10-Q 1 bj-20211030.htm 10-Q bj-20211030
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
FORM 10-Q
_______________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 2021
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                
Commission File Number: 001-38559
_______________________________
bj-20211030_g1.jpg
BJ’S WHOLESALE CLUB HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
_______________________________
Delaware45-2936287
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
25 Research Drive
WestboroughMassachusetts
01581
(Address of principal executive offices)(Zip Code)
(774512-7400
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01BJNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of November 18, 2021, the registrant had 145,348,881 shares of common stock, $0.01 par value per share, outstanding.




Table of Contents

2


FORWARD-LOOKING STATEMENTS 
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q should be considered forward-looking statements, including, without limitation, statements regarding our future results of operations and financial position, business strategy, transformation, strategic priorities and future progress, including expectations regarding deferred revenue, lease commencement dates, impact of infrastructure investments on our operating model and selling, general and administrative expenses, sales of gasoline and gross profit margin rates, and new club and gas station openings, as well as statements that include terms such as "may", "will", "should", "expect", "plan", "anticipate", "could", "intend", "project", "believe", "estimate", "predict", "continue", "forecast", "would", or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:
•    uncertainties in the financial markets and the effect of certain economic conditions or events on consumer and small business spending patterns and debt levels;
•    risks related to our dependence on having a large and loyal membership;
•    the effects of competition in, and regulation of, the retail industry;
•    our dependence on vendors to supply us with quality merchandise at the right time and at the right price;
•    risks related to our indebtedness;
•    changes in laws related to, or the governments administration of, the Supplemental Nutrition Assistance Program or its electronic benefit transfer systems;
•    the risks and uncertainties related to the impact of the novel coronavirus (COVID-19) pandemic, including the duration, scope and severity of the pandemic, federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation or revocation of current restrictions, and the direct and indirect impact of such measures;
•    risks related to climate change and natural disasters;
•    our ability to identify and respond effectively to consumer trends, including our ability to successfully maintain a relevant omnichannel experience for our members;
•    risks related to cybersecurity, which may be heightened due to our e-commerce business, including our ability to protect the privacy of member or business information and the security of payment card information;
•    our ability to attract and retain a qualified management team and other team members;
•    our ability to implement our growth strategy by opening new clubs and gasoline stations; and
•    the other risk factors identified in our filings with the Securities and Exchange Commission, including in particular those set forth under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 (the "Annual Report on Form 10-K for the fiscal year 2020") and this Quarterly Report on Form 10-Q.
Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by applicable law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future, and you should not rely upon these forward-looking statements after the date of this Quarterly Report on Form 10-Q.
3


TRADEMARKS 
BJ’s Wholesale Club®, BJ’s®, Wellesley Farms®, Berkley Jensen®, My BJ’s Perks®, BJ’s Easy Renewal®, BJ’s Gas®, BJ’s Perks Elite®, BJ’s Perks Plus®, Inner Circle® and BJ’s Perks Rewards® are all registered trademarks of BJ’s Wholesale Club, Inc. Other trademarks, tradenames and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend our use or display of those other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report on Form 10-Q may appear without the ® or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. 
DEFINED TERMS
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires: 
•    "the Company", "BJ’s", "we", "us" and "our" mean BJ’s Wholesale Club Holdings, Inc. and, unless the context otherwise requires, its consolidated subsidiaries;
•    "ABL Facility" means the Company’s senior secured asset based revolving credit and term facility;
•    "First Lien Term Loan" means the Company’s senior secured first lien term loan facility;
•    "fiscal year 2020" means the 52 weeks ended January 30, 2021; and
•    "fiscal year 2021" means the 52 weeks ending January 29, 2022. 

4


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
(Unaudited)
October 30, 2021January 30, 2021October 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$84,691 $43,518 $46,116 
Accounts receivable, net200,315 172,719 188,413 
Merchandise inventories1,255,659 1,205,695 1,264,323 
Prepaid expenses and other current assets58,622 48,649 97,116 
Total current assets1,599,287 1,470,581 1,595,968 
Operating lease right-of-use assets, net2,151,255 2,058,763 2,034,742 
Property and equipment:
Land and buildings405,982 385,572 376,635 
Leasehold costs and improvements254,340 249,073 221,403 
Furniture, fixtures and equipment1,420,083 1,298,440 1,258,876 
Construction in progress85,743 23,633 43,382 
2,166,148 1,956,718 1,900,296 
Less: accumulated depreciation and amortization(1,285,244)(1,158,929)(1,131,038)
Total property and equipment, net880,904 797,789 769,258 
Goodwill924,134 924,134 924,134 
Intangibles, net127,260 135,123 138,088 
Deferred income taxes5,167 5,737  
Other assets22,233 19,403 20,094 
Total assets$5,710,240 $5,411,530 $5,482,284 
LIABILITIES
Current liabilities:
Current portion of long-term debt$ $260,000 $260,000 
Current portion of operating lease liabilities137,036 131,513 131,025 
Accounts payable1,235,763 988,074 1,176,104 
Accrued expenses and other current liabilities731,297 651,625 643,309 
Total current liabilities2,104,096 2,031,212 2,210,438 
Long-term operating lease liabilities2,082,287 1,988,840 1,961,321 
Long-term debt748,149 846,175 845,696 
Deferred income taxes33,995 45,096 47,241 
Other non-current liabilities173,977 180,880 200,210 
Commitments and contingencies (see Note 6)
STOCKHOLDERS’ EQUITY
Preferred stock; par value $0.01; 5,000 shares authorized, and no shares issued
   
Common stock, par value $0.01300,000 shares authorized, 145,318 shares issued and 136,075 outstanding at October 30, 2021; 143,428 shares issued and 137,192 outstanding at January 30, 2021; and 143,199 shares issued and 137,263 outstanding at October 31, 2020
1,453 1,434 1,432 
Additional paid-in capital889,142 826,377 814,376 
Accumulated earnings (deficit)23,745 (295,339)(391,221)
Accumulated other comprehensive loss(2,199)(20,528)(26,124)
Treasury stock, at cost, 9,243 shares at October 30, 2021; 6,236 shares at January 30, 2021; and 5,936 shares at October 31, 2020
(344,405)(192,617)(181,085)
Total stockholders’ equity567,736 319,327 217,378 
Total liabilities and stockholders’ equity$5,710,240 $5,411,530 $5,482,284 
The accompanying notes are an integral part of the consolidated financial statements.
5


BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
October 30, 2021October 31, 2020
Net sales$4,172,594 $3,646,723 
Membership fee income91,493 84,946 
Total revenues4,264,087 3,731,669 
Cost of sales3,472,869 2,988,397 
Selling, general and administrative expenses617,991 552,307 
Pre-opening expense3,071 610 
Operating income170,156 190,355 
Interest expense, net11,854 25,882 
Income from continuing operations before income taxes158,302 164,473 
Provision for income taxes31,700 41,590 
Income from continuing operations126,602 122,883 
Loss from discontinued operations, net of income taxes(85)(87)
Net income$126,517 $122,796 
Income per share attributable to common stockholders—basic:
Income from continuing operations$0.93 $0.90 
Loss from discontinued operations  
Net income$0.93 $0.90 
Income per share attributable to common stockholders—diluted:
Income from continuing operations$0.92 $0.88 
Loss from discontinued operations  
Net income$0.92 $0.88 
Weighted average shares of common stock outstanding:
Basic135,582 136,011 
Diluted138,005 139,060 
Other comprehensive income:
Amounts released from other comprehensive income, net of tax$733 $3,670 
Unrealized gain on cash flow hedge, net of income tax provision of $1,279 and $2,278, respectively
3,293 5,856 
Total other comprehensive income4,026 9,526 
Total comprehensive income$130,543 $132,322 
The accompanying notes are an integral part of the consolidated financial statements.

6


BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)

Thirty-Nine Weeks Ended
October 30, 2021October 31, 2020
Net sales$12,042,830 $11,236,403 
Membership fee income266,634 247,001 
Total revenues12,309,464 11,483,404 
Cost of sales10,027,991 9,247,042 
Selling, general and administrative expenses1,816,014 1,733,482 
Pre-opening expense5,265 5,180 
Operating income460,194 497,700 
Interest expense, net47,567 68,467 
Income from continuing operations before income taxes412,627 429,233 
Provision for income taxes93,442 103,940 
Income from continuing operations319,185 325,293 
Loss from discontinued operations, net of income taxes(101)(145)
Net income$319,084 $325,148 
Income per share attributable to common stockholders—basic:
Income from continuing operations$2.35 $2.39 
Loss from discontinued operations  
Net income$2.35 $2.39 
Income per share attributable to common stockholders—diluted:
Income from continuing operations$2.31 $2.34 
Loss from discontinued operations  
Net income$2.31 $2.34 
Weighted average shares of common stock outstanding:
Basic135,604 136,269 
Diluted138,288 139,003 
Other comprehensive income:
Amounts released from other comprehensive income, net of tax$8,909 $3,670 
Unrealized gain (loss) on cash flow hedge, net of income tax provision of $3,662 and income tax benefit of $1,246, respectively
9,420 (3,208)
Total other comprehensive income 18,329 462 
Total comprehensive income$337,413 $325,610 
The accompanying notes are an integral part of the consolidated financial statements.
7


BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Amounts in thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated Earnings (Deficit)Accumulated
Other
Comprehensive
Loss
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balance, January 30, 2021143,428 $1,434 $826,377 $(295,339)$(20,528)(6,236)$(192,617)$319,327 
Net income— — — 81,579 — — — 81,579 
Amounts released from other comprehensive income, net of tax— — — — 4,665 — — 4,665 
Unrealized gain on cash flow hedge, net of tax— — — — 3,187 — — 3,187 
Common stock issued under stock incentive plans590 6 (6)— — — —  
Stock compensation expense— — 27,300 — — — — 27,300 
Net cash received on option exercises— — 1,497 — — — — 1,497 
Treasury stock purchases— — — — — (542)(24,031)(24,031)
Balance, May 1, 2021144,018 $1,440 $855,168 $(213,760)$(12,676)(6,778)$(216,648)$413,524 
Net income— — — 110,988 — — — 110,988 
Amounts released from other comprehensive income, net of tax— — — — 3,511 — — 3,511 
Unrealized gain on cash flow hedge, net of tax— — — — 2,940 — — 2,940 
Common stock issued under stock incentive plans223 2 (2)— — — —  
Common stock issued under Employee Stock Purchase Plan (ESPP)59 1 1,876 — — — — 1,877 
Stock compensation expense— — 7,334 — — — — 7,334 
Net cash received on option exercises— — 3,416 — — — — 3,416 
Treasury stock purchases— — — — — (1,175)(55,238)(55,238)
Balance, July 31, 2021144,300 $1,443 $867,792 $(102,772)$(6,225)(7,953)$(271,886)$488,352 
Net income— — — 126,517 — — — 126,517 
Amounts released from other comprehensive income, net of tax— — — — 733 — — 733 
Unrealized gain on cash flow hedge, net of tax— — — — 3,293 — — 3,293 
Common stock issued under stock incentive plans1,018 10 (10)— — — —  
Stock compensation expense— — 7,794 — — — — 7,794 
Net cash received on option exercises— — 13,566 — — — — 13,566 
Treasury stock purchases— — — — — (1,290)(72,519)(72,519)
Balance, October 30, 2021145,318 $1,453 $889,142 $23,745 $(2,199)(9,243)$(344,405)$567,736 
The accompanying notes are an integral part of the consolidated financial statements.


8


BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Amounts in thousands)
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
(Deficit)
Accumulated
Other
Comprehensive
Loss
Treasury StockTotal
Stockholders’
Equity
(Deficit)
SharesAmountSharesAmount
Balance, February 1, 2020140,723 $1,407 $773,618 $(716,369)$(26,586)(3,425)$(86,414)$(54,344)
Net income— — — 95,734 — — — 95,734 
Unrealized loss on cash flow, net of tax— — — — (13,942)— — (13,942)
Common stock issued under stock incentive plans1,626 16 (16)— — — —  
Stock compensation expense— — 5,514 — — — — 5,514 
Net cash received on option exercises— — 5,608 — — — — 5,608 
Treasury stock purchases— — — — — (258)(6,073)(6,073)
Balance, May 2, 2020142,349 $1,423 $784,724 $(620,635)$(40,528)(3,683)$(92,487)$32,497 
Net income— — — 106,618 — — — 106,618 
Unrealized gain on cash flow hedge, net of tax— — — — 4,878 — — 4,878 
Common stock issued under stock incentive plans246 3 (3)— — — —  
Common stock issued under Employee Stock Purchase Plan (ESPP)58 1 1,106 — — — — 1,107 
Stock compensation expense— — 9,064 — — — — 9,064 
Net cash received on option exercises— — 3,397 — — — — 3,397 
Treasury stock purchases— — — — — (1,047)(38,460)(38,460)
Balance, August 1, 2020142,653 $1,427 $798,288 $(514,017)$(35,650)(4,730)$(130,947)$119,101 
Net income— — — 122,796 — — — 122,796 
Amounts released from other comprehensive income, net of tax— — — — 3,670 — — 3,670 
Unrealized gain on cash flow hedge, net of tax— — — — 5,856 — — 5,856 
Common stock issued under stock incentive plans546 5 (5)— — — —  
Stock compensation expense— — 8,667 — — — — 8,667 
Net cash received on option exercises— — 7,426 — — — — 7,426 
Treasury stock purchases— — — — — (1,206)(50,138)(50,138)
Balance, October 31, 2020143,199 $1,432 $814,376 $(391,221)$(26,124)(5,936)$(181,085)$217,378 
The accompanying notes are an integral part of the consolidated financial statements.
9


BJ’S WHOLESALE CLUB HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Thirty-Nine Weeks Ended
October 30, 2021October 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$319,084 $325,148 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization135,664 124,331 
Amortization of debt issuance costs and accretion of original issue discount2,555 3,470 
Debt extinguishment charges657 4,077 
Stock-based compensation expense42,428 23,245 
Deferred income tax (benefit) provision(17,659)2,289 
Changes in operating leases and other non-cash items6,112 5,441 
Increase (decrease) in cash due to changes in:
Accounts receivable(27,596)17,940 
Merchandise inventories(49,964)(182,821)
Prepaid expenses and other current assets(13,841)(16,964)
Other assets(2,882)(1,959)
Accounts payable247,689 389,692 
Accrued expenses and other current liabilities72,525 61,829 
Other non-current liabilities18,403 46,254 
Net cash provided by operating activities733,175 801,972 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net of disposals(222,498)(152,800)
Proceeds from sale leaseback transactions19,080 25,893 
Net cash used in investing activities(203,418)(126,907)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on First Lien Term Loan(100,000)(513,297)
Proceeds from ABL Facility 996,000 
Payments on ABL Facility(260,000)(1,064,000)
Net cash received from stock option exercises18,479 16,431 
Net cash received from ESPP1,877 1,107 
Acquisition of treasury stock(149,449)(94,671)
Proceeds from financing obligations1,333  
Other financing activities(824)(723)
Net cash used in financing activities(488,584)(659,153)
Net increase in cash and cash equivalents41,173 15,912 
Cash and cash equivalents at beginning of period43,518 30,204 
Cash and cash equivalents at end of period$84,691 $46,116 
Supplemental cash flow information:
Interest paid$34,189 $52,306 
Income taxes paid100,753 111,105 
Non-cash financing and investing activities:
Lease liabilities arising from obtaining right-of-use assets213,642 90,320 
Property additions included in accrued expenses25,445 10,760 
The accompanying notes are an integral part of the consolidated financial statements.
10


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
BJ’s Wholesale Club Holdings, Inc. and its wholly-owned subsidiaries is a leading warehouse club operator primarily on the east coast of the United States. As of October 30, 2021, the Company operated 222 warehouse clubs and 151 gas stations in 17 states.
The Company follows and reports based on the National Retail Federation’s fiscal calendar. The thirteen week periods ended October 30, 2021 and October 31, 2020 are referred to as the "third quarter of fiscal year 2021" and the "third quarter of fiscal year 2020," respectively.
The novel coronavirus ("COVID-19") pandemic has severely impacted the economies of the U.S. and other countries around the world. In the preparation of these financial statements and related disclosures we have assessed the impact that COVID-19 has had on our estimates, assumptions and accounting policies and made additional disclosures, as necessary.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim financial statements of BJ’s Wholesale Club Holdings, Inc. are unaudited and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair statement of the Company’s financial statements in accordance with generally accepted accounting principles in the United States of America ("GAAP"). 
The consolidated balance sheet as of January 30, 2021 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations through the third quarter of fiscal year 2021 are not necessarily indicative of future results or results to be expected for fiscal year 2021. The Company’s business, in common with the business of retailers generally, is subject to seasonal influences. The Company’s sales and operating income have typically been highest in the fourth quarter holiday season and lowest in the first quarter of each fiscal year. 
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year 2020, as filed with the Securities and Exchange Commission on March 19, 2021.
Recently Adopted Accounting Pronouncements
The accounting policies the Company follows are set forth in its audited financial statements for fiscal year 2020. There have been no material changes to these accounting policies, except as noted below for a new accounting pronouncement adopted at the beginning of fiscal year 2021.
Income Taxes (ASU 2019-12)
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this standard as of January 31, 2021. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.
11


3. Revenue Recognition
Performance Obligations
The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue as it satisfies a performance obligation by transferring control of the goods or services to the customer.
Net sales—The Company recognizes net sales at clubs and gas stations when the customer takes possession of the goods and tenders payment. Sales tax is recorded as a liability at the point of sale. Revenue is recorded at the point of sale based on the transaction price on the shelf sign, net of any applicable discounts, sales tax and expected refunds. For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping point. The following tables summarize the Company’s point of sale transactions at clubs and gas stations, excluding sales tax, as a percentage of both net sales and total revenues:
Thirteen Weeks Ended
October 30, 2021October 31, 2020
Point of sale transactions, excluding sales tax, as a percent of net sales
94%
96%
Point of sale transactions, excluding sales tax, as a percent of total revenues
92%
94%
Thirty-Nine Weeks Ended
October 30, 2021October 31, 2020
Point of sale transactions, excluding sales tax, as a percent of net sales
93%
96%
Point of sale transactions, excluding sales tax, as a percent of total revenues
91%
94%
BJ’s Perks Rewards and My BJ’s Perks programs—The Company’s BJ’s Perks Rewards® membership program allows participating members to earn 2% cash back, up to a maximum of $500 per year, on qualified purchases made at BJ’s. The Company also offers a co-branded credit card program, the My BJ’s Perks® program, which allows My BJ’s Perks® Mastercard credit card holders to earn up to 5% cash back on eligible purchases made at BJ’s and up to 2% cash back on purchases made with the card outside of BJ’s. Cash back has been in the form of electronic awards issued in $10 increments that may be used online or in-club at the register and expire six months from the date issued. 
Earned awards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned awards when customers redeem such awards as part of a purchase at one of the Company’s clubs or on the Company’s website or app. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of award dollars earned in deferred revenue at the time the award dollars are earned. This liability was $29.3 million at October 30, 2021, $25.5 million at January 30, 2021 and $24.6 million at October 31, 2020.
Royalty revenue received in connection with the My BJ’s Perks co-brand credit card program is variable consideration and is considered deferred until the card holder makes a purchase. The Company’s total deferred royalty revenue related to the outstanding My BJ’s Perks Rewards was $19.1 million, $13.5 million and $13.5 million at October 30, 2021, January 30, 2021 and October 31, 2020, respectively. The timing of revenue recognition is driven by actual customer activities, such as redemptions and expirations. As of October 30, 2021, the Company expects to recognize $13.4 million of the deferred revenue in fiscal year 2021 and expects the remainder to be recognized in the periods thereafter.
Membership—The Company charges a membership fee to its customers. That fee allows customers to shop in the Company’s clubs, shop on the Company’s website and app and purchase gasoline at the Company’s gas stations for the duration of the membership, which is generally 12 months. As the Company has the obligation to provide access to its clubs, website, app and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The Company’s deferred revenue related to membership fees was $168.1 million, $155.6 million and $151.2 million at October 30, 2021, January 30, 2021 and October 31, 2020, respectively.
Gift Card Program—The Company sells BJ’s gift cards in both physical and digital format, which allow customers to redeem the card for future purchases equal to the amount of the original purchase price of the gift card. Revenue from gift card sales is recognized in proportion to its rate of gift card redemptions as the Company’s performance obligation to redeem the gift
12


card for merchandise is satisfied when the gift card is redeemed. The Company also recognizes breakage in proportion to its rate of gift card redemptions. Deferred revenue related to gift cards was $10.3 million, $10.3 million and $9.0 million at October 30, 2021, January 30, 2021 and October 31, 2020, respectively. The Company recognized $8.9 million and $9.2 million of revenue from gift card redemptions in the third quarter of fiscal year 2021 and third quarter of fiscal year 2020, respectively. The Company recognized $27.3 million and $28.7 million of revenue from gift card redemptions in the thirty-nine weeks ended October 30, 2021 and October 31, 2020, respectively.
Disaggregation of Revenue
The Company’s club retail operations, which represent substantially all of its consolidated total revenues, are the Company’s only reportable segment. All the Company’s identifiable assets are in the United States. The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.
The following tables summarize the Company’s percentage of net sales disaggregated by category:
Thirteen Weeks Ended
October 30, 2021October 31, 2020
Grocery72 %77 %
General Merchandise & Services12 %13 %
Gasoline and Other16 %10 %
Thirty-Nine Weeks Ended
October 30, 2021October 31, 2020
Grocery71 %78 %
General Merchandise & Services14 %13 %
Gasoline and Other15 %9 %
4. Debt and Credit Arrangements
The following table summarizes the Company’s debt (in thousands):
October 30, 2021January 30, 2021October 31, 2020
ABL Facility$50,000 $310,000 $310,000 
First Lien Term Loan701,920 801,920 801,920 
Unamortized debt discount and debt issuance cost(3,771)(5,745)(6,224)
Less: current portion (260,000)(260,000)
Long-term debt$748,149 $846,175 $845,696 
ABL Facility
The ABL Facility is comprised of a $950.0 million revolving credit facility and a $50.0 million term loan. The ABL Facility is secured on a senior basis by certain "liquid assets" of the Company and secured on a junior basis by certain "fixed assets" of the Company. Payment terms on the $50.0 million term loan are restricted in that the term loan cannot be repaid unless all loans outstanding under the revolving credit facility are repaid, and once repaid, cannot be re-borrowed. The availability under the $950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the agreement governing the ABL Facility. As amended, interest on the revolving credit facility is calculated either at LIBOR plus a range of 125 to 175 basis points or a base rate plus a range of 25 to 75 basis points; and interest on the term loan is calculated at LIBOR plus a range of 200 to 250 basis points or a base rate plus a range of 100 to 150 basis points, in all cases based on excess availability. The applicable spread of LIBOR and base rate loans at all levels of excess availability steps down by 12.5 basis points upon achieving total net leverage of 3.00 to 1.00. The ABL Facility also provides a sub-facility for issuances of letters of credit subject to certain fees defined in the agreement governing the ABL Facility. The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolving credit facility, which is scheduled to mature on August 17, 2023.
13


At October 30, 2021, there were $50.0 million outstanding in loans under the ABL Facility and $19.4 million in outstanding letters of credit. The interest rate on the revolving credit facility was 1.20%, the interest rate of the term loan was 2.08% and unused capacity was $930.6 million.
At January 30, 2021, there were $310.0 million outstanding in loans under the ABL Facility and $15.0 million in outstanding letters of credit. The interest rate on the revolving credit facility was 1.25%, the interest rate of the term loan was 2.14% and unused capacity was $641.1 million.
At October 31, 2020, there were $310.0 million outstanding in loans under the ABL Facility and $21.2 million in outstanding letters of credit. The interest rate on the revolving credit facility was 1.27%, the interest rate of the term loan was 2.14% and unused capacity was $670.8 million.
First Lien Term Loan
The Company’s First Lien Term Loan matures on February 3, 2024. Voluntary prepayments are permitted. Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds 3.50 to 1.00. The First Lien Term Loan is subject to certain affirmative and negative covenants but no financial covenants. It is secured on a senior basis by certain "fixed assets" of the Company and on a junior basis by certain "liquid" assets of the Company. 
On October 30, 2020, the Company borrowed $260.0 million from the ABL Facility. The proceeds from the Company’s borrowing and $100.0 million of the Company’s cash and cash equivalents were used to pay $360.0 million of the principal amount outstanding on the First Lien Term Loan. In connection with the payment, the Company expensed $2.8 million of previously capitalized debt issuance costs and original issue discount.
On April 30, 2021, the Company used $100.0 million of cash and cash equivalents to pay $100.0 million of the principal amount outstanding on the First Lien Term Loan. In connection with the payment, the Company expensed $0.7 million of previously capitalized debt issuance costs and original issue discount.
There were $701.9 million, $801.9 million and $801.9 million outstanding on the First Lien Term Loan at October 30, 2021, January 30, 2021 and October 31, 2020, respectively. Interest rates for the First Lien Term Loan were 2.09%, 2.13% and 2.15% at October 30, 2021, January 30, 2021 and October 31, 2020, respectively.
5. Interest Expense, net
The following details the components of interest expense for the periods presented (in thousands):
Thirteen Weeks EndedThirty-Nine Weeks Ended
October 30, 2021October 31, 2020October 30, 2021October 31, 2020
Interest on debt$10,864 $15,915 $34,264 $52,860 
Interest on capital lease and financing obligations966 972 2,947 2,971 
Debt issuance costs amortization544 629 1,649 1,934 
Original issue discount amortization288 477 906 1,535 
Loss on debt extinguishment 2,794 657 4,077 
Loss (gain) on cash flow hedge(808)5,097 7,146 5,097 
Capitalized interest (2)(2)(7)
Interest expense, net$11,854 $25,882 $47,567 $68,467 
Interest expense in the thirteen and thirty-nine weeks ended October 30, 2021 decreased due to lower debt balances outstanding and lower interest rates.
14


6. Commitments and Contingencies
The Company is involved in various legal proceedings that are typical of a retail business. In accordance with applicable accounting guidance, an accrual will be established for legal proceedings if and when those matters present loss contingencies that are both probable and estimable. The Company does not believe the resolution of any current proceedings will result in a material loss to the consolidated financial statements.
7. Stock Incentive Plans
On June 13, 2018, the Company’s Board of Directors adopted, and its stockholders approved, the BJ’s Wholesale Club Holdings, Inc. 2018 Incentive Award Plan (the "2018 Plan"). The 2018 Plan provides for the grant of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock appreciation rights, and cash awards. Prior to the adoption of the 2018 Plan, the Company granted stock-based compensation to employees and non-employee directors under the Fourth Amended and Restated 2011 Stock Option Plan of BJ’s Wholesale Club, Inc. (f/k/a Beacon Holding Inc.), as amended (the "2011 Plan") and the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (f/k/a Beacon Holding, Inc.), as amended (the "2012 Director Plan"). No further grants will be made under the 2011 Plan or the 2012 Director Plan.
The 2018 Plan authorizes the issuance of 13,148,058 shares, including 985,369 shares that were reserved but not issued under the 2011 Plan and the 2012 Director Plan. If an award under the 2018 Plan, the 2011 Plan or the 2012 Director Plan is forfeited, expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2018 Plan. Additionally, shares tendered or withheld to satisfy grant or exercise price, or tax withholding obligations associated with an award under the 2018 Plan, the 2011 Plan or the 2012 Director Plan will be added to the shares authorized for grant under the 2018 Plan. The following shares may not be used again for grant under the 2018 Plan: (1) shares subject to a stock appreciation right ("SAR") that are not issued in connection with the stock settlement of the SAR upon its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan. As of October 30, 2021, there were 5,565,015 shares available for future issuance under the 2018 Plan.
On April 16, 2021, the Compensation Committee approved a modification to the equity awards agreements under the 2011 Plan, 2012 Director Plan and 2018 Plan. In the event that an employee is terminated due to death or disability, the modified equity award agreements provide for: (i) full vesting of all time-based awards, including restricted stock awards and stock options, (ii) pro-rata vesting of all performance-based awards, including performance share units, based on actual performance as of the end of the applicable performance period, pro-rated based on the period of employment during the applicable performance period, and (iii) the extension of the post-termination exercise window for vested stock options.
The following table summarizes the Company’s stock award activity during the thirty-nine weeks ended October 30, 2021 (shares in thousands):
Stock OptionsRestricted StockRestricted Stock UnitsPerformance Stock
SharesWeighted
Average
Exercise
Price
SharesWeighted
Average
Grant
Date Fair
Value
SharesWeighted
Average
Grant
Date Fair
Value
SharesWeighted
Average
Grant
Date Fair
Value
Outstanding, January 30, 20213,673 $17.50 1,575 $26.29 29 $34.54 527 $23.96 
Granted  494 44.59 26 46.82 422 44.96 
Forfeited/canceled  (14)39.76   (282)28.98 
Exercised/vested(1,322)13.97 (1,013)29.52 (29)34.60   
Outstanding, October 30, 20212,350 $19.49 1,042 $33.99