BJ 10-K & 10-Q changes, risk factors and insider trading

Our results of operations are affected by the level of consumer spending and, therefore, by changes in the economic factors that impact consumer spending. Certain economic conditions or events, such as a contraction in the financial markets; high rates of inflation or deflation; high unemployment levels; decreases in consumer disposable income; unavailability of consumer credit; higher consumer debt levels; higher tax rates and other changes in tax laws; fluctuations in interest rates; decreased consumer confidence, higher fuel, energy and other commodity costs; weakness in the housing market; higher insurance and health care costs; and product cost increases resulting from an increase in commodity prices or supply chain issues, could reduce, and in some cases have reduced, consumer spending generally, which could cause our customers to spend less or to shift their spending to our competitors. Reduced consumer spending may result in reduced demand for our items and may also require increased selling and promotional expenses. Issues or trends that affect consumer spending broadly could affect spending by our members disproportionately. A reduction or shift in consumer spending could negatively impact our business, results of operations and financial condition.

Natural disasters, extreme weather or unusual conditions and catastrophic events beyond our control could negatively affect our business, financial condition and results of operations.

Our business could be severely impacted by natural disasters and extreme weather conditions, such as hurricanes, earthquakes, floods, wildfires or other incidents beyond our control, such as global or regional pandemics, epidemics or outbreaks of infectious diseases, terrorism, war/conflict, geopolitical tensions or events, riots, acts of violence and other crimes (including looting or vandalism), particularly in locations where our centralized operating systems and administrative personnel are located. For example, our operations are concentrated primarily on the eastern half of the United States, and any adverse weather event or natural disaster, such as a hurricane or heavy snowstorm, or severe or unseasonable regional weather such as unusually heavy precipitation, could have a material adverse effect on a substantial portion of our operations. Such natural disasters or catastrophic events beyond our control could result in, among other things: physical damage to one or more of our properties or inventory; the temporary closure of one or more of our clubs, Company-operated or contracted distribution centers or our home office facility; the temporary reduction in the availability of products in our clubs and online or a reduction in demand for certain of our products; the temporary lack of an adequate work force in a market; a temporary or long-term disruption in merchandise distribution, including issues with the transport of goods to or from overseas, each of which could have a negative adverse effect on our business, financial condition, cash flows and results of operations.

We accept payments using an increasing variety of methods, including cash, checks, our co-branded credit cards and a variety of other credit and debit cards, as well as Paypal, Apple Pay®, Google Pay, and EBT payments. Our efficient operation, like that of most retailers, requires the transmission of information permitting cashless payments. As we offer new payment options to our members, we may be subject to additional rules, regulations and compliance requirements, along with the risk of higher fraud losses. For certain payment methods, we pay interchange and other related card acceptance fees, along with additional transaction processing fees. We rely on third parties to provide secure and reliable payment transaction processing services, including the processing of credit and debit cards, and our co-branded credit card, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association and network operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change over time. For example, we are subject to Payment Card Industry Data Security Standards, which contain stringent compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. We are alsowere subject to a consent decree entered by the FTC in 2005 in connection with a complaint alleging that we had failed to adequately safeguard members’ personal data. That consent decree expired by its terms on September 20, 2025. Under the consent decree, we arewere required to maintain a comprehensive information security program that iswas reasonably designed to protect the security, confidentiality, availability and integrity of personal information collected from or about our members. In addition, if our third-party processor systems arewere breached or compromised, we may behave been subject to substantial fines, remediation costs, litigation and higher transaction fees and loselost our ability to accept credit or debit card payments from our members, and our reputation, business and operating results could alsohave bebeen materially adversely affected.

Our security measures have been breached in the past and may be undermined in the future due to the actions of outside parties, including nation-state sponsored actors, team member error, internal or external malfeasance, or otherwise, and, as a result, an unauthorized party may obtain access to our data systems and misappropriate, alter, or destroy business and personal information, including payment card information. Such information may also be placed at risk, and has been compromised in the past, through our use of outside vendors, which may have data security systems that differ from those that we maintain or whichthat are more vulnerable to breach. Any such incident could result in significant legal and financial exposure, damage to our reputation and harm to our relationship with our members, any of which could have an adverse effect on our business.

Given the very high volume of transactions we process each year, it is important that we maintain uninterrupted operation of our business-critical computer systems and infrastructure. Our systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, internal or external security incidents, including tampering with hardware and breaches of our transaction processing or other systems that could result in the compromise of confidential customer or team member data, ransomware or other malware attacks, social engineering, catastrophic events such as fires, earthquakes, tornadoes and hurricaneshurricanes, floods and errors by our team members. Phishing attacks have emerged as particularly pervasive, including as a means for ransomware attacks, which have increased in both frequency and breadth.breadth, and attacks leveraging artificial intelligence are becoming more common. If our systems or infrastructure are damaged or cease to function properly, we may have to make significant investments to fix or replace them, and we may suffer serious interruptions in our operations, which might not be short-lived, in the interim. Any material interruption to these systems or infrastructure could have a material adverse effect on our business and results of operations. Additionally, we rely on third party technology and vendors and other service providers for certain of our critical business functions, and any system failures of these third party providers, whether caused by security breaches, fraud or otherwise, and our our inability to find suitable alternatives in a timely and efficient manner and on acceptable terms, or at all, could disrupt our operations and subject us to losses or costs to remediate any of these deficiencies. In addition, the cost of securing our systems against failure or attack is considerable, and increases in these costs, particularly in the wake of a security incident, could be material.

The extent to which global or regional pandemics, epidemics or outbreaks of any highly infectious disease impacts our business, operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. Any global or regional pandemic, epidemic or outbreak of any highly infectious disease, may materially adversely affect our business, financial condition and results of operations, and may have the effect of heightening many of the risks described in this "“Risk Factors"” section, including: a complete or partial closure of, or a decrease in member traffic at, one or more of our clubs, due to government restrictions or the spread of disease among our team members or employees at a specific location; any difficulties and delays in obtaining products from our distributors and suppliers, delivering products to our clubs and adequately staffing our clubs and distribution centers; a decrease in consumer discretionary spending and confidence or changes in our members’ needs; and any inability to continue to provide our team members with appropriate compensation and protective measures and any limited access to our management, support staff and professional advisors.

Our quarterly operating results may be adversely affected by a number of factors including losses in new clubs, price changes in response to competitors’ prices, increases in operating costs, volatility in gasoline, energy and commodity prices, increasing penetration of sales of our private label brands (Wellsley Farms® and Berkley Jensen®), federal budgetarybudgetary, regulatory and tax policies, weather conditions, including natural disasters, local economic conditions and the timing of new club openings and related start-up costs.

Research analysts and stockholders may recognize and react to the foregoing changes to our key performance indicators and believe that they indicate a decline in our performance, and this could occur regardless of whether or not the underlying cause has an adverse impact on our profitability. If we suffer an adverse change to our key performance indicators, this could adversely affect the trading price of our common stock.

Our business is moderately seasonal, with a meaningful portion of our sales dedicated to seasonal and holiday merchandise, resulting in the realization of higher portions of net sales, operating incomesales and cash flows in the second and fourth fiscal quarters. Due to the importance of our peak sales periods, which include the spring and year-end holiday seasons, the second and fourth fiscal quarters have historically contributed, and are expected to continue to contribute, significantly to our operating results for the entire fiscal year. In anticipation of seasonal increases in sales activity during these periods, we incur significant additional expense prior to and during our peak seasonal periods, which we may finance with additional short-term borrowings. These expenses may include the acquisition of additional inventory, seasonal staffing needs and other similar items. As a result, any factors negatively affecting us during these periods,periods including adverseregional weather andconditions, such as seasonally unusual temperatures, prolonged periods of precipitation, or weather patterns that delay or shorten key selling seasons, reduce consumer demand for seasonal merchandise, or shift the timing of customer purchases. Any such conditions, particularly if they occur during our peak sales periods, as well as unfavorable economic conditions, could have a material adverse effect on our results of operations for the entire fiscal year.

We are subject to the risk of inventory lossloss, spoilage and theft. Our inventory shrinkage rates have not been material, or fluctuated significantly in recent years, although it is possible that rates of inventory loss and theft in the future will exceed our estimates and that our measures will be ineffective in reducing our inventory shrinkage. Although some level of inventory shrinkage is an unavoidable cost of doing business, if we experience higher rates of inventory shrinkage or incur increased security costs to combat inventory theft, for example as a result of increased use of self-checkout technologies, it could have a material adverse effect on our business, results of operations and financial condition.

We are typically responsible for taxes, utilities, insurance, repairs and maintenance for our leased retail properties. Our net lease cost for fiscal years 2024,2025, 2024 and 2023 and 2022 totaled $392.5$398.6 million, $372.6$392.5 million and $368.0$372.6 million, respectively. Our future minimum rental commitments for all operating leases in existence as of FebruaryJanuary 1,31, 20252026 was $361.2$359.4 million for fiscal year 20252026 and a total of $3.1$2.87 billion thereafter. We expect that certain new clubs may be leased to us, which will further increase our lease costs and require significant capital expenditures. We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from borrowings under our senior secured asset based revolving credit and term facility (the "ABL Revolving Facility") or other sources, we may not be able to service our lease expenses or fund our other liquidity and capital needs, which would materially affect our business.

The operating leases for our retail properties, distribution centers and corporate office expire at various dates through fiscal year 2051.2050. Several leases have renewal options for various periods of time at our discretion. When leases for our clubs with ongoing operations expire, we may be unable to negotiate renewals, either on commercially acceptable terms, or at all. Further, if we attempt to relocate a club for which the lease has expired, we may be unable to find a new location for that club on commercially acceptable terms or at all, and the relocation of a club might not be successful for other reasons. Any of these factors could cause us to close clubs in desirable locations, which could have an adverse impact on our results of operations.

The collection, use and processing of individually identifiable data, including personal health information, by our business is regulated at the federal and state levels. New privacy and information security laws and regulations continue to be passed or proposed and interpretations of existing laws change. As such, compliance with them may result in cost increases due to necessary system changes and the development of new administrative processes and may add additional complexity to our operations, require additional investment of resources in compliance programs, impact our business strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies, as well as increase the risk of potential liability. If we fail to comply with these laws and regulations or experience a data security incident, our reputation could be damaged, possibly resulting in lost future business, and we could be subjected to additional legal or financial risk, including the imposition of fines or other penalties, asdue a result ofto non-compliance.

As our e-commerce business grows, we increasingly encounter the risks and difficulties that internet-based businesses face. The successful operation of our e-commerce business, and our ability to provide a positive shopping experience that will generate orders and drive subsequent visits depend on efficient and uninterrupted operation of our order-taking and fulfillment operations. Risks associated with our e-commerce business include, but are not limited to: uncertainties associated with our website, including changes in required technology interfaces, website downtime and other technical failures, costs and technical issues as we upgrade our website software, inadequate system capacity, computer viruses, human error, security incidents; disruptions in telecommunications service or power outages; reliance on third parties for computer hardware and software and delivery of merchandise to our customers; rapid changes in technology; incorporation or failure to incorporate artificial intelligence properly; credit or debit card fraud and other payment processing related issues; changes in applicable federal and state regulations; liability for online content; cybersecurity and consumer privacy concerns and regulation; and reliance on third parties for same-day delivery.

In addition, we must keep up-to-date with competitive technology trends, including the use of new or improved technology,technology including artificial intelligence and agentic artificial intelligence, which may increase our costs and which may not increase sales or attract customers. If we are unable to allow real-time and accurate visibility into product availability when customers are ready to purchase, fulfill our customers’ orders quickly and efficiently use the fulfillment and payment methods they demand, provide a convenient and consistent experience for our customers regardless of the ultimate sales channel or manage our online sales effectively, our ability to compete and our results of operations could be adversely affected.

We imported approximately 3%2% of our merchandise directly from overseas countries such as China, Vietnam, Bangladesh and India during fiscal year 2024.2025. In addition, many of the products we purchase from domestic vendors are imported and would be subject to tariffs or other disruptions before reaching our clubs.

Foreign sourcing subjects us to a number of risks generally associated with doing business abroad, including lead times, labor issues, shipping and freight constraints, supply chain disruptions, product and raw material issues, political and economic conditions, government policies, tariffs and restrictions, epidemics and natural disasters.

Tariffs, or the threat of tariffs, may also significantly disrupt our ability to offer competitive prices as a result ofby negatively impacting consumer behavior and the assortment of goods we carry. Tariffs also can impact our ability or our vendors’ ability to source product efficiently or create other supply chain disruptions. We may not be able to fully or substantially mitigate the impact of current or future tariffs, pass price increases on to our customers or secure adequate alternative sources of products, which would have a material adverse effect on our business, operating results and financial performance.

Our goodwill and indefinite-lived intangible assets, which consist of goodwill and our trade name, represented a significant portion of our total assets as of FebruaryJanuary 1,31, 2025.2026. Accounting rules require the evaluation of our goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Such indicators are based on market conditions and the operational performance of our business.

As of FebruaryJanuary 1,31, 2025,2026, our total outstanding debt was $573.8$519.1 million. Our leverage could expose us to interest rate risk associated with our variable rate debt and prevent us from meeting our obligations under our ABL Revolving Facility and First Lien Term Loan. Our indebtedness could have important consequences to us, including: limiting our ability to deduct interest in the taxable period in which it is incurred in light of the Tax Cuts and Jobs Act and exposing us to the risk of increased interest rates as substantially all of our borrowings are at variable rates.

The timing and amount of repurchases of shares of our common stock, if any, will depend upon several factors, including market and business conditions, the trading price of our common stock, our cost of capital and the nature of other investment opportunities. The Inflation Reduction Act of 2022 imposesimposed a non-deductible 1% excise tax on the fair market value of stock repurchases, net of stock issuances, commencing in 2023 that exceed $1 million in a taxable year, which will make our share repurchase program more expensive to us. Our share repurchase program may be limited, suspended or discontinued at any time without prior notice. In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of our share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock. Although our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so and short-term stock price fluctuations could reduce the effectiveness of the program. Our share repurchase program may be suspended or terminated at any time without notice.

We currently anticipate that we will retain future earnings for the operation and expansion of our business and do not expect to pay any cash dividends on shares of our common stock in the foreseeable future. We are a holding company, and substantially all of our operations are carried out by our operating subsidiaries. Any inability on the part of our subsidiaries to make payments to us could have a material adverse effect on our business, financial condition and results of operations. Under our ABL Revolving Facility and First Lien Term Loan, our operating subsidiaries are significantly restricted in their ability to pay dividends or otherwise transfer assets to us, and we expect these limitations to continue in the future. Our ability to pay dividends may also be limited by the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries. Accordingly, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Stockholders seeking cash dividends in the foreseeable future should not purchase our common stock.

We are dependent upon several key management and other team members. If we were to lose the services of one or more of our key team members, this could have a material adverse effect on our operations. Our continued success also depends upon our ability to attract and retain highly qualified team members to meet our future growth needs while controlling related labor costs. Our ability to control labor costs is subject to numerous external factors, including healthcare costs and prevailing wage rates, which may be affected by, among other factors, competitive wage pressure, minimum wage laws and general economic conditions. If we experience competitive labor markets, either regionally or in general, we may have to increase our wages in order to attract and retain highly qualified team members, which could increase our selling, general and administrative expenses ("“SG&A"”) and adversely affect our operating income. We compete with other retail and non-retail businesses for these employees and invest significant resources in training them. There is no assurance that we will be able to attract or retain highly qualified team members to operate our business.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Although we are not a borrower or party to any such instruments with SVB or any other financial institution currently in receivership, if any of our lenders or counterparties to any such instruments were to be placed into receivership, we may be unable to access such funds. In addition, if any of our customers, suppliers or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. Furthermore, while we did not hold any cash directly at SVB, we regularly maintain cash balances at third-party financial institutions more than the FDIC insurance limit and there is no guarantee that the federal government would guarantee all depositors if such financial institutions were to fail, as they did with SVB depositors, in the event of further bank closures and continued instability in the global banking system. Any future adverse developments in the global banking system could directly or indirectly negatively impact our results of operations.

In addition, an economic downturn or investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding generally or our or our customers or suppliers access to cash and liquidity resources could, among other risks, adversely impact our liquidity or ability to meet our operating demands or result in breaches of our financial and/or contractual obligations.

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to theJanuary last day of January.31. Accordingly, references herein to "“fiscal year 2025” and “fiscal year 2024" and "fiscal year 2022"” relate to the 52 weeks ended January 31, 2026 and February 1, 2025 and January 28, 2023,2025, respectively, and references herein to "“fiscal year 2023"” relate to the 53 weeks ended February 3, 2024.

BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily onin the eastern half of the United States. We deliver significant value to our members, consistently offering up to 25% or more savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on groceries, continuouslyfresh refreshedfoods, general merchandise, gasolinegasoline, and other ancillary services, coupon books, and promotionsservices to deliver a differentiated shopping experience that is further enhanced by our digital capabilities. Additionally, we provide access to coupons and promotions to deliver further value to our members.

Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 253263 large-format, high volume warehouse clubs and 189199 gas stations spanning 21 states as of the date of this filing. In our coreoriginating New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product,GDP, we operate more thannearly three times the number of clubs compared to the next largest warehouse club competitor. In addition to shopping in our clubs, members are able to shop when and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our BOPIC service, curbside delivery, same-day delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces. We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day deliveries over a one-year period. Additionally, members may use ExpressPay® to skip checkout lines when they shop in club and pay via their mobile devices.

Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We have over 7.58 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. Through December 31, 2024, theThe annual membership fee for our Club Card membership wasis generally $55,$60 and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, wasis generally $110.$120. EffectivePrior to January 1, 2025, the Club Card membership fee increased to $60 per year and the Club+ membership feefees increasedwere to$55 $120and $110 per year.year, We believe that these membership fee increases will allow us to invest in an even stronger value proposition for our growing member base.respectively. We believe that members can save over ten times their $55$60 Club Card membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label brands, Wellsley Farms® and Berkley Jensen®, represent approximately 26%27% of theour Company'stotal annualnet sales.sales, excluding gasoline. Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $456.5$499.8 million for fiscal year 2024.2025.

Our business is moderatelysubject seasonalto insome nature.seasonality. Historically, our business has generally realized a slightly higher portion of net sales, operating income,sales and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively. Our quarterly results have been, and will continue to be, affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, our financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year.

The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending in our clubs, while economic weakness, which generally results in a reduction of customer spending, may have a different or more extreme effect on spending at our clubs. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include, among others, employment rates, changes to the Supplemental Nutrition Assistance Program (SNAP), government stimulus programs, tax legislation, business conditions, changes in the housing market, the availability of credit, interest rates and inflation, tariffs, tax ratesrates, and fuel and energy costs. In addition, unemployment rates and benefits may cause us to experience higher labor costs.

The membership model is a critical element of our business. Members drive our results of operations through their membership fee income and their purchases. The majority of members renew within six months following their renewal date. Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. We have grown our membership fee income each year for over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in fiscal year 2024.2025. Our membership fee income totaled $456.5$499.8 million in fiscal year 2024.2025. Our tenured membership renewal rate, a key indicator of membership engagement, satisfactionsatisfaction, and loyalty, was 90% at the end of fiscal year 2024.2025.

Our net sales and gross profit are affected by our ability to purchase our products in sufficient quantities at competitive prices. Further, our ability to maintain our appeal to existing customers and attract new customers primarily depends on our ability to originate, developdevelop, and offer a compelling product assortment responsive to customer preferences. As a result, our level of net sales could be adversely affected due to constraints in our supply chain, including our inability to procure and stock sufficient quantities of some merchandise in a manner that is able to match market demand from our customers.

Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, ExpressPay, and ExpressPaya digital coupon gallery will enable us to replicate our profitable club format and provide a differentiated shopping experience. We expect these infrastructure investments to support our successful operating model across our club operations.

The market price of gasoline impacts our net sales and comparable club sales, and large fluctuations in the price of gasoline may produce a short-term impact on our sales and margins. Retail gasoline prices are driven by daily crude oil and wholesale commodity market changes and are volatile, as they are influenced by factors that include changes in demand and supply of oil and refined products, global geopolitical events, regional market conditions, and supply interruptions caused by severe weather conditions. Typically, the change in crude oil prices impacts the purchase price of wholesale petroleum fuel products, which in turn impacts retail gasoline prices at the pump. During times when prices are particularly volatile, differences in pricing and procurement strategies between the Company and its competitors may lead to temporary margin contraction or expansion, depending on whether prices are rising or falling, and this impact could affect our overall results for a fiscal quarter.

Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, which could lead to a reduction in our sales, as well as greater margin pressure, as costs may not be able to be passed on to consumers. Changes in commodity prices and changes in inflation rates have impacted several categories of our business in fiscal year 2024 and may continue to do so. Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, tariffs, and other factors. In response to general inflationary volatility, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mixmix, or increasing our pricing when necessary.

Net sales for fiscal year 20242025 were $20.0$20.96 billion, a 2.5%4.6% increase from net sales reported for fiscal year 20232024 of $19.5$20.05 billion. The increase was due primarily to strengthtraffic and unit growth, particularly in the perishables, grocery, and sundries division, anas well as a net increase inof gasolinethirteen sales,clubs and sevengas clubstations openingsfrom duringthe fiscalprior 2024.year period, partially offset by a decrease in the average retail price-per-gallon of gasoline.

Various factors affect comparable club sales, including customer preferences and trends, product sourcing, promotional offerings and pricing, shopping frequency from new and existing members and the amount they spend on each visit, weatherweather, and holiday shopping period timing and length. Sales comparisons can be influenced by certain factors that are beyond our control such as changes in the cost of gasoline and macro-economic factors such as inflation. The higher comparable club sales, the more we can leverage certain of our selling, general and administrative ("SG&A") expenses, reducing them as a percentage of sales and enhancing profitability.

Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period. Merchandise comparable club sales increased by 2.8%2.6% in fiscal year 20242025 compared to fiscal year 20232024, driven by increased sales ofin the perishables, grocery, and sundries division of approximately 3.2%2.9% as well as increased sales of general merchandise and services of approximately 0.7%.1.0%.

In the perishables, grocery, and sundries division, growth was led by fresh meat and produce, as well as dairy, fresh beef, nutrition, beverages,candy, and papersnack categories when compared to fiscal year 2023, partially offset by a decrease in sales of alcohol.2024.

General merchandise and services increasedexhibited growth during fiscal year 2025 compared to fiscal year 2024 due to increasedstrength demandin forconsumer toyselectronics and electronics, including video games, apparel, and home categories compared to fiscal year 2023, partially offset by a decreaseheadwinds in consumerlarge spendingticket discretionary items in certainhome and seasonal categories.

The impact of gasoline sales on comparable club sales is dueprimarily tothe result of a decrease in retail prices year-over-year, partially offset by an increase in comparable gallons sold in fiscal year 20242025 compared to fiscal year 20232024, andas anwell as a net increase of twelvethirteen gas stations.

Membership fee income was $499.8 million in fiscal year 2025, compared to $456.5 million in fiscal year 2024, compareda to $420.7 million in fiscal year 2023, an 8.5%9.5% increase. The increase was primarily driven by strength in membership acquisition, retentionretention, and higher tierhigher-tier membership penetration across both new and existing clubs. We continued to add new members from our seven new club openings in fiscal year 2024clubs, as well as the five new clubs that openedincrease in the fourth quarter of fiscal year 2023. As noted above, we increased ourannual membership feesfees, which became effective in January 1, 2025 which we anticipate will positively impact membership fee income in fiscal year 2025, and had a minimal impact on fiscal year 2024 results.2025.

Cost of sales was $16.7$17.46 billion, or 83.3% of net sales, in fiscal year 2025, compared to $16.74 billion, or 83.5% of net sales, in fiscal year 2024, compared to $16.3 billion, or 83.5% of net sales, in fiscal year 2023.2024. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreasedremained approximately 10 basis pointsflat compared to fiscal year 2023.2024. MerchandiseThe marginsCompany werecontinues negativelyto impacted bymanage the mixbusiness ofto sales,drive asprofitable wellgrowth as our continued investments inacross the business.broader merchandise assortment.

SG&A increased by 5.0%6.4% to $3.0$3.15 billion in fiscal year 20242025 from $2.8$2.96 billion in fiscal year 2023.2024. The year-over-year increase in SG&A was primarily driven by increased laborlabor, occupancy, and occupancyoperational costs mainly as a result of new club and gas station openings and an increase in incentive compensation.openings. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense.expense Theyear-over-year. increaseIn infiscal SG&Ayear was partially offset by2024, the favorableCompany benefitted from the net impact of legal settlements reached of approximately $20 millionmillion, duringwhich thecontributed thirdto quartera ofreduction in SG&A expenses compared to fiscal year 2024, as well as the impact of the 53rd week in fiscal year 2023. We remain focused on investing in member engagement, marketing, and digital strategies.2025.

Pre-opening expenses were $29.4 million in fiscal year 2025 compared to $28.3 million in fiscal year 2024 compared to $19.6 million in fiscal year 2023.2024. Pre-opening expenses increasedfluctuated due to timing of spend and the number of club openings year-over-year.

Interest expense, net was $42.4 million for fiscal year 2025 compared to $51.4 million for fiscal year 2024 compared to $64.5 million for fiscal year 2023.2024. The decrease was primarily due to a reductionfluctuations in average outstanding borrowings and fluctuations in interest rates,rates year-over-year, partially offset by an increase in interest expense on financing obligations related to finance leases and failed sale-leaseback transactions year-over-year.transactions.

The Company’s effective income tax rate fromwas continuing25.3% operationsfor wasfiscal year 2025 and 25.9% for fiscal year 2024 and 28.8% for fiscal year 2023.2024. The decrease in the effective income tax rate was primarilyattributable drivento benefits recognized from the utilization of income tax credits, as well as increased current year research and development tax credits, partially offset by higherdecreased tax benefits from stock-based compensation year-over-year.compared to the prior year period.

The accompanying Consolidatedconsolidated Financialfinancial Statements,statements, including the related notes, are presented in accordance with GAAP. In addition to relevant GAAP measures, we also provide non-GAAP measures, including adjusted net income, adjusted net income per diluted share ("“adjusted EPS"”), adjusted EBITDA, adjusted free cash flow, and other key performance indicators, including comparable club sales, because management believes these metrics are useful to investors and analysts by excluding items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, adjusted net income, adjusted EPS, adjusted EBITDA, adjusted free cash flow, and comparable club sales may not be comparable to similarly titled measures used by other companies in our industry or across different industries. See Results of Operations above for our comparable club sales and merchandise comparable club sales resultsresults. Adjusted free cash flow is discussed within Liquidity and Capital Resources section below.

Adjusted EBITDA is defined as net income from continuing operations before interest expense, net, provision for income taxestaxes, and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments.

The following is a reconciliation of our net income from continuing operations to adjusted EBITDA for the periods presented:

Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of FebruaryJanuary 1,31, 2025,2026, cash and cash equivalents totaled $28.3$46.2 million and we had $1.0$1.04 billion of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures;expenditures, fund share repurchases, and meet debt service and principal repayment obligations. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.

During fiscal year 2024,2025, we repurchased 2,181,8852,599,000 shares under the 20212024 Repurchase Program for a total purchase price of $190.9$252.4 million, inclusive of associated costs,costs. fullyWe exhaustingcontinue theto $500.0prioritize milliondisciplined authorizationcapital underallocation, suchbalancing program.reinvestment in growth and returns to share holders through share repurchases.

Our net cash from operating activities can fluctuate from period to period due to several factors, including: the timing and mix of sales, which are typically higher in the second and fourth quarters due to seasonality; the timing of inventory purchases as the Company prepares for holiday seasons, lease-related activity, income tax and other payments.

Net cash used in investing activities was $702.3 million in fiscal year 2025, compared to $589.6 million in fiscal year 2024,2024. comparedThe to $454.8 millionincrease in fiscalcash yearused 2023. This fluctuation iswas primarily driven by an increase in capital spending of $120.9$114.1 million as we continue to execute on our growth profilestrategy includeswith a greater mix of ownednew clubs asin opposedour topipeline leasedand clubs.expanded supply chain capabilities.

Net cash used in financing activities in fiscal year 20242025 was $319.1$309.7 million compared to $262.0$319.1 million in fiscal year 2023.2024. The increasedecrease in cash used in fiscal year 2024 iswas primarily due to aan $58.0$89.0 million increasedecrease in net payments on our ABL Revolving Facility, aspartially welloffset asa an increased outflow of $64.5$67.2 million forincrease in the acquisition of treasury stock which exhausted the authorization on our previous share repurchase program; partially offset byand a $50.0$13.3 million net decrease in principal payments on our First Lien Term Loan and an increase in net cash received from stock option exercises of $15.7 million.exercises.

We present adjusted free cash flowflow, a non-GAAP measure, because we believe it assists investors and analysts in evaluating our liquidity. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We define adjusted free cash flow as net cash provided by operating activities less additions to property and equipment, net of disposals, plus proceeds from sale-leaseback transactions.

Adjusted free cash flow increased to $331.0 million for fiscal year 2025 compared to $312.9 million for fiscal year 2024 compared to $264.1 million for fiscal year 2023.2024. The increase is driven by higher cash flows from operating activities primarily due to higher net income and favorable fluctuations in working capital, timing of lease payments, and higher net income, partially offset by an increase in capital spending.

On July 28, 2022, the Company entered into the ABL Revolving Facility with an aggregate ABL Revolving Commitment of $1.2$1.20 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto. The maturity date of the ABL Revolving Facility is July 28, 2027.

AtAs Februaryof 1,January 2025,31, 2026, there was $175.0$120.0 million outstanding in loans under the ABL Revolving Facility and $11.1$9.6 million in outstanding letters of credit. The interest rate on the revolving credit facility was 5.41%,4.77%, and unused capacity was $1.0$1.04 billion.

AtAs Februaryof 1,January 2025,31, 2026, the interest rate for the First Lien Term Loan was 6.08%5.43% and there was $400.0 million outstanding.

We also have cancellable and non-cancellable purchase obligations under purchase orders for merchandise inventory, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, transferable tax credits, and other agreements. As of January 31, 2026, we had a cash commitment of approximately $91 million, expected to be paid in the first half of fiscal year 2026, related to the purchase of transferable tax credits.

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. Accordingly, references herein to “fiscal year 2026” relate to the 52 weeks ending January 30, 2027, and references herein to “fiscal year 2025” relate to the 52 weeks ended January 31, 2026. The firstsecond quarter of fiscal year 2026 ended on MayAugust 2,1, 2026, and the firstsecond quarter of fiscal year 2025 ended on MayAugust 3,2, 2025, and both included thirteen weeks.

Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We have overapproximately 88.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. The annual membership fee for our Club membership is generally $60, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $120. Prior to January 1, 2025, the Club and Club+ membership fees were $55 and $110 per year, respectively. We believe that members can save over ten times their $60 Club membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label brands, Wellsley Farms® and Berkley Jensen®, represented approximately 27% of our total net sales, excluding gasoline, for fiscal year 2025. Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $511.7$524.0 million for the trailing twelve-months ended MayAugust 2,1, 2026.

The membership model is a critical element of our business. Members drive our results of operations through their membership fee income and their purchases. The majority of members renew within six months following their renewal date. Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. We have grown our membership fee income each year for over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in the first thirteentwenty-six weeks of fiscal year 2026. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2025.

NetThe salesincrease for theboth firstcomparative quarter of fiscal year 2026 were $5.53 billion, a 9.9% increase from net sales reported for the first quarter of fiscal year 2025 of $5.03 billion. The increaseperiods was due primarily to growth in traffic and ticket in each of the general merchandise and services division and the perishables, grocery, and sundries division, as well as a net increase of ninetwelve clubs from the prior year period. Additionally, net sales for both comparative periods were positively impacted by an increase in the average retail price-per-gallon of gasoline sold compared to the second quarter and first quartersix months of fiscal year 2025, as well as an increase in comparable gallons sold.

Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period. Merchandise comparable club sales increased 1.5%3.1% and 2.3% in the second quarter and the first quartersix months of fiscal year 2026, respectively, compared to the firstsame quarterperiods ofin fiscal year 2025,2025. driven by increased sales in theThe general merchandise and services division generated a sales increase of 7.1%5.3% and 6.1% for the second quarter and the first six months of fiscal year 2026, while sales in the perishables, grocery, and sundries division ofincreased 0.7%.by 2.8% and 1.8%, respectively.

General merchandise and services exhibited growth in each of the second quarter and the first quartersix months of fiscal year 2026 compared to the first quarter of fiscalprior year 2025periods, primarily due to strength in consumer electronics,electronics partially offset by headwinds inand home and fashion.categories.

In the perishables, grocery, and sundries division, growth was led by fresh meatbeverages and produce, as well as non-alcoholic beverage,active nutrition, candy, and snack categories whenas well as fresh meat and produce compared to the second quarter and the first quartersix months of fiscal year 2025. FirstGrowth quarterin growthboth periods was partially offset by a decrease in dairy, primarily driven by continued deflation in perishables,the especiallyprice eggs,of as well as decreases in household cleaning and health and beauty categories.eggs.

The impact of gasoline sales is a result of an increase in retail prices year-over-year, as well as an increase in comparable gallons sold.sold for both comparative periods.

Membership fee income was $132.4$135.6 million in the firstsecond quarter of fiscal year 2026 compared to $120.4$123.3 million in the firstsecond quarter of fiscal year 2025, a 9.9% increase. The increase was primarily driven by strength in membership acquisition, retention and higher-tier membership penetration across both new and existing clubs.

Cost of sales was $4.63$5.12 billion, or 83.8%84.0% of net sales, in the firstsecond quarter of fiscal year 2026 compared to $4.18$4.37 billion, or 83.1%83.2% of net sales, in the firstsecond quarter of fiscal year 2025. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased by approximately 1020 basis points compared to the first quarter of fiscalprior year 2025, primarily driven by the Company’s continued investments in pricing, partially offset by tariff refund benefits recognized in the quarter.period.

SG&A increased by 5.9% to $806.0 million in the first quarter of fiscal year 2026 from $760.9 million in the first quarter of fiscal year 2025. The increase in SG&A for both comparative periods was primarily driven by increased labor, occupancy, and operational costs mainly as a result of new club and gas station openings. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense year-over-year. These increases were partially offset by a gain recognized in connection with a sale-leaseback transaction in the second quarter of fiscal year 2026.

Pre-opening expenses were $14.0$6.4 million in the firstsecond quarter of fiscal year 2026 compared to $5.0$3.3 million in the firstsecond quarter of fiscal year 2025. Pre-opening expenses fluctuated due to timing of spend and the number of club openings year-over-year.

The effective income tax rate was 27.0%27.3% and 22.2%26.9% for the firstsecond quarter of fiscal years 2026 and 2025, respectively. The increase in the effective income tax rate was primarily attributable to lower tax gains on transferable tax credits, partially offset by higher tax benefits from stock-based compensation compared toin the priorcurrent year period.

Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of MayAugust 2,1, 2026, cash and cash equivalents totaled $27.8$30.0 million and we had $816.2$962.3 million of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures, fund share repurchases, and meet debt service and principal repayment obligations. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.

During the thirteentwenty-six weeks ended MayAugust 2,1, 2026, we repurchased 2,114,0003,498,278 shares under the 2024 Repurchase Program for a total purchase price of $206.6$330.7 million, inclusive of associated costs. We continue to prioritize disciplined capital allocation, balancing reinvestment in growth, and returns to shareholders through share repurchases.

Net cash used in investing activities was $184.6$321.7 million for the thirteentwenty-six weeks ended MayAugust 2,1, 2026 compared to $142.3$306.2 million for the thirteentwenty-six weeks ended MayAugust 3,2, 2025. This fluctuation is primarily driven by an increase in capital spending of $41.5$53.3 million, partially offset by $41.4 million asof wenet continueproceeds tofrom executethe onassignment of a purchase option and related sale-leaseback of our growthnew strategyambient throughdistribution center in Ohio. The increase in capital spend reflects our continued investment in new clubsclub inopenings our pipeline, as well as strategicand enhancements across our distribution network.network, including a new ambient distribution center.

Net cash providedused byin financing activities for the thirteentwenty-six weeks ended MayAugust 2,1, 2026 was $26.3$236.0 million compared to $54.6$132.8 million used in financing activities for the thirteentwenty-six weeks ended MayAugust 3,2, 2025. The increase in cash providedused is primarily due to $255.0 million of net borrowings on our ABL Revolving Facility for the thirteen weeks ended May 2, 2026 compared to net payments of $25.0 million in the thirteen weeks ended May 3, 2025, partially offset by a $184.4$265.9 million increase in the acquisition of treasury stock compared to the prior year period.period, partially offset by $110.0 million of net borrowings on our ABL Revolving Facility for the twenty-six weeks ended August 1, 2026 compared to net payments of $70.0 million in the twenty-six weeks ended August 2, 2025.

Adjusted free cash flow decreasedincreased $109.6to $265.5 million during the firstsecond quarter of fiscal year 2026 compared to $87.3 million for the firstsecond quarter of fiscal year 2025. The decrease is driven by a decrease in cash provided by operating activities, primarily due to unfavorable fluctuations in working capital, and an increase in capital spending.

At MayAugust 2,1, 2026, there was $375.0$230.0 million outstanding in loans under the ABL Revolving Facility and $8.8$7.7 million in outstanding letters of credit. The interest rate on the revolving credit facility was 4.75%4.83% and unused capacity was $816.2$962.3 million.

At MayAugust 2,1, 2026, the interest rate for the First Lien Term Loan was 5.41% and there was $400.0 million outstanding.

Our material cash commitments consist primarily of debt obligations, interest payments, leases, and purchase orders for merchandise inventory, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, transferable tax credits, and other agreements. These material cash commitments impact our short-term and long-term liquidity and capital needs. As of MayAugust 2,1, 2026, other than a cash commitmentcommitments of approximately $85$93 million, the majority of which is expected to be paid in the first quarter of fiscal year 2027, related to the purchase of transferable tax credits, and those items related to the ordinary course of operations of our business such as inventory purchases, agreements for capital items, and new leases and lease amendments, there were no material changes to our material cash commitments from those described in our Annual Report on Form 10-K for fiscal year 2025.