NATICK, MA-BJ's Wholesale Club, Inc. announced that it would entertain purchase offers Thursday, after showing good quarterly numbers this week. The announcement comes after Leonard Green made no secret of its plans to attempt a hostile takeover of the company, after the venture capital group gained 9.5% of BJ's shares.
Posting third quarter numbers with net sales up to $2.568 million year-over-year from $2.45 million. Comparable club sales, excluding gasoline, were up 1.5%, while customer count increased around 2%, while transaction amount decreased 1%. BJ's also closed five stores, three in Atlanta and one each in Sunrise, CA and Charlotte, NC. The closures cost the company roughly $44 million to $46 million pre-tax. These are due to lease termination fees and severance.
But as BJ's does well, it competes with other bulk store operators such as CostCo and Walmart, among others, even throughout the down cycle of the economy. But if not Leonard Green, then who?
"Another venture capital operation," explains Howard Davidowitz, chairman of New York City-based Davidowitz & Associates, Inc. "Venture capital is very active. I think retail is a target. I think there's going to be a number of acquisitions." Noting activity such as 7-Eleven and somewhat non-activity in RadioShack putting itself out there, retail has been a focus. Leonard Green has been particularly aggressive, grabbing both J.Crew and Jo-Ann Fabrics.
" The board has a responsibility to do the deal at the highest possible price," he explains. "They have a fiduciary duty." So the counter to Leonard Green's play for the business is, for sure, a price-driver. "Now can they get another buyer? I have no idea," he says. "Here's what I know: Venture capital has a ton of money on the sidelines. They're able to raise money now for acquisitions." BJ's is in good financial shape and is waiting for a bidding war. It remains to be seen whether that will happen.
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