubs and
expansions.
Comparable club sales allow us to evaluate how our club base is performing by measuring the change in period-over-
period net sales in clubs that have been open for the applicable period. Various factors affect comparable club sales, including
consumer preferences and trends, product sourcing, promotional offerings and pricing, customer experience and purchase
amounts, weather and holiday shopping period timing and length.
36
Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline
operations for the applicable period. Refer to "Results of Operations" below for further discussion of comparable club sales and
merchandise comparable club sales.
Free Cash Flow
We present free cash flow because we use it to report to our board of directors and we believe it assists investors and
analysts in evaluating our liquidity. Free cash flow should not be considered as an alternative to cash flows from operations as a
liquidity measure. We define free cash flow as net cash provided by operating activities less additions to property and
equipment, net of disposals, plus proceeds from sale leaseback transactions. The following is a reconciliation of our net cash
provided by operating activities to free cash flow for the periods presented:
(In thousands)
Net cash provided by operating activities
Less: Additions to property and equipment, net of disposals
Plus: Proceeds from sale leaseback transactions
Free cash flow
Fiscal Year Ended
January 29, 2022 January 30, 2021 February 1, 2020
$
$
831,655 $
868,546 $
323,591
19,080
218,333
25,893
527,144 $
676,106 $
355,143
196,901
21,606
179,848
Free cash flow continues to be healthy. The decline year-over-year is a result of the timing of net working capital
investments and capital spend in fiscal year 2021 as we opened five new clubs and seven new gas stations.
Adjusted Net Income
The adjusted net income and adjusted net income per diluted share metrics are important measures used by management
to compare the performance of core operating results between periods. We define adjusted net income as net income as reported
adjusted for: stock-based compensation related to acceleration of stock awards; acquisition and integration costs; incremental
home office expenses; loss on cash flow hedge; expenses related to debt payments; severance charges; offering costs; gains on
sale leaseback transactions; club closing and impairment charges; and the tax impact of the foregoing adjustments on net
income. We define adjusted net income per diluted share as adjusted net income divided by the weighted-average diluted shares
outstanding.
We believe adjusted net income and adjusted net income per diluted share are useful metrics to investors and analysts
because they present more accurate year-over-year comparisons for our net income and net income per diluted share because
adjusted items are not the result of our normal operations.
Net income as reported
Adjustments:
Stock-based compensation related to acceleration of stock
awards (1)
Acquisition and integration costs (2)
Incremental home office expense (3)
Loss on cash flow hedge (4)
Charges related to debt payments (5)
Severance charges (6)
Offering costs (7)
Gains on sale leaseback transactions (8)
Club closing and impairment charges (9)
Tax impact of adjustments to net income (10)
Adjusted net income
Weighted-average diluted shares outstanding
Adjusted net income per diluted share (11)
52 Weeks Ended
January 29, 2022
52 Weeks Ended
January 30, 2021
52 Weeks Ended
February 1, 2020
$
426,652 $
421,030 $
187,176
17,494
3,504
552
6,340
657
2,300
—
—
—
(8,641)
448,859 $
138,045
3.25 $
—
—
—
6,926
4,077
—
—
—
—
(3,081)
428,952 $
138,876
3.09 $
—
—
—
—
3,820
3,994
1,928
(2,585)
15,383
(6,311)
203,405
139,109
1.46
$
$
37
(1) Represents accelerated vesting of equity awards, which were related to the passing of a former executive.
(2) Represents costs related to the anticipated acquisition of assets of Burris Logistics, including due diligence, legal, and
other consulting expenses.
(3) Represents incremental rent expense as the Company transitions from the current home office to a new home office
building in fiscal year 2022.
(4) Represents the reclassification into earnings of accumulated other comprehensive income associated with the de-
designation of hedge accounting on one of our swap agreements due to the payment of debt.
(5) Represents the expensing of fees and deferred fees and original issue discount associated with the partial prepayment of
debt.
(6) Represents severance charges associated with labor reductions from the realignment of our field operations in fiscal year
2021 and a reduction in workforce announced in January 2020.
(7) Represents costs related to registered offerings by selling shareholders.
(8) Represents a gain from the sale leaseback of one of our Michigan locations.
(9) Represents primarily closing costs associated with our clubs in Charlotte, N.C. and Geneva, N.Y., which closed in the
fourth quarter of fiscal year 2019.
(10) Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.
(11) Adjusted net income per diluted share is measured using weighted average diluted shares outstanding.
Factors Affecting Our Business
Overall economic trends
The overall economic environment and related changes in consumer behavior have a significant impact on our business.
In general, positive conditions in the broader economy promote customer spending in our clubs, while economic weakness,
which generally results in a reduction of customer spending, may have a different or more extreme effect on spending at our
clubs. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include
employment rates, changes to the Supplemental Nutrition Assistance Program (SNAP), government stimulus programs, tax
legislation, business conditions, changes in the housing market, the availability of credit, interest rates, tax rates and fuel and
energy costs. In addition, unemployment rates and benefits may cause us to experience higher labor costs.
Size and loyalty of membership base
The membership model is a critical element of our business. Members drive our results of operations through their
membership fee income and their purchases. The majority of members renew within six months following their renewal date.
Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to
the reporting date. We have grown our membership fee income each year for the past two decades. Our membership fee income
totaled $360.9 million in fiscal year 2021. Our membership renewal rate, a key indicator of membership engagement,
satisfaction and loyalty, was 89% at the end of fiscal year 2021.
Effective sourcing and distribution of products and consumer demands
Our net sales and gross profit are affected by our ability to purchase our products in sufficient quantities at competitive
prices. Recently, we have experienced challenges in the global supply chain, which we expect to continue for the foreseeable
future. Further, our ability to maintain our appeal to existing customers and attract new customers primarily depends on our
ability to originate, develop and offer a compelling product assortment responsive to customer preferences. As a result, our
level of net sales could be adversely affected due to constraints in our supply chain, including our inability to procure and stock
sufficient quantities of some merchandise in a manner that is able to match market demand from our customers.
Infrastructure investment
Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made
significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe
that strengthening our management team and enhancing our information systems, including our distribution center management
and point-of-sale systems, and investing in hardware and digitally enabled shopping capabilities for convenience, such as
BOPIC and curbside pickup, will enable us to replicate our profitable club format and provide a differentiated shopping
experience. We expect these infrastructure investments to support our successful operating model across our club operations.
38
Gasoline prices
The market price of gasoline impacts our net sales and comparable club sales, and large fluctuations in the price of
gasoline may produce a short-term impact on our margins. Retail gasoline prices are driven by daily crude oil and wholesale
commodity market changes and are volatile, as they are influenced by factors that include changes in demand and supply of oil
and refined products, global geopolitical events, regional market conditions and supply interruptions caused by severe weather
conditions. Typically, the change in crude oil prices impacts the purchase price of wholesale petroleum fuel products, which in
turn impacts retail gasoline prices at the pump. During times when prices are particularly volatile, differences in pricing and
procurement strategies between the Company and its competitors may lead to temporary margin contraction or expansion,
depending on whether prices are rising or falling, and this impact could affect our overall results for a fiscal quarter.
In addition, the relative level of gasoline prices from period to period may lead to differences in our net sales between
those periods. Further, because we generally attempt to maintain a fairly stable gross profit per gallon, this variance in net sales,
which may be substantial, may or may not have a significant impact on our operating income.
Inflation and deflation trends
Our financial results can be directly impacted by substantial increases in product costs due to commodity cost increases or
general inflation, which could lead to a reduction in our sales, as well as greater margin pressure, as costs may not be able to be
passed on to consumers. Changes in commodity prices and general inflation have impacted several categories of our business.
This inflationary pressure is due primarily to supply chain disruptions complicated by the COVID-19 pandemic. In response to
increasing commodity prices or general inflation, we seek to minimize the impact of such events by sourcing our merchandise
from different vendors, changing our product mix or increasing our pricing when necessary.
Results of Operations
Information pertaining to fiscal year 2019 was included in the Company’s Annual Report on Form 10-K for the year
ended January 30, 2021 in Part II, Item 7, "Management’s Discussion and Analysis of Financial Position and Results of
Operations," which was filed with the SEC on March 19, 2021.
The following tables summarize key components of our results of operations for the periods indicated:
Statement of Operations Data (dollars in thousands):
Net sales
Membership fee income
Total revenues
Cost of sales
Selling, general and administrative expenses
Pre-opening expenses
Operating income
Interest expense, net
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Income (loss) from discontinued operations, net of income taxes
Net income
Operational Data:
Total clubs at end of period
Comparable club sales
Merchandise comparable club sales
Adjusted EBITDA
Free cash flow
Membership renewal rate
39
Fiscal Year Ended
January 29,
2022
January 30,
2021
$ 16,306,365
$ 15,096,913
360,937
333,104
16,667,302
15,430,017
13,588,612
12,451,061
2,446,465
2,326,755
14,902
617,323
59,444
557,879
131,119
426,760
9,809
642,392
84,385
558,007
136,825
421,182
(108)
(152)
$
426,652
$
421,030
226
6.5 %
(0.5) %
221
15.9 %
21.3 %
$
879,550
527,144
$
857,492
676,106
89 %
88 %
Fiscal Year 2021 Compared to Fiscal Year 2020
Net Sales
Net sales are derived from direct retail sales to customers in our clubs and online, net of merchandise returns and
discounts. Growth in net sales is impacted by opening new clubs and increases in comparable club sales. Net sales for fiscal
year 2021 were $16.3 billion, an 8.0% increase from net sales reported for fiscal year 2020 of $15.1 billion. The increase was
due primarily to a 6.5% increase in comparable club sales and incremental sales from new clubs opened over the past two
years.
Comparable Club Sales and Merchandise Comparable Club Sales
We believe net sales is an important driver of our profitability, particularly comparable club sales. Comparable sales
growth is a function of increasing shopping frequency from new and existing members and the amount they spend on each visit.
Sales comparisons can be influenced by certain factors that are beyond our control such as changes in the cost of gasoline and
macro-economic factors such as inflation. The higher comparable club sales, the more we can leverage certain of our selling,
general and administrative (SG&A) expenses, reducing them as a percentage of sales and enhancing profitability.
Comparable club sales
Less: Contribution from gasoline sales
Merchandise comparable club sales
Fiscal Year Ended
January 29, 2022
6.5 %
7.0 %
(0.5) %
Merchandise comparable club sales decreased (0.5)% in fiscal year 2021. The decrease was driven by a decrease in sales
of groceries of 1.7% and growth in sales of general merchandise and services of approximately 5.7%.
In grocery, sales decreased as a result of categories impacted by the COVID-19 pandemic and supply chain challenges,
including paper products, cleaning supplies, and dairy. In general merchandise and services, sales were strongest in apparel,
toys, tires and indoor furniture.
Membership fee income
Our membership structure is pinnacle to our business and we continue to see growth in the size and quality of our
membership base, primarily driven by renewals and favorable membership mix. Higher-tier membership penetration has
increased year-over-year. This group consists of our most loyal members with the highest lifetime value.
Membership fee income was $360.9 million in fiscal year 2021, compared to $333.1 million in fiscal year 2020, an
8.4% increase. The growth in membership fee income was due to successful member acquisition efforts, improving our renewal
rate to 89%, increasing higher tier membership penetration and improving the quality of memberships.
Cost of sales
Cost of sales consists primarily of the direct cost of merchandise and gasoline sold at our clubs, including costs associated
with operating our distribution centers, including payroll, payroll benefits, occupancy costs and depreciation; freight expenses
associated with moving merchandise from vendors to our distribution centers and from distribution centers to our clubs, and
vendor allowances, rebates and cash discounts. We continue to experience inflation across most categories and have invested in
certain categories to preserve our member value proposition.
Cost of sales was $13.6 billion, or 83.3% of net sales, in fiscal year 2021, compared to $12.5 billion, or 82.5% of net
sales, in fiscal year 2020. The 0.9% increase as a percentage of net sales was driven by higher penetration of gas sales.
Merchandise gross margin rate increased approximately 20 basis points over fiscal year 2020. While merchandise margins
benefited from strong sales performance, execution of our category profitability improvement initiatives and performance of
our services businesses, these drivers were slightly offset by costs associated with the COVID-19 pandemic and cost inflation in
certain commodities.
Selling, general and administrative expenses
SG&A consists of various expenses related to supporting and facilitating the sale of merchandise in our clubs, including
the following: payroll and payroll benefits for team members; rent, depreciation and other occupancy costs for retail and
corporate locations; advertising expenses; tender costs, including credit and debit card fees; amortization of intangible assets;
and consulting, legal, insurance, acquisition and integration costs, and other professional services expenses.
40
SG&A includes both fixed and variable components and, therefore, is not directly correlated with net sales. We expect
that our SG&A will increase in future periods due to investments to spur comparable club sales growth and our expanding
footprint as we open new clubs. In addition, any future increases in wages, stock options or other stock-based grants or
modifications will increase our SG&A expenses.
SG&A expenses were $2.4 billion, or 15.0% of net sales, in fiscal year 2021, compared to $2.3 billion, or 15.4% of net
sales, in fiscal year 2020. The year-over-year increase in SG&A was primarily driven by $43.1 million in investments in club
team member wages, $19.3 million in occupancy costs, $17.5 million of accelerated stock-based compensation expense related
to a former executive, increased depreciation and amortization expense, and other operating costs related to volume and
continued investments to drive strategic priorities.
Pre-opening expenses
Pre-opening expenses include startup costs for new clubs. Expenses will vary based on the number of new club openings,
geography of the club, whether the club is owned or leased, and timing of the opening relative to our fiscal year end.
Pre-opening expenses were $14.9 million in fiscal year 2021, compared to $9.8 million in fiscal year 2020. Pre-opening
expenses for fiscal year 2021 included charges for new clubs and gas stations that opened in fiscal year 2021 and new club
openings that are expected for fiscal year 2022.
Interest expense, net
Interest expense, net was $59.4 million for fiscal year 2021, compared to $84.4 million for fiscal year 2020. Interest
expense, net for fiscal year 2021 included interest expense of $45.1 million related to debt service on outstanding borrowings
and $0.7 million of fees and write-offs of deferred financing costs and original issue discounts associated with the partial
prepayments of our First Lien Term Loan. Additionally, interest expense included $3.4 million of amortization expense on
deferred financing costs and original issue discounts on our outstanding borrowings, $6.3 million of reclassified unrealized
losses on interest rate swap agreements and $3.9 million of other interest charges.
Interest expense, net for fiscal year 2020 included interest expense of $65.3 million related to debt service on outstanding
borrowings and $4.1 million of fees and write-offs of deferred financing costs and original issue discounts associated with the
partial prepayments of our First Lien Term Loan in October and July of fiscal year 2020. Additionally, interest expense
included $4.4 million of amortization expense on deferred financing costs and original issue discounts on our outstanding
borrowings, $6.9 million of reclassified unrealized losses on interest rate swap agreements and $3.7 million of other interest
charges.
Provision for income taxes
The Company’s effective income tax rate from continuing operations was 23.5% for fiscal year 2021 and 24.5% for fiscal
year 2020. The decrease in the effective tax rate is primarily due to a higher excess tax benefit from exercises of stock-based
awards in fiscal year 2021.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Facility. As
of January 29, 2022, cash and cash equivalents totaled $45.4 million and we had $886.9 million of unused capacity under our
ABL Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational
expenses and anticipated capital expenditures; fund pending and possible acquisitions, including the anticipated acquisition of
assets from Burris Logistics; fund share repurchases and meet debt service and principal repayment obligations. We believe that
our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Facility,
will be sufficient to finance our operations for at least the next twelve months.
We do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to
have, a current or future material effect on our results of operations or financial position. We do, however, enter into letters of
credit and purchase obligations in the normal course of our operations.
41
Summary of Cash Flows
A summary of our cash flows from operating, investing and financing activities is presented in the following table:
(In thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents
Net Cash from Operating Activities
Fiscal Year Ended
January 29,
2022
January 30,
2021
$
$
831,655 $
(304,511)
(525,226)
1,918 $
868,546
(192,440)
(662,792)
13,314
Net cash provided by operating activities was $831.7 million in fiscal year 2021, compared to $868.5 million in fiscal year
2020. The decrease in operating cash flow was due to timing of investments in net working capital.
Net Cash from Investing Activities
Cash used in investing activities was $304.5 million in fiscal year 2021, compared to $192.4 million in fiscal year 2020.
The increase was due to continued investments in new clubs, new gas stations and digital capabilities compared to the prior
year.
Net Cash from Financing Activities
Cash used in financing activities in fiscal year 2021 was $525.2 million, compared to $662.8 million in fiscal year 2020.
The decrease in fiscal year 2021 is due mainly to lower levels of repayment of outstanding borrowings on our First Lien Term
Loan and ABL Facility, offset by higher share repurchases in fiscal year 2021 of $179.2 million.
Debt and Borrowing Capacity
Our primary sources of borrowing capacity are the ABL Facility, which is comprised of a $950.0 million revolving credit
facility and a $50.0 million term loan, and is scheduled to mature on August 17, 2023, and the First Lien Term Loan, a senior
secured first lien term loan that matures on February 3, 2024. For a further description of the ABL Facility and First Lien Term
Loan, see Note 5, "Debt and Credit Arrangements" of our consolidated financial statements included in this Annual Report on
Form 10-K.
On April 30, 2021, the Company used $100.0 million of cash and cash equivalents to pay $100.0 million of the principal
amount outstanding on the First Lien Term Loan. In connection with the payment, the Company expensed $0.7 million of
previously capitalized debt issuance costs and original issue discount.
At January 29, 2022, there was $50.0 million outstanding in loans under the ABL Facility and $12.7 million in
outstanding letters of credit. The interest rate on the revolving credit facility was 1.23%, the interest rate on the term loan was
2.10% and unused capacity was $886.9 million.
At January 29, 2022, there was $701.9 million outstanding under the First Lien Term Loan and the interest rate, before the
effect of the interest rate swaps, was 2.11%.
42
Material Cash Commitments
The following table summarizes our material cash commitments as of January 29, 2022:
(Dollars in thousands)
Outstanding borrowings and interest (1)
Operating leases
Financing leases including interest
Purchase obligations (2)
Total
$
Total
783,117
3,440,341
30,648
1,859,767
$ 6,113,873
(1) Total interest payments associated with these borrowings are included within this amount and are estimated to be
$31.2 million based on the interest rate of 2.11% on the First Lien Term Loan and 2.10% on the ABL term loan, which
were the rates in effect as of January 29, 2022.
(2)
Includes our material unconditional cash commitments. For cancellable agreements, any penalty due upon cancellation
is included. These commitments do not exceed our projected requirements and are in the normal course of business.
Examples include firm commitments for merchandise purchase orders, capital expenditures, gasoline and information
technology.
In addition, On January 25, 2022, we entered into an agreement to acquire the assets and operations of four distribution
centers and the related private transportation fleet from Burris Logistics. The transaction is expected to close in the second
quarter of fiscal year 2022 and we expect to finance the purchase price with a combination of available cash and borrowings
under the ABL Facility.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. We review our estimates on an ongoing basis and make judgments about the carrying value of
assets and liabilities based on a number of factors. These factors include historical experience and assumptions made by
management that are believed to be reasonable under the circumstances. Although management believes the judgment applied
in preparing estimates is reasonable based on circumstances and information known at the time, actual results could vary
materially from estimates based on assumptions used in the preparation of our consolidated financial statements. This section
summarizes critical accounting policies and the related judgments involved in their application.
Workers’ Compensation and General Liability Self-insurance Reserves
We are primarily self-insured for workers’ compensation and general liability claims. Amounts in excess of certain levels,
which range from $0.3 million to $1.0 million per occurrence, are insured as a risk reduction strategy to mitigate the impact of
catastrophic losses on net income. Reported reserves for claims are derived from estimated ultimate costs based upon individual
claim file reserves and estimates for incurred but not reported claims. The estimates are developed utilizing actuarial methods
and are based on historical claims experience and other actuarial assumptions related to loss development factors. The inherent
uncertainty of future loss projections could cause actual claims to differ from our estimates. When historical losses are not a
good measure of future liability, such as in the event of COVID-19, we base our estimates of ultimate liability on our
interpretation of current law, claims filed to date and other relevant factors which are subject to change. These accruals, if any,
are included in accrued expenses and other current liabilities and other non-current liabilities in the Company’s Consolidated
Balance Sheets.
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" of our consolidated financial statements included in this
Annual Report on Form 10-K for additional information regarding recently issued accounting pronouncements.
43
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to changes in market interest rates and these changes in rates will impact our net interest expense and our
cash flow from operations. Substantially all our borrowings carry variable interest rates. An increase in interest rates could have
a material impact on our cash flow.
In July 2017, the Financial Conduct Authority announced it intended to stop compelling banks to submit rates for the
calculation of LIBOR after 2021. In March 2021, the ICE Benchmark Administration, the administrator of LIBOR, announced
its intention to cease publication of certain LIBOR settings after 2021, while continuing to publish overnight and one-, three-,
six-, and twelve-month U.S. dollar LIBOR rates through June 30, 2023. While this announcement extended the transition period
to June 2023, the United States Federal Reserve Board and other regulatory bodies concurrently issued guidance encouraging
banks and other financial market participants to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate
as soon as practicable and in any event no later than December 31, 2021. In the U.S., the Alternative Reference Rates
Committee ("AARC"), which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has
recommended that the Secured Overnight Financing Rate ("SOFR") plus a recommended spread adjustment as its preferred
alternative to USD-LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured
lending rate while SOFR is a secured rate, and SOFR is an overnight rate while LIBOR reflects term rates at different
maturities.
We expect that all LIBOR settings relevant to us will cease to be published or will no longer be representative after June
30, 2023. As a result, any of our LIBOR-based borrowings that extend beyond such date will need to be converted to a
replacement rate, including our ABL Facility and First Lien Term Loan. Certain risks may arise in connection with transitioning
contracts to SOFR or any other alternative variable rate, including any resulting value transfer that may occur. The value of
loans, securities, or derivative instruments tied to LIBOR could also be impacted. However, for some instruments, the method
of transitioning to an alternative rate may be challenging, as they may require substantial negotiation with each respective
counterparty. If a contract is not transitioned to an alternative variable rate and LIBOR is discontinued, the impact is likely to
vary by contract.
The discontinuation of LIBOR will not affect our ability to borrow or maintain already outstanding borrowings or swaps,
but if our contracts indexed to LIBOR, including certain contracts governing our variable rate debt, including our ABL Facility
and First Lien Term Loan, and our interest rate swaps, are converted to SOFR, the differences between LIBOR and SOFR, plus
the recommended spread adjustment, could result in interest costs that are higher than if LIBOR remained available.
Additionally, although SOFR is the AARC’s recommended replacement rate, it is also possible that lenders may instead choose
alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in ways that would result in higher
interest costs for us. It is not yet possible to predict the magnitude of LIBOR’s end on our borrowing costs given the remaining
uncertainty about which rates will replace LIBOR.
44
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021
Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended January 29, 2022,
January 30, 2021 and February 1, 2020
Consolidated Statements of Shareholders’ Equity (Deficit) for the Fiscal Years Ended January 29, 2022, January
30, 2021 and February 1, 2020
Consolidated Statements of Cash Flows for the Fiscal Years Ended January 29, 2022, January 30, 2021 and
February 1, 2020
Notes to Consolidated Financial Statements
Page
46
48
49
50
51
52
45
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of BJ’s Wholesale Club Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of BJ’s Wholesale Club Holdings, Inc. and its subsidiaries (the
“Company”) as of January 29, 2022 and January 30, 2021, and the related consolidated statements of operations and
comprehensive income, of shareholders' equity (deficit) and of cash flows for each of the three years in the period ended
January 29, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting as of January 29, 2022, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for
each of the three years in the period ended January 29, 2022 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of January 29, 2022, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for
leases in 2019.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
46
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Workers’ Compensation and General Liability Reserves
As described in Notes 2, 14 and 15 to the consolidated financial statements, the Company is primarily self-insured for workers’
compensation and general liability claims. As of January 29, 2022, workers’ compensation and general liability reserves were
approximately $99 million within other non-current liabilities and a significant portion of insurance reserves of $48 million
within accrued expenses and other current liabilities. The reported reserves for workers’ compensation and general liability
claims are derived from estimated ultimate costs based upon individual claim file reserves and estimates for incurred but not
reported claims. The estimates are developed utilizing actuarial methods and are based on historical claims experience and other
actuarial assumptions related to the loss development factors.
The principal considerations for our determination that performing procedures relating to workers’ compensation and general
liability reserves is a critical audit matter are (i) the significant judgment by management when developing the estimated
workers’ compensation and general liability reserves; (ii) a high degree of auditor judgment, subjectivity, and effort in
performing procedures and in evaluating audit evidence related to the actuarial methods and significant assumptions related to
loss development factors; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s estimate of workers’ compensation and general liability reserves, including controls over the actuarial methods
and significant assumptions related to the loss development factors. These procedures also included, among others (i) the
involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate for the
accrual for workers’ compensation and general liability reserves and (ii) comparing the independent estimate to management’s
estimate to evaluate the reasonableness of management’s estimate. Developing the independent estimate involved (i) testing the
completeness and accuracy of underlying data provided by management and (ii) independently developing the loss
development factors and applying actuarial methods.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 17, 2022
We have served as the Company’s auditor since 1996.
47
BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Merchandise inventories
Prepaid expenses and other current assets
Total current assets
Operating lease right-of-use assets, net
Property and equipment:
Land and buildings
Leasehold costs and improvements
Furniture, fixtures and equipment
Construction in progress
Less: accumulated depreciation and amortization
Total property and equipment, net
Goodwill
Intangibles, net
Deferred income taxes
Other assets
Total assets
LIABILITIES
Current liabilities:
Current portion of long-term debt
Current portion of operating lease liabilities
Accounts payable
Accrued expenses and other current liabilities
Total current liabilities
Long-term operating lease liabilities
Long-term debt
Deferred income taxes
Other non-current liabilities
Commitments and contingencies (see Note 8)
SHAREHOLDERS’ EQUITY (DEFICIT)
Preferred stock; $0.01 par value; 5,000 shares authorized, no shares issued
Common stock; $0.01 par value; 300,000 shares authorized, 145,451 shares issued and
135,506 shares outstanding at January 29, 2022; 300,000 shares authorized, 143,428 shares
issued and 137,192 shares outstanding at January 30, 2021
Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive income (loss)
Treasury stock, at cost, 9,945 shares at January 29, 2022 and 6,236 shares at January 30,
2021
Total shareholders’ equity
Total liabilities and shareholders’ equity
January 29,
2022
January 30,
2021
$
45,436 $
173,951
1,242,935
54,734
1,517,056
2,131,986
43,518
172,719
1,205,695
48,649
1,470,581
2,058,763
$
$
430,376
282,495
1,249,490
70,779
2,033,140
(1,090,809)
942,331
924,134
124,640
5,507
23,240
5,668,894 $
385,572
249,073
1,298,440
23,633
1,956,718
(1,158,929)
797,789
924,134
135,123
5,737
19,403
5,411,530
— $
141,453
1,112,783
748,245
2,002,481
2,059,760
748,568
52,850
157,127
260,000
131,513
988,074
651,625
2,031,212
1,988,840
846,175
45,096
180,880
—
—
1,454
902,704
131,313
1,305
1,434
826,377
(295,339)
(20,528)
(388,668)
648,108
5,668,894 $
(192,617)
319,327
5,411,530
$
The accompanying notes are an integral part of the consolidated financial statements.
48
BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
Net sales
Membership fee income
Total revenues
Cost of sales
Selling, general and administrative expenses
Pre-opening expense
Operating income
Interest expense, net
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Basic income per share
Income from continuing operations
Loss from discontinued operations
Net income
Diluted income per share
Income from continuing operations
Loss from discontinued operations
Net income
Weighted-average number of common shares outstanding:
Basic
Diluted
Other comprehensive income (loss):
Postretirement medical plan adjustment, net of income tax of $43, $12
and $385, respectively
Amounts reclassified from other comprehensive income, net of tax
Unrealized gain (loss) on cash flow hedge, net of income tax of
Fiscal Year
Ended
January 29,
2022
Fiscal Year
Ended
January 30,
2021
Fiscal Year
Ended
February 1,
2020
$ 16,306,365 $ 15,096,913 $ 12,888,556
360,937
333,104
302,151
16,667,302
15,430,017
13,190,707
13,588,612
12,451,061
10,763,926
2,446,465
2,326,755
2,059,430
14,902
617,323
59,444
557,879
131,119
426,760
9,809
642,392
84,385
558,007
136,825
421,182
15,152
352,199
108,230
243,969
56,212
187,757
(108)
(152)
(581)
426,652 $
421,030 $
187,176
3.15 $
3.09 $
—
—
3.15 $
3.09 $
3.09 $
3.03 $
—
—
3.09 $
3.03 $
1.38
(0.01)
1.37
1.35
—
1.35
135,386
138,045
136,111
138,876
136,174
139,109
(110) $
9,526
(33) $
6,081
(990)
—
$
$
$
$
$
$
$4,827, $4 and $5,554, respectively
Total other comprehensive income (loss)
Total comprehensive income
12,417
21,833
10
6,058
(14,281)
(15,271)
$
448,485 $
427,088 $
171,905
The accompanying notes are an integral part of the consolidated financial statements.
49
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T
BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
426,652 $
421,030 $
187,176
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
180,548
167,454
157,000
Amortization of debt issuance costs and accretion of original issues
discount
Debt extinguishment and refinancing charges
Impairment charges
Stock-based compensation expense
Deferred income tax provision (benefit)
Changes in operating leases and other non-cash items
Increase (decrease) in cash due to changes in:
Accounts receivable
Merchandise inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses
Other non-current liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net of disposals
Proceeds from sale leaseback transactions
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long term debt
3,387
657
—
53,837
(507)
9,226
(1,232)
(37,240)
(9,953)
(4,301)
124,709
81,419
4,453
831,655
(323,591)
19,080
(304,511)
4,362
4,077
—
32,150
(9,197)
9,389
33,634
(124,193)
(3,496)
(1,682)
201,663
97,690
35,665
868,546
(218,333)
25,893
(192,440)
5,172
2,167
13,306
18,796
10,246
2,028
(12,053)
(29,196)
22,169
1,710
(30,468)
15,640
(8,550)
355,143
(196,901)
21,606
(175,295)
—
(3,297)
(14,829)
Paydown of the First Lien Term Loan and extinguishment of Second Lien
Term Loan
Proceeds from ABL facility
Payments on ABL facility
Debt issuance costs paid
Dividends paid
Financing obligations payments
Net cash received from stock option exercises
Net cash received from Employee Stock Purchase Program (ESPP)
Acquisition of treasury stock
Proceeds from financing obligations
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental cash flow information:
Interest paid
Income taxes paid
Non-cash financing and investing activities:
Lease liabilities arising from obtaining right-of-use assets
Property additions included in accrued expenses
(100,000)
—
(260,000)
—
(25)
(1,112)
18,713
3,822
(194,316)
7,692
(525,226)
1,918
43,518
(510,000)
996,000
(1,064,000)
—
(25)
(984)
17,985
2,676
(106,203)
5,056
(662,792)
13,314
30,204
$
$
45,436 $
43,518 $
45,148 $
117,567
65,274 $
154,668
261,228
29,640
154,714
13,131
The accompanying notes are an integral part of the consolidated financial statements.
(200,000)
1,390,000
(1,301,000)
(21)
(25)
(612)
11,072
1,728
(67,305)
4,202
(176,790)
3,058
27,146
30,204
96,861
40,351
166,602
11,247
51
BJ’S WHOLESALE CLUB HOLDINGS, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
BJ’s Wholesale Club Holdings, Inc. and its wholly-owned subsidiaries (the "Company" or "BJ’s") is a leading warehouse
club operator concentrated primarily on the east coast of the United States of America. As of January 29, 2022, BJ’s operated
226 warehouse clubs in 17 states.
BJ’s business is moderately seasonal in nature. Historically, the Company has realized a slightly higher portion of net
sales, operating income and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the
impact of the summer and year-end holiday season, respectively. The quarterly results have been, and will continue to be,
affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, the financial
results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved
for a full fiscal year.
The novel coronavirus ("COVID-19") pandemic has severely impacted the economies of the U.S. and other countries
around the world. In the preparation of these financial statements and related disclosures we have assessed the impact that
COVID-19 has had on our estimates, assumptions and accounting policies and made additional disclosures, as necessary.
On January 25, 2022, the Company entered into an agreement to acquire the assets and operations of four distribution
centers and the related private transportation fleet from Burris Logistics. The transaction is expected to close in the second
quarter of fiscal year 2022 and the Company expects to finance the purchase price with a combination of available cash and
borrowings under the Company’s revolving credit facility.
2.
Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in
the United States of America ("GAAP"). The consolidated financial statements include the Company and its subsidiaries. All
intercompany balances and transactions have been eliminated in consolidation.
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal year 2021 ("2021") consists of the 52 weeks
ended January 29, 2022, fiscal year 2020 ("2020") consists of the 52 weeks ended January 30, 2021 and fiscal year
2019 ("2019") consists of the 52 weeks ended February 1, 2020.
Secondary Offerings
On March 11, 2019, certain selling shareholders completed a registered sale (the "March 2019 Secondary Offering")
of 19,550,000 shares of the Company’s common stock at a public offering price of $25.08 per share. Of the 19,550,000 shares
sold, 2,550,000 shares represented the underwriters’ exercise of their overallotment option. The Company did not receive any
proceeds from the March 2019 Secondary Offering or incur underwriters’ discounts or commissions on the sale. The Company
incurred transaction costs of $1.2 million primarily for legal, accounting and printer services related to the March 2019
Secondary Offering.
On June 6, 2019, certain selling shareholders completed a registered sale (the "June 2019 Secondary Offering") of
17,500,000 shares of the Company’s common stock at a public offering price of $24.65 per share. The Company did not receive
any proceeds from the June 2019 Secondary Offering or incur underwriters’ discounts or commissions on the sale. The
Company incurred immaterial transaction costs related to the June 2019 Secondary Offering.
On June 27, 2019, the Company completed a registered sale of 9,977,024 shares of the Company’s common stock at a
price of $25.41 per share. In connection with this offering, the Company repurchased 2,500,000 shares at $25.41 per share. The
Company did not receive any proceeds from this offering or incur underwriters’ discounts or commissions on the sale. The
Company incurred immaterial transaction costs related to the June 27, 2019 offering.
Estimates Included in Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and shareholders’ equity, and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
52
reporting period. The significant estimates relied upon in preparing these consolidated financial statements are estimating
workers’ compensation and general liability self-insurance reserves. The inherent uncertainty of future loss projections could
cause actual claims to differ from our estimates.
Segment Reporting
The Company’s retail operations, which include retail club and other sales procured from our clubs and DC’s, represent
substantially all of the consolidated total revenues, and are the only reportable segment. All of the Company’s identifiable
assets are located in the United States. The Company does not have significant sales outside the United States, nor does any
customer represent more than 10% of total revenues for any period presented.
The following table summarizes the percentage of net sales by category:
Grocery
General merchandise and services
Gasoline and other
Concentration Risk
2021
Fiscal Year
2020
2019
71 %
14 %
15 %
77 %
14 %
9 %
72 %
15 %
13 %
An adverse change in the Company’s relationships with its key suppliers could have a material effect on the business and
results of operations of the Company. Currently, one distributor, Burris Logistics, consolidates a substantial majority of
perishables for shipment to the clubs. The Company has entered into an agreement to acquire four distribution centers and
related private transportation fleet from Burris Logistics, which is expected to bring end-to-end perishable supply chain in-
house. However, disruption in logistics processes could materially impact sales and profitability for the near term while the
Company is integrating the assets into its operations.
The warehouse clubs are primarily located in the eastern United States. Sales from the New York metropolitan area made
up approximately 23% of net sales in fiscal year 2021 and approximately 25% in fiscal years 2020 and 2019.
Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash held
in financial institutions. The Company considers the credit risk associated with these financial instruments to be minimal. Cash
is held by financial institutions with high credit ratings and the Company has not historically sustained any credit losses
associated with its cash balances.
Cash and Cash Equivalents
Highly liquid investments with a maturity of three months or less at the time of purchase are considered to be cash
equivalents. Book overdrafts not subject to offset with other accounts with the same financial institution are classified as
accounts payable.
Accounts Receivable
Accounts receivable consists primarily of credit card receivables and receivables from vendors related to rebates and
coupons and is stated net of allowances for credit losses of $4.9 million and $3.1 million at January 29, 2022 and January 30,
2021, respectively. The determination of the allowance for credit losses is based on BJ’s historical experience applied to an
aging of accounts and a review of individual accounts with a known potential for write-off.
Merchandise Inventories
Inventories are stated at the lower of cost and determined under the average cost method, or net realizable value. The
Company recognizes the write-down of slow-moving or obsolete inventory in cost of sales when such write-downs are probable
and estimable. The Company writes down inventory for estimated shrinkage for the period between physical inventories based
on historical results of previous physical inventories, shrinkage trends or other judgments management believes to be
reasonable under the circumstances.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line
method. Property and equipment which is not ready for its intended use is recorded as construction in progress. Buildings and
53
improvements are depreciated over estimated useful lives of 33 years. Interest related to the development of buildings is
capitalized during the construction period. Leasehold costs and improvements are amortized over the remaining lease term
(which includes renewal periods that are reasonably assured) or the asset’s estimated useful life, whichever is shorter. Furniture,
fixtures and equipment are depreciated over estimated useful lives, ranging from three to ten years. Depreciation expense was
$170.1 million in fiscal year 2021, $155.6 million in fiscal year 2020 and $143.5 million in fiscal year 2019.
Certain costs incurred in connection with developing or obtaining computer software for internal use are capitalized.
Capitalized software costs are included in furniture, fixtures, and equipment and are amortized on a straight-line basis over the
estimated useful life of the software, which is three years. Software costs not meeting the criteria for capitalization are expensed
as incurred.
Expenditures for betterments and major improvements that significantly enhance the value and increase the estimated
useful life of the assets are capitalized and depreciated over the new estimated useful life. Repairs and maintenance costs on all
assets are expensed as incurred.
Deferred Issuance Costs
The Company defers costs directly associated with acquiring third-party financing. Debt issuance costs related to the term
loans are recorded as a direct deduction from the carrying amount of the debt. Debt issuance costs associated with the ABL
Facility (as defined in Note 5) are recorded within other assets. Debt issuance costs are amortized over the term of the related
financing arrangements on a straight-line basis, which is materially consistent with the effective interest method. Amortization
of deferred debt issuance costs is recorded in interest expense and was $2.2 million in fiscal year 2021, $2.5 million in fiscal
year 2020 and $2.7 million in fiscal year 2019.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived trade name intangible assets are not subject to amortization. The Company assesses the
recoverability of its goodwill and trade name annually in the fourth quarter or whenever events or changes in circumstances
indicate it may be impaired. The Company has determined it has one reporting unit for goodwill impairment testing purposes.
The Company may assess its goodwill for impairment initially using a qualitative approach ("step zero") to determine
whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying
value. If management concludes, based on its assessment of relevant events, facts and circumstances that it is more likely than
not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to
determine if there is any impairment. The Company may also elect to initially perform a quantitative analysis instead of starting
with step zero. The quantitative assessment for goodwill requires comparing the carrying value of a reporting unit, including
goodwill, to its fair value. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be
impaired and no further testing is required. If the carrying amount of the reporting unit exceeds its fair value, an impairment
charge is recorded to write down goodwill to its implied fair value and is recorded as a component of selling, general and
administrative expenses ("SG&A"). The Company assessed the recoverability of goodwill in fiscal years 2021, 2020 and 2019
and determined that there was no impairment.
The Company assesses the recoverability of its trade name whenever there are indicators of impairment, or at least
annually in the fourth quarter. If the recorded carrying value of the trade name exceeds its estimated fair value, the Company
records a charge to write the intangible asset down to its estimated fair value as a component of SG&A. The Company assessed
the recoverability of the BJ’s trade name and determined that its estimated fair value exceeded its carrying value and that no
impairment was necessary in fiscal years 2021, 2020 or 2019.
Test for Recoverability of Long-Lived Assets
The Company reviews the realizability of long-lived assets periodically and whenever a triggering event occurs that
indicates an impairment loss may have been incurred using fair value measurements with unobservable inputs (Level 3).
Current and expected operating results and cash flows and other factors are considered in connection with management’s
reviews. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using
undiscounted net cash flows of individual clubs and consolidated net cash flows for long-lived assets not identifiable to
individual clubs. Impairment losses are measured as the difference between the carrying amount and the estimated fair value of
the assets being evaluated. In fiscal years 2021 and 2020, the Company recorded no impairment charges. In fiscal year 2019,
the Company recorded $13.3 million of impairment charges to lower the carrying value of the assets to their estimated fair
value. The total impairment charges consisted of $1.7 million related to IT assets, $2.0 million related to fixed assets and
$9.6 million related to operating lease right of use ("ROU") assets. The fixed asset impairment charges and operating lease
54
ROU asset impairment charges related to four club locations. The combined fixed assets and ROU asset carrying value of these
four locations after the impairment charge was $10.5 million.
Asset Retirement Obligations
An asset retirement obligation represents a legal obligation associated with the retirement of a tangible long-lived asset
that is incurred upon the acquisition, construction, development or normal operation of that long-lived asset. The Company
recognizes asset retirement obligations in the period in which they are placed in service, if a reasonable estimate of fair value
can be made. The asset retirement obligation is subsequently adjusted for changes in fair value. The associated estimated asset
retirement costs are capitalized in leasehold improvements and depreciated over their useful life. The Company’s asset
retirement obligations relate to the future removal of gasoline tanks and solar panels installed at leased clubs and the related
assets associated with the gas stations and solar panel locations. See Note 13 for further information on the amounts accrued.
Workers’ Compensation and General Liability Self-insurance Reserves
We are primarily self-insured for workers’ compensation and general liability claims. Amounts in excess of certain levels,
which range from $0.3 million to $1.0 million per occurrence, are insured as a risk reduction strategy to mitigate the impact of
catastrophic losses on net income. Reported reserves for claims are derived from estimated ultimate costs based upon individual
claim file reserves and estimates for incurred but not reported claims. The estimates are developed utilizing actuarial methods
and are based on historical claims experience and other actuarial assumptions related to loss development factors. The inherent
uncertainty of future loss projections could cause actual claims to differ from our estimates. When historical losses are not a
good measure of future liability, such as in the event of COVID-19, we base our estimates of ultimate liability on our
interpretation of current law, claims filed to date and other relevant factors which are subject to change. These accruals, if any,
are included in accrued expenses and other current liabilities and other non-current liabilities in the Company’s Consolidated
Balance Sheets.
Revenue Recognition - Performance Obligations
The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The
Company recognizes revenue as it satisfies a performance obligation by transferring control of the goods or services to the
customer.
Net sales—The Company recognizes net sales at clubs and gas stations when the customer takes possession of the goods
and tenders payment. Sales tax is recorded as a liability at the point of sale. Revenue is recorded at the point of sale based on the
transaction price on the shelf sign, net of any applicable discounts, sales tax and expected refunds. For e-commerce sales, the
Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping
point. The following table summarizes the Company’s point of sale transactions at clubs and gas stations, excluding sales tax,
as a percentage of both net sales and total revenues.
Fiscal Year Ended
January 29, 2022
January 30, 2021
February 1, 2020
Point of sale transactions, excluding sales tax, as a percent of
net sales
Point of sale transactions, excluding sales tax, as a percent of
total revenues
93 %
91 %
95 %
93 %
96 %
93 %
BJ’s Perks Rewards and My BJ’s Perks programs— The Company’s BJ’s Perks Rewards® membership program allows
participating members to earn 2% cash back, up to a maximum of $500 per year, on qualified purchases made at BJ’s. The
Company also offers a co-branded credit card program, the My BJ’s Perks® program, which allows My BJ’s Perks®
Mastercard credit card holders to earn up to 5% cash back on eligible purchases made at BJ’s and up to 2% cash back on
purchases made with the card outside of BJ’s. Cash back is in the form of electronic awards issued in $10 increments that may
be used online or in-club at the register and expire six months from the date issued.
Earned awards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned
awards when customers redeem such awards as part of a purchase at one of the Company’s clubs or the Company’s website.
The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate
performance obligations using their relative fair values. The Company includes the fair value of award dollars earned in
deferred revenue at the time the award dollars are earned. This liability was $30.3 million at January 29, 2022 and $25.5 million
at January 30, 2021.
55
Royalty revenue received in connection with the My BJ’s Perks co-brand credit card program is variable consideration
and is considered deferred until the card holder makes a purchase. The Company’s total deferred royalty revenue related to the
outstanding My BJ’s Perks credit card program was $17.8 million and $13.5 million at January 29, 2022 and January 30, 2021,
respectively. The timing of revenue recognition of these awards is driven by actual customer activities, such as redemptions and
expirations. At January 29, 2022, the Company expects to recognize $17.3 million of the deferred revenue in fiscal year 2022,
and expects the remainder will be recognized in the years thereafter.
Membership—The Company charges a membership fee to its customers. That fee allows customers to shop in the
Company’s clubs, shop on the Company’s website and purchase gasoline at the Company’s gas stations for the duration of the
membership, which is generally 12 months. Because the Company has the obligation to provide access to its clubs, website and
gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the
life of the membership. The Company’s deferred revenue related to membership fees was $174.9 million and $155.6 million at
January 29, 2022 and January 30, 2021, respectively.
Gift Card Programs—The Company sells BJ’s gift cards that allow customers to redeem the card for future purchases
equal to the amount of the original purchase price of the gift card. Revenue from gift card sales is recognized upon redemption
of the gift card because the Company’s performance obligation to redeem the gift card for merchandise is satisfied when the gift
card is redeemed. Deferred revenue related to gift cards was $11.8 million and $10.3 million at January 29, 2022 and
January 30, 2021, respectively. The Company recognized revenue from gift card redemptions of approximately $39.7 million in
fiscal year 2021, $39.7 million in fiscal year 2020 and $49.1 million in fiscal year 2019.
Warranty Programs
The Company passes on any manufacturers’ warranties to members. In addition, BJ’s includes an extended warranty on
tires sold at the clubs, under which BJ’s customers receive tire repair services or tire replacement in certain circumstances. This
warranty is included in the sale price of the tire and it cannot be declined by the customers. The Company is fully liable for
claims under the tire warranty program. As the primary obligor in these arrangements, associated revenue is recognized on the
date of sale and an estimated warranty obligation is accrued based on claims experience. The liability for future claims under
this program is not material to the financial statements.
Extended warranties are also offered on certain types of products such as appliances, electronics and jewelry. These
warranties are provided by a third party at fixed prices to BJ’s. No liability is retained to satisfy warranty claims under these
arrangements. The Company is not the primary obligor under these warranties, and as such net revenue is recorded on these
arrangements at the time of sale. Revenue from warranty sales is included in net sales on the income statement.
Determine the Transaction Price
The transaction price is the amount of consideration the Company expects to receive under the arrangement. The
Company is required to estimate variable consideration (if any) and to factor that estimate into the determination of the
transaction price. The Company may offer sales incentives to customers, including discounts. The Company has significant
experience with return patterns and relies on this experience to estimate expected returns when determining the transaction
price.
Returns and Refunds—The Company’s products are generally sold with a right of return and may provide other credits or
incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. The
Company records an allowance for returns based on current period revenues and historical returns experience. The Company
analyzes actual historical returns, current economic trends, changes in sales volume and acceptance of the Company’s products
when evaluating the adequacy of the sales returns allowance in any accounting period.
The sales returns reserve, which reduces sales and cost of sales for the estimated impact of returns, was $6.7 million in
fiscal year 2021, $7.2 million in fiscal year 2020 and $6.5 million in fiscal year 2019.
Customer Discounts—Discounts given to customers are usually in the form of coupons and instant markdowns and are
recognized as redeemed and recorded in contra-revenue accounts, as they are part of the transaction price of the merchandise
sale. Manufacturer coupons that are available for redemption at all retailers are not reduced from the sale price of merchandise.
Agent Relationships
The Company enters into certain agreements with service providers that offer goods and services to the Company’s
members. These service providers sell goods and services including home improvement services and cell phones to the
Company’s customers. In exchange, the Company receives payments in the form of commissions and other fees. The Company
56
evaluates the relevant criteria to determine whether they serve as the principal or agent in these contracts with customers, in
determining whether it is appropriate in these arrangements to record the gross amount of merchandise sales and related costs,
or the net amount earned as commissions. When the Company is considered the principal in a transaction, revenue is recorded
gross; otherwise, revenue is recorded on a net basis. Commissions received from these service providers are considered variable
consideration and are constrained until the third-party customer makes a purchase from one of the service providers.
Significant Judgments
Standalone Selling Prices—For arrangements that contain multiple performance obligations, the Company allocates the
transaction price to each performance obligation on a relative standalone selling price basis.
Policy Elections
In addition to those previously disclosed, the Company made the following accounting policy elections and practical
expedients:
Portfolio Approach—The Company uses the portfolio approach when multiple contracts or performance obligations are
involved in the determination of revenue recognition.
Taxes—The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing
authorities.
Shipping and Handling Charges—Charges that are incurred before and after the customer obtains control of goods are
deemed to be fulfillment costs.
Time Value of Money—The Company’s payment terms are less than one year from the transfer of goods. Therefore, the
Company does not adjust promised amounts of consideration for the effects of the time value of money.
Disclosure of Remaining Performance Obligations—The Company does not disclose the aggregate amount of the
transaction price allocated to remaining performance obligations for contracts that are one year or less in term. Additionally, the
Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations when
the transaction price is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to
transfer a good or service that forms part of a series of distinct goods or services.
Cost of Sales
The Company’s cost of sales includes the direct costs of sold merchandise, which includes customs, taxes, duties and
inbound shipping costs, inventory shrinkage and adjustments and reserves for excess, aged and obsolete inventory. Cost of
goods sold also includes certain distribution center costs and allocations of certain indirect costs, such as occupancy,
depreciation, amortization, labor and benefits.
Presentation of Sales Tax Collected from Customers and Remitted to Governmental Authorities
In the ordinary course of business, sales tax is collected on items purchased by the members that are taxable in the
jurisdictions when the purchases take place. These taxes are then remitted to the appropriate taxing authority. These taxes
collected are excluded from revenues in the financial statements.
Vendor Rebates and Allowances
The Company receives various types of cash consideration from vendors, principally in the form of rebates, based on
purchasing or selling certain volumes of product, time-based rebates or allowances, which may include product placement
allowances or exclusivity arrangements covering a predetermined period of time, price protection rebates and allowances for
retail price reductions on certain merchandise and salvage allowances for product that is damaged, defective or becomes out-of-
date.
Such vendor rebates and allowances are recognized based on a systematic and rational allocation of the cash consideration
offered to the underlying transaction that results in progress by BJ’s toward earning the rebates and allowances, provided the
amounts to be earned are probable and reasonably estimable. Otherwise, rebates and allowances are recognized only when
predetermined milestones are met. The Company recognizes product placement allowances as a reduction of cost of sales in the
period in which the product placement is completed. Time-based rebates or allowances are recognized as a reduction of cost of
57
sales over the performance period on a straight-line basis. All other vendor rebates and allowances are recognized as a reduction
of cost of sales when the merchandise is sold or otherwise disposed.
Cash consideration is also received for advertising products in publications sent to BJ’s members. Such cash consideration
is recognized as a reduction of SG&A to the extent it represents a reimbursement of specific, incremental and identifiable
SG&A costs incurred by BJ’s to sell the vendors’ products. If the cash consideration exceeds the costs being reimbursed, the
excess is characterized as a reduction of cost of sales. Cash consideration for advertising vendors’ products is recognized in the
period in which the advertising takes place.
Manufacturers’ Incentives Tendered by Consumers
Consideration from manufacturers’ incentives (such as rebates or coupons) is recorded gross in net sales when the
incentive is generic and can be tendered by a consumer at any reseller and the Company receives direct reimbursement from the
manufacturer, or clearinghouse authorized by the manufacturer, based on the face value of the incentive. If these conditions are
not met, such consideration is recorded as a decrease in cost of sales.
Leases
The Company adopted Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842") using the modified
retrospective method at the beginning of fiscal year 2019. The adoption of this standard had a $11.6 million impact on
beginning retained earnings in fiscal year 2019 primarily associated with the impact of the Company’s deferred gain on prior
years’ sale leaseback transactions, net of tax.
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a
contract and classifies each lease as either an operating or finance lease at commencement. The Company only reassesses lease
classification subsequent to commencement upon a change to the expected lease term or the contract being modified. The
Company has operating and finance leases for the Company’s clubs, and operating leases for the Company’s distribution
centers, home office, and stand-alone gas stations.
Operating leases, net of accumulated amortization, are included in operating lease ROU assets, and current and non-
current operating lease liabilities, on the Consolidated Balance Sheets. Finance leases are included in property and equipment,
accrued expenses and other current liabilities, and other non-current liabilities on the Consolidated Balance Sheets. Lease
liabilities are calculated using the effective interest method, regardless of classification, while the amortization of the ROU
assets varies depending upon classification. Finance lease classification results in a front-loaded expense recognition pattern
over the lease term, which amortizes the ROU assets by recognizing interest expense and amortization expense as separate
components of lease expense and calculates the amortization expense component on a straight-line basis. Conversely, operating
lease classification results in a straight-line expense recognition pattern over the lease term and recognizes lease expense as a
single expense component, which results in amortization of the ROU assets that equals the difference between lease expense
and interest expense.
Lease expense for finance and operating leases are included in SG&A on the Consolidated Statement of Operations and
Comprehensive Income. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance
Sheets. Please refer to Note 4 for additional information.
Pre-opening Expenses
Pre-opening expenses consist of direct incremental costs of opening or relocating a facility and are expensed as incurred.
Advertising Costs
Advertising costs generally consist of efforts to acquire new members and typically include media advertising (some of
which is vendor-funded). BJ’s expenses advertising as incurred as a component of SG&A. Advertising expenses were
approximately 0.5%, 0.6% and 0.6% of net sales in fiscal years 2021, 2020 and 2019, respectively.
Stock-based Compensation
The fair value of service-based employee awards is recognized as compensation expense on a straight-line basis over the
requisite service period of the award. The fair value of the performance-based awards is recognized as compensation expense
ratably over the service period of each performance tranche. The fair value of the stock-based awards is determined using the
Black-Scholes option pricing model. Determining the fair value of options at the grant date requires judgment, including
estimating the expected term that stock options will be outstanding prior to exercise and the associated volatility.
58
The Company’s common stock is listed on the NYSE and its value is determined by the market price on the NYSE. See
Note 9 for additional description of the accounting for stock-based awards.
Earnings Per Share
Basic income per share is calculated by dividing net income available to common shareholders by the weighted-average
number of common shares outstanding for the period. Basic income from continuing operations per share is calculated by
dividing income from continuing operations by the weighted-average number of common shares outstanding for the period.
Basic loss from discontinuing operations per share is calculated by dividing loss from discontinuing operations by the
weighted-average number of common shares outstanding for the period.
Diluted income per share is calculated by dividing net income available to common shareholders by the diluted weighted-
average number of common shares outstanding for the period. Diluted income from continuing operations per share is
calculated by dividing income from continuing operations by the diluted weighted-average number of common shares
outstanding for the period. Diluted loss from discontinuing operations per share is calculated by dividing loss from
discontinuing operations by the diluted weighted-average number of common shares outstanding for the period.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement
carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the
temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for
income taxes. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is
more likely than not that all or a portion of the deferred tax assets will not be realized. Potential for recovery of deferred tax
assets is evaluated by estimating the future taxable profits expected, scheduling of anticipated reversals of taxable temporary
differences, and considering prudent and feasible tax planning strategies.
The Company records liabilities for uncertain income tax positions based on a two-step process. The first step is
recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being
sustained upon examination based on the technical merits of the position, including resolution of any related appeals or
litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax
benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second
step of measuring the benefit to be recorded. The amount of the benefit that may be recognized is the largest amount that has a
greater than 50% likelihood of being realized on ultimate settlement. The actual benefits ultimately realized may differ from the
estimates. In future periods, changes in facts, circumstances and new information may require the Company to change the
recognition and measurement estimates regarding individual tax positions. Changes in recognition and measurement estimates
are recorded in income tax expense and liability in the period in which such changes occur.
Any interest or penalties incurred related to unrecognized tax benefits are recorded as a component of the provision for
income tax expense.
Derivative Financial Instruments
All derivatives are recognized as either assets or liabilities on the Consolidated Balance Sheets and measurement of these
instruments is at fair value. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair
value of the derivative are recorded as a component of accumulated other comprehensive income and are recognized in the
consolidated statement of operations when the hedged item affects earnings. Any portion of the change in fair value that is
determined to be ineffective is immediately recognized in earnings as SG&A. Derivative gains or losses included in
accumulated other comprehensive income are reclassified into earnings at the time the hedged transaction occurs as a
component of SG&A.
Fair Value of Financial Instruments
Certain assets and liabilities are carried at fair value in accordance with GAAP. Fair value is defined as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants on the measurement date.
The Company uses a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires
entities to maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities
59
carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which
the first two are considered observable and the last is considered unobservable:
•
•
•
Level 1 - Quoted market prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted market prices included in Level 1 such as quoted market prices for
markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar
techniques that use significant unobservable inputs.
Comprehensive Income
Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than
with equity holders, and would normally be recorded in the consolidated statements of shareholders’ equity and the
consolidated statements of comprehensive income. Other comprehensive income consists of unrealized gains and losses from
derivative instruments designated as cash flow hedges and postretirement medical plan adjustments.
Treasury Stock
The Company records the repurchase of shares of common stock at cost based on the settlement date of the transaction.
These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury stock is included in
authorized and issued shares but excluded from outstanding shares.
Recently Issued Accounting Pronouncements
Business Combinations (ASU 2021-08)
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with
Customers". ASU 2021-08 improves the accounting for acquired revenue contracts with customers in a business combination
by addressing the diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment
terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU require acquirers to
recognize and measure contract assets and contract liabilities acquired in the business combination in accordance with Topic
606 as if it had originated the contracts. The standard is effective for public companies for fiscal years, and interim periods
within those fiscal years, beginning after December 25, 2023, with early adoption permitted. The Company does not expect
adoption of this standard to have a significant impact on the consolidated financial statements.
Recently Adopted Accounting Pronouncements
Income Taxes (ASU 2019-12)
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This
standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the
approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition
of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes
and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of
goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2020. The Company adopted this standard prospectively as of January 31, 2021. The adoption of
this standard did not have a material impact on the Company’s consolidated financial statements.
3. Related Party Transactions
One of the Company’s suppliers, Advantage Solutions Inc., was determined to be a related party of the Company.
Advantage Solutions Inc. is a provider of in-club product demonstration and sampling services. Currently, the
Company engages them from time to time to provide ancillary support services, including temporary club labor as needed. The
Company incurred approximately $2.9 million, $13.5 million and $42.6 million of costs payable to Advantage Solutions for
services rendered during fiscal years 2021, 2020 and 2019, respectively. The demonstration and sampling service fees are fully
funded by merchandise vendors who participate in the program.
60
4. Leases
The Company adopted ASC 842 as of February 3, 2019, using the modified retrospective method and applying
transitional relief allowing entities to initially apply the requirements at the adoption date by recognizing a cumulative-effect
adjustment to the opening balance of retained earnings in the period of adoption.
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a
contract and classifies each lease as either an operating or finance lease at commencement. The Company only reassesses lease
classification subsequent to commencement upon a change to the expected lease term or the contract being modified. The
Company has operating and finance leases for the Company’s clubs, and operating leases for the Company’s distribution
centers, home office, and stand-alone gas stations. Operating leases, net of accumulated amortization, are included in operating
lease ROU assets, and current and non-current operating lease liabilities, on the Consolidated Balance Sheets. Finance leases
are included in property and equipment, accrued expenses and other current liabilities, and other non-current liabilities on the
Consolidated Balance Sheets. Lease liabilities are calculated using the effective interest method, regardless of classification,
while the amortization of the ROU assets varies depending upon classification. Finance lease classification results in a front-
loaded expense recognition pattern over the lease term, which amortizes the ROU assets by recognizing interest expense and
amortization expense as separate components of lease expense and calculates the amortization expense component on a
straight-line basis. Conversely, operating lease classification results in a straight-line expense recognition pattern over the lease
term and recognizes lease expense as a single expense component, which results in amortization of the ROU assets that equals
the difference between lease expense and interest expense. Lease expense for finance and operating leases are included in
SG&A on the Consolidated Statement of Operations and Comprehensive Income. Leases with an initial term of twelve months
or less are not recorded on the Consolidated Balance Sheets.
The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which
are often variable lease payments. Such costs are presented as occupancy costs for finance and operating leases included in
SG&A on the Consolidated Statement of Operations and Comprehensive Income.
Certain of the Company’s lease agreements provide for lease payments based on future sales volumes at the leased
location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the
inception of the lease. The Company expenses such variable amounts in the period incurred, which is the period in which it
becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company’s lease
agreements do not contain any material residual value guarantees or material restrictive covenants.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to
make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement
date based on the present value of lease payments over the reasonably certain lease term. The operating lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Where the Company’s leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing
rate ("IBR") to determine the present value of lease payments. The collateralized IBR is based on a synthetic credit rating that is
externally prepared on an annual basis at the measurement date, and that the Company adjusts quarterly with a yield curve that
approximates the Company’s market risk profile.
In calculating the present value of the lease payments, the Company has elected to utilize its estimated IBR based on the
original lease term and not the remaining lease term. The initial primary term of the Company’s operating leases ranges from
5 to 44 years, with most of these leases having an initial term of 20 years. The initial primary term of the Company’s three
finance leases are 20 years.
61
The following table summarizes the Company’s finance and operating lease liabilities and ROU assets as of January 29,
2022 and January 30, 2021 (in thousands):
Finance Leases:
ROU assets recorded
Accumulated amortization
Lease liability
Operating Leases:
ROU assets recorded
Accumulated amortization
January 29, 2022
January 30, 2021
$
19,283 $
11,706
16,082
19,283
10,578
15,230
2,599,460
467,473
2,363,437
304,674
There were no impairments of ROU assets in fiscal year 2021 or fiscal year 2020. In fiscal year 2019, the Company
recorded an ROU asset impairment charge of $9.6 million.
The following table is a summary of the components of net lease costs for the years ended January 29, 2022, January 30,
2021 and February 1, 2020 (in thousands):
Operating lease cost
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease costs
Sublease income
Variable lease costs
Net lease costs
January 29,
2022
January 30,
2021
February 1,
2020
$
336,094 $
327,325 $
322,346
1,128
4,022
5,150
(980)
85
340,349 $
564
3,965
4,529
(251)
230
331,833 $
1,128
2,503
3,631
—
98
326,075
$
The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases as of
January 29, 2022 were as follows:
Weighted-average remaining lease term (in years)
Weighted-average discount rate
Operating
Leases
Finance
Leases
8.9
7.8 %
11.2
7.7 %
62
Cash paid for amounts included in the measurement of lease liabilities were as follows (in thousands):
Operating cash flows paid for operating leases
Operating cash flows paid for interest portion of finance leases
Financing cash flows paid for principal portion of finance leases
January 29,
2022
January 30,
2021
February 1,
2020
$
325,941 $
4,022
1,112
317,997 $
3,965
984
311,971
2,503
612
Future lease commitments to be paid by the Company as of January 29, 2022 were as follows (in thousands):
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
Total future minimum lease payments
Less: imputed interest
Present value of lease liabilities
Operating
Leases
Finance
Leases
$
$
337,452 $
335,268
317,742
302,356
287,180
1,860,343
3,440,341
(1,239,128)
2,201,213 $
3,601
3,601
3,601
3,928
3,970
11,947
30,648
(14,566)
16,082
As of January 29, 2022, the Company had certain executed real estate and gas station leases that have not yet commenced
and therefore are not reflected in the tables above. These leases are expected to commence in fiscal year 2022 with lease terms
ranging from 6 years to 20 years. We estimate future lease commitments for these leases to be approximately $437.4 million.
5. Debt and Credit Arrangements
Debt consisted of the following at January 29, 2022 and January 30, 2021 (in thousands):
ABL Facility
First Lien Term Loan
Unamortized debt discount and debt issuance costs
Less: Current portion
Long-term debt
ABL Facility
January 29,
2022
January 30,
2021
$
$
50,000 $
701,920
(3,352)
—
748,568 $
310,000
801,920
(5,745)
(260,000)
846,175
The ABL Facility is comprised of a $950.0 million revolving credit facility and a $50.0 million term loan. The ABL
Facility is secured on a senior basis by certain "liquid assets" of the Company and secured on a junior basis by certain "fixed
assets" of the Company. The $50.0 million term loan payment terms are restricted in that the term loan cannot be repaid unless
all loans outstanding under the ABL Facility are repaid, and once repaid, cannot be re-borrowed. The availability under the
$950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as
defined in the facility agreement. As amended, interest on the revolving credit facility is calculated either at LIBOR plus a
range of 125 to 175 basis points or a base rate plus a range of 25 to 75 basis points; and interest on the term loan is calculated at
LIBOR plus a range of 200 to 300 basis points or a base rate plus a range of 100 to 150 basis points, in all cases based on
excess availability. The applicable spread of LIBOR and base rate loans at all levels of excess availability steps down by
12.5 basis points upon achieving total net leverage of 3.00 to 1.00. The ABL Facility also provides a sub-facility for issuance of
letters of credit subject to certain fees defined in the ABL Facility agreement. The ABL Facility is subject to various
commitment fees during the term of the facility based on utilization of the revolving credit facility, which is scheduled to
mature on August 17, 2023.
At January 29, 2022, there was $50.0 million outstanding in borrowings under the ABL Facility and $12.7 million in
outstanding letters of credit. The interest rate on the revolving credit facility was 1.23%, the interest rate of the term loan
was 2.10% and unused capacity was $886.9 million.
63
At January 30, 2021, there was $310.0 million outstanding in borrowings under the ABL Facility and $15.0 million in
outstanding letters of credit. The interest rate on the revolving credit facility was 1.25%, the interest rate on the term loan was
2.14% and unused capacity was $641.1 million.
First Lien Term Loan
The First Lien Term Loan matures on February 3, 2024. Voluntary prepayments are permitted. Principal payments must
be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds
3.50 to 1.00. The First Lien Term Loan is subject to certain affirmative and negative covenants but no financial covenants. It is
secured on a senior basis by certain "fixed assets" of the Company and on a junior basis by certain "liquid" assets of the
Company.
On November 1, 2019, the Company borrowed $200.0 million from the ABL Facility. The proceeds from the Company’s
borrowing were used to pay a portion of the principal amount due on the First Lien Term Loan. In connection with the payment,
the Company expensed $2.0 million of previously capitalized deferred debt issuance costs and original issue discount.
On January 29, 2020, the Company amended its First Lien Term Loan to reduce the applicable interest rates. As amended,
the First Lien Term Loan has an initial principal amount of $1,315.2 million and interest is calculated either at LIBOR plus
225 basis points basis or a base rate plus 125 basis points and provided for a 25 basis point step down in the interest rate upon
the achievement of certain debt ratings upgrades. Total fees associated with the refinancing were approximately $1.7 million.
The Company wrote off $0.1 million of previously capitalized debt issuance costs and original issue discount and expensed
$1.7 million of new third-party fees.
On July 13, 2020, the Company paid $150.0 million of the principal amount due on the First Lien Term Loan. In
connection with the payment, the Company expensed $1.3 million of previously capitalized deferred debt issuance costs and
original issue discount. On July 29, 2020, due to upgrades in credit ratings, the base rate was reduced to LIBOR plus 200 basis
points.
On October 30, 2020, the Company borrowed $260.0 million from the ABL Facility. The proceeds from the Company’s
borrowing, as well as $100.0 million of the Company’s cash and cash equivalents, were used to pay $360.0 million of the
principal amount due on the First Lien Term Loan. In connection with the payment, the Company expensed $2.8 million of
previously capitalized deferred debt issuance costs and original issue discount.
On April 30, 2021, the Company used $100.0 million of cash and cash equivalents to pay $100.0 million of the principal
amount outstanding on the First Lien Term Loan. In connection with the payment, the Company expensed $0.7 million of
previously capitalized debt issuance costs and original issue discount.
There were $701.9 million and $801.9 million outstanding on the First Lien Term Loan at January 29, 2022 and January
30, 2021, respectively. Interest rates for the First Lien Term Loan were 2.11% and 2.13% at January 29, 2022 and January 30,
2021, respectively.
Future minimum payments
Scheduled future minimum principal payments on debt as of January 29, 2022 are as follows (in thousands):
Fiscal Year:
2022
2023
2024
2025
2026
Thereafter
Total
Principal
Payments
$
$
—
751,920
—
—
—
—
751,920
64
6.
Interest Expense, Net
The following details the components of interest expense for the periods presented (in thousands):
Interest on debt
Interest on financing obligations
Debt issuance costs amortization
Original issue discount amortization
Loss on debt extinguishment
Loss on cash flow hedge
Capitalized interest
Interest expense, net
Fiscal Year Ended
January 29, 2022
$
Fiscal Year Ended
January 30, 2021
65,064 $
45,124 $
4,022
2,193
1,195
657
6,340
3,965
2,496
1,865
4,077
6,927
Fiscal Year Ended
February 1, 2020
96,747
2,503
2,745
2,427
3,820
—
(12)
108,230
$
(87)
59,444 $
(9)
84,385 $
7.
Intangible Assets and Liabilities
Intangible assets and liabilities consist of the following (in thousands):
January 29, 2022
Goodwill
$
924,134 $
Gross
Carrying
Amount
Accumulated
Amortization Net Amount
924,134
— $
Intangible Assets Not Subject to Amortization:
BJ’s trade name
Intangible Assets Subject to Amortization:
Member relationships
Private label brands
Total intangible assets
Goodwill
Intangible Assets Not Subject to Amortization:
BJ’s trade name
Intangible Assets Subject to Amortization:
Member relationships
Private label brands
Total intangible assets
$
90,500 $
— $
90,500
245,000
8,500
344,000 $
(212,041)
(7,319)
(219,360) $
32,959
1,181
124,640
January 30, 2021
Gross
Carrying
Amount
Accumulated
Amortization Net Amount
924,134
— $
924,134 $
$
$
$
90,500 $
— $
90,500
245,000
8,500
344,000 $
(202,266)
(6,611)
(208,877) $
42,734
1,889
135,123
$
The Company records amortization expenses of intangible assets as a component of SG&A. Member relationships are
amortized over 15.3 years and private label brands are amortized over 12 years. Member relationships will be amortized
through fiscal year 2026 and private label brands will be amortized through fiscal year 2023.
65
The Company recorded amortization expenses of $10.5 million, $11.9 million and $13.5 million as a component of
SG&A for the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020, respectively. The Company
estimates that amortization expenses related to intangible assets will be as follows in each of the next five fiscal years (in
thousands):
2022
2023
2024
2025
2026
$
Intangible
Assets
9,230
7,866
6,517
5,639
4,887
8.
Commitment and Contingencies
The Company is involved in various legal proceedings that are typical of a retail business. In accordance with applicable
accounting guidance, an accrual will be established for legal proceedings if and when those matters present loss contingencies
that are both probable and estimable. The Company does not believe the resolution of any current proceedings will result in a
material loss to the consolidated financial statements.
9.
Stock Incentive Plans
On June 13, 2018, the Company’s board of directors adopted, and its shareholders approved, the BJ’s Wholesale Club
Holdings, Inc. 2018 Incentive Award Plan (the "2018 Plan"). The 2018 Plan provides for the grant of stock options, restricted
stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock
appreciation rights, and cash awards. Prior to the adoption of the 2018 Plan, the Company granted stock-based compensation to
employees and non-employee directors, respectively, under the Fourth Amended and Restated 2011 Stock Option Plan of BJ’s
Wholesale Club Holdings, Inc. (f/k/a Beacon Holdings, Inc.), as amended (the "2011 Plan"), and the 2012 Director Stock
Option Plan of BJ’s Wholesale Club Holdings, Inc. (f/k/a Beacon Holding Inc.), as amended (the "2012 Director Plan"). No
further grants will be made under 2011 Plan or the 2012 Director Plan.
The 2018 Plan authorizes the issuance of 13,148,058 shares, including 985,369 shares that were reserved but not issued
under the 2011 Plan and the 2012 Director Plan. If an award under the 2018 Plan, 2011 Plan or 2012 Director Plan is forfeited,
expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash
settlement, be used again for new grants under the 2018 Plan. Additionally, shares tendered or withheld to satisfy grant or
exercise price, or tax withholding obligations associated with an award under the 2018 Plan, the 2011 Plan or the 2012 Director
Plan will be added to the shares authorized for grant under the 2018 Plan. The following shares may not be used again for grant
under the 2018 Plan: (1) shares subject to a stock appreciation right ("SAR"), that are not issued in connection with the stock
settlement of the SAR on its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of
options under the 2018 Plan, 2011 Plan or 2012 Director Plan. As of January 29, 2022, there were 5,544,648 shares available
for future issuance under the 2018 Plan.
On April 16, 2021, the Compensation Committee approved a modification to the equity awards agreements under the
2011 Plan, 2012 Director Plan and 2018 Plan. In the event that an employee is terminated due to death or disability, the
modified equity award agreements provide for: (i) full vesting of all time-based awards, including restricted stock awards and
stock options, (ii) pro-rata vesting of all performance-based awards, including performance share units, based on actual
performance as of the end of the applicable performance period, pro-rated based on the period of employment during the
applicable performance period, and (iii) the extension of the post-termination exercise window for vested stock options. The
Company recognized $17.5 million of stock-based compensation expense due to the accelerated vesting of equity awards,
related to the passing of a former executive.
The Company recognized $53.8 million ($38.8 million post-tax), $32.2 million ($23.2 million post-tax) and $18.8 million
($13.5 million post-tax) of total stock-based compensation for fiscal years 2021, 2020 and 2019, respectively. As of January 29,
2022, there was approximately $49.5 million of unrecognized compensation cost, which is expected to be recognized over the
next three years.
Stock option awards are generally granted with vesting periods of three years. All options have a contractual term of ten
years. No options were granted during fiscal year 2021. The fair value of the options granted in fiscal year 2020 and fiscal year
66
2019 was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions (no
dividends were expected).
Risk-free interest rate
Expected volatility
Weighted-average expected option life (in years)
Weighted-average grant-date fair value
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
0.44%
25.0 %
5.75 - 6.0
$6.16 - $6.29 $
2.36%
25.8 %
6.0
8.37
The risk-free interest rate was based on United States Treasury yields in effect at the time of the grant for notes with terms
comparable to the awards. The expected option life represents an estimate of the period of time options are expected to remain
outstanding based upon an average of the vesting and contractual terms of the options. Forfeitures are recorded as incurred.
Presented below is a summary of the stock option activity and weighted-average exercise prices for the fiscal year ended
January 29, 2022:
(Options in thousands)
Outstanding, beginning of period
Granted
Forfeited
Exercised
Outstanding, end of period
Vested and expected to vest, end of period
Exercisable, end of period
Number of Securities to
be Issued Upon Exercise
of Outstanding Options
Weighted-
average Exercise
Price
Weighted-average
Remaining
Contractual Life
(in years)
3,673 $
—
—
(1,391)
2,282
2,282
1,837
17.50
—
—
13.94
19.68
19.68
18.11
6.6
6.6
6.4
The total intrinsic value of options exercised in fiscal years 2021, 2020 and 2019 was $55.2 million, $45.0 million and
$37.1 million, respectively. The Company received a tax benefit related to these option exercises of approximately $15.5
million, $12.6 million and $10.4 million in fiscal years 2021, 2020 and 2019, respectively. As of January 29, 2022, the total
intrinsic value of options vested and expected to vest was $87.3 million.
Presented below is a summary of our non-vested restricted shares, restricted stock units and performance stock and
weighted-average grant-date fair values for the fiscal year ended January 29, 2022:
Restricted Stock
Restricted Stock Units
Performance Stock
(Shares in thousands)
Outstanding, beginning of period
Granted
Forfeited
Vested
Outstanding, end of period
Shares
Weighted-
average
Grant-Date
Fair Value
26.29
45.03
39.76
29.59
34.36
1,575 $
509
(14)
(1,017)
1,053 $
Shares
Weighted-
average
Grant-Date
Fair Value
34.54
46.82
—
34.60
46.82
29 $
26
—
(29)
26 $
Shares
Weighted-
average
Grant-Date
Fair Value
23.96
45.18
28.98
—
39.76
527 $
429
(282)
—
674 $
67
As it relates to performance stock, the table above reflects a 100% payout, but the ultimate payout could be up to 200%.
The fair value as of the vesting date was $46.9 million for restricted stock and $1.3 million for restricted stock units.
2018 Employee Stock Purchase Plan
On June 14, 2018, the Company’s board of directors adopted and and its shareholders approved the BJ's Wholesale Club
Holdings, Inc. 2018 Employee Stock Purchase Plan (the "ESPP"), which became effective the day prior to the first day of
public trading of the Company's equity securities. The aggregate number of shares of common stock that was be reserved for
issuance under our ESPP was be equal to the sum of (i) 973,014 shares and (ii) an annual increase on the first day of each
calendar year beginning in 2019 and ending in 2028 equal to the lesser of (A) 486,507 shares, (B) 0.5% of the shares
outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of
shares as determined by the board of directors. The offering under the ESPP commenced on January 1, 2019. The amount of
expense recognized in the fiscal years ended January 29, 2022, January 30, 2021 and February 1, 2020 was $0.8 million, $0.6
million and $0.4 million, respectively.
10. Treasury Shares and Share Repurchase Programs
Treasury Shares Acquired on Restricted Stock Awards
On June 27, 2019, the Company completed an offering of 9,977,024 shares of the Company’s common stock and, in
connection with the offering, the Company repurchased 2,500,000 shares of common stock at a price of $25.41 per share. These
repurchased shares are being held in treasury.
In addition, 376,758 shares and 212,173 shares were reacquired to satisfy tax withholding obligations upon the vesting of
restricted stock awards in fiscal year 2021 and fiscal year 2020, respectively. These reacquired shares were recorded as $16.8
million and $6.5 million of treasury stock in fiscal years 2021 and 2020, respectively.
Share Repurchase Programs
On December 19, 2019, the Company’s board of directors authorized the repurchase of up to $250.0 million of the
Company’s outstanding common stock from time to time as market conditions warrant (the "2019 Repurchase Program"). The
2019 Repurchase Program was fully exhausted on November 17, 2021.
On November 16, 2021, the Company’s board of directors approved a new share repurchase program (the "2021
Repurchase Program"), effective immediately, that allows the Company to repurchase up to $500.0 million of its outstanding
common stock. The 2021 Repurchase Program expires in January 2025. The Company initiated the 2019 Repurchase Program
and the 2021 Repurchase Program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted
by the Company, in addition to enhancing shareholder value.
As of January 29, 2022, $471.2 million remained available to purchase under the 2021 Repurchase Program. In fiscal year
2021, the Company repurchased 3,331,956 shares of common stock totaling $179.2 million, including 2,880,614 shares of
common stock totaling $150.4 million under the 2019 Repurchase Program.
11. Income Taxes
The provision for income taxes from continuing operations includes the following (in thousands):
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
Federal:
Current
Deferred
State:
Current
Deferred
Total income tax provision
88,507 $
1,951
94,947 $
(1,130)
43,118
(2,457)
131,119 $
51,074
(8,066)
136,825 $
29,187
9,541
16,780
704
56,212
$
$
68
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:
Statutory federal income tax rates
State income taxes, net of federal tax benefit
Work opportunity and solar energy tax credit
Charitable contributions
Prior year adjustments
Excess tax benefit related to share-based payments
Other
Effective income tax rate
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
21.0 %
5.8
(0.8)
(0.3)
—
(2.4)
0.2
23.5 %
21.0 %
6.1
(0.6)
(0.2)
(0.2)
(1.5)
(0.1)
24.5 %
21.0 %
5.7
(1.0)
(0.2)
0.1
(2.7)
0.1
23.0 %
Significant components of the Company’s deferred tax assets and liabilities as of January 29, 2022 and January 30, 2021
are as follows (in thousands):
Deferred tax assets:
Operating lease liability
Self-insurance reserves
Compensation and benefits
Financing obligations
Interest rate swap
Environment clean up reserve
Startup costs
Other
Total deferred tax assets
Deferred tax liabilities:
Operating lease right-of-use assets
Property and equipment
Intangible assets
Debt costs
Other
Total deferred tax liabilities
Net deferred tax liabilities
January 29,
2022
January 30,
2021
$
$
$
$
616,340 $
37,188
25,958
3,287
87
4,939
1,987
22,863
712,649 $
596,957 $
116,053
34,899
1,324
10,759
759,992
(47,343) $
593,699
34,272
28,549
2,881
8,620
4,450
2,413
18,412
693,296
576,425
104,458
37,834
1,849
12,089
732,655
(39,359)
The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable
income during the periods in which the temporary differences become deductible. The Company has determined that it is more
likely than not that the results of future operations and the reversals of existing taxable temporary differences will generate
sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance has been recorded. In making this
determination, the Company considered historical levels of income as well as projections for future periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance, beginning of period
Additions for tax positions taken during the current year
Lapses in statute of limitations
Balance, end of period
Fiscal Year Ended
January 29, 2022
$
Fiscal Year Ended
January 30, 2021
2,161
97
(57)
2,201
2,201 $
105
(43)
2,263 $
$
69
The total amount of unrecognized tax benefits, reflective of federal tax benefits at both January 29, 2022 and January 30,
2021 that, if recognized, would favorably affect the effective tax rate was $2.0 million and $1.9 million, respectively.
As of January 29, 2022, management has determined it is reasonably possible that the total amount of unrecognized tax
benefits could decrease within the next twelve months by $1.0 million, due to the expiration of statute of limitations and
expected resolution of state tax audits. The Company’s tax years from 2017 forward remain open and are subject to
examination by the Internal Revenue Service or various state taxing jurisdictions.
The Company classifies interest expense and any penalties related to income tax uncertainties as a component of income
tax expense, which is consistent with the recognition of these items in prior reporting periods. For the periods ended January 29,
2022 and January 30, 2021, the Company recognized no interest income or expense. For the period ended February 1, 2020, the
Company recognized $0.3 million of interest income. As of both January 29, 2022 and January 30, 2021, the Company had $0.2
million of accrued interest related to income tax uncertainties.
12. Retirement Plans
Under the Company's 401(k) savings plans, participating employees may make pretax contributions up to 50% of covered
compensation subject to federal limits. The Company matches employee contributions at 50% of the first six percent of covered
compensation. The Company’s expense under these plans was $11.1 million, $11.6 million and $10.0 million for fiscal years
2021, 2020 and 2019, respectively.
The Company has a non-contributory defined contribution retirement plan for certain key employees. Under this plan, the
Company funds annual retirement contributions for the designated participants on an after-tax basis. The Company’s
contributions equaled 5% of the participants’ base salary. Participants become fully vested in their contribution accounts at the
end of the fiscal year in which they complete four full fiscal years of service. Pretax expense under this plan was $1.8 million,
$2.8 million and $2.6 million in fiscal years 2021, 2020 and 2019, respectively.
13. Asset Retirement Obligations
The following is a summary of activity relating to the liability for asset retirement obligations, which the Company will
incur primarily in connection with the expected future removal of solar panels, gasoline tanks and the related infrastructure. The
following is included in other non-current liabilities on the Consolidated Balance Sheets (in thousands):
Balance, beginning of period
Accretion expense
Liabilities incurred during the year
Balance, end of period
Fiscal Year Ended
January 29, 2022
$
Fiscal Year Ended
January 30, 2021
19,329 $
1,419
629
21,378 $
Fiscal Year Ended
February 1, 2020
15,248
1,111
794
17,153
17,153 $
1,302
874
19,329 $
$
70
14. Accrued Expenses and Other Current Liabilities
The major components of accrued expenses and other current liabilities are as follows (in thousands):
Deferred membership fee income
Employee compensation
Outstanding checks and payables
Insurance reserves
Sales, property, use and other taxes
BJ’s Perks rewards
Fixed asset accruals
Deferred revenues
Utilities, advertising and accrued interest
Membership fee income sales reserves and legal reserves
Gift cards
Accrued federal and state income taxes
Repairs and maintenance
Professional services
Other
Total
January 29,
2022
January 30,
2021
$
$
174,916 $
141,863
133,966
48,379
47,161
40,804
29,640
27,717
21,699
14,870
11,799
10,875
10,174
8,251
26,131
748,245 $
155,580
132,341
119,761
46,042
43,803
34,452
13,131
18,118
22,809
12,360
10,293
788
11,347
7,371
23,429
651,625
The following table summarizes membership fee income activity for each of the last two fiscal years (in thousands):
Deferred membership fee income, beginning of period
Cash received from members
Revenue recognized in earnings
Deferred membership fee income, end of period
Fiscal Year Ended
January 29, 2022
$
Fiscal Year Ended
January 30, 2021
143,969
344,715
(333,104)
155,580
155,580 $
380,273
(360,937)
174,916 $
$
15. Other Non-current Liabilities
The major components of other non-current liabilities are as follows (in thousands):
Workers’ compensation and general liability
Co-brand deferred revenue and other
Interest rate swap liability
Asset retirement obligations
Financing obligations
Deferred wage taxes
Total other non-current liabilities
16. Derivative Financial Instruments
Interest Rate Swaps
January 29,
2022
January 30,
2021
$
$
98,851 $
22,082
—
21,378
14,816
—
157,127 $
88,982
12,579
25,279
19,329
14,118
20,593
180,880
On November 13, 2018, the Company entered into three forward starting interest rate swaps (the "Interest Rate Swaps"),
which were effective starting on February 13, 2019 and fixed the LIBOR component of $1.2 billion of its floating rate debt at a
rate of approximately 3.0% from February 13, 2019 until February 13, 2022. The Company elected hedge accounting for the
71
interest rate swap agreements, and, as such, the effective portion of the gains or losses were recorded as a component of other
comprehensive income and the ineffective portion of gains or losses were recorded as interest expense.
On October 30, 2020, the Company borrowed $260.0 million from the ABL Facility. The proceeds from the Company’s
borrowing, as well as $100.0 million of the Company’s cash and cash equivalents, were used to pay $360.0 million of the
principal amount due on the First Lien Term Loan. Due to the payment of debt principal on the First Lien Term Loan, the
Company determined that certain interest payments are no longer probable and that a portion of one of the interest rate swap
agreements would be ineffective as a result of the payment of debt principal, and as such reclassified $5.1 million of losses
recorded in other comprehensive income to interest expense.
On November 10, 2020, the Company terminated one of the Interest Rate Swaps, which fixed $360.0 million of its
floating rate debt at a rate of approximately 3.0%. An additional interest rate swap, which fixed $240.0 million of its floating
rate debt at 3.0% was determined to be ineffective. Gains and losses on the ineffective interest rate swap agreement will be
recorded as interest expense.
On April 30, 2021, the Company used $150.0 million of its cash and cash equivalents to pay $100.0 million of the
principal amount outstanding on the First Lien Term Loan and $50.0 million of the outstanding amounts on the ABL Facility.
The Company accelerated the release of unrealized losses into earnings on the ineffective interest rate swap agreements and
reclassified $4.7 million recorded in other comprehensive income to interest expense, net of tax.
On July 30, 2021, the Company used $210.0 million of its cash and cash equivalents to pay $210.0 million of the principal
amount outstanding on the ABL Facility. The Company accelerated the release of unrealized losses into earnings on the
ineffective interest rate swap agreements and reclassified $3.5 million recorded in other comprehensive income to interest
expense, net of tax.
The Interest Rate Swaps are recorded as a liability of $2.2 million and $26.4 million in fiscal year 2021 and fiscal year
2020, respectively. The net of tax amount for the effective and ineffective Interest Rate Swaps recorded in other comprehensive
income and interest expense, respectively.
There were $24.2 million and $1.7 million of unrealized gains recorded in fiscal years 2021 and 2020, respectively.
The fair value of derivative instruments included on the Consolidated Balance Sheets are as follows (in thousands):
Accounting for Cash Flow
Hedges
Notional
Amount
Fixed Rate Balance Sheet Classification
Interest rate swap
$ 600,000
3.00 %
Interest rate swap
360,000
3.00 %
Interest rate swap
Net carrying amount
240,000
$ 1,200,000
3.00 %
Accrued expenses and other
current liabilities
Accrued expenses and other
current liabilities
Accrued expenses and other
current liabilities
Total liabilities
January
29, 2022
January
30, 2021
$
(1,540) $
(18,828)
—
—
(616)
(2,156) $
(7,525)
(26,353)
$
17. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The fair values of the Company’s derivative instruments are based on quotes received from third-party banks and
represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest
rates as well as the creditworthiness of the counterparties. These inputs are considered to be Level 2.
Financial Assets and Liabilities
The gross carrying amount and fair value of the Company’s debt at January 29, 2022 are as follows (in thousands):
72
First Lien Term Loan
ABL Facility
Total Debt
Carrying
Amount
Fair Value
$
$
701,920 $
50,000
751,920 $
702,053
50,000
752,053
The gross carrying amount and fair value of the Company’s debt at January 30, 2021 are as follows (in thousands):
First Lien Term Loan
ABL Facility
Total Debt
Carrying
Amount
Fair Value
$
$
801,920 $
310,000
1,111,920 $
802,256
310,000
1,112,256
Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
The Company measures certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-
recurring basis. See Note 2 for further information.
The Company believes that the carrying amounts of its other financial instruments, including cash, accounts receivable,
and accounts payable approximates their carrying value due to the short-term maturities of these instruments.
18. Earnings Per Share
The table below reconciles basic weighted-average common shares outstanding to diluted weighted-average common
shares outstanding for fiscal years 2021, 2020 and 2019:
Weighted-average shares of common stock outstanding, used
for basic computation
Plus: Incremental shares of potentially dilutive securities:
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
135,385,777
136,110,860
136,173,675
Stock incentive awards
2,658,750
2,765,637
2,935,513
Weighted-average shares of common stock and dilutive
potential shares of common stock outstanding
138,044,527
138,876,497
139,109,188
The table below summarizes restricted shares and stock options that were excluded from the computation of diluted
earnings for fiscal years 2021, 2020 and 2019, as their inclusion would have been anti-dilutive:
Restricted shares
Stock options
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
31,862
—
206,698
276,415
466,778
626,976
73
19. Condensed Financial Information of Registrant (Parent Company Only)
BJ’S WHOLESALE CLUB HOLDINGS, INC.
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
(Amounts in thousands)
ASSETS
Investment in subsidiaries
SHAREHOLDERS’ EQUITY
Preferred stock; $0.01 par value; 5,000 shares authorized, and no shares issued or
outstanding
Common stock; $0.01 par value; 300,000 shares authorized, 145,451 shares issued
and 135,506 shares outstanding at January 29, 2022; 300,000 shares authorized,
143,428 shares issued and 137,192 shares outstanding at January 30, 2021
Additional paid-in capital
Retained earnings (accumulated deficit)
Treasury stock, at cost, 9,945 shares at January 29, 2022 and 6,236 shares at
January 30, 2021
Total shareholders’ equity
Fiscal Year Ended
January 29, 2022
Fiscal Year Ended
January 30, 2021
$
$
$
648,108 $
319,327
— $
—
1,454
904,009
131,313
(388,668)
648,108 $
1,434
805,849
(295,339)
(192,617)
319,327
BJ’S WHOLESALE CLUB HOLDINGS, INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
Equity in net income of subsidiaries
Net income
Net income per share:
Basic
Diluted
Weighted-average number of common shares outstanding:
Basic
Diluted
Fiscal Year Ended
January 29, 2022
$
426,652 $
426,652
Fiscal Year Ended
January 30, 2021
Fiscal Year Ended
February 1, 2020
187,176
187,176
421,030 $
421,030
$
3.15 $
3.09
3.09 $
3.03
135,386
138,045
136,111
138,876
1.37
1.35
136,174
139,109
A statement of cash flows has not been presented as BJ’s Wholesale Club Holdings, Inc. did not have any cash as of, or
for, the years ended January 29, 2022, January 30, 2021 or February 1, 2020.
Basis of Presentation
These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule
I of Regulation S-X, as the restricted net assets of the subsidiaries of BJ’s Wholesale Club Holdings, Inc. (as defined in Rule
4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the Company. The ability of BJ’s Wholesale Club
Holdings, Inc.’s operating subsidiaries to pay dividends may be restricted due to terms of the subsidiaries’ First Lien Term
Loan and ABL Facility, as defined in Note 5. For example, the covenants of the ABL Facility restrict the payment of dividends
to, among other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if there is
no event of default, availability under the ABL Facility is greater than 12.5% of the lesser of the commitments under the ABL
Facility and the borrowing base under the ABL Facility for 6 months following such dividend or distribution and, if availability
is less than 20% of the lesser of the commitments under the ABL Facility and the borrowing base under the ABL Facility, a
1.00 to 1.00 (or higher) fixed charge coverage ratio for 12 months after giving effect to such dividend or distribution, and (iii) a
basket for up to 6.0% per annum of the net proceeds received by or contributed to the borrower’s common stock from certain of
such public offerings. The covenants of the First Lien Term Loan restrict the payment of dividends and distributions to, among
74
other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if no event of default
exists and the pro-forma total net leverage ratio is less than or equal to 4.25 to 1.00, (iii) a "growing" basket based on, among
other things, retained excess cash flow subject to no event of default and compliance with a pro-forma interest coverage ratio of
greater than or equal to 2.00 to 1.00, and (iv) a basket for 6.0% per annum of the net cash proceeds received from such qualified
IPO that are contributed to the borrower in cash. As of January 29, 2022, the amount of net income free of such restrictions and
available for payment by BJ’s Wholesale Club Holdings, Inc. as dividends was $426.7 million, and the total amount of
restricted net assets of consolidated subsidiaries of BJ’s Wholesale Club Holdings, Inc. was $117.8 million.
All subsidiaries of BJ’s Wholesale Club, Inc. are consolidated. These condensed parent company financial statements
have been prepared using the same accounting principles and policies described in the notes to the consolidated financial
statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method.
75
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in
the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s
management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of
the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation
of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of
January 29, 2022, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the
reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant
to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the most recently completed fiscal quarter that materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting
was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the
Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United
States. Our internal control over financial reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States, and that receipts and
expenditures are being made only in accordance with authorizations of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of January 29, 2022.
In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on
the results of this assessment, management, including our Chief Executive Officer and our Chief Financial Officer, has
concluded that, as of January 29, 2022, our internal control over financial reporting was effective.
The report of our independent registered public accounting firm regarding our internal control over financial reporting is
set forth in this Annual Report on Form 10-K under the caption "Report of Independent Registered Public Accounting Firm"
and is incorporated herein by reference.
The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the
effectiveness of the Company’s internal control over financial reporting as of January 29, 2022.
76
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
77
PART III
The information required by Items 10-14 will be set forth in our Definitive Proxy Statement for our 2022 Annual Meeting
of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this report (the "2022 Proxy Statement"), and is incorporated herein by reference.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item, other than the information about our executive officers contained in the discussion
entitled "Information about our Executive Officers" in Part I of this Annual Report on Form 10-K, is incorporated by reference
to the 2022 Proxy Statement.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the 2022 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to the 2022 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to the 2022 Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the 2022 Proxy Statement.
78
Item 15. Exhibits and Financial Statement Schedules
(1) Financial Statements
PART IV
We include this portion of Item 15 under Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules
All schedules are omitted as the required information is either not present, not present in material amounts or presented
within the consolidated financial statements or related notes.
(3) Exhibits
The following list of exhibits includes exhibits submitted with this Annual Report on Form 10-K as filed with the SEC
and those incorporated by reference to other filings.
79
Exhibit Number
3.1
3.1.1
3.2
4.1
10.1
10.1.1
10.2
10.2.1
10.2.2
10.3#
10.4#
10.5#
10.6#
10.7#
10.8#
10.9#
10.9.1#
Exhibit Description
Second Amended and Restated Certificate of Incorporation of the Company (previously filed as Exhibit
3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019
and incorporated herein by reference).
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the
Company (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June
22, 2020 and incorporated herein by reference).
Second Amended and Restated Bylaws of the Company (previously filed as Exhibit 3.2 to the
Company’s Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and
incorporated herein by reference).
Description of Company’s Securities (previously filed as Exhibit 4.1 to the Company's Annual Report on
Form 10-K on March 19, 2021 and incorporated herein by reference).
Amended and Restated Credit Agreement among BJ’s Wholesale Club, Inc., the Company, Wells Fargo
Bank, National Association, as administrative agent and the other lenders and issuers party thereto from
time to time, dated as of February 3, 2017 (previously filed as Exhibit 10.1 to the Company’s
Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and incorporated
herein by reference).
First Amendment to Amended and Restated Credit Agreement by and among BJ’s Wholesale Club, Inc.,
the Company, Wells Fargo Bank, National Association, as administrative agent and the other lenders
party thereto, dated as of August 17, 2018 (previously filed as Exhibit 10.1(a) to the Company’s
Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and incorporated
herein by reference).
First Lien Term Loan Credit Agreement among BJ’s Wholesale Club, Inc., the Company, the lenders
party thereto from time to time and Nomura Corporate Funding Americas, LLC, as administrative agent
and collateral agent, dated as of February 3, 2017 (previously filed as Exhibit 10.2 to the Company’s
Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and incorporated
herein by reference).
Refinancing Amendment to First Lien Term Loan Credit Agreement by and among BJ’s Wholesale Club,
Inc., the Company, the lenders party thereto from time to time and Nomura Corporate Funding Americas,
LLC, as administrative agent and collateral agent, dated as of August 13, 2018 (previously filed as
Exhibit 10.2(a) to the Company’s Registration Statement on Form S-1 (File No. 333-229593) on
February 11, 2019 and incorporated herein by reference).
Second Refinancing Amendment to First Lien Term Loan Credit Agreement, by and among BJ’s
Wholesale Club, Inc., the Company, the lenders party thereto from time to time and Nomura Corporate
Funding Americas, LLC, as administrative agent and as collateral agent, dated as of January 29, 2020
(previously filed as Exhibit 10.2.2 to the Company’s Annual Report on Form 10-K on March 19, 2020
and incorporated herein by reference).
Employment Agreement between Lee Delaney and BJ’s Wholesale Club, Inc., dated as of January 30,
2020 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.
001-38559) on February 4, 2020 and incorporated herein by reference).
Employment Agreement between Robert W. Eddy and BJ’s Wholesale Club, Inc., dated as of May 10,
2021 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.
001-38559) on May 14, 2021 and incorporated herein by reference).
Employment Agreement between Laura L. Felice and BJ’s Wholesale Club, Inc., dated as of May 10,
2021 (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.
001-38559) on May 14, 2021 and incorporated herein by reference).
Employment Agreement between William C. Werner and BJ's Wholesale Club, Inc. dates as of May 10,
2021 (previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K (File No.
001-38559) on May 14, 2021 and incorporated herein by reference).
Employment Agreement between Jeff Desroches and BJ's Wholesale Club, Inc. dated as of April 8, 2018
(filed herewith).
Employment Agreement between Paul Cichocki and BJ's Wholesale Club, Inc., dated as of January 30,
2020 (previously filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K on March 19,
2021 and incorporated herein by reference).
Fourth Amended and Restated 2011 Stock Option Plan of the Company, effective as of March 24, 2016
(previously filed as Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No.
333-229593) on February 11, 2019 and incorporated herein by reference).
Amendment to the Fourth Amended and Restated 2011 Stock Option Plan of the Company, dated as of
June 14, 2018 (previously filed as Exhibit 10.12(a) to the Company’s Registration Statement on Form
S-1 (File No. 333-229593) on February 11, 2019 and incorporated herein by reference).
80
10.10#
10.10.1#
10.11#
10.12#
10.13#
10.13.1#
10.13.2#
10.14#
10.15#
10.15.1#
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
2012 Director Stock Option Plan of the Company, effective as of April 13, 2012 (previously filed as
Exhibit 10.14 to the Company’s Registration Statement on Form S-1 (File No. 333-229593) on February
11, 2019 and incorporated herein by reference).
Amendment to the 2012 Director Stock Option Plan of the Company, dated as of June 14, 2018
(previously filed as Exhibit 10.14(a) to the Company’s Registration Statement on Form S-1 (File No.
333-229593) on February 11, 2019 and incorporated herein by reference).
2018 Incentive Award Plan of the Company (previously filed as Exhibit 10.16 to the Company’s
Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and incorporated
herein by reference).
Employee Stock Purchase Plan of the Company (previously filed as Exhibit 10.17 to the Company’s
Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and incorporated
herein by reference).
Non-Employee Director Compensation Policy of the Company (previously filed as Exhibit 10.24 to the
Company’s Registration Statement on Form S-1 (File No. 333-229593) on February 11, 2019 and
incorporated herein by reference).
First Amendment to the Non-Employee Director Compensation Policy of the Company, effective as of
October 1, 2020 (previously filed as Exhibit 10.13.1 to the Company's Annual Report on Form 10-K on
March 19, 2021 and incorporated herein by reference).
Second Amendment to the Non-Employee Director Compensation Policy of the Company, effective as of
October 1, 2021 (filed herewith).
Form of Indemnification Agreement for Executive Officers and Directors (previously filed as Exhibit
10.27 to the Company’s Registration Statement on Form S-1 (File No. 333-229593) on February 11,
2019 and incorporated herein by reference).
BJ’s Wholesale Club Annual Incentive Plan, effective as of January 29, 2017 (previously filed as Exhibit
10.15 to the Company's Annual Report on Form 10-K on March 19, 2021 and incorporated herein by
reference).
First Amendment to BJ’s Wholesale Club Annual Incentive Plan, effective as of January 18, 2021
(previously filed as Exhibit 10.15.1 to the Company's Annual Report on Form 10-K on March 19, 2021
and incorporated herein by reference).
List of Subsidiaries of the Company (filed herewith).
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm (filed herewith).
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(filed herewith).
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(filed herewith).
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document (filed herewith)
Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
Inline XBRL Taxonomy Extension Linkbase Document (filed herewith)
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension
information contained in Exhibits 101.*) (filed herewith).
# Represents management compensation plan, contract or arrangement.
Item 16. Form 10-K Summary
None.
81
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
BJ’S WHOLESALE CLUB HOLDINGS, INC.
/s/ Robert W. Eddy
Robert W. Eddy
President & Chief Executive Officer
Dated: March 17, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated.
82
/s/ Robert W. Eddy
Robert W. Eddy
Director, President & Chief Executive Officer
(Principal Executive Officer)
Date: March 17, 2022
/s/ Laura L. Felice
Laura L. Felice
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
Date: March 17, 2022
/s/ Joseph McGrail
Joseph McGrail
Senior Vice President, Controller
(Principal Accounting Officer)
Date: March 17, 2022
/s/ Christopher J. Baldwin
Christopher J. Baldwin
Executive Chairman
Date: March 17, 2022
/s/ Darryl Brown
Darryl Brown
Director
Date: March 17, 2022
/s/ Maile Clark
Maile Clark
Director
Date: March 17, 2022
/s/ Michelle Gloeckler
Michelle Gloeckler
Director
Date: March 17, 2022
/s/ Thomas A. Kingsbury
Thomas A. Kingsbury
Director
Date: March 17, 2022
/s/ Ken Parent
Ken Parent
Director
Date: March 17, 2022
/s/ Christopher H. Peterson
Christopher H. Peterson
Director
Date: March 17, 2022
/s/ Robert Steele
Robert Steele
Director
Date: March 17, 2022
83
/s/ Judith L. Werthauser
Judith L. Werthauser
Director
Date: March 17, 2022
84
.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
Reconciliation to Adjusted EBITDA
(Amounts in millions)
(Unaudited)
Income from continuing operations
Interest expense, net
Provision for income taxes
Depreciation and amortization
Compensatory payments related to options
Stock-based compensation expense
Pre-opening expenses
Management fees
Acquisition and integration costs
Non-cash rent
Strategic consulting
Severance
Other adjustments
Adjusted EBITDA
Note: Numbers may not foot due to rounding.
52 Weeks Ended
February 3, 2018
$
52 Weeks Ended
January 29, 2022
$
52
197
(28)
164
78
9
3
8
—
5
30
9
7
534
427
59
131
181
—
54
15
—
4
6
—
2
1
880
$
$
BJ'S WHOLESALE CLUB HOLDINGS, INC.
Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA
(Amounts in millions)
(Unaudited)
Total debt
Less: Cash and cash equivalents
Net Debt
Adjusted EBITDA
Net debt to LTM adjusted EBITDA
Note: Numbers may not foot due to rounding.
February 3, 2018
January 29, 2022
$ 2,712
$
35
$ 2,677
$
$
534
$
5.0x
749
45
703
880
0.8x
.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Chris Baldwin
Executive Chairman
Darryl Brown
President and Chief Executive Officer of
Shadowbrook Investments, LLC
Bob Eddy
President and Chief Executive Officer
Maile Naylor (nee Clark)
Former Investment Officer of MFS Investment
Management
Ken Parent
Special Advisor of Pilot Flying J
Chris Peterson
Chief Financial Officer and President, Business
Operations of Newell Brands, Inc.
Michelle Gloeckler
Former Executive Vice President and Chief Merchant of
Academy Sports & Outdoors
Rob Steele
Former Vice Chairman of Global Health and Well-Being
of The Procter & Gamble Company
Tom Kingsbury
Former President and Chief Executive Officer of
Burlington Stores, Inc.
Judy Werthauser
Executive Vice President and Chief Experience Officer
of Five Below, Inc.
EXECUTIVE OFFICERS
Bob Eddy
President and Chief Executive Officer, Director
Scott Kessler
Executive Vice President, Chief Information Officer
Laura Felice
Executive Vice President, Chief Financial Officer
Graham Luce
Senior Vice President, General Counsel and Secretary
Paul Cichocki
Executive Vice President, Chief Commercial Officer
Monica Schwartz
Executive Vice President, Chief Digital Officer
Jeff Desroches
Executive Vice President, Chief Operations Officer
Bill Werner
Executive Vice President, Strategy and Development
CORPORATE INFORMATION
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Annual Report and the letter to shareholders contain forward-
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements contained in this Annual
Report and the letter to shareholders that do not relate to matters of
historical fact should be considered forward-looking statements,
including, without limitation, statements regarding our strategic
priorities; our outlook; and expectations regarding our future progress;
as well as statements that include the words “will,” “could,” “predict,”
“continue,” “would,” “expect,” “intend,” “plan,” “believe,” “project,”
“forecast,” “estimate,” “may,” “should,” “anticipate” or the negative of
these terms or other similar expressions. These forward-looking
statements are based on management’s current expectations. These
statements are neither promises nor guarantees, but involve known and
unknown risks, uncertainties and other important factors that may cause
actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Important factors that could
cause our actual results to differ materially from those indicated by the
forward-looking statements made in the Annual Report and the letter to
shareholders are discussed in our Annual Report on Form 10-K. While
we may elect to update such forward-looking statements at some point
in the future, unless required by law, we disclaim any obligation to do
so, even if subsequent events cause our views to change.
SHAREHOLDER INFORMATION
Transfer Agent, Trustee and Registrar
American Stock Transfer & Trust Company
help@astfinancial.com
(800) 937-5449 or (718) 921-8124
https://www.astfinancial.com/contact-us
Form 10-K Requests
Our Annual Report on Form 10-K for the fiscal year
ended January 29, 2022 is incorporated herein and has
been filed with the Securities and Exchange
Commission. Additional copies of the Annual Report
and Form 10-K are available without charge upon
written request by contacting us at our Corporate
Headquarters, attention: Investor Relations.
Corporate Headquarters
25 Research Drive
Westborough, MA 01581
www.bjs.com
Common Stock Data
Traded: NYSE
Symbol: BJ
Investor Relations
Catherine Park
Vice President, Investor Relations
774-512-6744
cpark@bjs.com
Annual Meeting
Our annual meeting of shareholders will be held
virtually on Thursday, June 16, 2022 at 8:00 am
Eastern Time. Please visit
www.virtualshareholdermeeting.com/BJ2022 to listen
to the meeting live, submit questions and vote.
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
101 Seaport Blvd,
Boston, MA 02210
Corporate Counsel
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210