BJ's Wholesale Club Holdings, Inc. (BJ) is having a moment. The warehouse retailer posted third-quarter results that topped Wall Street's expectations, and the market rewarded it with a rally. But beyond the headline numbers, what's really interesting is the story underneath: shoppers are sticking around, trading up to premium memberships, and buying more stuff online.

The company reported adjusted earnings per share of $1.16 for the quarter, comfortably ahead of the analyst consensus estimate of $1.09. Revenue came in at $5.348 billion, just edging past expectations of $5.347 billion. Not a massive beat on the top line, but enough to show the business is holding steady.

Membership Momentum and Digital Growth

Here's where things get more compelling. Comparable club sales rose 1.1% year-over-year, or 1.8% if you strip out gasoline sales. The two-year stack on that metric hit 5.5%, which suggests consistent momentum rather than a one-quarter fluke.

The real standout? Digital sales surged 30% compared to last year, with a two-year stacked growth rate of 61%. That's the kind of acceleration that indicates BJ's is actually winning over customers who want the convenience of online ordering paired with warehouse club pricing.

Membership fee income climbed to $126.3 million from $115 million a year earlier. Management attributed this jump to stronger acquisition and retention rates, plus more customers opting for higher-tier memberships. The annual membership fee increase that took effect in January 2025 also helped pad those numbers.

"Our business continues to perform well in a volatile environment and we are maintaining an unwavering focus on what matters most: taking care of families who depend on us," said Bob Eddy, Chairman and Chief Executive Officer of BJ's Wholesale Club.

The Profit Picture

Gross profit increased to $1.01 billion in the third quarter compared to $975.5 million a year ago. Merchandise gross margin rate remained flat year-over-year when you exclude gasoline sales and membership fee income, suggesting the company isn't sacrificing pricing discipline for volume.

Operating income did slip 4.8% to $218.4 million, and adjusted EBITDA declined 2.2% to $301.4 million. Not ideal, but the company is clearly prioritizing growth investments over near-term margin expansion.

BJ's also kept buying back stock, repurchasing 905,000 shares for $87.3 million during the quarter. About $866.2 million remains available under the existing repurchase program.

Raising the Bar on Guidance

BJ's Wholesale Club raised its fiscal 2025 adjusted EPS guidance to a range of $4.30 to $4.40, up from the prior outlook of $4.20 to $4.35. That's above the analyst consensus of $4.31, which explains some of the positive market reaction.

"We are narrowing our outlook for full-year merchandise comparable club sales while increasing our outlook for adjusted earnings per share," said Laura Felice, Executive Vice President and Chief Financial Officer.

The company expects comparable club sales, excluding gasoline, to increase 2% to 3% year-over-year. That's a slight narrowing from the previous guidance of 2% to 3.5%, but the higher profit forecast suggests better operational efficiency and membership revenue are picking up the slack.

BJ's is on track to open seven new clubs in the fourth quarter and has earmarked $800 million in capital expenditures for fiscal 2025 as it continues its expansion push.

BJ Price Action: BJ's Wholesale Club shares were up 1.56% at $92.00 during premarket trading on Thursday.