BJ's Wholesale Club

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saw its profits drop in the fourth quarter,and its outlook for 2003 doesn't look a whole lot better.

The company, which competes with


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Sam's Club, earned$48.5 million, or 70 cents a share, in its quarter ended Feb. 1. That wasdown from the $56.6 million, or 77 cents per share, BJ's earned in the year-ago period. The drop in earnings came despite a revenue jump of 12.3% to$1.72 billion.

Not including a loss of $707,000, or a penny a share, related to the closureof three club locations, the company earned 71 cents per share. Analystssurveyed by Thomson Financial/First Call had been expecting BJ's to earn 70cents per share on some $1.73 billion in sales.

For the full year, BJ's earned $130.9 million, or $1.84 a share, on$5.86 billion in sales. In fiscal 2001, the company earned $82.3 million, or$1.11 per share, on $5.22 billion in revenue. The company's 2002 resultsinclude $14.9 million, or 21 cents a share, in losses related to the closureof the three clubs.

Although BJ's revenue increased significantly in the quarter, itsexpenses grew even faster. The company's cost of sales increased 13.8% overthe year-ago period to $1.52 billion. Meanwhile, the company's sales,general and administrative expenses jumped 16.7% to $110.8 million.

The company warned analysts to lower their expectations for its currentfiscal year, projecting that its earnings for fiscal 2003 would come inbetween $1.25 and $1.35 a share. Analysts had been expecting BJ's to earn$1.71 per share in the current year, according to Thomson Financial/FirstCall.

In the current year, BJ's expects to lower its prices while "makingsubstantial investments to reinvigorate sales," the company said in astatement.