BJ's Wholesale Club turned in a solid top-line print for the first quarter of fiscal 2026, with the period ending May 2, 2026 and results filed on May 28, 2026, but the quarter was a story of two operating halves working against each other. Comparable club sales (the year-over-year revenue change at locations open at least thirteen months) accelerated to 6.3% from 1.6% a year earlier, but the headline number was propped up by a 4.8% lift in gasoline comparable sales driven by higher pump prices and slightly higher comparable gallons. Strip out fuel, and merchandise comparable club sales slowed to 1.5% from 3.9% the prior year, with management pointing to weakness in home and fashion categories and a deflationary drag from eggs, household cleaning, and health and beauty. Total revenue landed at $5.66 billion, up 9.9% year over year, with the gap between revenue growth and merchandise comparable sales entirely explained by nine net new clubs and a richer gasoline mix.
The P&L showed the cost of that growth. Net income fell 4.7% to $142.7 million, diluted EPS (earnings per share) slipped to $1.10 from $1.13, and the effective tax rate jumped to 27.0% from 22.2% on lower stock-comp tax benefits. Operating income was essentially flat at $207.9 million versus $203.6 million, with cost of sales expanding 70 basis points to 83.8% of net sales and selling, general and administrative expenses (SG&A) up 5.9% to $806.0 million as the company staffed new clubs. The bright spot was membership: fee income grew 9.9% to $132.4 million on stronger acquisition and higher-tier penetration, the tenth consecutive fiscal year of membership growth that management has now strung together at over 25 years. Adjusted EBITDA (a non-GAAP measure of operating cash earnings defined as net income before interest, taxes, depreciation, amortization, stock-based compensation, and one-time items) of $298.1 million was a record first quarter, up 4.3% year over year.
Our interpretation is that BJ's is in a transition year where unit growth and a richer gas business are masking a softer underlying merchandise business that is being aggressively defended with pricing investments. The company retired 2.1 million shares for $206.6 million in the quarter under its $1.0 billion 2024 repurchase authorization, and $545.0 million of buyback capacity remains, suggesting management views the recent pullback from the $106.69 fifty-two-week high to roughly $91.79 as a buying opportunity. The thesis we are testing is that the 1.5% merchandise comparable figure represents a cyclical low rather than a structural break, and that the 9.9% membership growth, ongoing footprint expansion toward 270-plus clubs, and 27% private-label mix in non-gas sales are expected to compound into operating leverage (the tendency for margins to expand as revenue grows faster than fixed costs) once the pricing investments cycle off and tariff refund benefits normalize. The falsifiable clock is the Q2 FY26 print in early September, where the merchandise comparable needs to hold above 1.5% and the merchandise gross margin (revenue minus the direct cost of goods sold, excluding fuel) needs to stop contracting to keep the unit-growth-plus-pricing-investment narrative intact.