I previously wrote about BJ’S Wholesale(BJ) in September when the stock was at $26. Since then, the stock has slowly crept up prior today’s leap which has had it trading as high as $32. Today’s jump comes after the company announced that CEO Mike Wedge would be retiring. Reading the press release further gives additional color to the circumstances of Wedge’s departure:
In a joint statement, Messrs. Wedge and Zarkin stated, “While the Company has made great strides in its efforts to improve general merchandise sales and customer traffic, overall progress has not come as quickly as we had hoped and expected. We agree that the Company’s leadership team will benefit from a fresh perspective at this time.”
Mr. Wedge was replaced as CEO by 68 year old Chairman of the Board Herb Zarkin, who will serve in an interim role as replacement is found. Based on the positive move upwards, the market appears to think that longstanding rumors that BJ’s will be acquired will come to pass. The company looks like an attractive target for private equity as it has no long term debt and owns substantial real estate.
On the other hand, Mr. Wedge’s departure raises troubling questions about the company’s performance. Same store sales have been lackluster of late, but last week’s earnings announcement was ahead of expectations and management expressed optimism regarding Q4.
I have a sinking feeling that another shoe may drop before a buyer comes along. Given the 25% runup in the past 2 months, now looks like a good time to follow Mr. Wedge out the door and say goodbye to BJ’s
Disclosure: I have a position in BJ