Ladies and gentlemen, thank you for standing by, welcome to the BJ's Wholesale Club fourth quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speakers today, Faten Freiha, Vice President, Investor Relations. Please go ahead. Good morning, everyone. Thank you for joining BJ's Wholesale Club's fourth quarter fiscal 2020 earnings conference call. Lee Delaney, President, CEO, Bob Eddy, Chief Financial and Administrative Officer, and Bill Werner, Senior Vice President, Strategic Planning and Investor Relations, are on the call. Please remember that during this call, we may make forward-looking statements within the meaning of the federal securities laws. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations described on this call. Please see the Risk Factors section of our most recent Forms 10-K and Form 10-Q filed with the SEC for a description of those risks and uncertainties. Finally, note that on today's call, we will refer to certain non-GAAP financial measures that we believe will provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release posted on the Investors section of our website for a reconciliation of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. With that, I'll turn the call over to Lee. Good morning, and thank you for joining us. I hope you're healthy and safe. 2020 has been a remarkable and challenging year. I am humbled by our role helping our communities through this pandemic and immensely proud of our team members' dedication to serving our members during these unprecedented times. Our highest priority continues to be the safety and well-being of our team members, our members, and the communities we serve. We have implemented extensive protocols to maintain a safe and healthy environment. We continue to support our team members with investments and bonuses, enhanced benefits, and safety measures. In 2020, we invested over $150 million in these practices. Our performance this year would not be possible without the hard work and dedication of our team. The unique circumstances brought on by the pandemic challenged us in almost every dimension. Our team remained intently focused on meeting short-term challenges and positioning the company for long-term growth, enabling us to deliver extraordinary financial performance and accelerate our long-term strategic transformation. Let me touch on both. From a financial perspective, we delivered industry-leading results this past year, including comp sales growth of 21%, adjusted EBITDA of $857 million, reflecting 47% year-over-year growth, adjusted EPS of $3.09, or 112% growth, free cash flow of $676 million, or 276% growth, and a leverage ratio of 1.2x compared to 2.8x a year ago. In addition to the great performance, we made transformational progress on each of our long-term strategic pillars, namely growing and retaining our membership, delivering value with merchandising and marketing, improving convenience with digital, and strategically expanding our footprint. Let me say a bit more about each. From a membership standpoint, we are seeing great results across all key metrics. Our membership base has strengthened in size and quality. This year, we attracted new members at record levels, including in the fourth quarter, where we added approximately 80,000 net members relative to the third quarter. Our retention rate for tenured members improved to an all-time high of 88%, and we made even greater gains with our first-year renewal rate. Higher tier penetration is at 31%, reflecting a 300 basis point increase compared to the prior year. In total, our membership grew by 11.3% on a net basis relative to the prior year. Across member cohorts, we are seeing elevated shopping levels, including larger baskets and increased trips to our clubs. In addition, our new members skew younger and are more digitally engaged. Assortment optimization remains a key initiative to deliver value to our members. Our merchants met a changing demand profile by adding dozens of additional suppliers and new relevant categories, including personal protective equipment. We meaningfully adjusted planning to account for rapid shifts in consumer demand and leveraged relationships with suppliers to receive priority for inventory allocations. These short-term actions, combined with market growth and the increased need to buy in bulk, led to outsized performance, where our food business grew at two times the rate of the market. We also made significant progress on longer-term simplification and expansion into new high-demand categories. We reset the food business with better-for-you and organic options. We expanded into new categories where we were historically underpenetrated, including fitness, sporting goods, household goods such as outdoor heaters and fire tables, and select consumer electronic products. Own brands continued to grow, with penetration increasing to 21%, driven by success in several new categories like basic tableware, dairy, spreads, and home storage. We expanded our services offering significantly to further elevate the value of BJ's memberships. Specifically, we upgraded our offerings in optical, home improvement, major appliances, and financial services. For example, we just announced our consumer point-of-sale financing partnership with Citizens Bank. Through this partnership, our members will be able to pay for large purchases in club or online through simple, transparent, and affordable installment loans by Q2 of 2021. We are thrilled to offer this flexibility and provide our members even more payment options to conveniently shop at BJ's. We continue to believe services will be a significant growth driver for many years to come. Our digitally enabled sales grew by 168% this quarter, surpassing our high expectations. The centerpiece of our digital strategy is our recently upgraded app, which continues to resonate strongly with our members. Our app's utility, including personalized promotions, improved shopping, and efficient fulfillment options. Total app downloads exceeded 5 million, compared to a little over 2 million last year, with roughly 30% of our membership regularly using the app, compared to 12% last year. Our app receives a higher rating than many of our peers, and we have a robust roadmap to further enhance it with new features that deliver convenience. On a scale-adjusted basis, our digital app engagement appears ahead of many of us as we're making shopping meaningfully easier and faster. We continue to expand our digital fulfillment options. Following our Q2 launch of curbside pickup, we added the ability to fulfill fresh items through BOPIC and curbside late in Q3. More than 50% of our club orders for the fourth quarter were delivered curbside. In recent weeks, we began the rollout of a multi-phase plan to enable our members to use EBT payment when shopping on bjs.com for in-club pickup and curbside pickup. By spring 2021, we plan to have this payment option available to all locations in states participating in the SNAP Online Purchasing Pilot. Our efforts to expand our footprint remain on track. We have strengthened our real estate pipeline considerably, enabling us to accelerate the pace of new club openings. After opening four clubs in 2020, we plan to open as many as six clubs in 2021. Even more exciting is that we can see a path to 10 more clubs in 2022. This progress is underpinned by the performance of our newest clubs, where we are gaining market share and driving membership growth. For the two clubs we opened in the first half of 2020, Chesterfield, Michigan and Pensacola, the membership per club average is higher than the chain. In our Michigan clubs, first dates are well above chain-wide averages. We believe we have cracked the code on successfully opening new clubs and will invest aggressively to grow share in an expanded market. Overall, we are incredibly proud of the progress we have made, both managing through the challenges of 2020 and redefining our go-forward business model. Against this backdrop, we suspect you will have two key questions. What should we expect in 2021, and how has your long-term growth algorithm changed? Let me address each. In 2021, we will continue to do everything in our power to stay in stock for members and lean into investments that will drive long-term growth, all while prioritizing health and safety. We face uncertainties driven by market factors outside of our control, most notably the trajectory of at-home food consumption and the overall macroeconomic environment. These uncertainties lead to a range of possible scenarios for 2021. Our expectation is that current trends will continue for at least the first half of the year but may change in the second half as vaccine distribution expands and life looks a little more normal again. Should the public health situation fail to materially improve in our markets, we would expect a longer period of elevated food-at-home consumption, driving our sales further. Under any scenario, we expect our membership, sales, and profitability to be well ahead of our historical plans. We have considerable confidence in our long-term algorithm, which we anticipate will be well above the levels we framed at the time of our IPO. Our conviction is grounded in shifts to long-term trends and our progress against our strategic initiatives. Let me elaborate on the underlying factors. We believe at-home food consumption will reset at a higher level, and economic uncertainty has heightened consumers' focus on value. We have a loyal, growing and higher quality membership base that has changed their shopping behaviors to our benefit. We will continue to upgrade our assortment, particularly in services, general merchandise, and own brands, to power the next wave of growth and grow share of wallet with our members. We have a relevant and growing digital business with industry-leading levels of engagement and advantaged economics. We expect dramatically higher unit growth rates as we push towards 10+ units per year, allowing us to tap into considerably expanded addressable markets and grow share. In summary, we have truly transformed our business by every measure. We are not the same company we were 12 months ago. Our underlying growth rate will accelerate as we benefit from long-term trends and continue to accelerate on our strategic initiatives. While the short-term COVID-related uncertainties may create headwinds that temporarily mask these long-term gains, we will reset at a higher base and faster growth rate. Our team members continue to execute at the highest level, enabling us to take advantage of the opportunities ahead and positioning the company for long-term success. With that, I'll turn the call over to Bob. Bob? Thanks, Lee. Good morning, everyone. We delivered industry-leading results during this past fiscal year, enabled by a terrific performance by team members throughout the chain, taking great pride in serving their communities through these unprecedented times. I'm so proud of their efforts, and I'm thrilled to share the results of their work with you today. This past year has, in many ways, been the most transformational year in our company's history. Our team's efforts have allowed us to capitalize upon the opportunities afforded by the challenges of 2020. We have record membership, a relevant and growing omni business, a robust real estate pipeline, and a revamped balance sheet. BJ's is a much stronger company than it was at the time of our IPO, and the opportunities provided in this challenging year set us up to be even stronger in the long term. Let's turn to our results for the fourth quarter. Net sales for the quarter were $3.9 billion. Merchandise comp sales, which exclude sales of gasoline, increased by 16% and were driven by ticket and traffic. Across our geographies, we continue to gain share, and our members are expanding their baskets and increasing their trips to our clubs. In the first three weeks of November, comps were running north of 20% as we continued to see increased food-at-home trends and elevated consumer home investments. We also experienced much earlier holiday shopping. In the last week of November, we began to see a relative slowdown given the absence of large parties and holiday gatherings. This continued through December, followed by a stronger January. Our digitally enabled sales grew by approximately 168% and drove about five percentage points of our 16% merchandise comp. We continue to invest behind digital platforms, particularly in BOPIC, curbside pickup, and same-day delivery, which together drove more than 80% of our digital growth during the fourth quarter. As you know, with digital, our economics are advantaged versus many of our peers, and the concentration of digital orders being fulfilled by our clubs furthers that thought. We operate a limited SKU warehouse environment with higher average ticket, allowing us to be more efficient. BOPIC and curbside sales tend to skew towards bigger baskets, and same-day delivery sales have the same margins as traditional sales in our clubs. Most importantly, the growth of these businesses highlights our increasing relevance with our membership. Digitally engaged members shop more categories, have average baskets that are 30% larger, and make on average five more trips per year than members who only shop traditionally. Our success in capitalizing on these trends bodes well for membership renewal rates, as generally the more a member shops and spends, the more likely that member is to renew. Comps in our grocery division grew by 18%. We saw robust comps across all categories, most notably in perishables, where we saw strong growth in fresh meat, frozen meals, and fresh produce. In edible grocery, beverages and salty snacks grew nicely, and in our non-edible grocery division, paper products, cleaning supplies, and wellness solutions led the way. Our general merchandise and services division saw comp growth of 9%, driven by strong sales of TVs, indoor furniture, small appliances, and consumer electronics. Although we made great progress, our services business is still ramping back to its full run rate potential and represents a great opportunity for growth in the new year. In our gasoline business, although sales were impacted by lower prices, we continued to gain market share. Gallons sold at comp clubs in the fourth quarter grew by approximately 5%, significantly outpacing overall market performance. Over the course of the year and this past quarter, we delivered industry-leading results that demonstrate strong market share gains. While these share gains were in part driven by demand associated with the pandemic, our execution, accelerated merchandising activities, and digital expansion were also significant drivers. In stock-up categories such as household cleaning products, where we grew almost 3x the rate of market growth, our share gains were driven by strong inventory levels and elevated member demand for these key items that have value. At the same time, we're extremely pleased with share gains in new categories we introduced, including better-for-you snacks, which grew at six times the rate of market growth, and prepared foods, which grew nine times the market rate. We continue to focus on improving our perishables assortment, enabling us to grow twice as fast as the market, with strong share gains in dairy, fresh produce, and frozen meals this past quarter. In our sundries division, where we continue to make significant progress, we grew at 13x the market rate, with significant gains in wellness solutions, cleaning, and baby food. Our focus is to continue to build on these share gains and drive further growth. Membership Fee Income, or MFI, grew by 11% during the fourth quarter to $86 million. The transformation of our company takes root here. We have unprecedented levels of total members, retention rate, and membership quality. We saw growth in new members, renewals, and favorable membership mix during the quarter. We delivered a new all-time high renewal rate of 88% for our tenured members, along with increasing our new member retention rate by 300 basis points relative to the prior year. Our penetration of higher-tier memberships increased to 31%, and Easy Renewal enrollment is at 70%. As you know, we're beginning to lap the heights of new member acquisition of the pandemic back in March and April. While it's obviously too early to discuss renewal rates for these members, we find their elevated shopping behavior and digital engagement encouraging. When we look at their baskets in Q4, they are approximately 19% larger than typical first-year members. In addition, they're opting into Easy Renewal and our higher-tier programs at higher rates. These new members are utilizing our app at double the rate of historical first-year members and leveraging our digital services, including BOPIC, curbside, and same-day delivery, at more than six times historical new member rates. Let's move now to our gross margins. Excluding the gasoline business, our merchandise gross margin rate increased by 50 basis points, driven by CPI initiatives and the mix of general merchandise sales. These gains were partially offset by increased COVID-related distribution costs. SG&A expenses for the quarter were $593 million and included approximately $27 million of total costs associated with the pandemic. These costs are primarily driven by increased labor, safety, and sanitation costs. Our adjusted EBITDA grew by 36% to $205 million, reflecting robust sales growth and margin expansion. Adjusted net income in the fourth quarter was $97 million, or $0.70 per share, and reflected a 75% year-over-year growth on a per share basis. Our earnings growth highlights the strength of our business and reduced interest expense provided by our transformed balance sheet. I'd like to take a moment to highlight our full-year performance. During 2020, we had merchandise comp sales growth of 21% and eclipsed $15 billion in net sales. Membership Fee Income of $333 million, an increase of 10%. Margin rate grew by 10 basis points despite significant price investments and elevated distribution costs associated with COVID. Adjusted EBITDA, $857 million, a growth of 47%, and we more than doubled adjusted EPS. It's hard to overstate the strength of this performance, but for just a bit of perspective, know that we started the year with a plan to do just over $600 million in adjusted EBITDA. Our team should be very proud. We also generated a record $676 million of free cash flow this year. This cash flow has allowed us to transform our balance sheet with 1.2x funded leverage versus 2.8x last year. This tremendous free cash flow allowed us to repay more than $500,000,000 in debt. More importantly, this reduced level of debt will allow us great flexibility with which we can invest into our future. As we allocate capital going forward, our overwhelming priority is to grow our business. Investments to support membership, omni, and our real estate growth plan will be funded by these cash flows and enabled by this newfound flexibility. Our next priority is to opportunistically enhance our already strong and healthy balance sheet. Finally, we plan to continue to return capital to shareholders. In 2020, we returned approximately $100 million to our shareholders by repurchasing 2.6 million shares. The evolution of the pandemic and associated member behavior, government stimulus efforts, and associated costs of running our business are far from clear. As a result, 2021 is very difficult to forecast. Given these uncertainties, we will not offer formal detailed guidance. We do hope and expect that the pandemic will fade as we progress through this year. Based on current pandemic trends and vaccination timelines, we expect consumer demand will remain elevated through the first half of the year when compared to pre-pandemic levels. If current shopping trends continue, that would imply high teens double-digit stacked comps in Q1. We also currently expect something that looks more like normal life to emerge as more people are vaccinated. As that happens, and more people venture back to restaurants, we expect to give up some of the sales gains experienced in 2020 that resulted from increased consumption of food at home. At this point, we cannot accurately judge the timing or degree of these changes. From a membership standpoint, we expect member count to be flat or better during 2021 and expect MFI growth to be in line with historical years. Lastly, we expect to continue to incur COVID-related costs for at least the first half of the year. Note that we will also continue to invest in our business and our team, particularly in membership, digital, and geographic expansion. Despite these costs, we expect to achieve strong adjusted EBITDA and earnings growth relative to 2019. BJ’s Wholesale Club is a much different and better company today than at our IPO in 2018. This is true in ways big and small, but let me focus on just a few. At the conclusion of this fiscal year, we had nearly 20% more members, about a million more than at our IPO. Not only do we have more members, but the membership is of vastly better quality. We have the highest renewal rates for both new and tenured members in our history. Tenured renewal rates are 200 basis points higher today than at our IPO. Higher-tier memberships are 600 basis points higher at 31%. Easy Renewal penetration is 1,700 basis points higher at 70%. We've discontinued the practice of offering free trial memberships, pivoting towards acquiring paid members with better lifetime values and continually engaging those members through renewal. Most importantly, we are intent on investing heavily to retain the members gained in 2020. We have tremendous momentum here and are intent on keeping it going. We have a relevant and growing omni business. At our IPO, our digitally enabled sales were approximately $140 million. Today's business is more than 5x that big and growing. In 2018, we had launched BOPIC and same-day delivery, but the experience was not great, and we lacked key current capabilities such as curbside pickup and the ability to order fresh goods. In the fourth quarter, approximately 50% of our BOPIC orders were picked up curbside, and the usage of our app is twice as high as it was at our IPO. We continue to invest in these offerings as they are the future and enable members more convenient ways to access our tremendous value. We've witnessed the tremendous acceleration of our real estate pipeline. In the year of our IPO, we only opened one new club. This past year, we opened four new clubs, all successful, and we will open six in 2021. Five of the six will be in the back half. Moreover, we see a path to 10 clubs per year in the 2022 months. Finally, we have a transformed balance sheet. At year end in 2018, we had more than 3x funded debt to adjusted EBITDA. We find ourselves today at just above 1x. This allows us tremendous flexibility to invest in our business and return capital to shareholders in ways we couldn't have considered just two short years ago. While the coming year's financial results may be noisy and hard to predict, we have great momentum and are pivoting from a deleverage story to a story about growth. Our pre-COVID algorithm included very low single-digit top-line growth. While a return towards normal may temporarily cloud the picture, we expect membership trends and our progress on our real estate pipeline to power a revised algorithm that includes mid-single-digit top-line growth in the future. Those boosts in membership and real estate should be easy to see concrete and powerful unlocks of future growth. In conclusion, we have a team doing the best work I've seen in my long tenure with the company. I'd like to once again thank them all. I can't wait to report their future results. Now I'll turn the call back over to the operator to begin the Q&A session. As a reminder, to ask a question, you will need to press star one on your telephone keypad. To withdraw your question, press the pound or hash key. Your first question comes from Peter Benedict from Baird. Your line is open. Hi, guys. Thank you for taking the question. I guess first, appreciate the color, given all the uncertainty. Maybe I need to speak a little bit more about the thought process behind comp stacks for this first quarter, first half of the year. Just how you're seeing the initial cycling of. I assume that that's just extending what you're seeing right now. Just maybe any more color you can add on that. My second question just is really more around how you think about the average spend per member here. You gave a lot of detail there, which was helpful. I guess as we think about versus 2019 levels, is it safe to assume that the members should be spending more than what they spent in 2019? Is that the trend that you're seeing? Thanks. Do you want to take that one, Bob? Sure. Hey, Peter. Good morning. Thanks for the question. Listen, we are really pleased with the way that the fourth quarter turned out, and as we said in the prepared remarks, it's incredibly hard to forecast what the next year is going to look like. We simply tried to take what we saw in the fourth quarter and sort of tell you what we would see versus last Q1 if those fourth quarter trends persist. Just very simply, we did a 27 comp last first quarter and a 16 comp in Q4. You can do the math from there. None of us is very certain on how this will roll out. We're very encouraged by what we're seeing under the covers, and you bring up a good point with average spend. The early read, I think is good, but I do think we'll see some pressure on this as we cycle the amazing results of Q1 and Q2. Beyond that, it just gets really tough to understand what will happen, which is why we didn't issue any guidance for the full year. I think it's the right way to think about it on a stack basis. I think we built our plan off of 2019 levels and tried to moderate that based on what we're seeing throughout 2020. Under the covers, we see a lot of encouraging things, particularly in membership levels and the quality of the memberships. We tried to reflect that in the prepared remarks, but sort of all-time high number of members, all-time high renewal rates, increasing renewal rates in both tenured and new members. The quality of the membership is amazing. Higher-tier members continue to rise 31%, up 300 basis points. Easy Renewal is going great across all the cohorts. Elevated shopping levels, larger baskets, trip consolidation, taking share from all sorts of classes of trade. We're very bullish about the long-term of the business. It's just going to be a little bit muddy as we get through this next year. Yeah. No, totally understood. Thank you for that. I guess my one follow-up would just be around the COVID expenses, I think, which were, I think, around $150 million this year. I know you said you expect some to extend into 2021. Can you give a sense maybe how much you expect to extend? Also maybe what was the COVID hit to gross margin, I guess, in the fourth quarter? How much of, I think you said elevated distribution expense, or was there any wages and stuff like that up there? Thank you. No worries. That's, again, a little bit difficult to give pinpoint guidance on because it largely depends on the state of the virus. I do think it's fair to assume as we go through the front half of this year, we will spend less than we did in the front half of last year. As you know, we were paying extra wages, bonuses, and the state of the disease caused all sorts of spending in that period around PPE and keeping our team members safe. We'll continue to do that to the degree that we need to almost forever. Our team members and our members and their safety are our first priority. I do think that will moderate versus what we saw in the first half. The back half of 2020 spending is probably a decent proxy to think about on the front half of this year. Again, it's a little bit difficult as that spending has tended to vary based on the state of the disease. Sure. Okay. Listen, thanks, Bob. Appreciate it. No worries. Thanks, Peter. Your next question comes from Steph Wissink from Jefferies. Your line is open. Thanks. Good morning to everyone. Lee, question for you on new unit and new market growth. I think you had walked us through the plans for six new units this year, 10+ 2022 and beyond. Help us think through the greenfield versus the existing market penetration. I think you referenced you've cracked the code, or Bob may have said you've cracked the code. Can you just talk a little bit about what you're doing differently that you maybe weren't doing in the past, where your new clubs are opening up much stronger, much faster? It sounds like your performance of your new members within those clubs is than what you would have seen in the proxy cohort. Talk a little bit about new clubs, if you could. Thank you. Sure. Thanks, Steph, for the question. As we said in the prepared remarks, we're very excited about the possibility for much faster unit expansion. In our IPO, we were opening one club per year. To do four last year, aim towards six this year, and then 10 next year is a real change. We spent a lot of time just getting the model right. We feel like we've done that. If you looked at Michigan, we're seeing membership levels that are 20% above the chain averages a little more than a year in with terrific first-year renewal rates. I think, the key underneath that is a whole bunch of work by a lot of people on the team. We're applying some fairly advanced analytics to figure out what the right site selection looks like in the market, how we place ourselves in the right location with good distances and good demographics. We've opened with much more aggressive and strong marketing. We have the right assortment from the start. We've got the right in-store environment from the beginning with our new signage package and the right layout. We're enrolling far more people in the credit cards at opening with just a really clear value proposition. We've got higher engagement with Easy Renewal, where essentially everyone in a new club joins Easy Renewal. That's really all working for us. As we look forward, it will be a mix of infill locations because there are still a number of places in our existing geographies where we see opportunity, but it'll increasingly be new markets. That's really exciting for us because there's so much of the country that is open to us that, as we put further west, we open up meaningfully big opportunities. We're setting our sights on six this year and 10 next year. It takes a little time to get there to build a real estate portfolio, really good real estate availability, given the broader world and just really pretty unlimited potential for your unit expansion story that we're very excited about. Any costs or CapEx that we should be thinking about for this year, maybe even timing of those units into the model? Yeah, sure. Do you want to take that side of it, Bob? Yeah, sure. Not too much to think about from a construction cost perspective, Steph, as even though the price of lumber, for instance, is up a lot and steel has been increasing as well, that's largely offset by the cost of the real estate getting a little bit cheaper. I wouldn't stray too far from the historic levels of cost per club that you may have in your models. As far as when the clubs should come into the chain, for the six this year, one should open towards the end of the first half. That will be in New Hampshire, the remaining five should be probably in the fourth quarter as we are just starting construction on those here in the spring. It usually takes eight or nine months to get them done and open. They'll be certainly weighted. As I look forward to the following year, that should hold where we get one or two in the front part of the year and the remainder in the back part of the year. Very helpful. Thank you very much. Your next question comes from Robby Ohmes from BofA. Your line is open. Hey, good morning. My question is, I know you're not giving guidance, but could you talk about maybe giving us some puts and takes to how to think about your gross margin, SG&A ratio, or sort of your structural EBIT margin going forward under different scenarios? Do you think there's been an upshift in the profitability of BJ's under most scenarios post-pandemic? Maybe just how should we think about the puts and takes on scenarios as we try and model your EBIT margin, et cetera, for next year? Yeah. Hey, Robby. It's Bob. Good morning. It's a good question. It's a bit hard to answer given any rate you talk about is obviously impacted by sales. I do think as you step all the way back and compare against 2019, it's fair to assume that our company gets more profitable over time. I would make that statement because of two reasons. One, we have more members and more sales, I think, under really any scenario than we did in 2019. The reinvented balance sheet 2021 interest should be probably almost half of what 2019 interest was. The company should get more profitable over time. It's a bit hard to unpack all of those things. I would encourage everybody to remember some of the key things sort of sloshing around through the compares against 2020. You take Q1, for instance, and remember we had outsized gas profit. We had a huge bonus accrual where we basically capped out the management team's bonus for the year. We had huge apparel markdowns, for instance, as the apparel business stopped and then really restarted in Q2. There are all sorts of things to think about among the quarters. I think the story is great when you back all the way out and think about it in the long term. Once we get through this noisy period, the company should be growing at a higher rate as we talked about, and it should be more profitable as we go because we're increasingly leveraging our costs. Got you. That's helpful. Just a quick follow-up, maybe for Lee. When you look to merchandising changes moving forward, is it more on the fresh side of the business or it sounds like, again, more success in hard lines? Maybe some insight on what's in the pipeline for BJ's on the merchandising side as you move through 2021? Yeah, thanks, Robby. It's a bit of a mix. We're seeing opportunities across the board. Certainly in our fresh food business, which is the heart of our shop, we will continue to tighten and refine the assortment. With the influx of younger members we're seeing, it's becoming increasingly relevant to have organic options, natural options, good for you options, and we're evolving our assortment in those directions and seeing really good results. We're equally, if not more excited about the opportunity in general merchandise and services. Think about our business as roughly 17% general merchandise, where some of our nearest competitors are meaningfully higher. We know that we're not competing in all the places that our competitors compete. As we've moved in that direction by tightening up the rest of the assortment, we're seeing really good results. We got into a meaningfully higher assortment of fitness equipment this past year. That was obviously timely with the pandemic and people at home. It's broader than that. We're seeing good results in consumer electronics, in our cement, some of the seasonal goods, and we're really excited about that. Services, I think, is an underappreciated area of upside for us, where many of our competitors have quite large businesses and services. It had never been a major priority for the company until roughly a year ago, where we built out a new merchandising team focused entirely on services and then set about to build and construct an entirely new set of offers this past year. We've gotten into major appliances in a big new way. We've added full offering in cell phones. We've totally retooled our home improvement offering. We talked on the call about our pay later options, and we think the opportunity for growth there is just enormous, and we're very excited about what we're seeing. Now, to be fair, a lot of that is driven by in-club experiential shopping, where we would have, in our optical business, we would have people come in and try on glasses, and that wasn't happening as much during the pandemic. We've been building out infrastructure, and we would expect as some of the pandemic related restrictions fade, that that business will be particularly well poised for growth. It really is across the board. That sounds great. Thanks so much. Your next question comes from Edward Kelly from Wells Fargo. Your line is open. Hi, guys. Good morning. Thanks for all the color today. I wanted to first ask you about membership and retention. Obviously, some big renewals coming up. You're optimistic about retaining a lot of these members. You've mentioned investment into that. Can you just provide a bit more color around sort of what you're doing to try to ensure that a lot of these members are sticky? Then maybe just go back and remind us about how these guys are shopping, like how often are they coming to the store, what their baskets look like, and what is that telling you about retention? Sure. It's a great question, Ed. Thanks for asking it. You'll remember it was about this time last year when there was a meaningful change in consumer-related behaviour tied to the pandemic. It was just a few days from now when the national emergency was declared, the NBA canceled their season, and we began to see a meaningful influx of members at that time that was well ahead of what we would normally see. That first COVID cohort of members is really important to us. The early data is quite encouraging, and we're fortunate because we have a whole slew of metrics to look at. We look at shop rate, how much they're spending, what their basket size looks like, are they engaged with us digitally, which membership tiers are they enrolled in, credit card, higher tiers, are they included in Easy Renewal? Are they engaging with us on promotions? Are their demographics favorable? Really across the board, it's very encouraging. In the prepared remarks, we talked about baskets up 19% app usage at double the rate of normal new members, BOPIC, curbside, same-day delivery at 6x the rate. These are very engaged members. The shop rate looks relatively similar to what you would normally see in a world of broader trip consolidation. Across the board, we are quite hardened, and we appreciate that these members are coming due for a renewal in a period where pandemic-related shopping behaviors are still largely holding across our footprint, and there's likely to be another infusion of government stimulus soon. Those two things, along with the underlying shopping behavior, would bode pretty well for strong renewal rates. We'll find out shortly over the course of the next few months what that looks like. As we sit here today, the signs are all quite promising. Great. Maybe just a follow-up on new stores. The new store commentary, obviously very encouraging. What are you seeing in Newburgh and Long Island City so far? Just a question around how you're thinking about financing new stores or company-owned versus leased. Generating the cash, your stock's really key. How are you thinking about balancing the spending there relative to the option around returning cash to shareholders? Sure. Let me take the first half, and I'll turn it over to Bob for the second half of that question. Newburgh and Long Island City opened at the very end of last year. It was in the last couple of weeks. The early performance of those clubs is quite encouraging. We're seeing really good shopping results, good membership results, and we're excited about the potential for both of those. They're a little bit more of an infill set of locations, although there's white space for us both in and around the boroughs of New York and Long Island City, and then a little bit further north with Newburgh. We're excited about those markets, and we'll obviously have much more momentum included from them as we progress into this year with just their opening in the back half. Bob, do you want to take the question around just structuring and financing? Sure. Ed, good question on how we're pursuing all these things. I hope everyone's noted the bullish tone here and the tone of aggressiveness of wanting to really grow quickly. The way we're attacking the real estate growth profile is that way. We are effectively doing any type of deal that will get the new buildings open quickly. If that means that it's a lease, great. If it means it's a purchase, great. If it's a ground lease and we own the building, great. The fact that we are seeing so many opportunities and the fact that we have a newly transformed balance sheet allows us so much flexibility to go to market quickly. We will do any deal that makes financial sense in any structure. I think that means, realistically, that we end up buying more buildings, buying more land and building buildings than we have in the past. There will be a fairly meaningful tick up in CapEx this year as we currently sit, as we buy more buildings as we go. We've got the cash flow and the balance sheet to do that. I suspect that continues as we go forward as well, and we use the balance sheet a little bit more than we have using exclusively leasing. That makes it a little faster, usually makes the deal a little bit more accretive to us as you take out the developer's margin in the middle. If the quickest way to do a new store that we're attracted to is a lease, we'll still do that. Did you give CapEx guidance, Bob? I don't know if I heard that. We didn't give guidance because it's a little bit uncertain as to actually what we'll get done given COVID delays and all sorts of stuff. I think the best way to think about it, Ed, is two more clubs than last year, plus increasing investment across the chain behind digital and other investments. It's not a game changer in our view, it is more spending than we spent last year. Thank you. Your next question comes from Kate McShane from Goldman Sachs. Your line is open. Thank you. Good morning. Thanks for taking my question. My first question was just on any thoughts or insights into where some of your market share gains came from, just based on where you're seeing the strength in some of those categories. The second question was just focused on inventory. It looks like it was up double digits. Just wondered if you are where you need to be when it comes to inventory going into the next couple of quarters. Thanks, Kate, for the question. On the share gain side of it, we're really excited by what we're seeing. We saw share gain in every market that we compete in, from Maine down to Florida, across almost every category. We think versus every competitor, just given our industry-leading comp results for the year and for the quarter. Some of that is clearly related to just the on-trend nature of buying in bulk in a pandemic, and it's flowing into us into club stores. Some of it, I think, really does tie to the progress we've made against the strategic pillars. If you think about our gains in membership, we've had really nice gains in membership at a high quality. We think that will be sticky going forward. We've made a number of changes to the assortment, which has positioned us well in new categories. That's helping to drive share gain by just competing in places we haven't competed before. With the new club openings at a higher rate even last year, we're getting into new places where we haven't been before, which is structural share gain. Then the digital side of it is really encouraging. We're seeing just incredibly strong data. We've talked before about having an advantage set of economics there, where we're essentially picking in a warehouse with limited SKU. We highlighted on the call the app engagement as just the centerpiece. Our app is delivering real utility with shopping lists and personalized promotions and coupons, access to all of our fulfillment options like curbside, the ability to pay in clubs through the app. The usage rate there is great. We're talking 5 million downloads with 30% effective monthly usage of that app. If you were to compare that with scale competitors, on any kind of adjusted basis, we have amazing app engagement that is well ahead of some competitors who get a lot of credit for being quite omni-enabled. We think that's sticky, too, and it's helping to drive our share gain. Just across the board, while some of the share gain is clearly tied to buying in bulk and pandemic behaviors, we do think a lot of the share gain is tied to some of the progress we've made on initiatives. The tough thing is just dissecting those two factors, and we're gonna stay focused on what we can control. On the inventory side of things, clearly we had a bit of an inventory build against a year where we were never quite in the in-stock position that we would like. We spent time repairing that in-stock position and then also just being really thoughtful about some of the upcoming large seasonal businesses that are largely sourced out of Asia, and particularly China. You no doubt have heard about some of the container shortages, some of the port shortages, and we wanted to make sure with Chinese New Year smack at the end of our fiscal year, that we were well-positioned. We made a number of aggressive buys leaned in inventory to both plug holes in our in-stock position, but also position us well for the spring season coming up and summer season coming up. In that regard, we have a little bit heavier in inventory, but we did it to support the business going forward, which we thought was the right call. Thank you. Your next question comes from Chuck Grom from Gordon Haskett. Your line is open. Hey, good morning. Obviously congrats on a really great year. I wanted to ask you guys a question from a little bit of a different angle. I think you guys added around 700,000 new members in calendar 2020. We're talking to you guys a year from now, I guess I'm curious what percent of those would you be happy with if you retain them as long term? Sean, the guidance for MFI growth, if I look back, average MFI dollar growth from 2013-2019 was around 4%. That a good proxy for the next couple of years? You guys said historical, just wanted to sort of frame that out. Let me start on the membership side. It's a good question. I think we've done a nice job improving renewal rate, taking the 10-year renewal rate to 88%. I think really important as you think about that metric, remember, the definition is such that it really reflects progress through the middle of last year. We're looking at renewals through the midpoint of the year with a six-month lag thereafter. Our hope would be we can continue to make progress on renewal rates. Since IPO, we've improved about 100 basis points per year. We're very relevant. We're making good progress with our credit card penetration, our higher-tier penetration. My hope would be with continued increased relevance, with all the progress we're making on the strategic priorities, that we will be able to continue to make gains there. This year will be a pretty important one for us to demonstrate that trend. We did stop short of issuing guidance because it's very hard to say what exactly that will look like. We're very focused on maintaining that. Bob, do you want to kind of weigh in and take the second part? Yeah, I think, Chuck, you centered in exactly where we were trying to get you to in that historical years MFI growth statement. I do think we are bullish for all the reasons we just stated, but again, it's a little bit hard to figure out what might happen. The prepared remarks basically said we expect membership count to be flat or better, and that would imply something in the neighborhood of a [1%] MFI growth for next year at the flat level. If it's better, it's better, and we're certainly going to pull every string to try and make it better as we go. Just to follow up, curbside's been really successful for you guys. Just wondering if we could compare the basket size of somebody that purchases curbside to somebody that comes in the store. How does the merchandise margin compare, and I guess how that's evolved over the year? Thanks. Basket size is bigger across the digital platforms. Anybody that engages with us on BOPIC or curbside or same-day delivery tends to buy a lot more in those baskets than they do if they. That's great for our economic, obviously. There is a little bit more cost of a BOPIC transaction or a curbside transaction for us, but if we can offset that with- Got it. Thanks, and good luck. Your next question comes from Mike Baker from D.A. Davidson. Hi. Thanks. I know you're just starting to come up against those new members that signed up early in the pandemic, but I think you try to get people to renew before they get to 12 months, right? Don't you sort of go after them after 10 months or so? That would've been a couple months ago already. I know this is a near-term, short-term question, but any sort of color into how that has progressed as you try to get these guys who first signed up during the pandemic to renew? Yeah. The renewal rate really happens at the one-year mark. When people enroll in BJ's Easy Renewal, there can be a little bit of pull forward because it typically would trigger on the first of the month. We're not renewing at the 10-month mark or earlier. What we are doing is looking very intently at all of the shopping-related behaviors to understand: Are people in the clubs, are they using our digital services, are they expanding their shop to include a broad variety of categories? We're giving them, as appropriate, targeted incentives to try to foster the behavior that will lead to renewal rates. There's a large focus on making sure that people are engaged, they're shopping. That starts earlier than the 10-month mark. We're kind of constantly monitoring that through the life cycle of a member. The real renewal rate is at the 12-month mark shortly earlier. We're just entering that window now. We don't have a lot of kind of quantifiable results other than the early indicators, which, as we said, across the board are quite promising. Okay. That makes sense. I really hate to ask another really short-term question, but you did talk about it a year ago, so I guess I'll ask you. In your first quarter call last year, you said the fourth week of February was up in the low teen level, and then I think you started to accelerate through the first week of March. As we're cycling up against that, can you talk about are we sort of on pace with that high teen stacked comment at the end of February and early March, or is that more what you think might happen as we progress through March? Hey, Mike. I'm realizing you have questions. That's why we gave Q1 guidance and not any texture in February. We're trying to cover the whole quarter with that texture that we gave, rather than any one week within the quarter. There are just too many things sort of sloshing back and forth within the quarter to really make one week a reasonably predictive metric. We think the high teen stack is the right way to think about it, and we'll see what happens as we get through the quarter. Okay. Well, fair enough. Since you didn't really answer that, I'll slide one more in. If you're high teens stack, that means down 7%, 8%, or 9% even in the first quarter. What happens to your cost structure in the first quarter? Can you lower SG&A? Do you lower hours? Do you somehow adjust to a negative comp? We certainly try and target our cost structure to the rest of our business, you believe extraneous things that we're lapping as well that you need to consider. If we've got less shopping, we would have slightly less labor, more shopping, we'd have slightly more labor, this is a fairly fixed cost, heavy business. I guess what I would say is, it's a bit tough to give you an answer to that question as well. As we learned to be nimble throughout the entirety of last year, we'll need to be nimble as we go through the year as well, that's what we'll do. I think all of these short-term questions, I don't mean this to you, all these short-term questions are just noise. I think the thing that people should focus on is the long-term transformation of this business. More members, more sales, more margin. It should be structurally more profitable versus 2019 as we go forward. We'll invest behind all of those notions, right? We're in a little bit of a weird period here, but the entire management team here is very bullish on the state of our company and how we will grow from here. Yeah, I think that makes perfect sense, and it's pretty clear that the long term, I think, should be better, which is why I focus on the short term. Thanks for the call, appreciate it. Your final question comes from Chuck Cerankosky from Northcoast Research. Good morning, everyone. Congratulations on the new year. I want to get into a little bit the faster club growth. What new markets can you talk about at this point, and how have you restaffed or increased the staff of your real estate department? We've certainly added some capacity across the organic growth to deal with it. Going from four clubs to six clubs is not a Herculean lift. Going to 10 clubs is a little bit more. As we continue to make progress against this incredibly important strategic goal, we'll serve that as we have been investing behind digital and membership, all the other things that are success. There's not much of a structural cost increase behind the real estate. Could you talk about any of the new markets you'll be entering, specific cities, for instance? Sure. As Lee talked about in his remarks, there'll be new markets and existing markets as we go forward. This year will be a mix of those. I mentioned New Hampshire as the first club, and then we should be getting into a new market this year in Pittsburgh. Undoubtedly, that's been in the press, so many of you have probably seen that. We're very excited to get into that market. It's been lacking from our Pennsylvania assortment for a long time. As we go forward into the new year, there'll be more new markets, and it will be generally the westward march from there. We're very excited. We're seeing all sorts of good deals come our transom, and our team's working hard to keep up with them all. When you enter a new market like Pittsburgh, do you want to enter with more than one location immediately as you did in Michigan? How about distribution capacity? How are you thinking about that? Sure. Every market's a little bit different, Chuck, certainly in a big market like Pittsburgh, we would love to enter with more than one club. We will open two clubs there this year and hopefully more in the future. The distribution capacity right now is not a limiting factor. Sort of out towards Mississippi is where you get into a little bit of trouble. As we move westward, we may have to consider how we do that. Right now, we're comfortable servicing all of our new club needs out of our existing distribution format. Thank you, and good luck for fiscal 2021. Thanks [inaudible]. Thanks Chuck. There are no further questions at this time. I'll turn the call back over to presenters. Great. Well, thank you everyone for your time today and your interest in the company. I hope going forward you all remain healthy and safe during these continued trying times. My hope today is, even though this year is a bit tricky to predict as we lap the incredibly strong performance of last year and some of the COVID-related shopping behaviors may change, I do hope that you came away with a sense for how bullish we are on long-term prospects for the business. As you think about all the things we're doing to drive a different long-term algorithm between membership, the digital assortment that we're offering, the product assortment, and then the new club growth, we're all very excited about our prospects for the years to come and look forward to hopefully seeing you all in person in the not-too-distant future. Take care, everyone. Thanks. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.