BJ's Wholesale Club Holdings, Inc.

Hello, everyone, and welcome to the BJ's Wholesale First Quarter 2022 Earnings Conference Call. My name is Victoria, and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. If you wish to withdraw your question, please press star 2. When preparing to ask your question, please ensure that your line is unmuted locally. I'll now pass over to your host, Cathy Park, to begin. Please go ahead.

Good morning, and thank you all for joining BJ's Wholesale and Closet First Quarter Fiscal 2022 Earnings Conference Call. Bob Eddy, President and Chief Executive Officer, Laura Felice, Chief Financial Officer, and Bill Werner, Executive Vice President, Strategy and Development are on the call. Please remember that during this call, we may make forward-looking statements within the meaning of the federal securities laws. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations described on this call. Please see the risk factors section of our most recent Form 10-K and Form 10-Q filed with the SEC for a description of those risks and uncertainties. Finally, please note that on today's call, we will refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release posted on the investor section of our website for a reconciliation of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. With that, I'll turn the call over to Bob.

Good morning. Thank you for joining us today. In the first quarter, we continued to build on the transformational gains we have driven over the last two years. Our membership continues to get stronger, achieving new all-time records in key membership metrics, including eclipsing 6.5 million members in the first quarter. Our digital business remains a key competitive advantage. We are quickly expanding our footprint, opening three clubs already this year. Our recent acquisition of our perishable distribution network from Burroughs Logistics will support our future growth efforts. And with this environment of high inflation and waning government stimulus stretching consumer wallets, value is becoming a necessity in purchasing decisions being made today. As a result, the Club Channel remains more relevant than ever, and we are delivering more value to our members while executing on our key initiatives to drive membership lifetime values. Our performance in the first quarter was strong as we navigated what is already shaping up to be another dynamic year here in 2022. Our first quarter comp sales were up over 4%, adjusted EBITDA grew 9% to $221 million, and adjusted EPS grew 21% to 87 cents. Our comps were driven by significant gains in traffic and market share, and our sales were led by our grocery and perishable categories. The current consumer environment in the gasoline business drove continued increases in comp gallons, up 23% versus last year, and up 51% on a two-year stack basis. This dramatic increase in market share and the rapidly increasing price of gasoline during the first quarter drove traffic into our clubs as members continue to recognize the value of their BJ's membership. We made further progress in the first quarter on our strategic priorities. which are growing and retaining members, delivering value, improving convenience with digital, and expanding our footprint. Let me briefly touch on each. Our membership stats are as strong as I've seen in my history with the company. In the first quarter, our member count grew 5% year over year, reaching 6.5 million members. We achieved this milestone earlier than expected driven by a combination of strong renewals as well as membership acquisition related to new club growth. In terms of membership quality, we made great progress here as well. Easy renewal enrollment was just shy of 76% compared to roughly 72% in the prior year quarter. Higher tier membership penetration grew to 36% in the first quarter, representing a four-point improvement from the first quarter of last year. Higher tier members are more valuable to BJs given higher spending and loyalty. Therefore, as the penetration of these members increases, the quality of our membership improves meaningfully. Not only are we driving growth in membership count and quality, but in MFI per member as well. In fact, in the first quarter, our average MFI dollars per member crossed the $60 mark for the first time in the company's history, up 5% from last year. We're also taking meaningful strides toward achieving our targeted 90% tenured renewal rate, having hit a record 89% last year. Within the membership cohorts that we track, we see encouraging shopping behavior. Crips are increasing, and while we see some pressure on the lower end of the economic spectrum, that is more than offset by gains at the higher end as those members increasingly search for value. We will invest to continue delivering value in order to foster long-term growth The gains in membership count, quality, and rates over the past quarters and years will power us into the future. One of the many benefits of our membership model is that it allows us to truly focus on delivering unbeatable value to our members. Earlier this month, we closed on our acquisition of our perishable supply chain from Barris Logistics. I mentioned last quarter that our fresh foods are a major reason why our members shop our clubs. Having full control over our perishable food supply chain will allow us to provide more value through network efficiencies and also opens the door to long-term growth of the business. There's a lot we can do here to elevate our fresh offering over the long run, but in the meantime, we are thrilled to welcome the over 800 new team members to our BJ Stanley. Improving our merchandising is a crucial element to providing great member experience, and the key is having the right talent. Over the past year, we have been very deliberate and focused on building a best-in-class merchandising team by promoting our star merchants from within, as well as recruiting the best talent externally. In addition to Rachel Vegas, our chief merchant, we now have two incredibly talented individuals heading up our own brands and B2B initiatives. We also hired a fantastic new head of general merchandise. Growth in our general merchandise business is at the top of our list of merchandising improvements to come. The transformation of this company over the last handful of years can be directly linked to attracting and retaining the best talent. Continuing those improvements is my first priority. With respect to our assortment improvement initiatives, we continue to make progress on our sundry simplification work in the first quarter. Our clubs typically carry more SKUs than our warehouse club peers, yet compete in fewer categories, thus eroding our members' ability to efficiently shop our clubs We're looking to change that by reducing skews and categories where we feel there is unnecessary choice and introducing new categories or increasing skews and categories where we feel there is too little choice. The simplified categories performed well in the first quarter and are much easier to shop and service. As you know, one of our ongoing initiatives is increasing the penetration of our own brands, Wellesley Farms and Berkley Jensen. We continue to gain traction in the first quarter with own brands penetration of 200 basis points to an all time high of 24%. I can't think of a better time than in these economic circumstances to lean into our own brands, showcasing value and deepening member loyalty. A recent example of success here is our new Wellesley Farms single cup coffee pods, which we introduced in March. Based on an understanding of our members needs and extensive benchmarking of competitive offerings We invested in a better quality product and delivered savings for our members, bringing our price per cup down by 20% and giving our members more than 40% savings per cup against branded competitors. Eight weeks in, we're already seeing strong sales and repeat rate. This is just one example of our efforts to broaden our own brand's reach. On the digital front, we are driving robust growth across all of our digital channels, particularly in BOPIC and curbside. We also continue to expand the way in which our members conveniently shop with us. We know that digitally engaged members tend to have higher average baskets and shop with us more frequently. And members who make more trips have a higher likelihood of renewing. Our growth in digitally enabled sales continues as we develop new offerings like our partnership with DoorDash and strive towards frictionless shopping. We believe that adding convenient shopping offerings to the significant value offered by the Club Channel is a long-term winner. We also launched Same Day Select in the first quarter, which offers BJS members the ability to pay a one-time fee for either unlimited or 12 same-day grocery deliveries over a one-year period. While it's still in the early days, we are encouraged with the adoption rates and are thrilled to see our efforts resonating with our members. Finally, we remain on track with our real estate plans, and our confidence in our expansion strategy continues to grow with each new club opening. Year to date, we have opened three new clubs and two new gas stations. This includes our small box pilot, BJ's Market, in Warwick, Rhode Island. BJ's Market is about half the size of a typical club. It will serve as a place where we can test assortments, displays, product demonstrations, and convenience initiatives, and then apply those lessons across the broader portfolio to strengthen our operations over time. We continue to expect to open a total of 11 new clubs this year and see a path to opening another 10 next year. I'm proud of the significant transformation we've made at this company. We are a much stronger company with a clear path for sustainable long-term growth and value creation. This is evident in our membership base, digital business, and footprint expansion, and our conviction is further validated by our share purchases executed in the first quarter. These are turbulent economic times. Inflation is continuing, gasoline prices are high, and last year's stimulus benefits are winding down. In light of all this, we've continued to invest in our value proposition. In fact, our internal competitive pricing benchmarks show our pricing positions have improved over the past few quarters. A good example is our signature rotisserie chicken, which at $4.99 maintains industry-leading pricing despite robust inflation impacting this item. We've made similar investments in select categories, such as paper and water, which we know are key member value items. These are the times that our business and the club industry overall was made for. When consumer wallets are pressured, they search for value. When they search for value, they come to us. We believe we are well positioned for the future. Our results remain a testament to the strength of our team members and their continued dedication to the company and serving our members. To our team members who are listening in today, thank you again for all of your hard work. With that, I will turn it over to Laura to provide more details on our results. and outlook for the rest of the year. Laura?