BJ'S Wholesale Club Announces Strategic Actions (BJ)

BJ's Wholesale Club, Inc. BJ today announced strategic actions to strengthen its operations that include closing five underperforming clubs (three in the Atlanta market, one in Sunrise, FL, and one in Charlotte, NC) by the end of this month, and restructuring its home office and certain field operations. Upon closure, the operating results of the five clubs will be classified as discontinued operations in the Company's financial statements. Laura J. Sen, CEO of BJ's Wholesale Club 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. 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. We will be supporting affected team members in many ways to help ease their transition.” The Company estimates that, taken together, the total charges associated with the announcements made today will be between $42 and $44 million after-tax, or $0.78 to $0.82 per share in the fiscal fourth quarter ending January 29, 2011. The Company anticipates that pre-tax expenses associated with the club closures will be approximately $44 to $46 million, consisting of approximately $43 million of lease termination and facility closure related costs, and approximately $2 million in severance costs. These charges are expected to result in cash expenditures of approximately $41 to $43 million, with approximately $5 million paid in the current fiscal fourth quarter ending January 29, 2011 and the remainder in future periods. In connection with these closures, the Company expects to record after-tax expenses in the range of $26 to $28 million, or $0.49 to $0.51 per share, in the fourth quarter ending January 29, 2011. The Company estimates the current full year pre-tax operating losses for these clubs to be between $4 and $5 million in the aggregate. In addition, the Company will record charges related to a restructuring of its home office and impairment charges on certain of its remaining clubs in its fourth quarter results. Pre-tax charges for the restructuring and impairments, as well as for the costs related to the management changes announced in a separate press release this morning, are estimated to be in a range of $26 to $28 million. Of these charges, $7 to $9 million will be cash expenditures, with approximately $1 million paid in the current fiscal fourth quarter ending January 29, 2011 and the remainder to be paid in future periods. The impairments and restructuring and management changes will result in after-tax expenses in the range of $15 to $17 million, or $0.29 to $0.31 per share.