(Updates with added details from conference with analysts)
By Karen Talley
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Strong food sales and slightly-better-than-expected membership renewals helped BJ's Wholesale Club Inc. (BJ) on Wednesday report a 41% jump in first-quarter earnings and improved margins on Wednesday.
The warehouse retailer also raised its earnings forecast for the year by 2 cents per share to $2.44 to $2.54 a share.
Food result were driven by a 12% comparable store increase in perishables, which came on top of 10% increase last year, a trend that BJ's plans to capitalize on by continuing to expand the category, President Laura Sen said during a conference call with analysts.
Computer equipment, televisions and health and beauty aid sales were also strong in the first quarter.
Apparel, jewelery and sporting goods were among the weaker categories.
"In spite of all the headlines from Wall Street and the stock market I think the consumer is very much in the same mind-set when it comes to discretionary spending," Sen said.
During the first quarter, average inventory per club increased by only 0.4% while merchandise comparable store sales increased 7.5%, as BJ's deftly balanced supply with demand.
Customer traffic rose 7% for the quarter, with the average transaction rising 1%, indicating customers continue to spend at or above last year's level, even though some of the items in their carts were cheaper than they were a year ago.
"While the first quarter was a great start to the year, BJ's will face a number of challenges for the remainder of this year," said Chief Financial Officer Frank Forward. "We need to be prudent about the uncertain macro economic environment. We're also, will be up against comparisons to last year's extraordinary levels of gasoline income."
BJ's shares are off 1.6%, or 60 cents, to $37.49 after considerable short-covering coming into Wednesday's earnings report.
A number of retailers have been reporting better-than-expected results in recent months, though some of the credit may go to cost cutting and inventory slashing rather than increased consumer optimism. For its part, BJ's has been showing improved results as shoppers flock to its lower prices on a per-ounce basis.
For the quarter ended May 2, the company reported a profit of $24.3 million, or 45 a share, up from $17.2 million, or 29 cents a share, a year ago. Earlier this month BJ's raised its view to 41 cents to 45 cents per share amid higher-than-expected sales and margins.
Also including buying and occupancy costs, gross margin rose to 8.5% from 7.23%.
BJ's reported earlier this month that net sales edged up 0.2% to $2.26 billion, with sharply lower gas prices cutting the figure by nine percentage points. Excluding gas, same-store sales jumped 7.5%.
-By Karen Talley, Dow Jones Newswires, 201-938-5106; karen.talley@dowjones.com
Tess Stynes contribute to this article