BJ's Wholesale Club Holdings, Inc.

1. Description of Business

BJ’s Wholesale Club Holdings, Inc. and its wholly-owned subsidiaries (the “Company” or “BJ's”) is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States. The Company providesa curated assortment focused on groceries, fresh foods, general merchandise, gasoline, andother ancillary services to deliver a differentiated shopping experience that is further enhanced by the Company's digital capabilities. As of August 2, 2025, BJ's operated 255 warehouse clubs and 190 gas stations in 21 states.

2. Summary of Significant Accounting Policies

(a)Basis of Presentation

The accompanying interim financial statements of BJ’s Wholesale Club Holdings, Inc. are unaudited and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair statement of the Company’s financial statements in accordance with GAAP.

The condensed consolidated balance sheet as of February 1, 2025 is derived from the audited consolidated balance sheet as of that date. The Company’s business, as is common with the business of retailers generally, is subject to seasonal influences. The Company’s sales and operating income have typically been highest in the fourth quarter holiday season and lowest in the first quarter of each fiscal year.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for fiscal year 2024, as filed with the Securities and Exchange Commission on March 14, 2025.

(b)Fiscal Year

The Company follows the National Retail Federation’s fiscal calendar and reports financial information on a 52- or 53-week year ending on the Saturday closest to January 31. The thirteen-week periods ended August 2, 2025 and August 3, 2024 are referred to herein as the “second quarter of fiscal year 2025” and the “second quarter of fiscal year 2024,” respectively. The twenty-six week periods ended August 2, 2025 and August 3, 2024 are referred to herein as the “twenty-six weeks ended August 2, 2025” and the “twenty-six weeks ended August 3, 2024,” respectively. Operating results for the twenty-six week period ended August 2, 2025 are not necessarily indicative of the results that may be expected for the 52-week fiscal year ending January 31, 2026.

(c)Recent Accounting Pronouncements and Policies

The Company’s accounting policies are set forth in the audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal year 2024. There have been no material changes to these accounting policies and no accounting pronouncements adopted that had a material impact on the Company’s financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 will require public companies to disclose, on an annual basis, a tabular tax rate reconciliation, using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory tax, further broken out by nature and/or jurisdiction. ASU 2023-09 requires all entities to disclose, on an annual basis, the amount of income taxes paid (net of refunds received), disaggregated between federal, state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid. The disclosures required under the guidance can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The new pronouncement will not have an impact on the Company's consolidated balance sheet, statement of operations and comprehensive income, statement of stockholders' equity, or statement of cash flows. The Company continues to evaluate the impact of enhanced disclosure requirements on the notes to the consolidated financial statements, including the method of adoption. The Company will adopt this new pronouncement as part of its annual report as of and for the fiscal year ended January 31, 2026.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The disclosures required under the guidance can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.

3. Revenue Recognition

Net sales

The Company recognizes net sales at clubs and gas stations when the customer takes possession of the goods and tenders payment. Sales tax is recorded as a liability at the point-of-sale. Revenue is recorded at the point-of-sale based on the transaction price, net of any applicable discounts, sales tax, and expected refunds. For digitally-enabled sales, including buy-online-pickup-in-club (“BOPIC”), curbside delivery, and same-day delivery, the Company generally recognizes revenue when the customer takes possession of the merchandise. For ship-to-home sales, the Company recognizes revenue when control of the merchandise is transferred to the customer, which is typically at the time of shipment.

Rewards programs

The Company's Club+ program allows participating members to earn 2% cash back, up to a maximum of $500 per year, on qualified purchases made in BJ's clubs, on bjs.com, or in the BJ's mobile app, a 5-cent per gallon discount at BJ's gas locations, andtwo free same-day deliveries. Cash back is in the form of electronic awards issued to each member once $10 in rewards have been earned.

The Company's co-branded credit card program, known as the BJ's One and BJ's One+ program, allows cardholders the opportunity to earn up to 5% cash back on purchases made in BJ's clubs, on bjs.com, or in the BJ's mobile app, and up to a 15-cent per gallon discount on gasoline when paying with a BJ's One or BJ's One+ Mastercard at BJ’s gas locations. BJ's One+ Mastercard cardholders also receivetwo free same-day deliveries if such benefit has not already been received under the Club+ program. Cash back is in the form of electronic awards issued to each member monthly on the credit card statement date. Earned rewards on each of the Club+ and co-branded credit card programs do not expire.

The Company accounts for these transactions as multiple-element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of award dollars earned in deferred revenue at the time the award dollars are earned. Earned awards may be redeemed on future purchases made at BJ's. The Company recognizes revenue related to earned awards when customers redeem such awards as part of a purchase at one of the Company’s clubs, on bjs.com, or in the BJ's mobile app. The Company recognizes royalty revenue related to the BJ's One and BJ's One+ credit card programs based upon actual customer activities, such as reward redemptions. While the Company continues to honor all rewards presented for redemption, the likelihood of redemption is deemed to be remote for certain rewards due to historical experience, including after long periods of inactivity, and rewards being linked to expired or canceled memberships. In these circumstances, the Company recognizes revenue, or breakage, from unredeemed rewards.

Membership

The Company charges a membership fee to its customers, which allows customers to shop in the Company’s clubs, on bjs.com, or in the BJ's mobile app, and purchase gasoline at the Company’s gas stations for the duration of the membership, which is generally 12 months. In addition, members have access to other ancillary services, coupons, and promotions. As the Company has the obligation to provide access to its clubs, website, mobile app, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. All membership fees and related membership revenues are recorded as membership fee income in the condensed consolidated statements of operations and comprehensive income.

Gift Card Program

The Company sells BJ’s gift cards that allow customers to redeem the cards for future purchases equal to the amount of the face value of the gift card. Revenue from gift card sales is recognized upon redemption of the gift cards and control of the purchased goods or services is transferred to the customer.

Contract Balances

The following table summarizes the Company's deferred revenue balance related to outstanding performance obligations for contracts with customers, excluding earned award dollars which are noted below (in thousands):

Current and long-term deferred revenue balances are included within accrued expenses and other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets.

The following table presents deferred revenue activity related to earned award dollars (in thousands):

Earned award dollars are combined in one homogeneous pool and are not separately identifiable. Revenue recognized on rewards consists of awards that were included in the deferred revenue balance at the beginning of the period as well as awards that were earned during the period.

The following table summarizes the Company's revenue recognized during the period that was included in the opening deferred balance, excluding earned award dollars, as of February 1, 2025 and February 3, 2024 (in thousands):

Performance obligations related to earned award dollars, royalty revenue, and membership fees are typically satisfied over a period of twelve months or less. Funds received related to marketing and other integration costs in connection with our co-brand credit card program are recognized as performance obligations are satisfied. The timing and recognition of gift card redemptions varies depending on consumer behavior and spending patterns.

Disaggregation of Revenue

The following table summarizes the Company’s percentage of net sales disaggregated by category:

4. Debt and Credit Arrangements

The following table summarizes the Company’s debt (in thousands):

ABL Revolving Facility

On July 28, 2022, the Company entered into the ABL Revolving Facility with an ABL Revolving Commitment of $1.2 billion pursuant to that certain credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and the other lenders party thereto. The maturity date of the ABL Revolving Facility is July 28, 2027.

Revolving loans under the ABL Revolving Facility are available in an aggregate amount equal to the lesser of the aggregate ABL Revolving Commitment or a borrowing base based on the value of certain inventory and accounts and credit card receivables, subject to specified advance rebates and reserves as set forth in the Credit Agreement. Indebtedness under the ABL Revolving Facility is secured by substantially all of the assets (other than real estate) of the Company and its subsidiaries, subject to customary exceptions. As amended, interest on the ABL Revolving Facility is calculated either at SOFR plus a range of 100 to 125 basis points or a base rate plus 0 to 25 basis points, based on excess availability. The Company will also pay an unused commitment fee of 20 basis points per annum on the unused ABL Revolving Commitment. Each borrowing is for a period ofone, three, orsix months, as selected by the Company, or for such other period that istwelve months or less requested by the Company and consented to by the lenders and administrative agent.

The ABL Revolving Facility places certain restrictions (i.e., covenants) upon the Borrower’s, and its subsidiaries’, ability to, among other things, incur additional indebtedness, pay dividends, and make certain loans, investments, and divestitures. The ABL Revolving Facility contains customary events of default (including payment defaults, cross-defaults to certain of our other indebtedness, breach of representations and covenants and change of control). The occurrence of an event of default under the ABL Revolving Facility would permit the lenders to accelerate the indebtedness and terminate the ABL Revolving Facility.

As of August 2, 2025, there was $105.0 million outstanding in loans under the ABL Revolving Facility and $19.6 million in outstanding letters of credit. The interest rate on the ABL Revolving Facility was 5.45% and unused capacity was $1.0 billion. As of February 1, 2025 and August 3, 2024, the interest rate on the ABL Revolving Facility was 5.41% and 6.44%, respectively.

First Lien Term Loan

On October 12, 2023, the Company entered into an amendment (the “Fourth Amendment”) to the First Lien Term Loan Credit Agreement, with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lenders party thereto.

The Fourth Amendment, among other things, extended the maturity date with respect to the term loans outstanding under the First Lien Term Loan Credit Agreement from February 3, 2027 to February 3, 2029. In addition, the Fourth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 275 basis points per annum to SOFR plus 200 basis points per annum.

On November 4, 2024, the Company entered into an amendment (the “Fifth Amendment”) to the First Lien Term Loan Credit Agreement, with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lenders party thereto.

The Fifth Amendment, among other things, provided for a new tranche of term loans in an aggregate principal amount of $400.0 million, which refinanced and replaced in full the existing Tranche B term loans outstanding under the First Lien Term Loan Credit Agreement immediately prior to the effectiveness of the Fifth Amendment. In addition, the Fifth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum.

Voluntary prepayments are permitted. Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation when the net leverage ratio exceeds 3.50 to 1.00. As of August 2, 2025, the Company's net leverage ratio did not exceed 3.50 to 1.00, and therefore, no incremental principal payments were required. The First Lien Term Loan is subject to certain affirmative and negative covenants but no financial covenants. It is secured on a senior basis by certain “fixed assets” of the Company and on a junior basis by certain “liquid” assets of the Company.

There was $400.0 million outstanding under the First Lien Term Loan as of each of August 2, 2025, February 1, 2025, and August 3, 2024. The interest rate on the First Lien Term Loan was 5.88%,6.08%, and 7.33% at August 2, 2025, February 1, 2025, and August 3, 2024, respectively.