BJ’s Wholesale Club Black Book today (BJ)
We are hosting our Black Book presentation on BJ’s Wholesale Club at 2 PM ET today.
BJ’s Wholesale Club is a Quad 4 outperformer on an absolute and relative basis. Food retailers benefited from the shift to at-home consumption during the pandemic. Just as COVID-19 restrictions were finally being lifted throughout the country and consumers were resuming their lives, food inflation and soaring gasoline prices have altered their behavior again. BJ’s Wholesale Club’s value proposition is positioned to gain share as consumers look to stretch their food budgets. BJ’s is an attractive capital preservation long for the quad environment with the highest probability of occurring. We see upside potential in both EPS estimates and the multiple as the company takes share and accelerates new store openings. We are currently long Grocery Outlet and BJs in food retail and short Kroger, Albertsons, Loblaw, and Sprouts Farmers Market.
Our investment themes for the presentation:
|
CLICK HERE at the time of the event for the live webcast and materials. |
Craft beer drops in the 1H (SAM)
Off-premise craft beer sales declined 7.4% in the first half of 2022 according to NielsenIQ and Bump Williams Consulting. The rate of decline slowed from Q1’s 8.5% decline to Q2’s 6.4% decline. IPAs accounted for 46% of craft dollar share, gaining 1.8% points. The only craft beer manufacturer in the top 25 to report dollar sales growth was New Belgium, owned by Lion, an Australian-based brewer. New Belgium grew 14.8% in the first half of the year. Boston Beer sales decreased 10.4% with Dogfish Head’s 18.4% decline Lagunitas, owned by Heineken, decreased 10.1%. Leinenekugel, owned by Molson Coors, decreased 8.7%. AB InBev’s Goose Island grew 1.6% while its Shock Top decreased 23.1% and Elysian decreased 9.9%. Craft beer was expected to recapture declines in the off-premise channel with on-premise recovery this year. The off-premise channel has been weaker than expected as has the on-premise channel likely reflecting inflationary headwinds for the consumer.
Crop conditions hold steady (PPC)
As of July 17, 37% of the U.S. corn crop is silking, behind the five-year average of 48% according to the USDA. 64% of the corn crop is in the good or excellent rating which is even with last week and last year’s 65%. For soybeans, 14% of the U.S. soybean crop is setting pods, behind the five-year average of 19%. 61% of the soybean crop is in the good or excellent rating, one point lower than last week and one point ahead of last year. Despite the late planting, the row crops are doing fine. USDA crop estimates are based on good yields this season and the coming heat wave across the Southern Plains is causing some concern. The positive development is that the Eastern corn belt appears to be escaping the heat wave.
