Inside This Issue - News
BJís makes major changes amid continued takeover rumors
January 10th, 2011
NATICK, Mass. – BJ’s Wholesale Club Inc. has shaken up management and unveiled plans to restructure its home office and some field operations plus close five underperforming stores by the end of this month.
The warehouse club chain also turned in lackluster same-store sales for December, which along with the restructuring and store closing announcements heightened industry buzz that the retailer is a likely takeover target.
BJ’s said it has promoted Robert Eddy, senior vice president and director of finance, to executive vice president and chief financial officer and Cornel Catuna, senior vice president of field operations, to executive vice president of club operations, effective January 30. Eddy and Catuna will replace chief financial officer Frank Forward and club operations vice president Thomas Gallagher, respectively, both of whom are scheduled to retire on January 29.
According to BJ’s, Forward’s retirement is a planned transition that has been discussed since 2007, when he joined the company to help manage the finance division, while Gallagher is retiring because of health reasons.
"Frank and Tom have made many important contributions to BJ’s, and we truly appreciate their years of service," stated Laura Sen, who serves as BJ’s president and chief executive officer. "Thanks to their ability to recruit and mentor successors, they have built strong organizations with exceptional leaders in Bob Eddy and Cornel Catuna."
The stores earmarked for closure include three clubs in the Atlanta market, one in Sunrise, Fla., and one in Charlotte, N.C.
"Our management team has been working for several months on a strategic plan to optimize our performance and build for the future, thereby enhancing shareholder value. The five clubs to be closed have historically underperformed and, after careful consideration, we concluded that improvement of their operating results was unlikely," Sen explained. "The savings associated with the actions we are announcing will be invested in new clubs, remodels and information technology, all of which are vital to our competitiveness, future growth and profitability. We remain committed to the Atlanta, Charlotte and South Florida markets and will look to expand in those markets if compelling opportunities present themselves.
"In making these very difficult but necessary choices, we eliminated positions held by team members who have contributed to our success," she added. "We will be supporting affected team members in many ways to help ease their transition."
BJ’s did not announce details about job cuts. But the Associated Press reported that the store closings and the home office and field operations restructuring will result in eliminating nearly 500 jobs, including more than 100 at the corporate level.
For the December sales period, covering the five weeks ended January 1, BJ’s reported that total revenue climbed 7.3% to $1.25 billion from $1.16 billion a year earlier, and comparable-club sales increased 3.8%, compared with a 4.8% gain a year ago.
Most of the same-store sales increase, however, was driven by fuel business. The retailer said comparable-club sales were up 2.4% for gasoline and only 1.4% for merchandise, compared with a 2.7% rise in merchandise comparable-club sales a year earlier.
The disappointing sales performance and restructuring moves come amid ongoing media reports that BJ’s is a buyout target. Some reports said the retailer’s latest announcements signal a company attempt to make itself more attractive to potential bidders.
In recent weeks, published reports have said buyout firm Leonard Green & Partners may make a bid for BJ’s. Leonard Green already holds an interest in Whole Foods Markets and recently has made offers for stakes in other retail chains.