BJ Wholesale Club Shares Jump On IPO

BJ's

Less than 10 years after going private, BJ’s Wholesale Club stock is proving to be a hit with investors after returning to public trading. Shares of the wholesale club retailer jumped more than 20 percent on Thursday (June 28), reaching north of $21, Financial Times reported.

BJ’s brought in $637.5 million by selling 37.5 million shares for $17, which was the top of the $15 to $17 range the retailer had provided in its regulatory filings. And, over the next month, underwriters will be able to purchase up to 5.6 million more shares.

The news comes as BJ’s Wholesale Club filed for an initial public offering (IPO) just seven years after going private, The Wall Street Journal (WSJ) reported in May. The deal could value the Westborough, Massachusetts-based, membership-only warehouse chain somewhere between $2 billion and $3 billion.

In the filing listed on Thursday (May 17), BJ’s said it could sell $100 million worth of shares, but this number is likely to be updated as the IPO moves forward. With 215 locations across 16 eastern U.S. states, BJ’s saw $12.75 billion in annual sales and drummed up profits of more than $50 million in its fiscal year ending in February. It collected membership fees from 5 million members at a renewal rate of 86 percent last year. At $55 per year, membership fees totaled $259 million last year.

BJ’s private equity-backed IPO listing is an unusual move at this time, noted WSJ. Retail IPOs, in general, have been rare amidst industry struggles. This time last year, 25 private equity-backed companies had debuted on U.S. exchanges, raising a total of $10 billion. This year, those numbers have been cut in half, with only 13 private equity-backed offerings raising $5.7 billion. Only one of those IPOs has been in the retail sector — that is, The Hudson Group, which operates stores in airports and other locations.

Lately, BJ’s has stepped up its omnichannel efforts. In May, for example, the retailer brought a click-and-collect service to 215 of its brick-and-mortar locations as part of its efforts to enhance its customer experience.