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BJ's Q1 Press Release and Conference Call May 18, 2004:
Q1 ends May 1, 2004

Q1 Press Release:

Net Income including effects of accounting principle changes:
Q1 2004 $16.1M or $0.23 per share
Q1 2003 $11.2M or $0.16 per share

Q1 2004 $1.61B sales + $36.7M membership fees = $1.65B
Q1 2003 $1.44B sales + $33.6M membership fees = $1.47B

Pre-tax Income from continuing operations:
Q1 2004 $26.4M
Q1 2003 $20.5M

Comparable Club Sales:
Up 6.6% including 0.4% for gasoline
Food up 9%, General merchandise up 4%

Share repurchases:
317,000 shares at $25.10 or $8M

Store Count:
Q1 2004 150 Clubs, 78 Gas stations
Q1 2003 143 Clubs, 71 Gas stations

Diluted Share Count:
Q1 2004 70.3M
Q1 2003 69.4M

Cash and equivalents:
Q1 2004 $75.9M
Q1 2003 $42.1M

Stockholder's Equity:
Q1 2004 $862M
Q1 2003 $752M

Net Cash from Operations:
Q1 2004 $39.4M
Q1 2003 $23.2M

Q1 Conference Call:

Comparable Club Sales Increase by Region
New England 3.7%
Upstate NY 6.3%
Metro New York City 8.3%
Mid Atlantic 7.5%
Southeast 10.9%

Fresh foods comp club sales over 20%.
Double digit sales increases in candy, health and beauty aids, household chemicals, paper products and soda and water.
Strong comparable club sales increases in computer equipment, domestics and pre-recorded video.
Weaker comp club sales in lawn and garden (weather related), automotive, office supplies, sporting goods and storage, primarily due to changes in merchandise assortment.

Income from membership fees as a percentage of sales decreased by 6 basis points from Q1 2003.
Slightly more than forecast. However on a dollar basis, MFI (membership fee income) increased by 9.4%.

Cost of sales including buying and occupancy increased by 20 basis points from Q1 2003.
Selling General and Administrative expense decreased by 20 basis points from Q1 2003.
Pre-Opening expense decreased by 27 basis points from Q1 2003 due to construction delays for new clubs.

Steadily rising gasoline prices caused stronger than expected gas sales but lower gas margin rates, which lowered earnings per share by $0.02. Wholesale gas prices increased more than 25% during the quarter.

20 basis points increase in merchandise margins was less than planned. Increased emphasis on fresh foods and private labels were offset by liquidation markdowns due to our merchandising reset, which will be described later during the conference call.

$82M remaining in share buyback authorization.
Strong cash position, essentially no debt, compared to $40M of short-term debt in Q1 2003.

BJ's compared to our two competitors:
BJ's is focused on the individual consumer.
We have a much broader choice of merchandise categories, and wider selection of products within those categories.
We have more choices in package sizes. Bulk sizes as well as smaller sizes.
Only BJ's accepts all major credit cards.
We have the widest choice of shopping hours.
We accept manufacturer's coupons, unlike our competitors.

BJ's compared to super centers:
Our prices are 20 percent less for a market basket of like items.
Our operating costs are significantly lower.
We offer much higher quality merchandise, including more brand names.
We cater to a higher income demographic.

Bj's compared to the supermarkets:
We see a tremendous potential for increased penetration based on the supermarket industry's inefficiencies and higher retail prices.
Our best members spend only 25% of their annual food budget with us. About $500 annually.
This represents a muti-billion dollar share of wallet opportunity.
Our efforts are directed to continue to gain market share.

Club re-merchandising:
Completed during Q1, as a result of our Member Insight program.
Accelerated the schedule and implemented it in 10 weeks, or half the time projected.
75% of the aisles, or 1 million linear feet of selling space has been relocated.
Caused disruptions in the club and confusion to our members as we moved products around.
I am gratified on how well our business held up during this period.
So far, we are seeing a higher comp club sales in May, better than our plan.
The negative effect on margins, caused by liquidating discontinued product lines, are now behind us.

Discontinued items:
large exercise equipment
slower moving automotive items
silk flowers and plants
certain stationery items

Replacement items (higher turning items):
additional beverages
low carbohydrate foods
paper goods
nutritional foods
salty snacks
ethnic foods
continued expansion of our fresh foods
These items tend to be non-overlapping with our competitors and carry slightly better margins.
These items started arriving in April.
They were 67% in stock on May 11th, and will be 90% in stock by June 1.

Club re-merchandising should drive margin expansion, boost frequency and sales.
An increased emphasis on fresh foods, private brands, and fashion will increase overall margins.
The increase on gross margins was evident during the first quarter.
We missed plan in February, improved a little bit in March, then strengthened every week in April.
This positive trend is continuing into May.
We moved our general merchandise to the front and center aisles.
We removed the high steel shelves from the center aisle to create a clear sight line in the middle of our clubs.
We expect our SKU count to reach 7,000 up from 6,500 at the end of last year.
Increasing the number of selection options our members have, versus our competitors.

Margin rates:
It is a common misperception that BJ's food department has lower margins than our general merchandise department. In fact, on a scale of high to low, fresh food is at the top, followed by private brand, and then the fashion and seasonal goods, and general merchandise. The rest of food and general merchandise products have approximately the same margin rates.

Q1 sales of private brands increased by 30 percent on a per club basis and 40% on a total basis.
Due to introduction of 75 new private brand items.
Private brand penetration was 7% of total sales in Q1 2004, up from 5.5% in Q1 2003.

Sales at our 6 month old concept club in Kissemme Florida, are outpacing our other clubs in the Orlando market by 30 percent, despite Kissemme having competition from Sam's and Costco within a distance of 3 miles.

Good success with new American Express credit card with 20 percent better average ticket than other credit cards.

In Q2 will transition from third party to direct management of our fresh produce business.
This will improve the quality in the department that we see as the key to accelerating shopping frequency.
New regional buyers are now on board.
The conversion of 26 southeastern clubs will be completed in Q2.
Most of the clubs in the chain will be transitioned by the end of the year.

The expansion of our pharmacy business continues this year.
Will end the year with 28 pharmacies, up from 14 at the end of last year.

New Club expansion:
Q2: Two new clubs, 1 in New Jersey, 1 in Pennsylvania
Second half of the year: we will open 8 new clubs. Most are already under construction.
All of the new clubs will be in existing markets.
15 to 20 clubs scheduled for renovation and expansion in the 2nd and 3rd quarter.

Q2: Earnings $0.35 to $0.39
Full year: $1.60 to $1.66
Q2 Comp Club Sales: 6 to 8%
Q2: Total Sales increase: 10 to 12%
Second half of the year: Comps increase 4 to 6%

We had strong comps for second half last year.
Comp sales 2002, Comp sales 2003, Average for 2 years:
Q1: 4.0%, 5.7%, 4.9%
Q2: 3.1%, 6.6, 4.9%
Q3: -0.1%, 11.3%, 5.6%
Q4: 1.6%, 7.5%, 4.6%
Full year: 2.0%, 7.8%, 4.9%
The strength in last year's second half was partly due to weaker sales in the second half of 2002.

Membership fee and other income:
We are tweaking our guidance down slightly.
Membership Fee Income (MFI) as a percent of total sales should increase two to five basis points.
Total MFI dollar amount should increase 11 to 13 percent.

Cost of Sales guidance:
We are tweaking our guidance slightly.
We estimate cost of sales will increase 5 to 10 basis points.
A slight improvement from prior guidance.

Selling General and Administrative (SG&A) expense guidance:
Full year SG&A will be 7 to 12 basis points below last year.
Partially offsetting this, we expect higher credit card costs.

Pre-opening expense will be flat year over year, but more weighted to the back half of the year.
We expect our corporate tax rate will be 38.5%, versus 37.9% in 2003. The increase affects the year by $0.02 per share.

Capital expenditures for the year should be $160M to $175M.
Club renovation expenses will be even with last year, and will fall mostly in Q2 and Q3.
Most of last year's expense was in Q1 and Q2.

Guidance for full year:
Total sales increase of 10 to 12%.
Comp sales increase 5% to 7%.

Questions and Answers:

Q: Why was the re-merchandising accelerated? What are the customers saying about it?
A: To get it done as quickly as possible. It caused disruption, we had some empty aisles. We had used our member insight data to understand share of wallet opportunities. We surveyed our members and talked to them and we used third party vendors to validate it.

Q: Is the increase of same store sales guidance due to the re-merchandising effort?
A: Part of it was increase in gasoline prices which we didn't anticipate. As you look at the 2 year comps, and you can see that we were able to get a 6.6% comp on a 4.9% two year historical in Q1, and you look at the rest of the year, that gave us the confidence to raise the guidance. It is very early to see the affect of the re-merchandising. Once the customers figure out where we put everything, they will get that down after a few shopping trips, based on some of the success in the new categories, we found some home-run items, that have surprised us.

Q: Membership trends, why is guidance coming down?
A: In the early spring trial program, we have highest level ever of conversions to paid memberships. On the dollar basis we were $100,000 short for the quarter. As sales remain strong, then MFI as a percent of sales declines. No pre-opening MFI in the quarter like we did last year. Strength of gasoline sales is also dropping it down a bit.

Q: Why should the membership dollar figure forecast grow less now than you were forecasting previously, when sales guidance is unchanged?
A: Sales guidance is actually higher. Dollar growth of MFI is on plan, but percentage is going down due to increased sales.

Q: Any changes in pricing of membership fee?
A: No.

Q: Changes due to re-merchandising?
A: Things got moved around a lot. 75% of selling space was affected. 500 SKU changes, and replaced with others. Gross margins will be a little higher. In private brands we are the least penetrated retailer out there, we feel good about the growth of private brands.

Q: Higher credit card costs? Due to American Express?
A: Confidentiality agreement, but not that much difference from other credit cards. We have seen increase in Visa fees. Higher amounts of credit use, but higher average ring.

Q: Margins?
A: Not increasing our prices, just changing our merchandising. We brought margins down last year about 60 basis points to drive traffic.

Q: Self-distribution of produce?
A: Our first 6 clubs will be up and running in a few weeks. 20 more in the southeast by the first week of July. No impact in first quarter. Merchandise margins and SG&A will rise. Main goal is not to increase profitability, but to increase quality to drive frequency and sales.

Q: What will free cash flow be? You have $1 per share of net cash on the balance sheet
A: $40M to $60M. We use excess cash to buy back stocks. Constantly looking for better uses of that money. Opportunistic real estate, other things that we can do with the capital.

Q. Can you improve inventory turns?
A: Yes. The new beverage and snack SKU's turn over much faster than old exercise equipment.

Q: Comp expectations, any inflationary trends? Has private label target changed/
A: Inflation in milk (52 cents a gallon), butterfat had moved up before that. Butter has doubled. Meat inflation. General merchandise, deflation due to China continues, but increases in steel prices cause stainless steel grills to go up. Some inflation in the mix, affects the comps by less than half of one percent. We want to grow aggressively in private brands. We now have more private branded cleaning products.

Q: MFI: old guidance was 15% dollar growth or $162M. Now it's $156M or about $5M less than prior guidance? Why?
A: We're really talking about small basis points here. We were a little aggressive on our guidance. On a dollar basis we almost made plan, down about $100,000. Guidance for the full year remains the same, flat with last year.

Q: Increasing SKU count? How will that affect frequency, average ticket, total ticket trend?
A: Everything is aimed at increasing frequency. Focus on fresh helps that. Additional SKU's will begin to build the basket.

Q: Marketing spending?
A: Using member insight technology for one to one communication, and using coupons. Probably no TV advertising.
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