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BJ's shakes up management, plans store closings
January 5th, 2011
NATICK, Mass. – Amid disappointing sales and takeover rumors, BJ's Wholesale Club Inc. has shaken up management and unveiled plans to close five underperforming stores and restructure its home office and some field operations.
The warehouse club chain said Wednesday that 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 Jan. 30.
Eddy and Catuna will replace CFO Frank Forward and club operations vice president Thomas Gallagher, respectively, both of whom are retiring as of Jan. 29. BJ's said Forward's retirement is a planned transition that has been discussed since 2007, while Gallagher is retiring for health reasons.
"Frank and Tom have made many important contributions to BJ’s, and we truly appreciate their years of service," BJ's president and chief executive officer Laura Sen said in a statement. "Thanks to their ability to recruit and mentor successors, they have built strong organizations with exceptional leaders in Bob Eddy and Cornel Catuna."
Meanwhile, stores slated for closure include three clubs in the Atlanta market, one in Sunrise, Fla., and one in Charlotte, N.C. Plans call for those locations to be shut by the end of this month, BJ's said.
"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 stated. "The savings associated with the actions we are announcing today 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," Sen added. "We will be supporting affected team members in many ways to help ease their transition."
BJ's didn't announce details of job cuts. But the Associated Press reported Wednesday that the store closings and the home office and field operations restructuring will result in the elimination of nearly 500 jobs, including more than 100 at the corporate level.
For the December sales period, covering the five weeks ended Jan. 1, BJ's reported a 7.3% year-over-year revenue gain to $1.25 billion and a comparable-club sales increase of 3.8% (versus a 4.8% same-store gain a year earlier).
However, most of the same-store sales increase stemmed from fuel business. The retailer said comparable-club sales were up 2.4% for gasoline and just 1.4% for merchandise, compared with a 2.7% rise in merchandise comparable-club sales a year earlier.
The lackluster sales report and restructuring moves come amid continued media buzz that BJ's is a takeover target, with some reports saying that the retailer's announcements on Wednesday signal an attempt by the company 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.