What changed in this filing

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Item 1. Financial Statements

2022-08-26 compared with 2022-05-27 · 210 added, 98 removed, 311 unchanged (50% of the section changed)

3 unchanged sentences

(Amounts in thousands, except par value)

April 30, 2022 January 29, 2022 May 1, 2021

July 30, 2022 January 29, 2022 July 31, 2021

Current assets:

12 unchanged sentences

Current liabilities:

Current portion of long-term debt $ 80,000 $ — $ 210,000

Short-term debt $ 350,000 $ — $ —

Current portion of operating lease liabilities 171,568 141,453 134,421

12 unchanged sentences

Common stock, par value $ 0.01 ;

300,000 shares authorized, 145,941 shares issued and 135,195 outstanding at April 30, 2022;

300,000 shares authorized, 146,157 shares issued and 135,052 outstanding at July 30, 2022;

145,451 shares issued and 135,506 outstanding at January 29, 2022;

and 144,018 shares issued and 137,240 outstanding at May 1, 2021

and 144,300 shares issued and 136,347 outstanding at July 31, 2021

1,461 1,454 1,443

2 unchanged sentences

Accumulated other comprehensive income (loss) 2,010 1,305 ( 6,225 )

Treasury stock, at cost, 10,746 shares at April 30, 2022;

Treasury stock, at cost, 11,105 shares at July 30, 2022;

9,945 shares at January 29, 2022;

and 6,778 shares at May 1, 2021

and 7,953 shares at July 31, 2021

( 463,198 ) ( 388,668 ) ( 271,886 )

6 unchanged sentences

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

July 30, 2022 July 31, 2021

Net sales $ 5,005,030 $ 4,088,402

3 unchanged sentences

Selling, general and administrative expenses 651,236 598,113

Pre-opening expense 4,900 561

Pre-opening expenses 5,901 1,633

Operating income 202,910 163,784

18 unchanged sentences

Amounts released from other comprehensive income, net of tax $ — $ 3,511

Unrealized gain on cash flow hedge, net of income tax provision of $ 229 and $ 1,240 , respectively

Unrealized gain on cash flow hedge, net of income tax provision of $ 1,143 , at July 31, 2021

Total other comprehensive income — 6,451

2 unchanged sentences

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share amounts)

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

Net sales $ 9,404,840 $ 7,870,236

Membership fee income 195,411 175,141

Total revenues 9,600,251 8,045,377

Cost of sales 7,949,043 6,555,122

Selling, general and administrative expenses 1,287,180 1,198,023

Pre-opening expenses 10,801 2,194

Operating income 353,227 290,038

Interest expense, net 18,715 35,713

Income from continuing operations before income taxes 334,512 254,325

Provision for income taxes 81,041 61,742

Income from continuing operations 253,471 192,583

Loss from discontinued operations, net of income taxes ( 14 ) ( 16 )

Net income $ 253,457 $ 192,567

Income per share attributable to common stockholders—basic:

Income from continuing operations $ 1.89 $ 1.42

Loss from discontinued operations — —

Net income $ 1.89 $ 1.42

Income per share attributable to common stockholders—diluted:

Income from continuing operations $ 1.86 $ 1.39

Loss from discontinued operations ( 0.01 ) —

Net income $ 1.85 $ 1.39

Weighted average shares of common stock outstanding:

Basic 134,293 135,615

Diluted 136,635 138,430

Other comprehensive income:

Amounts released from other comprehensive income, net of tax $ 117 $ 8,176

Unrealized gain on cash flow hedge, net of income tax provision of $ 229 and $ 2,383 , respectively

Total other comprehensive income 705 14,303

Total comprehensive income $ 254,162 $ 206,870

The accompanying notes are an integral part of the consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

11 unchanged sentences

Common stock issued under stock incentive plans 490 5 ( 5 ) — — — — —

Stock compensation expense — — 9,115 — — — — 9,115

Net cash received on option exercises — — 2,306 — — — — 2,306

Stock-based compensation expense — — 9,115 — — — — 9,115

Net cash received from option exercises — — 2,306 — — — — 2,306

Treasury stock purchases — — — — — ( 801 ) ( 51,342 ) ( 51,342 )

Balance, April 30, 2022 145,941 1,459 914,120 243,763 2,010 ( 10,746 ) ( 440,010 ) 721,342

Net income — — — 141,007 — — — 141,007

Common stock issued under stock incentive plans 172 2 ( 2 ) — — — — —

Common stock issued under ESPP 44 — 2,331 — — — — 2,331

Stock-based compensation expense — — 9,387 — — — — 9,387

Net cash received from option exercises — — 2,712 — — — — 2,712

Treasury stock purchases — — — — — ( 359 ) ( 23,188 ) ( 23,188 )

Balance, July 30, 2022 146,157 $ 1,461 $ 928,548 $ 384,770 $ 2,010 ( 11,105 ) $ ( 463,198 ) $ 853,591

The accompanying notes are an integral part of the condensed consolidated financial statements.

BJ’S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

Common Stock Additional

10 unchanged sentences

Common stock issued under stock incentive plans 590 6 ( 6 ) — — — — —

Stock compensation expense — — 27,300 — — — — 27,300

Net cash received on option exercises — — 1,497 — — — — 1,497

Stock-based compensation expense — — 27,300 — — — — 27,300

Net cash received from option exercises — — 1,497 — — — — 1,497

Treasury stock purchases — — — — — ( 542 ) ( 24,031 ) ( 24,031 )

Balance, May 1, 2021 144,018 1,440 855,168 ( 213,760 ) ( 12,676 ) ( 6,778 ) ( 216,648 ) 413,524

Net income — — — 110,988 — — — 110,988

Amounts released from other comprehensive income, net of tax — — — — 3,511 — — 3,511

Unrealized loss on cash flow, net of tax — — — — 2,940 — — 2,940

Common stock issued under stock incentive plans 223 2 ( 2 ) — — — — —

Common stock issued under ESPP 59 1 1,876 — — — — 1,877

Stock-based compensation expense — — 7,334 — — — — 7,334

Net cash received from option exercises — — 3,416 — — — — 3,416

Treasury stock purchases — — — — — ( 1,175 ) ( 55,238 ) ( 55,238 )

Balance, July 31, 2021 144,300 $ 1,443 $ 867,792 $ ( 102,772 ) $ ( 6,225 ) ( 7,953 ) $ ( 271,886 ) $ 488,352

The accompanying notes are an integral part of the condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Stock-based compensation expense 18,502 34,634

Deferred income tax (benefit) provision 6,299 ( 233 )

Deferred income tax provision (benefit) 12,212 ( 6,260 )

Changes in operating leases and other non-cash items 32,067 3,187

11 unchanged sentences

Proceeds from sale leaseback transactions 2,674 19,080

Acquisitions ( 376,521 ) —

Net cash used in investing activities ( 565,381 ) ( 128,728 )

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on long term debt ( 50,000 ) —

Payments on First Lien Term Loan — ( 100,000 )

Proceeds from ABL Facility 115,000 —

Payments on ABL Facility ( 35,000 ) ( 50,000 )

Proceeds from revolving lines of credit 905,000 —

Payments on revolving lines of credit ( 555,000 ) ( 260,000 )

Debt issuance costs paid ( 2,701 ) —

Net cash received from stock option exercises 5,018 4,913

Acquisition of treasury stock ( 51,342 ) ( 24,031 )

Net cash received from Employee Stock Purchase Plan (ESPP) 2,331 1,877

Treasury stock purchases ( 74,530 ) ( 79,269 )

Proceeds from financing obligations 13,083 1,333

14 unchanged sentences

BJ’s Wholesale Club Holdings, Inc.

and its wholly-owned subsidiaries is a leading warehouse club operator primarily on the east coast of the United States.

As of April 30, 2022, the Company operated 227 warehouse clubs and 159 gas stations in 17 states.

and its wholly-owned subsidiaries is a leading warehouse club operator concentrated primarily on the east coast of the United States.

As of July 30, 2022, the Company operated 229 warehouse clubs and 160 gas stations in 17 states.

The Company follows and reports based on the National Retail Federation’s fiscal calendar.

The thirteen week periods ended April 30, 2022 and May 1, 2021 are referred to herein as the "first quarter of fiscal year 2022" and the "first quarter of fiscal year 2021," respectively.

The novel coronavirus ("COVID-19") pandemic has severely impacted the economies of the U.S.

and other countries around the world.

In the preparation of these financial statements and related disclosures we have assessed the impact that COVID-19 has had on our estimates, assumptions and accounting policies and made additional disclosures, as necessary.

The thirteen week periods ended July 30, 2022 and July 31, 2021 are referred to herein as the "second quarter of fiscal year 2022" and the "second quarter of fiscal year 2021," respectively.

Events and global business conditions such as inflation, the ongoing coronavirus (“COVID-19”) pandemic and the war in Ukraine have resulted in certain impacts to the global economy, including market disruptions and supply chain challenges.

During the second quarter of fiscal year 2022 we continued to experience elevated supply chain costs, including increased commodity prices, logistics, and procurement costs.

We expect these market disruptions and inflationary pressures to continue throughout 2022.

On May 2, 2022, the Company closed the previously announced acquisition of the assets and operations of four distribution centers and the related private transportation fleet from Burris Logistics, LLC.

The Company financed the purchase price with a combination of available cash and borrowings under the Company’s ABL Facility.

The Company financed the purchase price with a combination of available cash and borrowings under the ABL Facility.

See Note 12, "Acquisitions" of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Summary of Significant Accounting Policies

3 unchanged sentences

The condensed consolidated balance sheet as of January 29, 2022 is derived from the audited consolidated balance sheet as of that date.

The unaudited results of operations for the first quarter of fiscal year 2022 are not necessarily indicative of future results or results to be expected for fiscal year 2022.

The unaudited results of operations for the second quarter of fiscal year 2022 are not necessarily indicative of future results or results to be expected for fiscal year 2022.

The Company’s business, in common with the business of retailers generally, is subject to seasonal influences.

10 unchanged sentences

Sales tax is recorded as a liability at the point of sale.

Revenue is recorded at the point of sale based on the transaction price on the shelf sign, net of any applicable discounts, sales tax and expected refunds.

For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping

The following table summarizes the Company’s point of sale transactions at clubs and gas stations, excluding sales tax, as a percentage of both net sales and total revenues:

Revenue is recorded at the point of sale based on the

transaction price on the shelf sign, net of any applicable discounts, sales tax and expected refunds.

For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping point.

The following tables summarize the Company’s point of sale transactions at clubs and gas stations, excluding sales tax, as a percentage of both net sales and total revenues:

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

July 30, 2022 July 31, 2021

Point of sale transactions, excluding sales tax, as a percent of net sales 92 %

Point of sale transactions, excluding sales tax, as a percent of total revenues 90 %

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

Point of sale transactions, excluding sales tax, as a percent of net sales 92 % 93 %

Point of sale transactions, excluding sales tax, as a percent of total revenues 90 % 91 %

BJ’s Perks Rewards and My BJ’s Perks programs—The Company’s BJ’s Perks Rewards ® membership program allows participating members to earn 2 % cash back, up to a maximum of $ 500 per year, on qualified purchases made at BJ’s.

The Company also offers a co-branded credit card program, the My BJ’s Perks ® program, which allows My BJ’s Perks ® Mastercard credit card holders to earn up to 5 % cash back on eligible purchases made at BJ’s and up to 2 % cash back on purchases made with the card outside of BJ’s.

Cash back has been in the form of electronic awards issued in $ 10 increments that may be used online or in-club at the register and expire six months from the date issued.

Cash back is in the form of electronic awards issued in $ 10 increments that may be used online or in-club at the register and expire six months from the date issued.

Earned awards may be redeemed on future purchases made at the Company.

2 unchanged sentences

The Company includes the fair value of award dollars earned in deferred revenue at the time the award dollars are earned.

This liability was $ 32.5 million at April 30, 2022, $ 30.3 million at January 29, 2022 and $ 24.8 million at May 1, 2021.

This liability was $ 40.0 million at July 30, 2022, $ 30.3 million at January 29, 2022 and $ 25.8 million at July 31, 2021.

Royalty revenue received in connection with the My BJ’s Perks co-brand credit card program is variable consideration and is considered deferred until the card holder makes a purchase.

The Company’s total deferred royalty revenue related to the outstanding My BJ’s Perks Rewards was $ 29.2 million, $ 17.8 million and $ 18.0 million at April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

The Company’s total deferred royalty revenue related to the outstanding My BJ’s Perks Rewards was $ 28.5 million, $ 17.8 million and $ 18.8 million at July 30, 2022, January 29, 2022 and July 31, 2021, respectively.

The timing of revenue recognition is driven by actual customer activities, such as redemptions and expirations.

As of April 30, 2022, the Company expects to recognize substantially all of the $ 29.2 million by the end of fiscal year 2022.

As of July 30, 2022, the Company expects to recognize $ 26.6 million by the end of fiscal year 2022 and expects the remainder to be recognized in the periods thereafter.

Membership—The Company charges a membership fee to its customers.

1 unchanged sentence

As the Company has the obligation to provide access to its clubs, website, app and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership.

The Company’s deferred revenue related to membership fees was $ 185.2 million, $ 174.9 million and $ 167.8 million at April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

Gift Card Program—The Company sells BJ’s gift cards in both physical and digital format, which allow customers to redeem the card for future purchases equal to the amount of the original purchase price of the gift card.

The Company’s deferred revenue related to membership fees was $ 185.4 million, $ 174.9 million and $ 169.3 million at July 30, 2022, January 29, 2022 and July 31, 2021, respectively.

Gift Card Program—The Company sells BJ’s gift cards in both physical and digital format, which allows customers to redeem the card for future purchases equal to the amount of the original purchase price of the gift card.

Revenue from gift card sales is recognized in proportion to its rate of gift card redemptions as the Company’s performance obligation to redeem the gift card for merchandise is satisfied when the gift card is redeemed.

The Company also recognizes breakage in proportion to its rate of gift card redemptions.

Deferred revenue related to gift cards was $ 11.2 million, $ 11.8 million and $ 9.6 million at April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

The Company recognized $ 10.5 million and $ 8.8 million of revenue from gift card redemptions in the first quarter of fiscal year 2022 and first quarter of fiscal year 2021, respectively.

Deferred revenue related to gift cards was $ 11.9 million, $ 11.8 million and $ 9.7 million at July 30, 2022, January 29, 2022 and July 31, 2021, respectively.

The Company recognized $ 12.7 million and $ 9.6 million of revenue from gift card redemptions in the second quarter of fiscal year 2022 and second quarter of fiscal year 2021, respectively.

The Company recognized $ 23.2 million and $ 18.4 million of revenue from gift card redemptions in the twenty-six weeks ended July 30, 2022 and July 31, 2021 respectively.

Disaggregation of Revenue

The Company’s club retail operations, which include retail club and other sales procured from our clubs and distribution centers, represent substantially all of its consolidated total revenues, and are the Company’s only reportable segment.

Company’s identifiable assets are in the United States.

All the Company’s identifiable assets are in the United States.

The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.

1 unchanged sentence

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

July 30, 2022 July 31, 2021

Grocery 64 % 70 %

General Merchandise & Services 11 % 15 %

General Merchandise and Services 12 % 15 %

Gasoline and Other 24 % 15 %

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

Grocery 65 % 71 %

General Merchandise and Services 12 % 15 %

Gasoline and Other 23 % 14 %

Debt and Credit Arrangements

The following table summarizes the Company’s debt (in thousands):

April 30, 2022 January 29, 2022 May 1, 2021

July 30, 2022 January 29, 2022 July 31, 2021

ABL Revolving Facility $ 350,000 $ — $ —

ABL Facility — 50,000 50,000

3 unchanged sentences

Long-term debt $ 699,406 $ 748,568 $ 747,730

The ABL Facility is comprised of a $ 950.0 million revolving credit facility and a $ 50.0 million term loan.

The ABL Facility is secured on a senior basis by certain liquid assets of the Company and secured on a junior basis by certain fixed assets of the Company.

Payment terms on the $ 50.0 million term loan are restricted in that the term loan cannot be repaid unless all loans outstanding under the revolving credit facility are repaid, and once repaid, cannot be re-borrowed.

The availability under the $ 950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the agreement governing the ABL Facility.

Interest on the revolving credit facility is calculated either at LIBOR plus a range of 125 to 175 basis points or a base rate plus a range of 25 to 75 basis points;

and interest on the term loan is calculated at LIBOR plus a range of 200 to 250 basis points or a base rate plus a range of 100 to 150 basis points, in all cases based on excess availability.

The applicable spread of LIBOR and base rate loans at all levels of excess availability steps down by 12.5 basis points upon achieving total net leverage of 3.00 to 1.00.

The ABL Facility also provides a sub-facility for issuances of letters of credit subject to certain fees defined in the agreement governing the ABL Facility.

The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolving credit facility, which is scheduled to mature on August 17, 2023.

At April 30, 2022, there were $ 130.0 million outstanding in loans under the ABL Facility and $ 10.9 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 1.89 %, the interest rate of the term loan was 2.45 % and unused capacity was $ 859.1 million.

ABL Revolving Facility

On July 28, 2022, the Company entered into the ABL Revolving Facility with an ABL Revolving Commitment of $ 1.2 billion pursuant to that certain credit agreement (the "Credit Agreement") with Bank of America, N.A., as administrative agent and collateral agent, and the other lenders party thereto.

The maturity date of the ABL Revolving Facility is July 28, 2027.

As part of this transaction, the Company extinguished the ABL Facility.

Revolving loans under the ABL Revolving Facility are available in an aggregate amount equal to the lesser of the aggregate ABL Revolving Commitment and a borrowing base based on the value of certain inventory, accounts and credit card receivables, subject to specified advance rebates and reserves as set forth in the Credit Agreement.

Indebtedness under the ABL Revolving Facility is secured by substantially all of the assets (other than real estate) of the Company and its subsidiaries, subject to customary exceptions.

As amended, interest on the ABL Revolving Facility is calculated either at the Secured Overnight Financing Rate ("SOFR") plus a range of 100 to 125 basis points or a base rate plus 0 to 25 basis points, based on excess availability.

The Company will also pay an unused commitment fee of 0.20 % per annum on the unused ABL Revolving Commitment.

Each borrowing is for a period of one , three , or six months , as selected by the Company, or for such other period that is twelve months or less requested by the Company and consented to by the lenders and administrative agent.

The ABL Revolving Facility places certain restrictions upon the Borrower’s, and its restricted subsidiaries’, ability to, among other things, incur additional indebtedness, pay dividends and make certain loans, investments and divestitures.

The ABL Revolving Facility contains customary events of default (including payment defaults, cross-defaults to certain of our other

indebtedness, breach of representations and covenants and change of control).

The occurrence of an event of default under the ABL Revolving Facility would permit the lenders to accelerate the indebtedness and terminate the ABL Revolving Facility.

At July 30, 2022, there were $ 350.0 million outstanding in loans under the ABL Revolving Facility and $ 12.9 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 3.42 % and unused capacity was $ 576.7 million.

ABL Facility - Former Credit Agreement

The ABL Revolving Facility replaced the ABL Facility, which comprised of $ 950.0 million revolving credit facility and a $ 50.0 million term loan.

Interest on the ABL Facility was calculated either at LIBOR plus a range of 125 to 175 basis points or a base rate plus a range of 25 to 75 basis points;

and interest on the term loan was calculated at LIBOR plus a range of 200 to 250 basis points or a base rate plus a range of 100 to 150 basis points, in all cases based on excess availability.

At January 29, 2022, there were $ 50.0 million outstanding in loans under the ABL Facility and $ 12.7 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 1.23 %, the interest rate of the term loan was 2.10 % and unused capacity was $ 886.9 million.

At May 1, 2021, there were $ 260.0 million outstanding in loans under the ABL Facility and $ 15.5 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 1.23 %, the interest rate on the term loan was 2.10 % and unused capacity was $ 886.9 million.

At July 31, 2021, there were $ 50.0 million outstanding in loans under the ABL Facility and $ 24.1 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 1.23 %, the interest rate of the term loan was 2.10 % and unused capacity was $ 768.2 million.

3 unchanged sentences

Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds 3.50 to 1.00.

The First Lien Term Loan is subject to certain affirmative and negative covenants but no financial

The First Lien Term Loan is subject to certain affirmative and negative covenants, but no financial covenants.

It is secured on a senior basis by certain fixed assets of the Company and on a junior basis by certain liquid assets of the Company.

1 unchanged sentence

In connection with the payment, the Company expensed $ 0.7 million of previously capitalized debt issuance costs and original issue discount.

There was $ 701.9 million outstanding on the First Lien Term Loan at April 30, 2022, January 29, 2022 and May 1, 2021.

Interest rates for the First Lien Term Loan were 2.52 %, 2.11 % and 2.11 % at April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

There was $ 701.9 million outstanding on the First Lien Term Loan at July 30, 2022, January 29, 2022 and July 31, 2021.

Interest rates for the First Lien Term Loan were 3.96 %, 2.11 % and 2.10 % at July 30, 2022, January 29, 2022 and July 31, 2021, respectively.

Commitments and Contingencies

15 unchanged sentences

(1) shares subject to a stock appreciation right ("SAR") that are not issued in connection with the stock settlement of the SAR upon its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan.

As of April 30, 2022, there were 5,310,185 shares available for future issuance under the 2018 Plan.

As of July 30, 2022, there were 5,295,613 shares available for future issuance under the 2018 Plan.

On April 16, 2021, the Compensation Committee approved a modification to the equity awards agreements under the 2011 Plan, 2012 Director Plan and 2018 Plan.

1 unchanged sentence

(i) full vesting of all time-based awards, including restricted stock awards and stock options, (ii) pro-rata vesting of all performance-based awards, including performance share units, based on actual performance as of the end of the applicable performance period, pro-rated based on the period of employment during the applicable performance period, and (iii) the extension of the post-termination exercise window for vested stock options.

The following table summarizes the Company’s stock award activity during the thirteen weeks ended April 30, 2022 (shares in thousands):

The following table summarizes the Company’s stock award activity during the twenty-six weeks ended July 30, 2022 (shares in thousands):

Stock Options Restricted Stock Restricted Stock Units Performance Stock

7 unchanged sentences

Exercised/vested ( 353 ) 14.36 ( 530 ) 30.88 ( 26 ) 46.82 — —

Outstanding, April 30, 2022 2,075 $ 20.53 819 $ 48.55 26 $ 46.82 855 $ 45.67

Stock-based compensation expense was $ 9.1 million and $ 27.3 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively.

Stock-based compensation expense in the thirteen weeks ended May 1, 2021 included $ 17.5 million of stock-based compensation related to the modification of stock awards associated with the passing of a former executive.

On June 14, 2018, the Company’s board of directors adopted, and its stockholders approved, the BJ’s Wholesale Club Holdings, Inc.

Employee Stock Purchase Plan (the "ESPP"), which became effective July 1, 2018.

The aggregate number of shares of common stock that were to be reserved for issuance under the ESPP was to be equal to the sum of (i) 973,014 shares and (ii) an annual increase on the first day of each calendar year beginning in 2019 and ending in 2028 equal to the lesser of (A) 486,507 shares, (B) 0.5 % of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of directors.

Outstanding, July 30, 2022 1,926 $ 20.65 807 $ 48.95 24 $ 58.61 853 $ 45.70

Stock-based compensation expense was $ 9.4 million and $ 7.3 million for the thirteen weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation was $ 18.5 million and $ 34.6 million for the twenty-six weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense in the twenty-six weeks ended July 31, 2021 included $ 17.5 million of stock-based compensation related to the modification of stock awards associated with the passing of a former executive.

On June 14, 2018, the Company’s board of directors adopted, and its stockholders approved, the ESPP, which became effective July 1, 2018.

The offering under the ESPP commenced on January 1, 2019.

The amount of expense recognized for the thirteen weeks ended April 30, 2022 and May 1, 2021 was $ 0.2 million and $ 0.1 million, respectively.

As of April 30, 2022, there were 2,128,365 shares available for issuance under the ESPP.

The amount of expense recognized for the thirteen weeks ended July 30, 2022 and July 31, 2021 was $ 0.3 million and $ 0.4 million, respectively.

The amount of expense recognized for both the twenty-six weeks ended July 30, 2022 and July 31, 2021 was $ 0.5 million.

As of July 30, 2022, there were 2,084,348 shares available for issuance under the ESPP.

Treasury Shares and Share Repurchase Program

Treasury Shares Acquired on Restricted Stock Awards

The Company acquired 229,900 shares to satisfy employees’ tax withholding obligations upon the vesting of restricted stock awards in the thirteen weeks ended April 30, 2022, which were recorded as $ 15.5 million of t reasury stock.

The Company acquired 226,404 shares to satisfy employees' tax withholding obligations upon the vesting of restricted stock awards in the thirteen weeks ended May 1, 2021, which were recorded as $ 10.0 million of treasury stock.

The Company acquired 5,945 shares to satisfy employees’ tax withholding obligations upon the vesting of restricted stock awards in the thirteen weeks ended July 30, 2022, which were recorded as $ 0.3 million of t reasury stock.

acquired 120,421 shares to satisfy employees' tax withholding obligations upon the vesting of restricted stock awards in the thirteen weeks ended July 31, 2021, which were recorded as $ 5.6 million of treasury stock.

The Company acquired 235,845 shares to satisfy employees' tax withholding obligations upon the vesting of restricted stock awards in the twenty-six weeks ended July 30, 2022, which were recorded as $ 15.9 million of treasury stock.

The Company acquired 346,825 shares to satisfy employees' tax withholding obligations upon the vesting of restricted stock awards in the twenty-six weeks ended July 31, 2021, which were recorded as $ 15.7 million of treasury stock.

Share Repurchase Program

On November 16, 2021, the Company's board of directors approved a share repurchase program (the "2021 Repurchase Program"), effective immediately, that allows the Company to repurchase up to $ 500.0 million of its outstanding common stock from time to time as market conditions warrant.

On November 16, 2021, the Company's board of directors approved a share repurchase program (the "2021 Repurchase Program") that allows the Company to repurchase up to $ 500.0 million of its outstanding common stock from time to time as market conditions warrant.

The 2021 Repurchase Program expires in January 2025.

The Company initiated the 2021 Repurchase Program to mitigate potentially dilutive effects of stock options and shares of restricted stock granted by the Company, in addition to enhancing shareholder value.

The Company repurchased 570,506 shares for $ 35.8 million during the thirteen weeks ended April 30, 2022.

As of April 30, 2022, $ 435.4 million remained available to purchase under the 2021 Repurchase Program.

The Company repurchased 353,000 shares for $ 22.8 million during the thirteen weeks ended July 30, 2022, and 923,506 shares for $ 58.6 million during the twenty-six weeks ended July 30, 2022.

As of July 30, 2022, $ 412.6 million remained available to purchase under the 2021 Repurchase Program.

The effective income tax rate is based on estimated income from continuing operations for the fiscal year, as well as discrete adjustments, if any, in the applicable quarterly periods.

The Company projects the estimated annual effective tax rate

for fiscal year 2022 to be 27.2 %, excluding the tax effect of discrete events, such as excess tax benefits from stock-based compensation, changes in tax legislation, settlements of tax audits and changes in uncertain tax positions, among others.

The Company’s effective income tax rate from continuing operations was 21.1 % and 23.7 % for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively.

The decrease in the effective tax rate for the thirteen weeks ended April 30, 2022 compared to the thirteen weeks ended May 1, 2021 is due primarily to higher excess tax benefits from stock-based compensation in the current year period.

The Company projects the estimated annual effective tax rate for fiscal year 2022 to be 27.4 %, excluding the tax effect of discrete events, such as excess tax benefits from stock-based compensation, changes in tax legislation, settlements of tax audits and changes in uncertain tax positions, among others.

The Company’s effective income tax rate from continuing operations was 26.6 % and 24.7 % for the thirteen weeks ended July 30, 2022 and July 31, 2021, respectively, and 24.2 % and 24.3 % for the twenty-six weeks ended July 30, 2022 and July 31, 2021, respectively.

The increase in the effective tax rate for the thirteen weeks ended July 30, 2022 compared to the thirteen weeks ended July 31, 2021 is due primarily to lower excess tax benefits from stock-based compensation in the current year period.

The slight decrease in the effective tax rate for the twenty-six weeks ended July 30, 2022 compared to the twenty-six weeks ended July 31, 2021 is due to higher excess tax benefits from stock-based compensation in the current year period.

The Company is subject to taxation in the U.S.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair values of the Company’s derivative instruments are based on quotes received from third-party banks and represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparties.

These inputs are considered to be Level 2.

The fair values of the Company’s derivative instruments were based on quotes received from third-party banks and represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparties.

These inputs were considered to be Level 2.

All derivative instruments expired in the first quarter of fiscal year 2022.

Financial Assets and Liabilities

The gross carrying amount and fair value of the Company’s debt at April 30, 2022 are as follows (in thousands):

The gross carrying amount and fair value of the Company’s debt at July 30, 2022 are as follows (in thousands):

Carrying Amount Fair Value

First Lien Term Loan $ 701,920 $ 700,797

ABL Facility 130,000 130,000

ABL Revolving Facility 350,000 350,000

Total Debt $ 1,051,920 $ 1,050,797

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Total Debt $ 751,920 $ 752,053

The gross carrying amount and fair value of the Company’s debt at May 1, 2021 are as follows (in thousands):

The gross carrying amount and fair value of the Company’s debt at July 31, 2021 are as follows (in thousands):

Carrying Amount Fair Value

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Earnings Per Share

The table below reconciles basic weighted-average shares of common stock outstanding to diluted weighted-average shares of common stock outstanding for the thirteen weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

The table below reconciles basic weighted-average shares of common stock outstanding to diluted weighted-average shares of common stock outstanding for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021:

Thirteen Weeks Ended Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Weighted-average shares of common stock outstanding, used for basic computation 134,341,280 135,521,353 134,292,751 135,615,068

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Weighted-average shares of common stock and dilutive potential shares of common stock outstanding 136,567,466 138,197,167 136,634,713 138,429,566

The table below summarizes restricted shares that were excluded from the computation of diluted earnings for the thirteen weeks ended April 30, 2022 and May 1, 2021, as their inclusion would have been anti-dilutive:

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

The table below summarizes restricted shares, restricted stock units, and ESPP shares that were excluded from the computation of diluted earnings for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021, as their inclusion would have been anti-dilutive:

Thirteen Weeks Ended Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Restricted shares 193,412 12,757 144,519 62,758

Restricted stock units 11,811 — 5,905 —

ESPP 510 — 255 —

Derivative Financial Instruments

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The interest rate swaps expired in February 2022.

There was no liability recorded as of April 30, 2022 and $ 2.2 million and $ 20.2 million recorded at January 29, 2022 and May 1, 2021, respectively.

There was no liability recorded as of July 30, 2022 and $ 2.2 million and $ 14.5 million recorded at January 29, 2022 and July 31, 2021, respectively.

The net of tax amount for the effective and ineffective interest rate swaps were recorded in other comprehensive income and interest expense, respectively.

There were gains of $ 0.8 million and $ 4.4 million recorded in other comprehensive income for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively.

The ineffective portion of gains of $ 0.3 million and $ 1.8 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively, were recorded in interest expense.

There were no gains or losses recorded for the thirteen weeks ended July 30, 2022 and $ 4.1 million gain recorded in other comprehensive income for the thirteen weeks ended July 31, 2021.

There were gains of $ 0.8 million and $ 8.5 million recorded in other comprehensive income for the twenty-six weeks ended July 30, 2022 and July 31, 2021, respectively.

There were no ineffective portion of gains in the thirteen weeks ended July 30, 2022 and $ 0.3 million recorded in interest expense for the twenty-six weeks ended July 30, 2022.

The ineffective portion of gains in the thirteen and twenty-six weeks ended July 31, 2021 of $ 1.6 million and $ 3.4 million, respectively, were recorded in interest expense.

The fair values of derivative instruments included on the condensed consolidated balance sheets are as follows (in thousands):

Fair Value at

for Cash Flow Hedges Notional Amount Fixed Rate Balance Sheet Classification April 30, 2022 January 29, 2022 May 1, 2021

for Cash Flow Hedges Notional Amount Fixed Rate Balance Sheet Classification July 30, 2022 January 29, 2022 July 31, 2021

Interest rate swap $ 600,000 3.00 % Other current liabilities $ — $ ( 1,540 ) $ ( 10,374 )

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Net carrying amount $ 1,200,000 Total liabilities $ — $ ( 2,156 ) $ ( 14,520 )

Subsequent Event

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, LLC to bring its end-to-end supply chain in-house.

The total consideration paid by the Company in connection with the acquisition was approximately $ 377 million, inclusive of approximately $ 90 million of inventory and other working capital adjustments, subject to certain customary post-closing adjustments and excluding transaction costs.

The Company recorded transaction costs related to the acquisition of $ 7.9 million during the three months ended April 30, 2022.

On May 2, 2022, the Company completed the Acquisition to bring its perishable end-to-end perishable supply chain in-house.

The total consideration paid by the Company in connection with the Acquisition was approximately $ 375.6 million, excluding transaction costs.

The Company recorded transaction costs related to the Acquisition of $ 3.6 million and

$ 11.5 million during the thirteen and twenty-six weeks ended July 30, 2022, respectively.

These costs are included in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed (in thousands) in connection with the Acquisition:

Fair value as of May 2, 2022

Property and equipment, net $ 203,400

Merchandise inventories 88,072

Goodwill 84,683

Operating lease right-of-use assets, net 15,994

Prepaid expenses and other current assets 433

Intangibles, net 100

Total Assets 392,682

Long-term operating lease liabilities ( 15,994 )

Accrued expenses and other current liabilities ( 1,106 )

Total Liabilities ( 17,100 )

Total consideration paid, including working capital adjustments $ 375,582

Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed.

Goodwill is primarily attributable to the assembled workforce and bringing the Company's perishable supply chain in-house.

Goodwill deductible for tax purposes is $ 84.7 million.

The Acquisition was accounted for as a business combination using the acquisition method with the Company as the accounting acquirer in accordance with ASC 805.

Under this method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed of the acquiree based upon their estimated fair values at the acquisition date.

The purchase price allocation for the Acquisition is preliminary and the Company's estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as the Company finalizes the valuation of certain tangible and intangible assets acquired and liabilities assumed.

There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation.

For each of the thirteen and twenty-six week periods ended July 30, 2022, the Acquisition generated an incremental $ 21.8 million in revenue.

It is impracticable to provide historical supplemental pro forma financial information along with earnings during the period subsequent to the Acquisition due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete entities within the Company’s organizational structure.

FORWARD-LOOKING STATEMENTS

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• changes in laws related to, or the governments administration of, the Supplemental Nutrition Assistance Program or its electronic benefit transfer systems;

• the risks and uncertainties related to the impact of the novel coronavirus (COVID-19) pandemic, including the duration, scope and severity of the pandemic, federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation or revocation of current restrictions, and the direct and indirect impact of such measures;

• the risks and uncertainties related to the impact of the COVID-19 pandemic, including the duration, scope and severity of the pandemic, federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation or revocation of current restrictions, and the direct and indirect impact of such measures;

• risks related to increases in product costs due to commodity cost increases or general inflation;

• risks related to our ability to purchase our products in sufficient quantities at competitive prices;

• risks related to climate change and natural disasters;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements