BJ’s Wholesale Club Holdings, Inc. Announces Record Fourth Quarter Fiscal 2018 Results

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) today announced its
financial results for the thirteen and fifty-two weeks ended February 2,
2019.

“We’re pleased with our fourth quarter and full year performance, which
exceeded our expectations for sales and earnings,” said Christopher J.
Baldwin, Chairman and Chief Executive Officer, BJ’s Wholesale Club. “We
ended the year with all-time high renewal rates and membership fee
income. We delivered strong fourth quarter merchandise comp sales,
supported by a successful holiday season and continued momentum through
January. Looking ahead, we intend to continue to invest in our strategic
priorities and look forward to driving further improvement in our
business in 2019 and beyond.”

Key Measures for the Thirteen Weeks (Q4 FY 2018) and Fifty-two Weeks
(FY 2018) Ended February 2, 2019:

53rd Week:

• The fourth quarter and full year of fiscal 2017 included one
  additional week ("53rd week") compared to the fourth quarter and full
  year of fiscal 2018. Net sales and Net income for the 53rd week were
  approximately $240 million and $7 million, respectively.
• Comparable club sales are calculated using the National Retail
  Federation's restated calendar comparing similar weeks and exclude the
  53rd week in fiscal 2017.

Additional Highlights:

• Comparable club sales for the fourth quarter of fiscal 2018 increased
  2.8% compared to the fourth quarter of fiscal 2017. Excluding the
  impact of gasoline sales, merchandise comparable sales increased 2.9%,
  representing the sixth consecutive quarter of positive merchandise
  comparable sales. For fiscal 2018, comparable sales increased 3.7%
  compared to fiscal 2017. Excluding the impact of gasoline sales,
  merchandise comparable sales for fiscal 2018 increased 2.2% compared
  to fiscal 2017.
• Gross profit increased to $628.9 million in the fourth quarter of
  fiscal 2018 from $621.3 million in the fourth quarter of fiscal 2017.
  For the full year gross profit increased to $2.36 billion from $2.24
  billion in fiscal 2017. Excluding the impact of gasoline sales and
  membership fee income, merchandise gross margin rate increased by
  approximately 10 basis points over the fourth quarter of fiscal 2017
  and by approximately 60 basis points over the full year of fiscal
  2017. The improvement was primarily driven by continued progress in
  our category profitability improvement program.
• Selling, general and administrative expenses ("SG&A") were $517.0
  million in the fourth quarter of fiscal 2018 compared to $527.7
  million in the fourth quarter of fiscal 2017 and were $2.05 billion in
  fiscal 2018 compared to $2.02 billion in fiscal 2017. SG&A, excluding
  charges associated with stock-based compensation related to our
  initial public offering (“IPO”), costs related to our IPO and the
  registered offering by selling stockholders (the "offering costs"),
  club asset impairment charges, voluntary retirement severance costs,
  management fees and compensatory payments related to stock options,
  was $516.3 million in the fourth quarter of fiscal 2018 compared to
  $516.7 million in the fourth quarter of fiscal 2017 and was $2.0
  billion in fiscal 2018 compared to $1.9 billion in fiscal 2017. The
  increase in SG&A reflects continued investments to drive the Company’s
  strategic priorities.
• Operating income increased to $109.9 million, or 3.2% of total revenue
  in the fourth quarter of fiscal 2018 compared to $92.7 million, or
  2.6% of total revenue in the fourth quarter of fiscal 2017. Excluding
  the voluntary retirement severance costs and management fees,
  operating income was $103.8 million, or 2.9% of total revenues, in the
  fourth quarter of fiscal 2017. In fiscal 2018, operating income
  increased to $303.5 million from $220.3 million in the prior year.
  Excluding charges associated with stock-based compensation related to
  our IPO, costs related to our IPO and the secondary offering, club
  asset impairment charges, voluntary retirement severance costs,
  management fees and compensatory payments related to stock options,
  operating income increased to $363.5 million in fiscal 2018 from
  $336.4 million in the prior year.
• Interest expense, net, decreased to $26.7 million in the fourth
  quarter of fiscal 2018 compared to $46.5 million in the fourth quarter
  of fiscal 2017. Excluding interest expense incurred on our second lien
  term loan prior to the paydown, interest expense, net, would have been
  $31.1 million in the fourth quarter of fiscal 2017. Interest expense,
  net, decreased to $164.5 million in fiscal 2018 from $196.7 million in
  fiscal 2017. Excluding expenses associated with the 2018 repricing of
  our outstanding borrowings, expenses associated with the paydown of
  our second lien term loan in the second quarter of 2018 and interest
  expense incurred on our second lien term loan prior to this paydown,
  interest expense, net, would have been $114.8 million in fiscal 2018
  compared to $139.5 million in fiscal 2017. The decline in interest
  expense reflects the pay down of debt and the benefit of repricing our
  first lien term loan and ABL facilities in the third quarter of fiscal
  2018.
• Income tax expense was $19.4 million in the fourth quarter of fiscal
  2018 compared to an income tax benefit of $21.9 million in the fourth
  quarter of fiscal 2017. The fourth quarter of fiscal 2018 included a
  benefit of $2.7 million from windfall tax benefits related to
  exercised stock options. The fourth quarter of fiscal 2017 included a
  benefit of approximately $32.1 million, associated with re-measurement
  of net deferred tax liabilities resulting from the Tax Cuts and Jobs
  Act of 2017. For fiscal 2018, income tax expense was $11.8 million
  compared to a benefit of $28.4 million in fiscal 2017.

Fiscal Year (FY) 2019 Outlook

Conference Call Details

A conference call to discuss the fourth quarter fiscal 2018 financial
results is scheduled for today, March 6, 2019, at 8:30 a.m. Eastern
Time. Investors and analysts interested in participating in the call are
invited to dial 877-274-0290 (international callers please dial
647-689-5405) approximately 10 minutes prior to the start of the call. A
live audio webcast of the conference call will be available online at https://investors.bjs.com.

A recorded replay of the conference call will be available within two
hours of the conclusion of the call and can be accessed both online at https://investors.bjs.com
and by dialing 416-621-4642 and entering the access code 7493058. The
recorded replay will be available until March 13, 2019 and an online
archive of the webcast will be available for one year.

About BJ’s Wholesale Club Holdings, Inc.

Headquartered in Westborough, Massachusetts, BJ's Wholesale Club
Holdings, Inc. is a leading operator of membership warehouse clubs in
the Eastern United States. The company currently operates 216 clubs and
138 BJ's Gas® locations in 16 states.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to matters
of historical fact should be considered forward-looking statements,
including, without limitation, statements regarding our strategic
priorities; our anticipated fiscal 2019 outlook; and our future
progress, as well as statements that include the words “expect,”
“intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,”
“should,” “anticipate” and similar statements of a future or
forward-looking nature. 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, including, but not limited to: uncertainties in the
financial markets, consumer and small business spending patterns and
debt levels; our dependence on having a large and loyal membership;
domestic and international economic conditions, including exchange
rates; our ability to procure the merchandise we sell at the best
possible prices; the effects of competition and regulation; our
dependence on vendors to supply us with quality merchandise at the right
time and at the right price; breaches of security or privacy of member
or business information; conditions affecting the acquisition,
development, ownership or use of real estate; our capital spending;
actions of vendors; our ability to attract and retain a qualified
management team and other team members; costs associated with employees
(generally including health care costs), energy and certain commodities,
geopolitical conditions (including tariffs); changes in our product mix
or in our revenues from gasoline sales; our failure to successfully
maintain a relevant omnichannel experience for our members; risks
related to our growth strategy to open new clubs; risks related to
our e-commerce business; and other important factors discussed under the
caption “Risk Factors” in our final prospectus under Rule 424(b) filed
with the U.S. Securities and Exchange Commission (“SEC”) on February 21,
2019, as such factors may be updated from time to time in our other
filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.
These and other important factors could cause actual results to differ
materially from those indicated by the forward-looking statements made
in this press release. Any such forward-looking statements represent
management’s estimates as of the date of this press release. 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. Thus, one should
not assume that our silence over time means that actual events are
bearing out as expressed or implied in such forward-looking statements.
These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of this
press release.

Non-GAAP Financial Measures

We refer to certain financial measures that are not recognized under
U.S. generally accepted accounting principles (“GAAP”). Please see “Note
Regarding Non-GAAP Financial Information and “Reconciliation of GAAP to
Non-GAAP Financial Information” below for additional information and a
reconciliation of the non-GAAP financial measures to the most comparable
GAAP financial measures.

Note Regarding Non-GAAP Financial Information

This press release includes financial measures that are not calculated
in accordance with GAAP, including adjusted net income, adjusted net
income per diluted share, and adjusted EBITDA.

We define adjusted net income as net income attributable to common
stockholders adjusted for: stock-based compensation related to the IPO;
offering costs; management fees; charges incurred in the 2017 dividend
recapitalization; compensatory payments related to options; club asset
impairment; charges related to extinguishing the second lien term loan;
interest and amortization on the second lien term loan; charges and
write-off fees related to the 2018 debt refinancings; the windfall tax
benefit from stock exercises; voluntary retirement severance costs, net
tax benefit related to the re-measurement of net deferred tax
liabilities as a result of the U.S. tax reform enacted in December 2017
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 diluted shares outstanding on the last day of the latest
period presented.

We define adjusted EBITDA as income from continuing operations before
interest expense, net, provision (benefit) for income taxes and
depreciation and amortization, adjusted for the impact of certain other
items, including: compensatory payments related to options; stock-based
compensation expense; preopening expenses; management fees; non-cash
rent; strategic consulting; severance; offering costs; and other
adjustments.

We present adjusted net income, adjusted net income per diluted share
and adjusted EBITDA, which are not recognized financial measures under
GAAP, because we believe it assists investors and analysts in comparing
our operating performance across reporting periods on a consistent basis
by excluding items that we do not believe are indicative of our core
operating performance.

Management believes that adjusted net income, adjusted net income per
diluted share and adjusted EBITDA are helpful in highlighting trends in
our core operating performance compared to other measures, which can
differ significantly depending on long-term strategic decisions
regarding capital structure, the tax jurisdictions in which companies
operate and capital investments. We use adjusted net income, adjusted
net income per diluted share and adjusted EBITDA to supplement GAAP
measures of performance in the evaluation of the effectiveness of our
business strategies; to make budgeting decisions; and to compare our
performance against that of other peer companies using similar measures.
We also use adjusted EBITDA in connection with establishing
discretionary annual incentive compensation.

You are encouraged to evaluate these adjustments and the reasons we
consider them appropriate for supplemental analysis. In evaluating
adjusted net income, adjusted net income per diluted share and adjusted
EBITDA, you should be aware that in the future we may incur expenses
that are the same as or like some of the adjustments in our presentation
of these metrics. Our presentation of adjusted net income, adjusted net
income per diluted share and adjusted EBITDA should not be considered as
alternatives to any other performance measure derived in accordance with
GAAP and they should not be construed as an inference that the Company’s
future results will be unaffected by unusual or non-recurring items.
There can be no assurance that we will not modify the presentation of
adjusted net income, adjusted net income per diluted share, or adjusted
EBITDA in the future, and any such modification may be material. In
addition, adjusted net income, adjusted net income per diluted share, or
adjusted EBITDA may not be comparable to similarly titled measures used
by other companies in our industry or across different industries.
Additionally, adjusted net income, adjusted net income per diluted share
and adjusted EBITDA have limitations as analytical tools, and you should
not consider them in isolation or as a substitute for analysis of our
results as reported under GAAP.

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