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What changed in BJ's Wholesale Club Holdings, Inc.'s 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of BJ's Wholesale Club Holdings, Inc.'s 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+264 added−253 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-18)

Top changes in BJ's Wholesale Club Holdings, Inc.'s 2026 10-K

264 paragraphs added · 253 removed · 218 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+12 added−10 removed46 unchanged
Biggest changeHe joined the Company in April 2015 as senior vice president, general counsel and secretary and served in that role until March 2023. Prior to joining the Company, Mr. Luce worked at Bain & Company, a management consulting firm, from 2000 to 2015 and Goodwin Procter LLP, a global law firm, from 1995 to 2000.
Biggest changeLuce worked at Bain & Company, a management consulting firm, from 2000 to 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.
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." Our principal operating subsidiary is BJ’s Wholesale Club, Inc., which is a wholly owned subsidiary of BJ's Wholesale Club Holdings.
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." Our principal operating subsidiary is BJ’s Wholesale Club, Inc., which is a wholly owned subsidiary of BJ's Wholesale Club Holdings, Inc.
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").
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 12 electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC").
We limit the items offered in each product line to fast selling styles, 8 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. By contrast, supermarkets normally carry an average of 40,000 SKUs, and supercenters may stock 100,000 SKUs or more.
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. By contrast, supermarkets normally carry an average of 40,000 SKUs, and supercenters may stock 100,000 SKUs or more.
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 its e-commerce site and driving innovation.
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.
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.
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. 14 William C.
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.
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 7 made possible by the high sales volumes and operating efficiencies achieved by warehouse clubs.
We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day grocery deliveries over a one-year period. Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee.
We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day deliveries over a one-year period. Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee.
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.
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. 11 We monitor changes in these laws and believe that we are in material compliance with applicable laws.
Our members appreciate the convenience of the BJ’s mobile app, as evidenced by millions of downloads since fiscal year 2019, as well as ExpressPay®, which allows members to skip checkout lines when they shop in club by paying with their phones.
Our members appreciate the convenience of the BJ’s mobile app, as evidenced by millions of downloads since fiscal year 2019, as well as the usage of ExpressPay®, which allows members to skip checkout lines when they shop in club by paying with their phones.
We rely on contractual provisions to ensure compliance by our vendors. 10 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.
We rely on contractual provisions to ensure compliance by our vendors. 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.
BJ’s consumer-focused private label products, sold under Wellsley Farms ® and Berkley Jensen ® brands, comprised approximately 26% of our total net sales, excluding gasoline, in fiscal year 2023. These products are primarily premium quality and generally are priced below the branded competing product.
BJ’s consumer-focused private label products, sold under Wellsley Farms ® and Berkley Jensen ® brands, comprised approximately 26% of our total net sales, excluding gasoline, in fiscal year 2024. These products are primarily premium quality and generally are priced below the branded competing product.
We believe that members can save over ten times their $55 Club Card 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.
We believe that members can save over ten times their $60 Club Card 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.
The above omnichannel 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.
The above digital portfolio offers our members convenient ways to shop, including our BOPIC service, curbside delivery, same-day delivery or traditional ship-to-home service. Our app delivers personalized promotions, improved shopping experiences, and an efficient gateway to our fulfillment options.
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 access to a fitness center for team members.
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 access to a fitness center for team members.
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. 14
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. 15
She also held the position of North America chief information officer at Fresenius from March 2020 to January 2021. From October 2018 to March 2020, she served as chief information officer at Hill-Rom, a medical technology provider. Prior to these positions, Mr.
She also held the position of North America chief information officer at Fresenius from March 2020 to January 2021. From October 2018 to March 2020, she served as chief information officer at Hill-Rom, a medical technology provider. Prior to these positions, Ms.
Werner 46 William C. Werner has served as BJ’s executive vice president, strategy and development since April 2021 and is responsible for building the Company’s market expansion and key strategic initiatives. Mr.
Werner 47 William C. Werner has served as BJ’s Executive Vice President, Strategy and Development since April 2021 and is responsible for building the company’s market expansion and key strategic initiatives. Mr.
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 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. Total Rewards .
A summary of our club locations by state as of February 3, 2024 is set forth in the table below: Market Club Count New York 49 Florida 37 Massachusetts 25 New Jersey 23 Pennsylvania 19 Virginia 14 Connecticut 13 Maryland 12 North Carolina 9 Ohio 8 New Hampshire 7 Georgia 6 Michigan 5 Delaware 4 Rhode Island 4 Maine 3 Tennessee 2 Alabama 1 Indiana 1 South Carolina 1 Segments Our retail operations, which include retail club and other sales procured from our clubs and distribution centers, represent substantially all of our consolidated total revenues, and are our only reportable segment.
A summary of our club locations by state as of February 1, 2025 is set forth in the table below: Market Club Count New York 49 Florida 39 Massachusetts 25 New Jersey 23 Pennsylvania 20 Virginia 14 Connecticut 13 Maryland 12 North Carolina 9 Ohio 8 New Hampshire 7 Georgia 6 Michigan 5 Delaware 4 Rhode Island 4 Tennessee 4 Maine 3 Indiana 2 Alabama 1 Kentucky 1 South Carolina 1 Segments Our retail operations, which include retail club and other sales procured from our clubs and distribution centers, represent substantially all of our consolidated total revenues, and are our only reportable segment.
Item 1. Business General BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily on the eastern half 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 .
Item 1. Business General BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States. We deliver significant value to our members, consistently offering up to 25% savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors.
Cichocki worked at Bain & Company, a management consulting firm, from 1997 to April 2020 where he spent over 20 years supporting clients across a broad range of industries, including retail, consumer products, financial services and food and beverage. Prior to Bain & Company, Mr.
Prior to joining BJ’s, Mr. Cichocki most recently worked at Bain & Company, a management consulting firm, from 1997 to April 2020 where he spent over 20 years supporting clients across a broad range of industries, including retail, consumer products, financial services and food and beverage. Prior to Bain & Company, Mr.
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.
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. 10 Our clubs are also subject to various local, state and federal laws, regulations and administrative practices affecting our business.
Customers at warehouse clubs are generally limited to members who pay an annual fee. 7 Our Clubs As of February 3, 2024, we operated 243 clubs ranging in size from 44,000 square feet to 177,000 square feet. We aim to locate our larger clubs in high density, high traffic locations that are difficult to replicate.
Customers at warehouse clubs are generally limited to members who pay an annual fee. Our Clubs As of February 1, 2025, we operated 250 clubs ranging in size from 44,000 square feet to 177,000 square feet. We aim to locate our larger clubs in high density, high traffic locations that are difficult to replicate.
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 Offerings We have built a robust omnichannel portfolio which consists of BJs.com, BerkleyJensen.com, Wellsleyfarms.com, as well as the BJ’s mobile app.
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. Digital Offerings We have built a robust digital portfolio which includes BJs.com and the BJ’s mobile app.
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, as well as through the DoorDash and Instacart marketplaces where members receive the same preferential pricing as in-club shoppers by linking their membership.
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 delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces.
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 approximately $4.1 billion in annual sales.
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 approximately 26% of our total net sales, excluding gasoline.
On May 2, 2022, the Company completed its acquisition of the assets and operations of four distribution centers and the related private transportation fleet from Burris Logistics (the "Acquisition"), which brings substantially all of the end-to-end perishable supply chain in-house. See " Note 20 .
On May 2, 2022, we completed our acquisition of the assets and operations of four distribution centers and the related private transportation fleet from Burris Logistics (the "Acquisition"), to bring substantially all of the end-to-end perishable supply chain in-house. See " Note 20 .
Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $420.7 million for fiscal year 2023.
Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $456.5 million for fiscal year 2024.
We have over 7 million members paying annual fees to gain access to savings on groceries and general merchandise and services. The annual membership fee for our Club Card membership is generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $110.
We have over 7.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. Through December 31, 2024, the annual membership fee for our Club Card membership was generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, was generally $110.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 243 large-format, high volume warehouse clubs and 174 gas stations spanning 20 states as of fiscal year end 2023.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 250 large-format, high volume warehouse clubs and 186 gas stations spanning 21 states as of fiscal year end 2024.
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 86% of our merchandise sales for fiscal year 2023. • General merchandise and services: consists of electronics, apparel, seasonal goods, small appliances, televisions, optical, tires, and gift cards, which constituted approximately 14% of our merchandise sales for fiscal year 2023.
We group our merchandise offerings into two divisions: perishables, grocery and sundries, and general merchandise and services. • Perishables, grocery, and sundries: 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 87% of our merchandise sales for fiscal year 2024. • General merchandise and services: consists of electronics, apparel, seasonal goods, small appliances, televisions, furniture, optical, tires, third-party gift cards, and other revenues, which constituted approximately 13% of our merchandise sales for fiscal year 2024.
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 February 3, 2024, we had 174 gasoline stations in operation at or near our clubs. The gas stations are generally self-service, with some locations accepting cash.
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 February 1, 2025, we had 186 gasoline stations in operation at or near our clubs. The gas stations are generally self-service.
Employees and Human Capital Resources As of February 3, 2024, we had over 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 .
Employees and Human Capital Resources As of February 1, 2025, we had over 33,000 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. Culture.
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.
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.
We provide a curated assortment focused on groceries, continuously refreshed general merchandise, gasoline and other ancillary services, coupon books, and promotions to deliver a differentiated shopping experience that is further enhanced by our omnichannel capabilities.
We provide a curated assortment focused on groceries, fresh foods, general merchandise, gasoline, and other ancillary services to deliver a differentiated shopping experience that is further enhanced by our digital capabilities. Additionally, we provide access to coupons and promotions to deliver further value to our members.
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.
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.
Before joining BJ’s, Ms. Felice worked at Clarks Americas, Inc., a British shoe manufacturer and retailer, from 2008 to 2016 in various roles of increasing responsibility, including serving as the senior vice president of finance from November 2015 to November 2016. In that role, she led all aspects of commercial finance for the Americas region distribution channels. Additionally, Ms.
Felice served as senior vice president, controller and was responsible for the integrity of our financial records. Before joining BJ’s, Ms. Felice worked at Clarks Americas, Inc., a British shoe manufacturer and retailer from 2008 to 2016 in various roles of increasing responsibility including serving as the senior vice president of finance from November 2015 to November 2016.
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 up to a 15-cent per gallon discount on gasoline when paying with a BJ's One™ or BJ's One+™ Mastercard® at our BJ’s Gas locations.
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, up to a 15-cent per gallon discount on gasoline when paying with a BJ's One™ or BJ's One+™ Mastercard® at our BJ’s Gas locations, and effective January 1, 2025, two free same-day deliveries if such benefit has not already been received under the Club+ program.
He holds a juris doctor from Boston University School of Law and bachelor’s degrees in political science and electrical engineering from Tufts University. Monica Schwartz 49 Monica Schwartz has served as BJ’s 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.
He holds a bachelor of science in business administration and management from the University of Phoenix. Monica Schwartz 50 Monica Schwartz has served as BJ’s 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 digital efforts.
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 do not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented . 8 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 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.
Our programs include annual bonuses, 401(k) plans, stock awards, an employee stock purchase plan, non-qualified deferred compensation 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.
Since fiscal year 2014, we have grown co-branded Mastercard® holders by over 1000%. In fiscal year 2023, Club+ members and co-branded Mastercard® members accounted for 38% of members and 49% of merchandise spend (excluding gas and membership fee income), compared to 38% of members and 48% of merchandise spend (excluding gas and membership fee income) in fiscal year 2022.
In fiscal year 2024, Club+ members and co-branded Mastercard® members accounted for 39% of members and 50% of merchandise spend (excluding gas and membership fee income), compared to 38% of members and 49% of merchandise spend (excluding gas and membership fee income) in fiscal year 2023.
In the fourth quarter of fiscal year 2022, we announced the launch of our retail media program, BJ’s Media Edge™. The program offers brands a comprehensive advertising solution to connect with BJ’s members. Membership Paid membership is an essential element of the warehouse club concept.
BJ’s Media Edge™, which launched in fiscal year 2022, is our retail media program that offers brands a comprehensive advertising solution to connect with BJ’s members. 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.
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.
Paul Cichocki 55 Paul Cichocki has served as BJ’s 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.
As a result of these factors, our 11 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.
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.
Luce 54 Graham N. Luce has served BJ’s executive vice president, general counsel and secretary since March 2023. He 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 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 joined the company in April 2015 as senior vice president, general counsel and secretary and served in that role until March 2023. Prior to joining the company, Mr.
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. 12 Information About our Executive Officers The following are the executive officers of BJ’s Wholesale Club as of March 18, 2024: Name Age Office and Business Experience Robert W.
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.
We generally charged $55 per year for a primary Club Card membership that included one additional card for a household member. Primary members could purchase up to three supplemental memberships for $30 each. A primary business membership typically cost $55 per year and included one free supplemental membership.
Through December 31, 2024, we generally charged $55 per year for a primary Club Card membership that included one additional card for a 9 household member, which increased to $60 per year, effective January 1, 2025. Primary members could purchase up to three supplemental memberships for $35 each.
BJ’s Charitable Foundation (the "Foundation") was established with the mission to enrich every community we serve. 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.
BJ’s Charitable Foundation (the "Foundation") was established with the mission to enrich the communities we serve. The Foundation supports nonprofit organizations that primarily benefit the underprivileged in the areas of hunger prevention, education, and health and wellness.
The annual fee for a Club+ membership is generally $110 per year. We also launched our new BJ's One™ and BJ's One+™ Mastercard® credit cards (formerly the My BJ’s Perks® program).
Through December 31, 2024, the annual fee for a Club+ membership was generally $110 per year, which increased to $120 per year, effective January 1, 2025. We also offer our BJ's One™ and BJ's One+™ Mastercard® credit cards (formerly the My BJ’s Perks® program).
U.S. military personnel—active and veteran—who enrolled at a BJ’s club location could do so for a reduced membership fee. 9 Our higher tier membership was rebranded from BJ’s Perks Rewards® to Club+, which offers members the opportunity to earn 2% cash back on most in-club and bjs.com purchases and 5-cent per gallon discount on gasoline.
Our higher tier membership was rebranded from BJ’s Perks Rewards® to Club+, which offers members the opportunity to earn 2% cash back on most in-club and bjs.com purchases, a 5-cent per gallon discount on gasoline, and effective January 1, 2025, two free same-day deliveries.
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. During fiscal year 2023, we rebranded our memberships and co-branded credit card. Historically, we've offered two core types of memberships: the Club Card (formerly Inner Circle®) memberships and business memberships.
During fiscal year 2023, we rebranded our memberships and co-branded credit card. Historically, we've offered two core types of memberships: the Club Card (formerly Inner Circle®) memberships and business memberships.
Felice worked at PricewaterhouseCoopers LLP, serving retail and consumer product companies 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. Ms. Felice also currently serves as a board member of Broadstone Net Lease, LLC (NYSE: BNL).
In that role, 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. Ms.
He also serves as a member of the board of directors and executive committee of the National Retail Federation and the Boston Children’s Hospital Trust. 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. Mr.
Eddy currently serves as chairman of the board of directors and executive committee of the National Retail Federation and as a member of the board of trustees of the Boston Children’s Hospital Trust. In September 2023, he became a director of DICK’s Sporting Goods (NYSE: DKS). From 2013 to 2017, Mr.
Eddy is a graduate of Babson College and attended Phillips Academy in Andover, Massachusetts as well. Laura L. Felice 42 Laura L. Felice has served as BJ’s executive vice president, chief financial officer since April 2021. From November 2016 to April 2021, Ms. Felice served as senior vice president, controller and was responsible for the integrity of our financial records.
Eddy chaired the Financial Executives Council of the National Retail Federation. He is also a member of the College Advisory Board for Babson College. Laura L. Felice 43 Laura L. Felice has served as BJ’s executive vice president, chief financial officer since April 2021. From November 2016 to April 2021, Ms.
He holds a bachelor’s degree in criminal justice and law enforcement administration from American Intercontinental University. 13 Anjana Harve 51 Anjana Harve is executive vice president, chief information officer of the Company. Ms. Harve was named to this position in September 2023 and is responsible for the strategic leadership and direction of the Company’s information technology organization.
Harve was named to this position in September 2023 and is responsible for the strategic leadership and direction of the company’s information technology organization.
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 7 million paid memberships as of February 3, 2024. Our target customers care about value, quality and convenience and shop at warehouse clubs for their family needs.
We have a large base of more than 7.5 million paid memberships as of February 1, 2025. 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.
Eddy joined the Company in 2007 and during his tenure served in various executive financial roles for the Company including as senior vice president finance, executive vice president, chief financial officer, and executive vice president, chief financial and administrative officer. Prior to joining BJ’s, 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 joined the board of directors and became president and chief executive officer. Mr.
Harve also held various technology and other senior management positions during her career, including at Novartis, a Swiss multinational pharmaceutical corporation, and Shire, also a multinational pharmaceutical corporation. Ms. Harve holds a bachelor’s degree in computer science engineering from Bangalore University in India and a master of business administration from the Wharton School at University of Pennsylvania. Graham N.
Harve also held various technology and other senior management positions during her career, including at Novartis, a Swiss multinational pharmaceutical corporation, and Shire, also a multinational pharmaceutical corporation. She also serves on the Supervisory Board of Wolters Kluwer, a global leader in professional information, software solutions and services. Ms.
Eddy served retail and consumer products companies as a member of the audit and business advisory practice of PricewaterhouseCoopers LLP. In addition to his role at BJ’s, Mr. Eddy currently serves as a member of the board of directors of DICK’s Sporting Goods, Inc (NYSE: DKS).
Eddy was named chairman of the board in June 2023. 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.
Substantially 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 .
Substantially all of our identifiable assets are located in the United States.
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Business members could purchase up to eight additional supplemental business memberships at $30 each.
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Effective January 1, 2025, the Club Card membership fee increased to $60 per year and the Club+ membership fee increased to $120 per year. We believe that these membership fee increases will allow us to invest in an even stronger value proposition for our growing member base.
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Our quarterly results have been, and will continue to be, affected by the timing of new club openings and their associated pre-opening expenses.
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A primary business membership typically costs $60 per year, representing an increase from $55 as of January 1, 2025, and includes one free supplemental membership. Business members could purchase up to eight additional supplemental business memberships at $35 each. U.S. military personnel—active and veteran—who enrolled at a BJ’s club location could do so for a reduced membership fee.
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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 2023, 43% of our total workforce were women and 53% were minorities.
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We are driven by a powerful purpose: we take care of the families who depend on us. For our team members, this means creating career opportunities at every level of our company. Our team members include those starting out their careers, those re-entering the work force and part-time workers as well as managers and executives.
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During fiscal year 2023, 40% of our new hires were women and 62% 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.
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Many of our leaders started out as part-time team members in our clubs and distribution centers. Our approach to creating opportunities has enabled us to build a world-class team that is committed to serving our members and making a positive difference in our communities. Team Member Engagement .
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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 .
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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.
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Eddy 51 Robert W. Eddy is chairman and chief executive officer of the Company. He has served as president and chief executive officer of the Company since April 2021. He joined the Company's board as a director in April 2021 and was appointed chairman of the board in June 2023. Mr.
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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. Since its inception in 2004, the BJ's Charitable Foundation has awarded over $37.0 million to non-profit organizations and schools, providing vital support in BJ's communities.
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She holds a master’s degree of accounting and a bachelor’s degree with a double major in finance and accounting from Boston College. Paul Cichocki 54 Paul Cichocki has served as BJ’s executive vice president, chief commercial officer since April 2021 and oversees merchandising, membership, marketing and analytics. From April 2020 to April 2021, Mr.
Added
Information About our Executive Officers The following are the executive officers of BJ’s Wholesale Club as of March 14, 2025: Name Age Office and Business Experience Robert W. Eddy 52 Robert W. Eddy is chairman of the board, president and chief executive officer of the company. Mr.
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Jeff Desroches 46 Jeff Desroches joined BJ's in 2001 and has served as our executive vice president, chief operations officer since April 2018. In his role, Mr.
Added
Felice also currently serves as a board member of Broadstone Net Lease, LLC (NYSE: BNL). She also sits on the Board of Advisors for the Boston Ballet and is a board member of the National Retail Federation Foundation. She holds a master’s degree of accounting and a bachelor’s degree with a double major in finance and accounting from Boston College.
Removed
Desroches leads all operations, club team members, regional field staff, and has oversight of policies and procedures at all the Company’s clubs and fuel stations as well as omni fulfillment, supply chain and asset protection. During his tenure at BJ’s, Mr.
Added
He is also a graduate from the University of Massachusetts, where he received a bachelor’s degree in operations management with high honors. 13 Anjana Harve 52 Anjana Harve is executive vice president, chief information officer of the company. Ms.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch natural disasters or other incidents beyond our control 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 online 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.
Biggest changeSuch natural disasters or catastrophic events beyond our control could result in, among other things: physical damage to one or more of our properties or inventory; the temporary closure of one or more of our clubs, Company-operated or contracted distribution centers or our home office facility; the temporary reduction in the availability of products in our clubs and online or a reduction in demand for certain of our products; 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, each of which could have a negative adverse effect on our business, financial condition, cash flows and results of operations. 17 Disruptions in our merchandise distribution could adversely affect sales and member satisfaction.
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; 19 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.
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.
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 incidents, including tampering with hardware and breaches of our transaction processing or other systems that could 17 result in the compromise of confidential customer or team member data, ransomware or other malware attacks, social engineering, catastrophic events such as fires, earthquakes, tornadoes and hurricanes and errors by our team members.
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 incidents, 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, social engineering, catastrophic events such as fires, earthquakes, tornadoes and hurricanes and errors by our team members.
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, with the use of digital platforms by consumers continuing to increase, and we must keep pace with changing member expectations and new developments by our competitors.
If we do not successfully maintain a relevant digital experience for our members, our results of operations could be adversely impacted. Digital retailing is rapidly evolving, with the use of digital platforms by consumers continuing to increase, and we must keep pace with changing member expectations and new developments by our competitors.
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 incidents; 22 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; and reliance on third parties for same-day home delivery.
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 incidents; 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; and reliance on third parties for same-day delivery.
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 18 we also offer.
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.
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. 24 We are a holding company with no operations of our own, and we depend on our subsidiaries for cash.
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.
Additionally, new laws or regulations on credit card operations may impose certain requirements and limitations on credit card providers. Compliance with these regulations may negatively impact the operation of our co-branded credit card program, resulting in lower revenue streams derived from our co-branded credit card program.
Additionally, new 18 laws or regulations on credit card operations may impose certain requirements and limitations on credit card providers. Compliance with these regulations may negatively impact the operation of our co-branded credit card program, resulting in lower revenue streams derived from our co-branded credit card program.
Deterioration in economic conditions could adversely affect our co-brand credit card program, including the volume of new credit accounts, the amount of credit card balances and the ability of credit card holders to pay their balances. These conditions could result in the Company receiving lower payments under the co-branded credit card program.
Deterioration in economic conditions could adversely affect our co-branded credit card program, including the volume of new credit accounts, the amount of credit card balances and the ability of credit card holders to pay their balances. These conditions could result in the Company receiving lower payments under the co-branded credit card program.
Additionally, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets or other intellectual property. 20 Additionally, we cannot be certain that we do not, or will not in the future, infringe on the intellectual property rights of third parties.
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.
Any such incident 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. Our co-brand credit card program may be affected by economic and regulatory conditions.
Any such incident 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. Our co-branded credit card program may be affected by economic and regulatory conditions.
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.
Additionally, changes in the enacted tax laws, 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.
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; fluctuations in 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 or supply chain issues, could reduce or shift consumer spending generally, which could cause our customers to spend less or to shift their spending to our competitors.
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; fluctuations in 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 or supply chain issues, could reduce, and in some cases have reduced, consumer spending generally, which could cause our customers to spend less or to shift their spending to our competitors.
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 2023. 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.
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 2024. 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.
Any global or regional pandemic, epidemic or outbreak of any highly infection disease, including the emergence of additional COVID-19 variants, 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 or the spread of disease among our team members or employees at a specific location; • 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; • a decrease in consumer discretionary spending and confidence or changes in our members’ needs; and • any inability to continue to provide our team members with appropriate compensation and protective measures and any limited access to our management, support staff and professional advisors.
Any global or regional pandemic, epidemic or outbreak of any highly infectious 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 or the spread of disease among our team members or employees at a specific location; • 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; • a decrease in consumer discretionary spending and confidence or changes in our members’ needs; and • any inability to continue to provide our team members with appropriate compensation and protective measures and any limited access to our management, support staff and professional advisors.
The extent to which global or regional pandemics, epidemics or outbreaks of any highly infectious disease, including the emergence of additional COVID-19 variants, impacts 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 actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.
The extent to which global or regional pandemics, epidemics or outbreaks of any highly infectious disease impacts 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 actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.
Our business could be severely impacted by natural disasters, such as hurricanes or earthquakes, or other incidents beyond our control, such as global or regional pandemics, epidemics or outbreaks of infectious diseases, terrorism, war/conflict, geopolitical tensions or events, riots, acts of violence and other crimes (including looting or vandalism), particularly in locations where our centralized operating systems and administrative personnel are located.
Our business could be severely impacted by natural disasters and extreme weather conditions, such as hurricanes, earthquakes, floods, wildfires or other incidents beyond our control, such as global or regional pandemics, epidemics or outbreaks of infectious diseases, terrorism, war/conflict, geopolitical tensions or events, riots, acts of violence and other crimes (including looting or vandalism), particularly in locations where our centralized operating systems and administrative personnel are located.
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.
Risks Relating to Our Business Our business may be affected by macroeconomic and other market 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.
We have no assurances of continued supply, 15 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.
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.
Our members are increasingly using mobile phones, tablets and other devices to shop and to interact with us through social media, with digitally-enabled comparable sales growth of 28.0% as of the fourth quarter of fiscal year 2023. We continue to make technology investments in our website and mobile application.
Our members are increasingly using mobile phones, tablets and other devices to shop and to interact with us through social media, with digitally-enabled 20 comparable sales growth of 26.0% as of the fourth quarter of fiscal year 2024. We continue to make technology investments in our website and mobile application.
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, war or other civil unrest, 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.
Although we believe that our receiving and distribution process is efficient, unforeseen disruptions in operations due to extreme weather, including hurricanes, earthquakes, tornados, wildfires, floods, or other catastrophic events, labor issues, war or other civil unrest, 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.
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 February 3, 2024.
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 February 1, 2025.
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. 27 We do not currently expect to pay any cash dividends.
If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report 28 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.
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 February 3, 2024, our total outstanding debt was $717.4 million.
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 February 1, 2025, our total outstanding debt was $573.8 million.
Any such program changes or reductions in funding for the SNAP program overall could alter consumer shopping habits resulting in decreased sales at our clubs and thereby materially and adversely affect our business, financial condition and results of operations. Natural disasters and other incidents beyond our control could negatively affect our business, financial condition and results of operations.
Any such program changes or reductions in funding for the SNAP program overall could alter consumer shopping habits resulting in decreased sales at our clubs and thereby materially and adversely affect our business, financial condition and results of operations.
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.
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. 22 We are subject to risks associated with leasing substantial amounts of space.
Disruptions in our merchandise distribution could adversely affect sales and member satisfaction. We depend on the orderly operation of our merchandise receiving and distribution process through our Company-operated distribution centers. All of our end-to-end perishable supply chain has been contained in-house since mid-2022.
We depend on the orderly operation of our merchandise receiving and distribution process through our Company-operated distribution centers. All of our end-to-end perishable supply chain has been contained in-house since mid-2022.
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.
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.
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.
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.
The credit agreements governing our ABL Revolving 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 credit agreements governing our ABL Revolving 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. 26 The restrictions in the credit agreements governing our ABL Revolving 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.
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 and in a timely fashion. We source our merchandise from a wide variety of domestic and international vendors.
We depend heavily on our ability to purchase merchandise in sufficient quantities at competitive prices and in a timely fashion. We source our merchandise from a wide variety of domestic and international vendors.
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.
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.
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 Revolving 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. 21 The operating leases for our retail properties, distribution centers and corporate office expire at various dates through fiscal year 2045.
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 Revolving 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.
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.
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.
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.
Because our decision to issue securities in any future offering 27 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 stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.
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.
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.
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.
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.
Any material interruption to these systems or infrastructure 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 security incident, could be material.
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 security incident, could be material. Global or regional pandemics, epidemics or outbreaks of infectious disease, could have an adverse effect on our business, financial condition and results of operations.
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.
The operating leases for our retail properties, distribution centers and corporate office expire at various dates through fiscal year 2051. 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.
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.
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, by price reductions in response to competition, and by high rates of inflation or deflation. 19 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.
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.
The estimates of fair value of the reporting unit is based on the 25 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.
Foreign Corrupt Practices Act and similar worldwide anti-bribery and anti-kickback laws. We sourced approximately 3% of our merchandise abroad during fiscal year 2023. 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.
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.
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.
We lease most of our retail properties, five of our eight 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.
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.
Any shortages of merchandise (especially seasonal and holiday merchandise), even if temporary, could result in missed opportunities, reducing our sales and profitability.
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.
In addition, a security incident could require that we expend significant additional resources related to the security of information systems and could result in a disruption of our operations. 23 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 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™.
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, and EBT payments. Our efficient operation, like that of most retailers, requires the transmission of information permitting cashless payments.
Any negative impact on the elements of our borrowing base, such as accounts receivable and inventory could reduce our borrowing capacity under the ABL Revolving Facility. 25 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.
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.
We imported approximately 3% of our merchandise directly from foreign countries such as China, Vietnam, Bangladesh and India during fiscal year 2023. In addition, many of our domestic vendors purchase a portion of their products from foreign sources.
We imported approximately 3% of our merchandise directly from overseas countries such as China, Vietnam, Bangladesh and India during fiscal year 2024. In addition, many of the products we purchase from domestic vendors are imported and would be subject to tariffs before reaching our clubs.
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.
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.
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.
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 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.
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. 16 We depend on vendors to supply us with quality merchandise at the right time and at the right price.
In addition, our ability to borrow under the ABL Revolving Facility is limited by the amount of our borrowing base.
In addition, our ability to borrow under the ABL Revolving 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 Revolving Facility.
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 2023, 2022 and 2021 totaled $372.6 million, $368.0 million and $340.3 million, respectively.
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.
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. 16 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.
In addition, increases in distribution costs (including, but not limited to, trucking and freight costs, or otherwise) could adversely affect our expenses, which could adversely affect our operating profit and results of operations.
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.
Our success depends, in part, on our ability to identify and respond to evolving trends in demographics and member preferences.
Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest. 26 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 stockholder value.
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 stockholder value. Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.
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.
It could also result in our customers seeking and obtaining the products in question from our competitors. 24 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 use a combination of insurance and self-insurance plans to provide for potential liability for workers’ compensation, general liability, property, cyber, trucking liability, 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 under the circumstances.
We use a combination of insurance and self-insurance plans to provide for potential liability for workers’ compensation, general liability, property, cyber, trucking liability, fiduciary liability and employee and retiree health care.
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.
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.
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.
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.
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.
We rely on our proprietary intellectual property, including trademarks, to market, promote and sell our products in our clubs.
See “Natural disasters and other incidents beyond our control could negatively affect our business, financial condition and results of operations.” for more information. 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.
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. 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.
Further, we are unable to predict whether unknown claims may be brought against us that could become material. 28 We could be subject to additional income tax liabilities. We compute our income tax provision based on enacted federal and state tax rates.
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 depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs.
We expect that certain new clubs may be leased to us, which will further increase our lease costs and require significant capital expenditures. We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs.
Our future minimum rental commitments for all operating leases in existence as of February 3, 2024 was $324.0 million for fiscal year 2024 and a total of $3.2 billion thereafter. We expect that certain new clubs may be leased to us, which will further increase our lease costs and require significant capital expenditures.
Our net lease cost for fiscal years 2024, 2023 and 2022 totaled $392.5 million, $372.6 million and $368.0 million, respectively. Our future minimum rental commitments for all operating leases in existence as of February 1, 2025 was $361.2 million for fiscal year 2025 and a total of $3.1 billion thereafter.
Global or regional pandemics, epidemics or outbreaks of infectious disease, could have an adverse effect on our business, financial condition and results of operations.
Any material interruption to these systems or infrastructure could have a material adverse effect on our business and results of operations.
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For certain payment methods, we pay interchange and other related card acceptance fees, along with additional transaction processing fees.
Added
If we are unable to purchase goods at attractive prices relative to our competitors, our growth could suffer.
Removed
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, by price reductions in response to competition, and by high rates of inflation or deflation.
Added
Additionally, if a significant vendor, particularly a vendor that supplies high demand products and for which we have limited alternative sources, has a supply chain disruption for any reason that negatively impacts their ability to supply us with the products we need in a timely or cost-effective manner, such disruption could have, and in the past has had, a material impact on our sales and results of operations.
Removed
We are subject to risks associated with leasing substantial amounts of space. We lease most of our retail properties, five of our eight Company-operated distribution centers and our home office.
Added
Natural disasters, extreme weather conditions and catastrophic events beyond our control could negatively affect our business, financial condition and results of operations.
Removed
In addition, a security incident could require that we expend significant additional resources related to the security of information systems and could result in a disruption of our operations.
Added
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.
Removed
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. 23 Factors associated with climate change could adversely affect our business. We use natural gas, propane, diesel oil, refrigerants and electricity in our distribution and sale operations.
Added
Additionally, we rely on third party technology and vendors and other service providers for certain of our critical business functions, and any system failures of these third party providers, whether caused by security breaches, fraud or otherwise, and our our inability to find suitable alternatives in a timely and efficient manner and on acceptable terms, or at all, could disrupt our operations and subject us to losses or costs to remediate any of these deficiencies.
Removed
Increased government regulations relating to climate change, including regulations designed to limit carbon dioxide and other greenhouse gas emissions may result in increased compliance costs and legislation 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.
Added
If our private label brands experience a loss of member acceptance or confidence, our net sales and operating results could be adversely affected. 21 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.
Removed
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 and increased frequency of such conditions, such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels, which could cause significant physical and monetary damage to our clubs, including those we recently opened in Florida and Alabama, two states which have experienced such extreme weather conditions in the past several years.
Added
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePrior to joining BJ’s in 2023, our current CIO served as global chief information officer at a public healthcare company, where she led information technology, privacy assurance, cyber, digital and data security across key business units.
Biggest changeGovernance Related to Cybersecurity Risks Our Chief Information Officer (“CIO”) is responsible for the strategic leadership and direction of the Company’s information technology organization. Prior to joining BJ’s in 2023, our current CIO served as global chief information officer at a public healthcare company, where she led information technology, privacy assurance, cyber, digital and data security across key business units.
Our vendor evaluation procedures include, as appropriate, the completion of a vendor security questionnaire and our implementation of vendor monitoring programs. We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business 29 strategy, results of operations, or financial condition.
Our vendor evaluation procedures include, as appropriate, the completion of a vendor security questionnaire and our implementation of vendor monitoring programs. We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Our cybersecurity risk assessment program includes a number of components, including information security program assessments, audits and maturity assessments, that are conducted periodically by both internal and external resources. Our internal audit function also conducts regular assessments of different systems to provide the audit committee with information on our cybersecurity risk management processes.
Our cybersecurity risk assessment program includes a number of components, including information security program assessments, audits and maturity assessments, that are conducted periodically by both internal and external resources.
However, like other companies in our industry, we and our third-party vendors have from time-to-time experienced threats and security incidents that could affect our information or systems. Governance Related to Cybersecurity Risks Our Chief Information Officer (“CIO”) is responsible for the strategic leadership and direction of the Company’s information technology organization.
However, like other companies in our industry, we and our third-party vendors have from time-to-time experienced threats and security incidents that could affect our information or systems. See “Item 1A. Risk Factors” for additional information on the Company’s cybersecurity-related risks.
Added
Additionally, we partner with multiple third-party managed security service providers for enhanced monitoring of our 30 information technology and data security environment and to perform proactive detection and investigation of malicious activity within our network.
Added
Our internal audit function also conducts regular assessments of different systems to provide the audit committee with information on our cybersecurity risk management processes, which processes are integrated into our overall enterprise risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe operate three cross-dock distribution centers for non-perishable items and also have four perishable item distribution centers which were acquired from Burris Logistics in the second quarter of fiscal year 2022. Our cross-dock distribution centers for non-perishable items are leased under lease agreements expiring between 2031 and 2033, and range between 480,000 and 630,000 square feet in size.
Biggest changeOur cross-dock distribution centers for non-perishable items are leased under lease agreements expiring between 2031 and 2033, and range between 480,000 and 630,000 square feet in size. One of the perishable distribution centers is leased under 31 an lease agreement expiring October 31, 2028 and the remaining three facilities are owned.
Item 2. Properties We operated 243 warehouse club locations as of February 3, 2024, of which 204 are leased under long-term leases and 19 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.
Item 2. Properties We operated 250 warehouse club locations as of February 1, 2025, of which 207 are leased under long-term leases and 22 are owned. We own the buildings at the remaining 21 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.
Our lease agreement for this center expires in 2029. See " Note 6 . Leases" of our consolidated financial statements included in this Annual Report on Form 10-K for additional information with respect to our leases. 30
Leases" of our consolidated financial statements included in this Annual Report on Form 10-K for additional information with respect to our leases.
One of the perishable distribution centers is leased under an lease agreement expiring October 31, 2028 and the remaining three facilities are owned. The perishable distribution centers range between 114,000 and 252,000 square feet in size. We operate another cross-dock distribution center primarily for business-to-business transactions, which occupies a total of approximately 100,000 square feet.
The perishable distribution centers range between 114,000 and 252,000 square feet in size. We operate another cross-dock distribution center primarily for business-to-business transactions, which occupies a total of approximately 100,000 square feet. Our lease agreement for this center expires in 2029.
We transitioned to a new home office in Marlborough, Massachusetts in fiscal year 2022. The home office, which is referred to as our "Club Support Center" occupies a total of 188,000 square feet. The lease expires on August 31, 2042. We terminated the lease on our prior home office in Westborough, Massachusetts in January of fiscal year 2022.
We transitioned to a new home office in Marlborough, Massachusetts in fiscal year 2022. The home office, which is referred to as our "Club Support Center" occupies a total of 188,000 square feet. The lease expires on August 31, 2042. We operate three cross-dock distribution centers for non-perishable items and also have four perishable item distribution centers.
Added
On January 28, 2025, we announced plans to build our fourth ambient distribution center, which will be located in Ohio. The new facility is expected to open in 2027. The new distribution center will expand our supply chain capacity and support our growing footprint. See " Note 6 .

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile 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. 31 PART II
Biggest changeWhile 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. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFebruary 2, 2019 February 1, 2020 January 30, 2021 January 29, 2022 January 28, 2023 February 3, 2024 BJ’s Wholesale Club, Inc. $ 100.00 $ 77.52 $ 158.93 $ 218.85 $ 263.32 $ 243.71 S&P 500 100.00 121.56 142.53 172.46 161.03 199.42 S&P 500 Retail 100.00 120.61 170.52 180.58 149.54 210.02 Issuer Purchases of Equity Securities The following table sets forth information regarding our purchases of shares of our common stock during the fourth quarter of fiscal year 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) (in thousands) October 29, 2023 to November 25, 2023 248,996 $ 68.06 246,000 $ 225,208 November 26, 2023 to December 30, 2023 176,952 65.09 176,952 213,691 December 31, 2023 to February 3, 2024 374,104 65.21 374,104 189,294 Total 800,052 797,056 (1) Includes 2,996 shares of common stock for the period October 29, 2023 to November 25, 2023 surrendered to the Company by employees to satisfy their tax withholding obligations in connection with the vesting of restricted stock awards.
Biggest changeThe comparisons in the table are not intended to forecast or be indicative of possible future performance of our common stock. 33 February 1, 2020 January 30, 2021 January 29, 2022 January 28, 2023 February 3, 2024 February 1, 2025 BJ’s Wholesale Club, Inc. $ 100.00 $ 205.02 $ 282.31 $ 339.67 $ 314.38 $ 482.70 S&P 500 100.00 117.25 141.87 132.47 164.06 202.59 S&P 500 Retail 100.00 141.39 149.72 123.99 174.14 227.91 Issuer Purchases of Equity Securities The following table sets forth information regarding our purchases of shares of our common stock during the fourth quarter of fiscal year 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) (in thousands) November 3, 2024 - November 30, 2024 — $ — — $ 61,017 December 1, 2024 - January 4, 2025 325,000 94.72 325,000 30,233 January 5, 2025 - February 1, 2025 320,294 94.39 320,294 1,000,000 Total 645,294 645,294 (1) No shares of common stock were surrendered to the Company by employees to satisfy their tax withholding obligations in connection with the vesting of restricted stock and performance stock awards during the fourth quarter of fiscal year 2024.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of February 3, 2024, 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., as amended (the "2011 Stock Option Plan"), the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc., as amended (the "2012 Director Stock Option Plan") and the BJ’s Wholesale Club Holdings, Inc.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of February 1, 2025, 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., as amended (the "2011 Stock Option Plan"), the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc., as amended (the "2012 Director Stock Option Plan") and the BJ’s Wholesale Club Holdings, Inc.
Holders As of March 6, 2024, there were approximately four 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.
Holders As of March 5, 2025, there were approximately four 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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol "BJ". As of the end of business on March 6, 2024, the trading price of our common stock closed at $72.15 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the NYSE under the symbol "BJ". As of the end of business on March 5, 2025, the trading price of our common stock closed at $100.09 per share.
Performance Graph The following graph illustrates a comparison of the cumulative total return on our common stock with the cumulative total return for (i) the S&P 500 Index and (ii) the S&P 500 Retail Index for the period from February 2, 2019 through February 3, 2024.
Performance Graph The following graph illustrates a comparison of the cumulative total return on our common stock with the cumulative total return for (i) the S&P 500 Index and (ii) the S&P 500 Retail Index for the period from February 1, 2020 through February 1, 2025.
(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 34 of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of directors.
(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. 35 (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.
Plan category: 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) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Equity compensation plans approved by stockholders 2018 Incentive Award Plan (1) 2,315,809 (2) $ 20.84 (3) 4,925,874 2011 Stock Option Plan 24,741 6.89 — 2012 Director Stock Option Plan 11,813 7.00 — ESPP (4) — 2,407,504 (5) Total equity compensation plans approved by stockholders 2,352,363 7,333,378 Equity compensation plans not approved by stockholders — — Total equity compensation plans approved and not approved by stockholders 2,352,363 7,333,378 (1) 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.
Plan category: 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) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Equity compensation plans approved by stockholders 2018 Incentive Award Plan (1) 1,803,289 (2) $ 19.33 (3) 4,518,327 2011 Stock Option Plan 625 5.72 — 2012 Director Stock Option Plan 11,813 7.00 — ESPP (4) — 2,785,722 (5) Total equity compensation plans approved by stockholders 1,815,727 7,304,049 Equity compensation plans not approved by stockholders — — Total equity compensation plans approved and not approved by stockholders 1,815,727 7,304,049 (1) 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.
See " Note 1 2 . Treasury Shares and Share Repurchase Programs" in the Notes to Audited Consolidated Financial Statements included in this Annual Report on Form 10-K. 33 (2) Excludes the impact of excise tax imposed on share repurchases pursuant to the Inflation Reduction Act.
See " Note 12 . Treasury Shares and Share Repurchase Programs" in the Notes to Audited Consolidated Financial Statements included in this Annual Report on Form 10-K.
(2) Includes (i) 21,726 shares of common stock issuable pursuant to restricted stock units outstanding, (ii) 1,618,318 shares of common stock issuable upon the exercise of outstanding options, and (iii) 675,765 shares of common stock issuable pursuant to performance stock units as of February 3, 2024.
(2) Includes (i) 368,794 shares of common stock issuable pursuant to restricted stock units outstanding, (ii) 808,349 shares of common stock issuable upon the exercise of outstanding options, and (iii) 626,146 shares of common stock issuable pursuant to performance stock units as of February 1, 2025.
(3) As disclosed by the Company on November 18, 2021, the Company’s board of directors approved a share repurchase program (the "2021 Repurchase Program") on November 16, 2021, that allows the Company to repurchase up to $500.0 million of its outstanding common stock. The 2021 Repurchase Program expires in January 2025. Recent Sales of Unregistered Securities None.
The 2021 Repurchase Program expired in the fourth quarter of fiscal 2024. On November 18, 2024, the Company's board of directors approved a new share repurchase program. The authorization allows the Company to repurchase up to $1.0 billion of its outstanding common stock and will expire in January 2029. Recent Sales of Unregistered Securities None.
The graph assumes an investment of $100 in our common stock and in each index at market close on February 2, 2019 32 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.
The graph assumes an investment of $100 in our common stock and in each index at market close on February 1, 2020 and the reinvestment of all dividends.
Removed
(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.
Added
(2) Excludes the impact of excise tax imposed on share repurchases pursuant to the Inflation Reduction Act. 34 (3) On November 18, 2021, the Company announced that on November 16, 2021, the Company’s board of directors approved the 2021 Repurchase Program, that allowed the Company to repurchase up to $500.0 million of its outstanding common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+17 added−14 removed26 unchanged
Biggest changeAdjusted 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; acquisition and integration costs; home office transition costs; restructuring and other adjustments. 40 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: Fiscal Year Ended February 3, 2024 January 28, 2023 (In thousands) Income from continuing operations $ 523,652 $ 514,262 Interest expense, net 64,527 47,462 Provision for income taxes 212,240 176,262 Depreciation and amortization 227,696 200,934 Stock-based compensation expense 39,021 42,617 Acquisition and integration costs (a) — 12,324 Home office transition costs (b) — 14,706 Restructuring (c) 13,940 — Other adjustments (d) 1,053 642 Adjusted EBITDA (e) $ 1,082,129 $ 1,009,209 Adjusted EBITDA as a percentage of net sales 5.5 % 5.3 % __________ (a) Represents costs related to the acquisition and integration of assets from Burris Logistics, including due diligence, legal, and other consulting expenses.
Biggest changeThe following is a reconciliation of our income from continuing operations to adjusted EBITDA for the periods presented: Fiscal Year Ended February 1, 2025 February 3, 2024 (In thousands) Income from continuing operations $ 534,417 $ 523,652 Interest expense, net 51,359 64,527 Provision for income taxes 186,430 212,240 Depreciation and amortization 262,068 227,696 Stock-based compensation expense 47,798 39,021 Restructuring (a) 8,427 13,940 Other adjustments (b) 96 1,053 Adjusted EBITDA $ 1,090,595 $ 1,082,129 (a) Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.
In addition, adjusted EBITDA, comparable club sales, adjusted free cash flow, adjusted net income, and adjusted EPS may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
In addition, adjusted net income, adjusted EPS, adjusted EBITDA, adjusted free cash flow, and comparable club sales may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include, among others, 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 and inflation, tax rates and fuel and energy costs.
Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include, among others, 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 and inflation, tariffs, tax rates and fuel and energy costs.
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.
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 41 as an inference that our future results will be unaffected by unusual or non-recurring items.
We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day grocery deliveries over a one-year period. Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee.
We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day deliveries over a one-year period. Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee.
See “ Note 7. Debt and Credit Arrangements” for future payments on the ABL Revolving Facility and First Lien Term Loan, including outstanding borrowings and applicable interest rates. 43 See “ Note 17.
See “ Note 7. Debt and Credit Arrangements” for future payments on the ABL Revolving Facility and First Lien Term Loan, including outstanding borrowings and applicable interest rates. See “ Note 17.
We also have cancellable and non-cancellable purchase obligations under purchase orders for merchandise, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, and other agreements.
We also have cancellable and non-cancellable purchase obligations under purchase orders for merchandise inventory, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, and other agreements.
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 over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in fiscal year 2023.
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 over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in fiscal year 2024.
On October 12, 2023, the Company amended the First Lien Term Loan to extend the maturity date from February 3, 2027 to February 3, 2029 and reduce applicable margin in respect of the interest rate, effective immediately, from SOFR plus 275 basis points per annum to SOFR plus 200 basis points per annum.
On October 12, 2023, the Company amended the First Lien Term Loan to extend the maturity date from February 3, 2027 to February 3, 2029 and reduce applicable margin in respect of the interest rate from SOFR plus 275 basis points per annum to SOFR plus 200 basis points per annum.
We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, and same-day home delivery will enable us to replicate our profitable club format and provide a differentiated shopping experience.
We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, and ExpressPay will enable us to replicate our profitable club format and provide a differentiated shopping experience.
We provide a curated assortment focused on groceries, continuously refreshed general merchandise, gasoline and other ancillary services, coupon books, and promotions to deliver a differentiated shopping experience that is further enhanced by our omnichannel capabilities.
We provide a curated assortment focused on groceries, continuously refreshed general merchandise, gasoline and other ancillary services, coupon books, and promotions to deliver a differentiated shopping experience that is further enhanced by our digital capabilities.
In addition to relevant GAAP measures we also provide non-GAAP measures, including adjusted EBITDA, comparable club sales, adjusted free cash flow, adjusted net income, and adjusted net income per diluted share ("adjusted EPS") 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.
In addition to relevant GAAP measures, we also provide non-GAAP measures, including adjusted net income, adjusted net income per diluted share ("adjusted EPS"), adjusted EBITDA, adjusted free cash flow, and other key performance indicators, including comparable club sales, 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.
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; share-based compensation, 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.
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; share-based compensation, advertising expenses; tender costs, including credit and debit card fees; amortization of intangible assets; and consulting, legal, insurance, restructuring charges, and other professional services expenses.
Changes in commodity prices and changes in inflation rates have impacted several categories of our business in fiscal year 2023 and may continue to do so. Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, and other factors.
Changes in commodity prices and changes in inflation rates have impacted several categories of our business in fiscal year 2024 and may continue to do so. Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, tariffs, and other factors.
Amounts in excess of certain levels, which range from $0.3 million to $1.0 million per occurrence for workers' compensation and general liability, and up to $2.0 million per occurrence for auto liability, are insured as a risk reduction strategy to mitigate the impact of catastrophic losses on net income.
Amounts in excess of certain levels, which range from $0.3 million to $1.0 million per occurrence for workers' compensation and general liability, and up to $2.0 million per occurrence for auto liability, are insured as a risk reduction strategy to mitigate the impact of catastrophic losses.
Prior to the amendment, the Company repaid $50.0 million of the principal amount outstanding under the First Lien Term Loan. At February 3, 2024, there was $319.0 million outstanding in loans under the ABL Revolving Facility and $18.2 million in outstanding letters of credit. The interest rate on the revolving credit facility was 6.44%, and unused capacity was $802.3 million.
Prior to the amendment, the Company repaid $50.0 million of the principal amount outstanding under the First Lien Term Loan. On February 3, 2024, there was $319.0 million outstanding in loans under the ABL Revolving Facility and $18.2 million in outstanding letters of credit. The interest rate on the revolving credit facility was 6.44%.
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 approximately $4.1 billion in annual sales.
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 approximately 26% of the Company's annual sales.
Adjusted Free Cash Flow We present adjusted 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. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure.
Adjusted Free Cash Flow We present adjusted free cash flow because we believe it assists investors and analysts in evaluating our liquidity. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure.
At February 3, 2024, the interest rate for the First Lien Term Loan was 7.33% and there was $400.0 million outstanding. Material Cash Commitments Refer to the descriptions of our material cash commitments, financing arrangements, and contractual obligations outlined below within the following notes to our consolidated financial statements. See “ Note 6.
At February 1, 2025, the interest rate for the First Lien Term Loan was 6.08% and there was $400.0 million outstanding. Material Cash Commitments Refer to the descriptions of our material cash commitments, financing arrangements, and contractual obligations outlined below within the following notes to our consolidated financial statements. See “ Note 6.
Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $420.7 million for fiscal year 2023. Our business is moderately seasonal in nature.
Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $456.5 million for fiscal year 2024. 36 Our business is moderately seasonal in nature.
We have over 7 million members paying annual fees to gain access to savings on groceries and general merchandise and services. The annual membership fee for our Club Card membership is generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $110.
We have over 7.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. Through December 31, 2024, the annual membership fee for our Club Card membership was generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, was generally $110.
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, as well as through the DoorDash and Instacart marketplaces where members receive the same preferential pricing as in-club shoppers by linking their membership.
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 delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces.
Our membership fee income totaled $420.7 million in fiscal year 2023. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2023.
Our membership fee income totaled $456.5 million in fiscal year 2024. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2024.
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.
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. 37 In addition, the relative level of gasoline prices from period to period may lead to differences in our net sales between those periods.
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 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.
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.
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.
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-based grants or modifications will increase our SG&A.
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 drive comparable club sales growth and our expanding footprint as we open new clubs and distribution centers.
Net Financing Cash Flows Cash used in financing activities in fiscal year 2023 was $262.0 million, compared to $52.6 million in fiscal year 2022.
Net Financing Cash Flows Net cash used in financing activities in fiscal year 2024 was $319.1 million compared to $262.0 million in fiscal year 2023.
On July 28, 2022, the Company entered into the ABL Revolving Facility with an aggregate ABL Revolving Commitment of $1.2 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto. The maturity date of the ABL Revolving Facility is July 28, 2027.
Debt and Credit Arrangements" of our consolidated financial statements included in this Annual Report on Form 10-K. On July 28, 2022, the Company entered into the ABL Revolving Facility with an aggregate ABL Revolving Commitment of $1.2 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto.
Fiscal Year Ended February 3, 2024 Comparable club sales (1.0) % Less: Impact from gasoline sales (2.7) % Merchandise comparable club sales 1.7 % Merchandise comparable club sales increased by 1.7% in fiscal year 2023 driven by an increase in sales of groceries of approximately 3.5%, partially offset by a decrease in sales of general merchandise and services of approximately 8.2%.
Fiscal Year Ended February 1, 2025 Comparable club sales 2.5 % Impact from gasoline sales 0.3 % Merchandise comparable club sales 2.8 % Merchandise comparable club sales increased by 2.8% in fiscal year 2024 compared to fiscal year 2023 driven by increased sales of perishables, of approximately 3.2% as well as increased sales of general merchandise and services of approximately 0.7%.
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. 36 Inflation and deflation trends Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, 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.
Inflation and deflation trends Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, 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.
We define adjusted 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. 42 The following is a reconciliation of our net cash provided by operating activities to adjusted free cash flow for the periods presented: Fiscal Year Ended February 3, 2024 January 28, 2023 (In thousands) Net cash provided by operating activities $ 718,883 $ 788,165 Less: Additions to property and equipment, net of disposals (467,075) (397,803) Plus: Proceeds from sale-leaseback transactions 12,310 27,266 Adjusted free cash flow $ 264,118 $ 417,628 Adjusted free cash flow decreased to $264.1 million for fiscal year 2023 compared to $417.6 million for fiscal year 2022.
The following is a reconciliation of our net cash provided by operating activities to adjusted free cash flow for the periods presented: Fiscal Year Ended February 1, 2025 February 3, 2024 (In thousands) Net cash provided by operating activities $ 900,872 $ 718,883 Less: Additions to property and equipment, net of disposals (587,983) (467,075) Plus: Proceeds from sale-leaseback transactions — 12,310 Adjusted free cash flow $ 312,889 $ 264,118 Adjusted free cash flow increased to $312.9 million for fiscal year 2024 compared to $264.1 million for fiscal year 2023.
We define adjusted EPS as adjusted net income divided by the weighted-average diluted shares outstanding. We believe adjusted net income and adjusted EPS 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.
We believe adjusted net income and adjusted EPS 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. We also use adjusted EPS in connection with establishing long-term incentive compensation.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 244 large-format, high volume warehouse clubs and 175 gas stations spanning 20 states as of the date of this filing. In our core New England market, which has high population density and generates a disproportionate part of U.S.
Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 253 large-format, high volume warehouse clubs and 189 gas stations spanning 21 states as of the date of this filing.
The following tables summarize key components of our results of operations for the periods indicated: Statement of Operations Data Fiscal Year Ended (dollars in thousands, except per share amounts) February 3, 2024 January 28, 2023 Net sales $ 19,548,011 $ 18,918,435 Membership fee income 420,678 396,730 Total revenues 19,968,689 19,315,165 Cost of sales 16,326,129 15,883,677 Selling, general and administrative expenses 2,822,513 2,668,569 Pre-opening expenses 19,628 24,933 Operating income 800,419 737,986 Interest expense, net 64,527 47,462 Income from continuing operations before income taxes 735,892 690,524 Provision for income taxes 212,240 176,262 Income from continuing operations 523,652 514,262 Income (loss) from discontinued operations, net of income taxes 89 (1,085) Net income $ 523,741 $ 513,177 Weighted-average shares outstanding—basic 133,047 134,017 Basic EPS (a) $ 3.94 $ 3.83 Weighted-average shares outstanding—diluted 135,118 136,473 Diluted EPS (a) $ 3.88 $ 3.76 Operational Data: Total clubs at end of period 243 235 Comparable club sales (b) (1.0) % 13.4 % Merchandise comparable club sales (b) 1.7 % 6.5 % Adjusted EBITDA (b) (c) $ 1,082,129 $ 1,009,209 Net cash provided by operating activities 718,883 788,165 Adjusted free cash flow (b) 264,118 417,628 Membership renewal rate 90 % 90 % (a) Basic and diluted EPS are calculated using net income.
The following tables summarize key components of our results of operations for the periods indicated: Statement of Operations Data Fiscal Year Ended (dollars in thousands, except per share amounts) February 1, 2025 February 3, 2024 Net sales $ 20,045,329 $ 19,548,011 Membership fee income 456,475 420,678 Total revenues 20,501,804 19,968,689 Cost of sales 16,737,378 16,326,129 Selling, general and administrative expenses 2,963,883 2,822,513 Pre-opening expenses 28,337 19,628 Operating income 772,206 800,419 Interest expense, net 51,359 64,527 Income from continuing operations before income taxes 720,847 735,892 Provision for income taxes 186,430 212,240 Income from continuing operations 534,417 523,652 Income from discontinued operations, net of income taxes — 89 Net income $ 534,417 $ 523,741 Weighted-average shares outstanding—basic 132,150 133,047 Basic EPS (a) $ 4.04 $ 3.94 Weighted-average shares outstanding—diluted 133,605 135,118 Diluted EPS (a) $ 4.00 $ 3.88 Operational Data: Total clubs at end of period 250 243 Comparable club sales (b) 2.5 % (1.0) % Merchandise comparable club sales (b) 2.8 % 1.7 % Adjusted net income (b) $ 541,111 $ 534,537 Adjusted EPS (b) 4.05 3.96 Adjusted EBITDA (b) 1,090,595 1,082,129 Net cash provided by operating activities 900,872 718,883 Adjusted free cash flow (b) 312,889 264,118 Membership renewal rate 90 % 90 % (a) Basic and diluted EPS are calculated using net income.
(b) See "Fiscal Year 2023 Compared to Fiscal Year 2022," "Non-GAAP Financial Measures" and "Liquidity and Capital Resources" within "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" for definitions.
(b) See "Fiscal Year 2024 Compared to Fiscal Year 2023," "Non-GAAP Financial Measures" and "Liquidity and Capital Resources" within "Item 7.
We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months. During fiscal year 2023, we repurchased 1,958,218 shares under the 2021 Repurchase Program for a total purchase price of $130.2 million.
We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.
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: Fiscal Year Ended February 3, 2024 January 28, 2023 (In thousands) Net cash provided by operating activities $ 718,883 $ 788,165 Net cash used in investing activities (454,765) (747,058) Net cash used in financing activities (261,984) (52,628) Net increase (decrease) in cash and cash equivalents $ 2,134 $ (11,521) Net Operating Cash Flows Net cash provided by operating activities was $718.9 million for fiscal year 2023, compared to $788.2 million for fiscal year 2022.
Summary of Cash Flows A summary of our cash flows from operating, investing and financing activities is presented in the following table: Fiscal Year Ended February 1, 2025 February 3, 2024 (In thousands) Net cash provided by operating activities $ 900,872 $ 718,883 Net cash used in investing activities (589,566) (454,765) Net cash used in financing activities (319,083) (261,984) Net (decrease) increase in cash and cash equivalents $ (7,777) $ 2,134 43 Net Operating Cash Flows Net cash provided by operating activities was $900.9 million for fiscal year 2024, compared to $718.9 million for fiscal year 2023.
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 2023", "fiscal year 2022" and "fiscal year 2021" relate to the 53-weeks ended February 3, 2024 and to the 52-weeks ended January 28, 2023 and January 29, 2022, respectively.
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.
Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures; fund possible acquisitions; fund share repurchases and meet debt service and principal repayment obligations.
As of February 1, 2025, cash and cash equivalents totaled $28.3 million and we had $1.0 billion of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures; fund share repurchases, and meet debt service and principal repayment obligations.
In response to general inflationary volatility, 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.
In response to general inflationary volatility, 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. 38 Results of Operations Information pertaining to fiscal year 2023 was included in the Company’s Annual Report on Form 10-K for the year ended February 3, 2024 in Part II.
Expenses will vary based on the number of club openings, geography of the club, whether the club is owned or leased, and timing of the opening relative to our period end. Pre-opening expenses were $19.6 million in fiscal year 2023 compared to $24.9 million in fiscal year 2022. Pre-opening expenses decreased due to timing of spend for club openings year-over-year.
Pre-opening expenses Pre-opening expenses include startup costs for new clubs and distribution centers and costs for relocated clubs. Expenses will vary based on the number of club openings, geography of the club, whether the club is owned or leased, and timing of the opening relative to our period end.
Interest expense, net Interest expense, net was $64.5 million for fiscal year 2023 compared to $47.5 million for fiscal year 2022. The increase was primarily due to rising interest rates year-over-year on outstanding borrowings. Provision for income taxes The Company’s effective income tax rate from continuing operations was 28.8% for fiscal year 2023 and 25.5% for fiscal year 2022.
The decrease was primarily due to a reduction in average outstanding borrowings and fluctuations in interest rates, partially offset by an increase in expense related to finance leases and failed sale-leaseback transactions year-over-year. Provision for income taxes The Company’s effective income tax rate from continuing operations was 25.9% for fiscal year 2024 and 28.8% for fiscal year 2023.
The increases in the effective tax rate and income tax expense were driven by lower tax benefits from stock-based compensation as well as an immaterial adjustment to certain deferred tax assets related to prior periods. Non-GAAP Financial Measures The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles ("GAAP").
The decrease in the effective income tax rate was primarily driven by higher tax benefits from stock-based compensation year-over-year. Non-GAAP Financial Measures The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with GAAP.
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. 35 Factors Affecting Our Business Overall economic trends The overall economic environment and related changes in consumer behavior have a significant impact on our business.
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.
The year-over-year increase in SG&A was primarily driven by increased labor, occupancy, and depreciation expenses as a result of new club and gas station openings, as well as other continued investments to drive strategic priorities, such as the restructuring of certain corporate functions.
The year-over-year increase in SG&A was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings and an increase in incentive compensation. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense.
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. 38 Cost of sales was $16.3 billion, or 83.5% of net sales, in fiscal year 2023, compared to $15.9 billion, or 84.0% of net sales, in fiscal year 2022.
As noted above, we increased our membership fees effective January 1, 2025 which we anticipate will positively impact membership fee income in fiscal year 2025, and had a minimal impact on fiscal year 2024 results. 40 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.
Workers’ Compensation and General Liability Self-insurance Reserves We are primarily self-insured for workers’ compensation and general liability claims.
This section summarizes critical accounting policies and the related judgments involved in their application. 45 Workers’ Compensation and General Liability Self-insurance Reserves We are primarily self-insured for workers’ compensation, general liability claims, and auto liability claims.
The increase in cash used in fiscal year 2023 is primarily due to a $491.0 million reduction in net proceeds from our ABL Revolving Facility, partially offset by a net decrease of $253.0 million of principal payments on long-term debt, a decrease of $17.1 million for the acquisition of treasury stock, and an increase of $11.3 million of proceeds from financing obligations compared to the prior year.
The increase in cash used in fiscal year 2024 is primarily due to a $58.0 million increase in net payments on our ABL Revolving Facility, as well as an increased outflow of $64.5 million for the acquisition of treasury stock which exhausted the authorization on our previous share repurchase program; partially offset by a $50.0 million net decrease in principal payments on our First Lien Term Loan and an increase in net cash received from stock option exercises of $15.7 million.
On January 5, 2023, the Company amended the First Lien Term Loan to extend the maturity date from February 3, 2024 to February 3, 2027 and transition the interest rate, from LIBOR to SOFR and change the applicable margin from LIBOR plus 200 – 225 basis points per annum to SOFR plus 275 basis points per annum.
On February 3, 2024, the interest rate for the First Lien Term Loan was 7.33% and there was $400.0 million outstanding. On November 4, 2024, the Company amended the First Lien Term Loan to reduce applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum.
Comparable Club Sales and Merchandise Comparable Club Sales We believe net sales is an important driver of our profitability, particularly comparable club sales.
The increase was due primarily to strength in the perishables, grocery, and sundries division, an increase in gasoline sales, and seven club openings during fiscal 2024. Comparable Club Sales and Merchandise Comparable Club Sales We believe net sales is an important driver of our profitability, particularly comparable club sales.
In connection with the amendment the Company paid approximately $151.9 million of the principal amount. On January 28, 2023, there was $405.0 million outstanding in loans under the ABL Revolving Facility and $11.5 million in outstanding letters of credit. The interest rate on the revolving credit facility was 5.63%.
At February 1, 2025, there was $175.0 million outstanding in loans under the ABL Revolving Facility and $11.1 million in outstanding letters of credit. The interest rate on the revolving credit facility was 5.41%, and unused capacity was $1.0 billion.
Fluctuations in net sales are impacted by opening new clubs and comparable club sales. Net sales for fiscal year 2023 were $19.5 billion, a 3.3% increase from net sales reported for fiscal year 2022 of $18.9 billion. The increase was due primarily to strength in the grocery division and an increase of eight clubs, partially offset by lower gasoline sales.
Net Sales Net sales are derived from direct retail sales to our customers, net of merchandise returns and discounts. Fluctuations in net sales are impacted by opening new clubs and gas stations and comparable club sales. Net sales for fiscal year 2024 were $20.0 billion, a 2.5% increase from net sales reported for fiscal year 2023 of $19.5 billion.
The $69.3 million decrease was primarily due to $95.3 million related to accounts payable as a result of timing of inventory receipts and payments, as well as commodity and fuel costs; $49.4 million of lease-related activity primarily due to prepaid rent based on the timing of year-end; $28.7 million related to an increase in merchandise inventory due to the increase in club counts and fuel stations; and $18.7 million related to prepaid expenses and other current assets driven by prepaid advertising and IT maintenance contracts due to the timing of year-end.
The $182.0 million increase was primarily due to fluctuations in working capital, including $82.6 million related to accounts payable as a result of timing of inventory receipts and vendor payments; $64.3 million of lease-related activity primarily due to a decrease in prepaid rent based on the timing of year-end; $61.3 million related to accrued expenses, primarily driven by the change in accrued incentive compensation as a result of differences in the expected achievement from period-to-period; $22.1 million related to merchandise inventories, primarily driven by changes in inventory levels in our perishables and general merchandise divisions; $15.9 million related to prepaid expenses and other current assets, primarily driven by prepaid advertising and IT maintenance contracts; partially offset by $62.4 million related to accounts receivable due to timing of vendor and customer cash receipts.
Adjusted Net Income The adjusted net income and adjusted EPS 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 39 non-recurring, infrequent, or unusual charges, net of the tax impact of such adjustments.
We define adjusted net income as net income as reported, adjusted for non-recurring, infrequent, or unusual charges, including restructuring charges, and other adjustments that the Company believes appropriate, net of the tax impact of such adjustments. We define adjusted EPS as adjusted net income divided by the weighted-average diluted shares outstanding.
Fiscal Year Ended (in thousands, except per share amounts) February 3, 2024 January 28, 2023 Net income as reported $ 523,741 $ 513,177 Adjustments: Acquisition and integration costs (a) — 12,324 Home office transition costs (b) — 14,706 Loss on termination and impairment of discontinued operations club lease — 662 Charges related to debt (c) 1,830 3,256 Restructuring (d) 13,940 — Other adjustments (e) (786) (165) Tax impact of adjustments to net income (f) (4,188) (8,718) Adjusted net income $ 534,537 $ 535,242 Weighted-average diluted shares outstanding 135,118 136,473 Adjusted EPS (g) $ 3.96 $ 3.92 (a) Represents costs related to the acquisition and integration of assets of Burris Logistics, including due diligence, legal, and other consulting expenses.
Fiscal Year Ended (in thousands, except per share amounts) February 1, 2025 February 3, 2024 Net income as reported $ 534,417 $ 523,741 Adjustments: Charges related to debt (a) 870 1,830 Restructuring (b) 8,427 13,940 Other adjustments (c) — (786) Tax impact of adjustments to net income (d) (2,603) (4,188) Adjusted net income $ 541,111 $ 534,537 Weighted-average diluted shares outstanding 133,605 135,118 Adjusted EPS (e) $ 4.05 $ 3.96 (a) Represents the expensing of fees, deferred fees, and original issue discount associated with the amendment of the senior secured first lien term loan.
Results of Operations Information pertaining to fiscal year 2022 was included in the Company’s Annual Report on Form 10-K for the year ended January 28, 2023 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 16, 2023.
"Item 7. Management’s Discussion and Analysis of Financial Position and Results of Operations," which was filed with the SEC on March 18, 2024.
SG&A increased by 5.8% to $2.8 billion in fiscal year 2023 from $2.7 billion in fiscal year 2022.
In addition, any future increases in wages or stock-based grants or modifications will increase our SG&A. SG&A increased by 5.0% to $3.0 billion in fiscal year 2024 from $2.8 billion in fiscal year 2023.
GDP, we operate more than three times the number of clubs compared to the next largest warehouse club competitor.
In our core New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product, we operate more than three times the number of clubs compared to the next largest warehouse club competitor.
Sales of groceries increased during fiscal year 2023 as demand for paper products, beverages, candy, snacks, fresh fruit and vegetables, dairy and bakery categories increased compared to fiscal year 2022, partially offset by a decrease in demand for meat and seafood categories.
In the perishables, grocery, and sundries division, growth was led by fresh produce, dairy, fresh beef, nutrition, beverages, and paper categories compared to fiscal year 2023, partially offset by a decrease in sales of alcohol.
The decrease in net operating cash flows was partially offset by a $71.7 million reduction in accounts receivable due to favorable timing of vendor and customer cash receipts, as well as a $10.6 million increase in net income, inclusive of increases of $26.8 million of depreciation and amortization expense and $27.5 million of deferred income tax expense.
Also contributing to the increase in net operating cash flow was a $10.7 million increase in net income, inclusive of a $34.4 million increase in depreciation and amortization and a net decrease in deferred income tax provisions of $44.1 million.
The decrease is primarily due to $376.5 million of cash outflows in the prior year related to the Acquisition, partially offset by an increase in capital spending, net of proceeds from sale-leaseback transactions, of $84.2 million as our growth profile in fiscal year 2023 was weighted toward owned clubs as opposed to leased clubs.
Net Investing Cash Flows Net cash used in investing activities was $589.6 million in fiscal year 2024, compared to $454.8 million in fiscal year 2023. This fluctuation is primarily driven by an increase in capital spending of $120.9 million as our growth profile includes a greater mix of owned clubs as opposed to leased clubs.
Liquidity and Capital Resources Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of February 3, 2024, cash and cash equivalents totaled $36.0 million and we had $802.3 million of unused capacity under our ABL Revolving Facility.
(b) Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan. Liquidity and Capital Resources Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility.
(e) Other non-cash items related to the reclassification into earnings of accumulated other comprehensive income/ loss associated with the de-designation of hedge accounting and other adjustments. (f) Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%. (g) Adjusted EPS is measured using weighted-average diluted shares outstanding.
(b) Represents charges related to the restructuring of certain corporate functions including, costs for severance, retention, outplacement, consulting fees, and other third-party fees. (c) Other non-cash items related to the reclassification into earnings of accumulated other comprehensive income/ loss associated with the de-designation of hedge accounting and other adjustments.
General merchandise and service sales decreased during fiscal year 2023 due to decreased demand for home goods and seasonal merchandise, as well as lower ancillary income, compared to fiscal year 2022. The impact of gasoline sales is a result of lower retail prices during fiscal year 2023 as compared to fiscal year 2022, as total gallons sold grew year-over-year.
The impact of gasoline sales on comparable club sales is due to a decrease in retail prices year-over-year, partially offset by an increase in comparable gallons sold in fiscal year 2024 compared to fiscal year 2023 and an increase of twelve gas stations.
Debt and Borrowing Capacity Our primary sources of borrowing capacity are the ABL Revolving Facility and the First Lien Term Loan, which are further discussed in " Note 7 . Debt and Credit Arrangements" of our consolidated financial statements included in this Annual Report on Form 10-K.
The increase is driven by higher cash flows from operating activities primarily due to favorable fluctuations in working capital, timing of lease payments, and higher net income, partially offset by an increase in capital spending. 44 Debt and Borrowing Capacity Our primary sources of borrowing capacity are the ABL Revolving Facility and the First Lien Term Loan, which are further discussed in " Note 7 .
Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 50 basis points compared to fiscal year 2022. Merchandise margins were positively impacted by our category management process, moderated supply chain costs, and the mix of sales .
Cost of sales was $16.7 billion, or 83.5% of net sales, in fiscal year 2024, compared to $16.3 billion, or 83.5% of net sales, in fiscal year 2023. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased approximately 10 basis points compared to fiscal year 2023.
Removed
Our quarterly results have been, and will continue to be, affected by the timing of new club openings and their associated pre-opening expenses.
Added
Accordingly, references herein to "fiscal year 2024" and "fiscal year 2022" relate to the 52 weeks ended February 1, 2025 and January 28, 2023, respectively, and references herein to "fiscal year 2023" relate to the 53 weeks ended February 3, 2024.
Removed
In addition, the relative level of gasoline prices from period to period may lead to differences in our net sales between those periods.
Added
Effective January 1, 2025, the Club Card membership fee increased to $60 per year and the Club+ membership fee increased to $120 per year. We believe that these membership fee increases will allow us to invest in an even stronger value proposition for our growing member base.
Removed
(c) Adjusted EBITDA for the fiscal year ended January 28, 2023 has been recast to exclude adjustments for pre-opening expenses and non-cash rent expense to conform to the current period definition. 37 Fiscal Year 2023 Compared to Fiscal Year 2022 Net Sales Net sales are derived from direct retail sales to our customers, net of merchandise returns and discounts.
Added
Factors Affecting Our Business Overall economic trends The overall economic environment and related changes in consumer behavior have a significant impact on our business.
Removed
Membership fee income We continue to see growth in the size of our membership base and continued quality. Membership fee income was $420.7 million in fiscal year 2023, compared to $396.7 million in fiscal year 2022, a 6.0% increase.
Added
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.
Removed
The increase was primarily driven by membership renewals, new members, and penetration of higher-tier membership levels, evidencing the strength of our membership quality.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations" for definitions. 39 Fiscal Year 2024 Compared to Fiscal Year 2023 Full year results for fiscal year 2023 included one additional week (the "53rd week") compared to the full year results for fiscal year 2024.
Removed
Our growth profile this year was weighted toward owned clubs as opposed to leased clubs, elevating our depreciation expense. We expect to continue to invest in member engagement, marketing and digital strategies. Pre-opening expenses Pre-opening expenses include startup costs for new clubs and costs for relocated clubs.
Added
General merchandise and services increased during fiscal year 2024 due to increased demand for toys and electronics, including video games, apparel, and home categories compared to fiscal year 2023, partially offset by a decrease in consumer spending in certain seasonal categories.
Removed
(b) Represents incremental rent expense, termination fee, other non-recurring lease costs, and write-off of impaired assets as the Company transitioned home office locations in fiscal 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of February 3, 2024, our total debt outstanding was $719.0 million, which included $319.0 million under our ABL Revolving Facility and $400.0 million under our First Lien Term Loan at interest rates of 6.44% and 7.33%, respectively. See " Note 7 .
Biggest changeAs of February 1, 2025, our total debt outstanding was $575.0 million, which included $175.0 million under our ABL Revolving Facility and $400.0 million under our First Lien Term Loan at interest rates of 5.41% and 6.08%, respectively. See " Note 7 .
Debt and Credit Arrangements" of our consolidated financial statements included in this Annual Report on Form 10-K for additional information. A 100 basis point change in prevailing market rates would cause annual interest costs to change by approximately $7.2 million. 44
Debt and Credit Arrangements" of our consolidated financial statements included in this Annual Report on Form 10-K for additional information. A 100 basis point change in prevailing market rates would cause annual interest costs to change by approximately $5.8 million. 46

Other BJ 10-K year-over-year comparisons