Evercore ISI analysts revised their price target for BJ's Wholesale (NYSE:BJ) from $71.00 to $65.00, while reiterating an In-Line rating on the stock. The analysts said that BJ's, which is expected to report its third-quarter earnings on November 17, was added to the firm’s Tactical Underperform List.

This decision reflects observed weaknesses in company-specific data and a general slowdown in the demand for groceries and consumables. Despite grocery sales constituting over 80% of BJ's in-club merchandise, industry demand has decreased slightly, attributed to reduced inflation and lower fuel-price-driven shopping trips.

However, BJ's is anticipated to continue achieving grocery sales growth above the industry average due to its strong and expanding membership base, with projected grocery comparable sales growth of 2-2.5%, about 1% higher than the industry rate. The concern is BJ's losing market share in the general merchandise segment, which accounts for 15-20% of its sales.

This could pose a risk to consensus sales estimates, as stabilizing general merchandise sales is crucial for BJ's second-half 2023 performance. The analysts are skeptical about the immediate impact of BJ's revised general merchandise offerings and suggest that declining discretionary spending may further impede short-term progress.