July 2011 – Stan Tashman & Associates, Inc.

BJ’s Buyout a Done Deal

July 13, 2011/in Retailing Today, Warehouse Clubs /by tashman

After months of speculation, BJ’s Wholesale Club has entered a definitive agreement to be acquired by Leonard Green & Partners and CVC Capital Partners for an all-cash transaction valued at about $2.8 billion.

BJ’s board of directors unanimously approved the merger agreement — which is subject to approval of BJ’s shareholders, customary closing conditions and regulatory approvals — and recommends that all BJ’s shareholders vote in favor of the transaction.

Wholesale Club War: BJ’s vs. Costco

July 13, 2011/in Costco Wholesale, Warehouse Clubs /by tashman

BJ’s Wholesale Club delivered healthy sales this spring. In April, the wholesale club retailer registered an 8.5% sales increase, and in May the company’s sales increased $7.4% from the same period the previous year. But the company has been seen as facing stiff competition from Costco, and now the company will accept an offer from two leading investment firms to buy the chain with the ambition of enhanced competition against Costco in the future.

With 190 wholesale club retail stores in 15 states, Westborough, Massachusetts-based BJ’s (NYSE: BJ) has performed well across all categories this year, improving across all categories, from beauty care products to coffee and small appliances. But analysts have been neutral on BJ’s stock because of stiff competition that’s coming on fast from Costco (NASDAQ: COST).

Discounting Lifts June Sales

July 13, 2011/in Retailing Today /by tashman

Most retailers surprised Wall Street with better-than-expected monthly sales results in June, as bargains led shoppers to spend more. June is the second most important month on a retailers’ sales calendar behind December. It is June that stores typically clear out summer merchandise to make room for fall goods.

Analysts polled by Thomson Reuters expected a 4.9% rise in June same-store sales, compared with a prior-year increase of 3.1%. Of those retailers who have reported, most are on pace to beat expectations. However, margins will likely show a squeeze as leading retailers were forced to offer deals to prompt spending, a trend that isn’t likely to abate as back-to-school season approaches.