BJ's Wholesale (NYSE:BJ) Membership Fees Will Drive Earnings Higher

Citing growing membership sign-ups and increased fees, Barclays (NYSE:BCS) said BJ's Wholesale (NYSE:BJ) is positioned to generate stronger earnings in 2010 and 2011.

"BJ's reported 3Q10 EPS of $0.43, above our estimate of $0.37. Total revenue increased 4.8% to $2.57 billion. Membership income increased 6.0% to $48.7 million, driven by new club openings, increases in renewal rates, and new Rewards membership sign -ups. Importantly, BJ's announced the increase of its basic membership fee to $50 from $45, which goes into effect on January 3, 2011. We estimate this could benefit Membership Fee Income by approximately $20 million, half of which will be recognized in 2011," Barclays said.

"Given potential for upside to Membership Fee Income, we are increasing our 2010 and 2011 EPS estimates to $2.50 and $2.80, from $2.45 and $2.70, respectively. We are establishing a FY12 EPS estimate of $3.10," Barclays added.

BJ's closed Thursday at $47.01, down by $0.53, or 1.11 percent. Barclays has a price target of $50 on them.