S&P Global Ratings Lifts BJ's Wholesale Outlook to Positive

S&P Global Ratings revised its credit outlook on BJ's Wholesale Club Holdings Inc. (NYSE:BJ) to positive from stable on Tuesday, signaling that the retailer could receive an investment-grade upgrade within the next 12 to 18 months. The ratings agency affirmed BJ's 'BB+' issuer credit rating, highlighting the company's solid operating momentum and disciplined financial management.

Ratings Rationale

The revised outlook reflects S&P's expectation that BJ's will continue to gain market share from traditional grocers. The agency pointed to the company's differentiated value model, which focuses on grocery assortments, fuel discounts, and promotional pricing, as a key strength.

S&P also noted the resilience of BJ's cash flow, which is supported by a high-margin membership model. According to the source, membership fees accounted for approximately 61% of total operating income in fiscal 2025 and are anchored by a 90% renewal rate.

Expansion and Performance

BJ's is pursuing a significant geographic expansion beyond its traditional East Coast base, with a plan to open 25 to 30 new locations across fiscal 2025 and 2026. This push includes a notable entry into Texas, where it will compete directly with warehouse giants Costco and Sam’s Club.

This growth strategy is supported by strong top-line performance. In the first half of 2026, BJ's reported:

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• Revenue growth of 12.9% to $11.9 billion
• Total comparable club sales growth of 9.2%

S&P noted that while adjusted EBITDA margins contracted slightly to 7.0% due to price reinvestments and store opening costs, the underlying performance remains robust.

Financial Health and Outlook

The company's conservative financial policy is pivotal to the positive outlook. S&P projects BJ's adjusted debt-to-EBITDA will remain in the low-2x range, while the company's own calculation of net leverage stood at a low 0.5x in the second quarter, well below its official target of under 1x.

The ratings agency stated that sustained execution in new markets while maintaining disciplined leverage could lead to a rating upgrade. Conversely, the outlook could revert to stable if leverage were to climb above 2.5x. S&P expects BJ's to generate enough free operating cash flow to self-fund $800 million in capital expenditures and $550 million in share repurchases in fiscal 2026.