BJ's Wholesale Ownership Change Could Mean Growth
When National Grid announced plans to move its headquarters from a sprawling complex on Route 9 in Westborough to a new building in Waltham, it was a blow to the local economy.
Luckily, the vacancy was soon filled by another large corporation: BJ's Wholesale Club - which moved its operations center from Natick to the former National Grid campus.
But any sense of glee in landing such a big corporate tenant in town was short-lived for Westborough officials, replaced instead by a level of uncertainty. That's because the publicly traded BJ's recently announced that it will be acquired for $2.8 billion by two private equity groups, Leonard Green & Partners and CVC Capital Partners.
However, at least one town leader isn't too concerned about the sale.
"I have no reason to believe it's going to affect their operation," said Jim Robbins, town planner for Westborough.
And trackers of BJ's stock say that going private will help the company better compete with larger wholesale chains - which could mean growth in Westborough instead of job cuts.
Looking Forward
Analysts say that the sale of BJ's will free up the company from shareholder scrutiny of quarterly earnings, allowing its leadership team to work toward expanding the number of store locations.
Moving out of its current core markets - the northeastern and southeastern regions of the country - could better position BJ's against its main competitors, Costco and Sam's Club, noted a recent report from David Strasser, an analyst with Philadelphia-based Janney Capital Markets.
Those two companies each have a presence in 40 or more states. In contrast, BJ's only has stores in 15 states on the eastern seaboard. Of its 189 stores, 23 are in Massachusetts, with plans to have a net total of two additional stores in the Bay State by the end of 2011.
Strasser writes that the sale will allow increased merchandising, pursuit of smaller store formats and improvement of BJ's supply chain and IT systems, such as new cash registers.
An equity research report from Wisconsin-based Robert W. Baird & Co. notes that BJ's will be ramping up its technology-related expenses by as much as $17 million per year over the next few years.
And for Robbins, the town planner in Westborough, the bigger concern is not BJ's sale, but its decision to move its Westborough store to a new development in Northborough.
"We were sad to see them go," Robbins said. "They felt the facility they were in currently was antiquated."
Robbins said that town officials have reached out to the building's owners but do not know what the future of the property might hold.
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