Jefferies has signaled a cautious outlook for BJ’s Wholesale Club as the chain moves into its next growth stage, saying the company may find expansion more difficult even as current earnings levels look stable. The brokerage maintained a Hold rating on the stock and highlighted comparable sales as the principal lever supporting BJ’s valuation.
At the center of Jefferies' concern is the trajectory of comparable-store sales. With food pricing trends beginning to soften, the brokerage expects pressure on comp growth, which in turn reduces the odds of further multiple expansion. In Jefferies' view, investors are pricing BJ’s in large part on its ability to sustain above-trend comps, and a deceleration would likely alter that calculus.
Operationally, Jefferies noted a specific risk tied to BJ’s market entry in the Dallas-Fort Worth area. The firm questioned how BJ’s will source fresh food for the new markets and pointed out that the closest fresh distribution center sits in Kentucky, which could constrain early flexibility. If BJ’s is unable to replicate the fresh assortment customers find in its existing stores, membership uptake in that region could lag. Jefferies warned that underperformance in fresh could force the company to invest in new distribution capacity down the line.
Some market participants have contended that BJ’s may be less exposed than peers because it does not operate pharmacies, avoiding a pharmacy-related drag. Jefferies acknowledged that benefit but emphasized that weaker food price dynamics in 2026 remain a potential downside that could be larger than current expectations.
Analysts also pointed to the possibility of a modest boost from general merchandise as discretionary categories cycle from weak comparables. Jefferies cautioned any lift from general merchandise would likely be limited given that those goods constitute a relatively small portion of in-store sales.
On financial modeling, Jefferies said it has kept earnings forecasts and margin assumptions largely intact, attributing resilience to the membership revenue model. Nevertheless, the firm issued a clear warning: should comparable sales slow toward or fall below 2 percent, BJ’s shares could trade at the lower valuation multiples that have been observed when comps decelerate.
Finally, Jefferies reiterated its preference for Costco, stating that Costco’s scale, operational consistency and structural advantages justify a higher valuation multiple than BJ’s.