The impact of organized retail crime has been a theme of retail earnings season, with BJ’s Wholesale Club Holdings Inc. CEO Bob Eddy the latest executive to weigh in on the issue.
“Organized retail crime is definitely a thing,” he said, during a conference call to discuss the company’s first-quarter results Tuesday. “We see it, and it is material,” he added.
The issue of inventory “shrink” caused by theft and organized retail crime was cited by Target Corp.
TGT,
when it reported its fiscal first-quarter results last week. Walmart Inc.
WMT,
also described the issue as “challenging” during the conference call to discuss its first-quarter results last week.
BJ Wholesale’s
BJ,
Eddy explained that he talks to his counterparts in the retail industry about the problem. “They are definitely seeing it in their businesses,” he said. However, BJ’s Wholesale benefits from its card-based membership system when it comes to tackling theft, according to Eddy. The company’s team has also done “really wonderful work” keeping track of inventory, keeping shrink as low as possible, and keeping members and employees safe, he added.
Related: BJ’s Wholesale stock falls toward 4-month low after profit matches expectations but revenue misses
But the CEO identified some parts of the U.S. that pose a particular challenge when it comes to shrink. “It is a much more pointed problem in certain places, particularly on the West Coast or places like Chicago or Albuquerque that have blue state or local blue governments that don’t really feel like prosecuting crime,” Eddy said. “My view is the government’s first obligation is to provide a safer environment for people to do their daily business and in some places that’s not happening. But politics aside, I think you continue to see this be a problem that the retail industry as a whole needs to work on.”
BJ’s Wholesale declined to provide additional comment when contacted by MarketWatch.
Last year the National Retail Federation reported that retail industry shrink was $94.5 billion in 2021, up from $90.8 billion in 2020 — primarily driven by external theft, including organized retail crime. The NRF’s National Retail Security Survey, which was conducted with the Loss Prevention Research Council, found that retailers, on average, saw a 26.5% increase in organized retail crime incidents in 2021. Eight in 10 retailers surveyed also reported that the violence and aggression associated with organized retail crime incidents increased.
Like many retailers this earnings season, BJ’s Wholesale also cited discretionary spending pressure when it reported first-quarter results, with Eddy saying that members are working “to stretch their dollars.”
Related: Target battling inventory ‘shrink’ caused by theft and organized retail crime, says CEO
The CEO added that consumers are being “reticent” when it comes to purchasing big-ticket items. “It’s a very picky consumer out there at this point, from a high-ticket perspective,” he said, citing products such as patio sets and “high-dollar” electronics. However, BJ’s Wholesale noted strength in its grocery and apparel businesses.
The retailer gave an update on its plans to expand its club footprint. “This year we continue to expect to open around 11 new clubs,” Eddy said. BJ’s Wholesale opened two new clubs during the first quarter, according to Eddy, and expects to enter its 19th state next month, when it enters the Nashville, Tenn., market. The company also opened three new gas stations during the first quarter.
BJ’s Wholesale exited the first quarter with 237 clubs and 167 gas stations in 18 states.
The company’s stock fell 7% Tuesday, outpacing the S&P 500
SPX,
index’s decline of 1.1%.
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