RondPoint24

Background Among the beneficiaries of state-wide lockdowns due to COVID-19 and sudden surge in grocery demand is BJ’s warehouse club who reported a record 27% in merchandise comparable sales for Q1 2020. Since 2018, the company has continuously communicated to investors its strategic plan for long-term growth consisting of, among other things, better in-house assortment of merchandise and stronger focus on acquiring members in its high tier program (BJ’s Reward and co-branded Mastercard). Following strong 1Q 20 earnings, the market has begun pricing in what is shaping out to be a favorable outlook for the company; currently offering a 17% buying opportunity. Thesis The company’s fundamentals have been strengthening quarter to quarter with strong tail winds shaping a long-term runway for growth. BJ’s has made incremental progress over the past few years, among which are scaling their digital capabilities (engaging more members in buy-online-pick-up-in-club or BOPIC activities) that tend...

Background In the advent of the COVID-19 pandemic that practically forced the global economy to a halt, a significant number of American citizens have lost their jobs or have been furloughed and many businesses have struggled to stay afloat following the significant drop in demand. As of May 6th, 2020, an estimated 23,000 (both public and non-public) filed bankruptcy cases were reported by U.S courts (1). In the retail industry alone, bankruptcies included popular brands such as J.C. Penney, Aldo, and J. Crew. As industry experts try to grapple with the effects of sudden drops in both supply and demand, it’s evident that there still lies great uncertainties ahead. As businesses await for a resurgence in demand, I believe some companies will be better positioned to come out of this crisis. An example of such an opportunity lies in the retail space, where some off-retail price companies will be better positioned (relative to their full-price retail peers) to return to profitability despi...