Traffic and Same Store Sales of BJ Remain Healthy

Analysts at Citi Investment Research & Analysis maintain their “hold” rating on BJ's Wholesale Club Inc (NYSE: BJ). The target price for BJ is set to $39.

BJ's traffic trends, membership-fee income growth, and general merchandise same-store sales remain healthy. BJ’s operating cash flows for the first nine months of the year surged to $192.6 million, from $124.2 million in the year-ago period. The analysts express their concerns, however, regarding the anticipated increase in competition during 1H10 and continuing food inflation. BJ Wholesale Club is planning to continue its pace of new-store openings in 2010.

Although BJ is poised to benefit from robust traffic growth, sales growth, and low-price positioning, continuing food inflation would affect the spending associated with its roadmap initiatives, sales, and margins during 2010, Citi Investment Research & Analysis believes.