August 18, 2010 / 11:20 AM / in 7 years

BJ's Wholesale cuts full-year forecast

CHICAGO (Reuters) - BJ’s Wholesale Club Inc BJ.N said full-year earnings would fall below analysts’ estimates as it expects merchandise sales to be less than its previous forecast.

The No. 3 U.S. warehouse club operator also said profit was $35.8 million, or 67 cents a share, in the second quarter, ended July 31, compared with $35.1 million, or 64 cents a share, a year earlier.

Analysts on average forecast 73 cents a share, according to Thomson Reuters I/B/E/S.

The weak forecast and disappointing earnings come as BJ’s faces pressure from a private equity investor who thinks the company’s shares are undervalued.

In July, a fund run by private equity firm Leonard Green & Partners said it had taken a 9.5 percent stake in BJ’s and that it might propose taking the company private.

Earlier this month, BJ’s said merchandise sales at stores open at least a year rose 2.9 percent in the second quarter. Revenue, including membership fees, was $2.79 billion, up from $2.57 billion a year earlier.

BJ’s cut its full-year earnings forecast to a range of $2.40 to $2.50 a share from its previous forecast of $2.58 to $2.68. Analysts’ average forecast is $2.67.

The company said it now expects full-year same-store merchandise sales to rise 2.5 percent to 4.5 percent, down for its previous forecast of 2.7 percent to 4.7 percent.

Reporting by Brad Dorfman; Editing by Derek Caney and John Wallace

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