Document and Entity Information	6 Months Ended
Document and Entity Information	Aug. 04, 2018
Document And Entity Information [Abstract]
Document Type	S-1
Amendment Flag	false
Document Period End Date	Aug. 04, 2018
Trading Symbol	BJ
Entity Registrant Name	BJ's Wholesale Club Holdings, Inc.
Entity Central Index Key	0001531152
Entity Filer Category	Non-accelerated Filer

Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 04, 2018	Feb. 03, 2018	Jul. 29, 2017	Jan. 28, 2017
Current assets:
Cash and cash equivalents	$ 31,305	$ 34,954	$ 32,817	$ 31,964
Accounts receivable, net	165,347	190,756	166,061	166,249
Merchandise inventories	1,005,045	1,019,138	1,031,053	1,031,844
Prepaid expenses and other current assets	69,116	81,972	29,815	34,105
Prepaid federal and state income taxes	31,679	9,784	18,994	233
Assets held for sale	6,550
Total current assets	1,309,042	1,336,604	1,278,740	1,264,395
Property and equipment:
Land and buildings	396,349	404,400	404,799	409,397
Leasehold costs and improvements	195,455	184,165	174,555	171,363
Furniture, fixtures and equipment	982,117	924,616	849,595	813,925
Construction in progress	16,538	20,775	14,259	6,848
Total property and equipment, gross	1,590,459	1,533,956	1,443,208	1,401,533
Less: accumulated depreciation and amortization	(842,778)	(775,206)	(707,005)	(637,890)
Total property and equipment, net	747,681	758,750	736,203	763,643
Goodwill	924,134	924,134	924,134	924,134
Intangibles, net	212,561	224,876	238,877	253,159
Other assets	27,438	29,492	31,131	26,888
Total assets	3,220,856	3,273,856	3,209,085	3,232,219
Current liabilities:
Current portion of long-term debt	62,250	219,750	236,250	20,000
Accounts payable	783,108	751,948	751,939	720,632
Accrued expenses and other current liabilities	473,500	495,767	436,518	457,697
Closed store obligations due within one year	2,122	2,122	2,013	2,012
Total current liabilities	1,320,980	1,469,587	1,426,720	1,200,341
Long-term debt	1,894,071	2,492,660	2,533,907	2,000,118
Noncurrent closed store obligations	5,818	6,561	5,692	6,258
Deferred income taxes	52,988	57,074	82,670	92,900
Other noncurrent liabilities	264,872	267,393	267,880	271,668
Commitments and contingencies
Contingently redeemable common stock		10,438	8,955	8,145
STOCKHOLDERS' DEFICIT
Preferred stock; par value $0.01; 5,000 shares authorized, and no shares issued or outstanding
Common stock	1,362	871	871	871
Additional paid-in capital	731,324	2,883	4,399	6,397
Accumulated deficit	(1,033,851)	(1,036,012)	(1,124,290)	(356,760)
Accumulated other comprehensive income	2,401	2,401	2,281	2,281
Treasury stock, at cost, 782 shares at August 4, 2018 and no shares at February 3, 2018 and July 29, 2017	(19,109)
Total stockholders' deficit	(317,873)	(1,029,857)	(1,116,739)	(347,211)
Total liabilities and stockholders' deficit	$ 3,220,856	$ 3,273,856	$ 3,209,085	$ 3,232,219

Consolidated Balance Sheets (Parenthetical) - $ / shares	Aug. 04, 2018	Feb. 03, 2018	Jul. 29, 2017
Statement of Financial Position [Abstract]
Contingently redeemable common stock, par value	$ 0.01	$ 0.01	$ 0.01
Contingently redeemable common stock, shares issued	0	1,456,000	1,365,000
Contingently redeemable common stock, shares outstanding	0	1,456,000	1,365,000
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000	5,000,000
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	305,000,000	305,000,000
Common stock, shares issued	136,195,000	87,073,000	87,073,000
Common stock, shares outstanding	135,413,000	87,073,000	87,073,000
Treasury stock, at cost, shares	782,000	0	0

Consolidated Statements Of Operations And Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 04, 2018	Jul. 29, 2017	Aug. 04, 2018	Jul. 29, 2017	Feb. 03, 2018	Jan. 28, 2017	Jan. 30, 2016
Total revenues	$ 3,307,105	$ 3,167,527	$ 6,368,802	$ 6,114,355	$ 12,754,589	$ 12,350,537	$ 12,467,553
Cost of sales	2,718,602	2,614,187	5,228,940	5,055,492	10,513,492	10,223,017	10,476,519
Selling, general and administrative expenses	549,188	477,333	1,034,760	1,009,834	2,017,821	1,908,752	1,797,780
Preopening expense	641	1,226	1,858	2,032	3,004	2,749	6,458
Operating income	38,674	74,781	103,244	46,997	220,272	216,019	186,796
Interest expense, net	59,555	43,820	104,758	107,890	196,724	143,351	150,093
Income (loss) from continuing operations before income taxes	(20,881)	30,961	(1,514)	(60,893)	23,548	72,668	36,703
Provision (benefit) for income taxes	(15,391)	11,146	(10,325)	(21,921)	(28,427)	27,968	12,049
Income (loss) from continuing operations	(5,490)	19,815	8,811	(38,972)	51,975	44,700	24,654
Loss from discontinued operations, net of income taxes	(124)	(103)	(288)	(210)	(1,674)	(476)	(550)
Net income (loss)	$ (5,614)	$ 19,712	$ 8,523	$ (39,182)	$ 50,301	$ 44,224	$ 24,104
Income (loss) per share attributable to common stockholders - basic:
Income (loss) from continuing operations	$ (0.05)	$ 0.22	$ 0.09	$ (0.44)	$ 0.59	$ 0.51	$ 0.28
Loss from discontinued operations					(0.02)	(0.01)	(0.01)
Net income (loss)	(0.05)	0.22	0.09	(0.44)	0.57	0.50	0.27
Income (loss) per share attributable to common stockholders - diluted:
Income (loss) from continuing operations	(0.05)	0.22	0.09	(0.44)	0.56	0.49	0.27
Loss from discontinued operations					(0.02)	(0.01)	(0.01)
Net income (loss)	$ (0.05)	$ 0.22	$ 0.09	$ (0.44)	$ 0.54	$ 0.48	$ 0.26
Weighted average number of common shares outstanding:
Basic	106,914,966	88,443,279	97,734,132	88,323,926	88,385,864	88,163,992	87,869,243
Diluted	106,914,966	91,745,569	102,731,740	88,323,926	92,263,577	90,736,079	90,241,354
Other comprehensive income, net of tax:
Postretirement medical plan adjustment, net of income tax of $717, $744 and $204, respectively					$ (312)	$ (1,086)	$ 1,045
Unrealized gain on cash flow hedge, net of income tax of $424, $25 and $0, respectively						38	619
Total other comprehensive income, net of tax					49,989	43,176	25,768
Product [Member]
Total revenues	$ 3,236,664	$ 3,103,335	$ 6,230,406	$ 5,986,633	12,495,995	12,095,302	12,220,215
Membership [Member]
Total revenues	$ 70,441	$ 64,192	$ 138,396	$ 127,722	$ 258,594	$ 255,235	$ 247,338

Consolidated Statements Of Operations And Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Feb. 03, 2018	Jan. 28, 2017	Jan. 30, 2016
Income Statement [Abstract]
Net income tax , post retirement medical plan	$ 204	$ 744	$ 717
Net income tax , unrealized gain on cash flow hedge	$ 0	$ 25	$ 424

Consolidated Statements Of Contingently Redeemable Common Stock And Stockholders' Deficit - USD ($) $ in Thousands	Total	Contingently Redeemable Common Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]
Beginning balance at Jan. 31, 2015	$ (427,475)		$ 871	$ (4,923)	$ (425,088)	$ 1,665
Beginning balance at Jan. 31, 2015		$ 6,944
Beginning balance, shares at Jan. 31, 2015			87,073
Beginning balance, shares at Jan. 31, 2015		413
Stock issuance		$ 500
Net income	24,104				24,104
Postretirement medical plan adjustment, net of tax	1,045					1,045
Common stock issued for public offering, net of related fees, shares		168
Unrealized gain on cash flow hedge, net of tax	619					619
Dividends paid	(25)			(25)
Stock compensation expense	2,265			2,265
Option exercises	(638)	$ 1,313		(638)
Option exercises, shares		504
Call of shares	(144)	$ (806)		(144)
Other equity transactions	(824)			(824)
Call of shares, shares		(140)
Ending balance at Jan. 30, 2016		$ 7,951
Ending balance at Jan. 30, 2016	(401,073)		$ 871	(4,289)	(400,984)	3,329
Ending balance, shares at Jan. 30, 2016		945
Ending balance, shares at Jan. 30, 2016			87,073
Net income	44,224				44,224
Postretirement medical plan adjustment, net of tax	(1,086)					(1,086)
Unrealized gain on cash flow hedge, net of tax	38					38
Dividends paid	(25)			(25)
Stock compensation expense	11,828			11,828
Option exercises	(661)	$ 1,038		(661)
Option exercises, shares		217
Call of shares	(583)	$ (844)		(583)
Other equity transactions	127			127
Call of shares, shares		(119)
Ending balance at Jan. 28, 2017	8,145	$ 8,145
Ending balance at Jan. 28, 2017	$ (347,211)		$ 871	6,397	(356,760)	2,281
Ending balance, shares at Jan. 28, 2017	1,043,000	1,043
Ending balance, shares at Jan. 28, 2017	87,073,000		87,073
Net income	$ (39,182)
Ending balance at Jul. 29, 2017	8,955
Ending balance at Jul. 29, 2017	$ (1,116,739)
Ending balance, shares at Jul. 29, 2017	1,365,000
Ending balance, shares at Jul. 29, 2017	87,073,000
Beginning balance at Jan. 28, 2017	$ (347,211)		$ 871	6,397	(356,760)	2,281
Beginning balance at Jan. 28, 2017	$ 8,145	$ 8,145
Beginning balance, shares at Jan. 28, 2017	87,073,000		87,073
Beginning balance, shares at Jan. 28, 2017	1,043,000	1,043
Net income	$ 50,301				50,301
Postretirement medical plan adjustment, net of tax	(312)					(312)
Dividends paid	(735,518)			(6,397)	(729,121)
Stock compensation expense	9,102			9,102
Option exercises	(2,850)	$ 3,708		(2,850)
Option exercises, shares		616
Call of shares	(554)	$ (1,415)		(554)
Other equity transactions	(2,815)			(2,815)	(432)	432
Call of shares, shares		(203)
Ending balance at Feb. 03, 2018	10,438	$ 10,438
Ending balance at Feb. 03, 2018	$ (1,029,857)		$ 871	2,883	(1,036,012)	$ 2,401
Ending balance, shares at Feb. 03, 2018	1,456,000	1,456
Ending balance, shares at Feb. 03, 2018	87,073,000		87,073
Net income	$ 8,523				$ 8,523
Stock reclassification as a result of public offering, shares		(1,736)
Stock reclassification as a result of public offering		$ (13,202)
Common stock issued for public offering, net of related fees, shares			43,125
Common stock issued for public offering, net of related fees	685,889		$ 431	685,458
Common stock issued under stock incentive plans, shares			4,261
Common stock issued under stock incentive plans			$ 43	(43)
Stock reclassification as a result of public offering, shares			1,736
Stock reclassification as a result of public offering	$ 13,202		$ 17	$ 13,185
Common stock repurchased upon vesting of stock awards, shares	0		0	0	0	0	0
Common stock repurchased upon vesting of stock awards	$ (19,109)						$ (19,109)
Stock compensation expense	52,126			$ 52,126
Option exercises	(2,210)	$ 2,792		(2,210)
Option exercises, shares		280
Call of shares	(12)			(12)
Call of shares prior to public offering		$ (28)
Net shares used to pay tax withholdings upon option exercise	(20,063)			(20,063)
Cumulative effect of change in accounting principle	(6,362)				$ (6,362)
Ending balance at Aug. 04, 2018	$ (317,873)		$ 1,362	$ 731,324	$ (1,033,851)	$ 2,401	$ (19,109)
Ending balance, shares at Aug. 04, 2018	0
Ending balance, shares at Aug. 04, 2018	135,413,000		136,195				(782)

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Aug. 04, 2018	Jul. 29, 2017	Feb. 03, 2018	Jan. 28, 2017	Jan. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 8,523	$ (39,182)	$ 50,301	$ 44,224	$ 24,104
Adjustments to reconcile net income to net cash provided by operating activities:
Charges for discontinued operations	399	357	2,766	802	913
Depreciation and amortization	82,498	82,288	164,061	178,325	177,483
Amortization of debt issuance costs and accretion of original issue discount	3,911	4,125	8,463	17,091	16,848
Debt extinguishment and refinancing charges	19,159	13,562
Write-off of debt issuance costs			9,788
Impairment charge for asset held for sale	3,000
Other non cash items, net	10,560	(753)	3,892	32	(4,534)
Stock-based compensation expense	52,126	5,740	9,102	11,828	2,265
Deferred income tax provision	(1,551)	(10,230)	(35,623)	(23,530)	(21,428)
Increase (decrease) in cash due to changes in:
Accounts receivable	25,409	188	(24,507)	26,533	(2,253)
Merchandise inventories	14,093	791	12,706	30,010	(23,660)
Prepaid expenses and other current assets	12,856	4,290	(47,867)	16,184	(967)
Other assets	1,005	381	967	2,034	(598)
Accounts payable	37,524	39,592	36,081	(29,277)	12,454
Change in book overdrafts	(28,295)	(11,133)	7,523	(42,781)	(20,077)
Accrued expenses	(3,604)	(20,171)	23,241	49,441	12,086
Accrued income taxes	(31,663)	(18,761)	(12,651)	6,343	(13,121)
Closed store obligations	(1,142)	(923)	(2,354)	(1,942)	(2,033)
Other noncurrent liabilities	(1,589)	3,809	4,196	12,111	1,879
Net cash provided by operating activities	203,219	53,970	210,085	297,428	159,361
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net of disposals	(75,666)	(46,253)	(137,466)	(114,756)	(112,363)
Net cash used in investing activities	(75,666)	(46,253)	(137,466)	(114,756)	(112,363)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term debt		547,544	547,544
Payments on long term debt	(22,829)	(4,812)	(14,437)	(65,161)	(16,760)
Extinguishment of 2nd Lien Term Loan	(631,283)
Proceeds from ABL facility	670,000	956,000	1,645,000	1,166,000	1,841,456
Payments on ABL facility	(794,000)	(744,000)	(1,483,000)	(1,287,000)	(1,871,456)
Debt issuance costs paid		(27,006)	(24,635)	(754)
Dividends paid		(735,580)	(735,518)	(25)	(25)
Capital lease and financing obligations payments	(349)	(322)	(657)	(535)	(553)
Net cash received (paid) from stock option exercises	(19,481)	812	858	377	1,175
Acquisition of treasury stock	(19,149)		(1,969)	(1,427)	(950)
Proceeds from Initial Public Offering, net of underwriters discount and commission	690,970
Payment of Initial Public Offering costs	(5,081)
Other financing activities		500	(2,815)	407	877
Net cash used in financing activities	(131,202)	(6,864)	(69,629)	(188,118)	(46,236)
Net (decrease) increase in cash and cash equivalents	(3,649)	853	2,990	(5,446)	762
Cash and cash equivalents at beginning of period	34,954	31,964	31,964	37,410	36,648
Cash and cash equivalents at end of period	31,305	32,817	34,954	31,964	37,410
Supplemental cash flow information:
Interest paid, net of capitalized interest	99,071	67,340	152,178	126,919	132,800
Income taxes paid	13,988	6,583	14,820	45,746	44,720
Noncash financing and investing activities:
Conversion of contingently redeemable common stock into common stock	13,202
Property additions included in accrued expenses	$ 13,747	$ 18,730	$ 19,405	16,915	$ 19,571
Property acquired through financing obligations				$ 6,500

Description of Business	6 Months Ended	12 Months Ended
Description of Business	Aug. 04, 2018	Feb. 03, 2018
Accounting Policies [Abstract]
Description of Business	1. Description of Business BJ’s Wholesale Club Holdings, Inc. (the “Company”) is a leading warehouse club operator in the Eastern United States. As of August 4, 2018, the Company operated 215 warehouse clubs, 135 of which operate gasoline stations, in 16 states. On June 28, 2018, the Company became a publicly traded entity upon the closing of its initial public offering (“IPO”) on the New York Stock Exchange (“NYSE”) under the ticker symbol “BJ.” The Company conforms to the National Retail Federation’s fiscal calendar. The thirteen-week periods ended August 4, 2018 and July 29, 2017 are referred to as the second quarter of 2018 and 2017, respectively.	1. Description of Business BJ’s Wholesale Club Holdings, Inc. and its wholly owned subsidiaries (the “Company” or “BJ’s”) is a leading warehouse club operator in the eastern United States of America. As of February 3, 2018, BJ’s operated 215 warehouse clubs in 16 states. BJ’s business, in common with the business of retailers generally, is subject to seasonal influences. Sales and operating income have typically been strongest in the fourth quarter holiday season and lowest in the first quarter of each fiscal year. BJ’s Wholesale Club, Inc. was previously an independent publicly traded corporation until its acquisition on September 30, 2011, by a subsidiary of Beacon Holding Inc., a company incorporated on June 24, 2011 by investment funds affiliated with or advised by Leonard Green & Partners and CVC Capital Partners, (collectively, “the Sponsors”) for the purpose of the acquisition. Beacon Holding Inc. changed its name to BJ’s Wholesale Club Holdings, Inc. on February 23, 2018.

Summary of Significant Accounting Policies

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

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 generally accepted accounting principles in the United States of America. References to “BJ’s” or the “Company” refer to BJ’s Wholesale Club Holdings, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

The consolidated balance sheet as of February 3, 2018 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the quarter ended August 4, 2018 are not necessarily indicative of future results or results to be expected for the full year ending February 2, 2019. The Company’s business, in 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.

You should read these statements in conjunction with the Company’s audited consolidated financial statements and related notes starting in page F-1 of the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on June 28, 2018 (the “Prospectus”).

Initial Public Offering

On July 2, 2018, the Company completed its IPO, in which the Company issued and sold 43,125,000 shares of its common stock (including 5,625,000 shares of common stock that were subject to the underwriters’ option to purchase additional shares) at an initial public offering price of $17.00 per share. The Company received total aggregate proceeds of $685.9 million net of underwriters discounts, commissions and other transaction expenses, which totaled $47.2 million.

On July 2, 2018, the Company used the net proceeds from the IPO to extinguish the total outstanding balance of $623.3 million of its senior secured second lien term loan facility (the “Second Lien Term Loan”). See Note 6, Debt and Credit Arrangements footnote, for further discussion regarding the Second Lien Term Loan extinguishment.

Stock Split

On June 15, 2018, the Company effected a seven-to-one stock split of its issued and outstanding shares of common stock and proportional adjustment to the existing conversion ratios for each series of the Company’s Contingently Redeemable Common Stock (see Note 10). Accordingly, all shares and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the contingently redeemable common stock conversion ratios.

Deferred Offering Costs

The Company capitalized certain legal, professional, accounting and other third-party fees that were directly associated with the IPO as deferred offering costs. Upon the consummation of the IPO, $47.2 million were recorded in stockholders’ deficit as a reduction of additional paid-in capital.

Recent Accounting Pronouncements

The accounting policies the Company follows are set forth in the Company’s audited financial statements for the fiscal year ended February 3, 2018 and included in the Company’s final Prospectus. There have been no material changes to these accounting policies, except as noted below for new accounting pronouncements adopted at the beginning of fiscal year 2018.

Revenue from Contracts with Customers (ASC No. 606)

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASC No. 606”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP as of its effective date.

The Company adopted the new guidance at the beginning of fiscal year 2018 using the modified retrospective adoption method and recognized the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of accumulated deficit. The new guidance was only applied to contracts not completed as of the initial date of application. Additionally, any contract that was modified prior to the adoption date has been reflected in the cumulative adjustment giving effect to the aggregate effect of all contract modifications prior to the initial application date. The impact of employing this practical expedient for contract modifications is immaterial. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to the Company’s February 3, 2018 balance sheet for the adoption of the standard update was as follows (in thousands):


	Balance as of February 3, 2018			Adjustment for new Standard			Balance as of February 4, 2018
Prepaid expenses and other current assets	$	81,972		$	7,820		$	89,792
Accrued expenses and other current liabilities		495,767			16,645			512,412
Deferred income taxes		57,074			(2,463	)		54,611
Accumulated deficit		(1,036,012	)		(6,362	)		(1,042,374	)

The impact of the adoption of the standards update on the Company’s Consolidated Statement of Operations for the thirteen and twenty-six weeks ended August 4, 2018, resulted in a decrease to cost of sales and net sales of $1.1 million and $5.7 million, respectively, due to recording the allowance for returns reserve on a gross basis. The remaining impact of the adoption of the standards on the Company’s Consolidated Statement of Operations for the thirteen weeks and twenty-six weeks ended August 4, 2018 was immaterial.

The impact of the adoption of the standards update on the Company’s Consolidated Balance Sheet as of August 4, 2018 was as follows (in thousands):


	As of August 4, 2018,
	As Reported			Balance without adoption			Effect of change
Prepaid expenses and other current assets	$	69,116		$	62,270		$	6,846
Accrued expenses and other current liabilities		473,500			457,531			15,969
Deferred income taxes		52,988			55,586			(2,598	)
Accumulated deficit		(1,033,851	)		(1,027,325	)		(6,526	)

Classification of Costs Related to Defined Benefit Pension and Other Post-Retirement Benefit Plans (ASU 2017-07)

At the beginning of fiscal year 2018, the Company adopted ASU No. 2017-07, Compensation—Retirement Benefits Topic 715: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 changes how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit costs in the statement of operations. Under this new guidance, an employer’s statement of operations presents service cost arising in the current period in the same statement line item as other employee compensation. However, all other components of current period costs related to defined benefit plans, such as prior service costs and actuarial gains and losses, are presented on the statement of operations on a line item outside (or below) operating income. ASU 2017-07 affects only the classification of certain costs on the statement of operations, not the determination of costs. Net periodic pension costs related to the Company’s frozen defined benefit pension plan and post-retirement medical benefit plan were not material for the second quarter of fiscal year 2018 or prior periods. The retrospective impacts of this standard on our historical financial statements are not material and will not be restated on future filings.

Modifications to Share-based Compensation Awards (ASU 2017-09)

At the beginning of fiscal year 2018, the Company adopted ASU No. 2017-09, Compensation-Stock Compensation Topic 718-Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 clarifies when changes to the terms and conditions of share-based payment awards must be accounted for as modifications. Entities apply the modification accounting guidance if the value, vesting conditions, or classification of an award changes. The Company has not modified any share-based payment awards. Should the Company modify share-based payment awards in the future, it will apply the provisions of ASU 2017-09.

Definition of a Business (ASU 2017-01)

At the beginning of fiscal year 2018, the Company adopted ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 assists entities in determining if acquired assets constitute the acquisition of a business or the acquisition of assets for accounting and reporting purposes. This distinction is important because goodwill can only be recognized in an acquisition of a business. Prior to ASU 2017-01, if revenues were generated immediately before and after a transaction, the acquisition was typically considered a business. Under ASU 2017-01, entities are required to further assess the substance of the processes they acquire. Should the Company commence or complete an acquisition in future periods, it will apply the provisions of ASU 2017-01.

Statement of Cash Flows (ASU 2016-15)

At the beginning of fiscal year 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). ASU 2016-15 represents a consensus of the FASB’s Emerging Issues Task Force on eight separate issues that, if present, can impact classifications on the statement of cash flows. The guidance requires application using a retrospective transition method. The adoption of ASU 2016-15 only impacted the classification of certain insurance proceeds on the Company consolidated statement of cash flows for the first quarter of fiscal year 2017. The Company’s insurance proceeds were $2.0 million for the second quarter of fiscal year 2018 and were not material for the second quarter of fiscal year 2017. The retrospective impacts of this standard on our historical financial statements are not material and will not be restated on future filings.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments for all leases with a term greater than 12 months. This standard is effective for annual reporting periods, and interim periods therein, beginning

after December 15, 2018 and is required to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. The Company has a significant number of leases, and as a result, expects this guidance to have a material impact on its Consolidated Balance Sheet, the impact of which is currently being evaluated.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal year 2015 (“2015”) consists of the 52 weeks ended January 30, 2016, Fiscal year 2016 (“2016”) consists of the 52 weeks ended January 28, 2017, and fiscal year 2017 (“2017”) consists of the 53 weeks ended February 3, 2018.

Estimates Included in Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and stockholders’ equity, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these consolidated financial statements include, but are not limited to, revenue recognition; vendor rebates and allowances; estimating inventory reserves; estimating impairment assessments of goodwill, intangible assets, and other long-lived assets; estimating self-insurance reserves; estimating income taxes and equity-based compensation. Actual results could differ from those estimates.

Segment Reporting

The Company’s club retail operations, which represent substantially all of the Company’s consolidated total revenues, are the Company’s only reportable segment. All of the Company’s identifiable assets are located in the United States. The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.

The following table summarizes the percentage of net sales by category:


	Fiscal Year
	2015 % of Total			2016 % of Total			2017 % of Total
Edible Grocery		24	%		25	%		24	%
Perishables		30	%		29	%		29	%
Non-Edible Grocery		21	%		22	%		21	%
General Merchandise		14	%		14	%		14	%
Gasoline & Other Ancillary Services		11	%		10	%		12	%

Concentration Risk

An adverse change in the Company’s relationships with its key suppliers could have a material effect on the business and results of operations of the Company. Currently, one distributor consolidates a substantial majority of perishables for shipment to the clubs. While the Company believes that such a consolidation is in its best interest overall, a prolonged disruption in logistics processes could materially impact sales and profitability for the near term.

All of the warehouse clubs are located in the eastern United States. Sales from the New York metropolitan area made up approximately 25% of net sales in 2015, 2016 and 2017.

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash held in financial institutions. The Company considers the credit risk associated with these financial instruments to be minimal. Cash is held by financial institutions with high credit ratings and the Company has not historically sustained any credit losses associated with its cash balances.

Cash and Cash Equivalents

Highly liquid investments with a maturity of three months or less at the time of purchase are considered to be cash equivalents. Book overdrafts not subject to offset with other accounts with the same financial institution are classified as accounts payable.

Accounts Receivable

Accounts receivable consists primarily of credit card receivables and receivables from vendors related to rebates and coupons and is stated net of allowances for doubtful accounts of $1.3 million at January 28, 2017 and $1.2 million at February 3, 2018. The determination of the allowance for doubtful accounts is based on BJ’s historical experience applied to an aging of accounts and a review of individual accounts with a known potential for write-off.

Merchandise Inventories

Inventories are stated at the lower of cost, determined under the average cost method, or net realizable value. The Company recognizes the write-down of slow-moving or obsolete inventory in cost of sales when such write-downs are probable and estimable. The Company writes down inventory for estimated shrinkage for the period between physical inventories based on historical results of previous physical inventories, shrinkage trends or other judgments management believes to be reasonable under the circumstances.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Buildings and improvements are depreciated over estimated useful lives of 33 years.

Interest related to the development of buildings is capitalized during the construction period. Leasehold costs and improvements are amortized over the remaining lease term (which includes renewal periods that are reasonably assured) or the asset’s estimated useful life, whichever is shorter. Furniture, fixtures and equipment are depreciated over estimated useful lives, ranging from three to ten years. Depreciation expense was $145.7 million in 2015, $149.5 million in 2016 and $138.0 million in 2017.

Certain costs incurred in connection with developing or obtaining computer software for internal use are capitalized. Capitalized software costs are included in furniture, fixtures, and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which is three to seven years. Software costs not meeting the criteria for capitalization are expensed as incurred.

Expenditures for betterments and major improvements that significantly enhance the value and increase the estimated useful life of the assets are capitalized and depreciated over the new estimated useful life. Repairs and maintenance costs on all assets are expensed as incurred.

Deferred Issuance Costs

The Company defers costs directly associated with acquiring third-party financing. Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt and debt issuance costs associated with the ABL are recorded within other assets. Debt issuance costs are amortized over the term of the related financing arrangements on a straight-line basis, which is materially consistent with the effective interest method. Amortization of deferred debt issuance costs is recorded in interest expense and was $7.4 million in 2015, $7.7 million in 2016 and $4.1 million in 2017.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived trade name intangible assets are not subject to amortization. The Company assesses the recoverability of its goodwill and trade name annually in the fourth quarter or whenever events or changes in circumstances indicate it may be impaired. The Company has determined it has one reporting unit for goodwill impairment testing purposes.

The Company may assess its goodwill for impairment initially using a qualitative approach (“step zero”) to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and circumstances that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any impairment. The Company may also elect to initially perform a quantitative analysis instead of starting with step zero. The quantitative assessment for goodwill is a two-step assessment. “Step one” requires comparing the carrying value of a reporting unit, including goodwill, to its fair value. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and no further testing is required. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is to measure the amount of impairment loss, if any. “Step two” compares the implied fair value of goodwill to the carrying amount of goodwill. The implied fair value of goodwill is determined by a hypothetical purchase price allocation using the reporting unit’s fair value as the purchase price. If the carrying amount of goodwill exceeds the implied fair value, an impairment charge is recorded to write down goodwill to its implied fair value and is recorded as a component of selling, general and administrative expense (“SG&A”). The Company assessed the recoverability of goodwill in 2015, 2016 and 2017 and determined that there was no impairment.

The Company assesses the recoverability of its trade name whenever there are indicators of impairment, or at least annually in the fourth quarter. If the recorded carrying value of the trade name exceeds its estimated fair value, the Company records a charge to write the intangible asset down to its estimated fair value as a component of SG&A. The Company assessed the recoverability of the BJ’s trade name and determined that its estimated fair value exceeded its carrying value and that no impairment was necessary in 2015, 2016 or 2017.

Impairment of Long-lived Assets

The Company reviews the realizability of long-lived assets periodically and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Current and expected operating results and cash flows and other factors are considered in connection with management’s reviews. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows of individual clubs and consolidated net cash flows for long-lived assets not identifiable to individual clubs. Impairment losses are measured as the difference between the carrying amount and the estimated fair value of the assets being evaluated. No impairment charges were recorded in 2015, 2016 or 2017.

Asset Retirement Obligations

An asset retirement obligation represents a legal obligation associated with the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development or normal operation of that long-lived asset. The Company recognizes asset retirement obligations in the period in which they are placed in service, if a reasonable estimate of fair value can be made. The asset retirement obligation is subsequently adjusted for changes in fair value. The associated estimated asset retirement costs are capitalized in leasehold improvements and depreciated over their useful life. The Company’s asset retirement obligations relate to the future removal of gasoline tanks and related assets from gasoline stations. See Note 15 for further information on the amounts accrued.

Self-Insurance Reserves

The Company is primarily self-insured for workers’ compensation, general liability claims and medical claims. Reported reserves for these claims are derived from estimated ultimate costs based upon individual claim file reserves and estimates for incurred but not reported claims. The Company carries stop-loss insurance on its workers’ compensation and general liability claims to mitigate its exposure to large claims.

Revenue Recognition

Revenue is recognized from the sale of merchandise, net of estimated returns, at the time of purchase by the customer in the club. In the limited instances when the customer is not able to take delivery at the point of sale, revenue from the sale of merchandise is not recognized until title and risk of loss pass to the customer. For sales of merchandise on the Company’s website, revenue is also recognized when title and risk of loss pass to the customer, which is normally at the time the merchandise is received by the customer. Sales incentives redeemable only at BJ’s, such as coupons and instant rebates, are recorded as a reduction of net sales.

The Company evaluates whether it is appropriate to record the gross amount of merchandise or service sales and related costs or the net amount earned as commission. Generally, when the Company is considered the primary obligor in the transaction, revenue is recorded at the gross sales price. If the Company is not considered the primary obligor, as in the case of third party ancillary services such as vision care, travel and insurance that are offered in club or through bjs.com, the net amount retained is recorded.

Membership fee income (“MFI”) is recognized on a straight-line basis over the life of the membership, which is typically 12 months.

The Company’s BJ’s Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ’s. The Company’s My BJ’s Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ’s and 1% or 2% cash back on purchases made with the card outside of BJ’s. Cash back is in the form of electronic awards issued in $20 increments that may be used in-club at the register and expire six months from the date issued. The Company accounts for the awards as a reduction of net sales, with the related liability classified within other current liabilities. This liability was $21.1 million in 2016 and $22.7 million in 2017.

BJ’s gift cards are available for purchase at all clubs. Revenue from gift card sales is recognized upon redemption of the gift card. Revenue from gift card and rewards breakage is recorded in net sales when the likelihood of redemption is remote and the Company does not have a legal obligation to escheat the value of unredeemed gift cards and rewards to any jurisdiction. Breakage recorded in 2015, 2016 and 2017 was not material.

The sales returns reserve, which reduces sales and cost of sales for the estimated impact of returns and also includes an estimate for membership cancellations, was $2.3 million in 2015, $3.7 million in 2016 and $3.4 million in 2017.

Warranty Programs

The Company passes on any manufacturers’ warranties to the members. In addition, BJ’s includes an extended warranty on tires sold at the clubs, under which BJ’s customers receive tire repair services or tire replacement in certain circumstances. This warranty is included in the sale price of the tire and it cannot be declined by the customers. The Company is fully liable for claims under the tire warranty program. As the primary obligor in these arrangements, associated revenue is recognized on the date of sale and an estimated warranty obligation is accrued based on claims experience. The liability for future claims under this program is not material to the financial statements.

Extended warranties are also offered on certain types of products such as electronics and jewelry. These warranties are provided by a third party at fixed prices to BJ’s. No liability is retained to satisfy warranty claims under these arrangements. The Company is not the primary obligor under these warranties, and as such net revenue is recorded on these arrangements at the time of sale. Revenue from warranty sales is included in net sales on the income statement.

Cost of Sales

The Company’s cost of sales includes the direct costs of sold merchandise, which includes customs, taxes, duties and inbound shipping costs, inventory shrinkage and adjustments and reserves for excess, aged and obsolete inventory. Cost of goods sold also includes certain distribution center costs and allocations of certain indirect costs, such as occupancy, depreciation, amortization, labor and benefits.

Presentation of Sales Tax Collected from Customers and Remitted to Governmental Authorities

In the ordinary course of business, sales tax is collected on items purchased by the members that are taxable in the jurisdictions when the purchases take place. These taxes are then remitted to the appropriate taxing authority. These taxes collected are excluded from revenues in the financial statements.

Vendor Rebates and Allowances

The Company receives various types of cash consideration from vendors, principally in the form of rebates, based on purchasing or selling certain volumes of product, time-based rebates or allowances, which may include product placement allowances or exclusivity arrangements covering a predetermined period of time, price protection rebates and allowances for retail price reductions on certain merchandise and salvage allowances for product that is damaged, defective or becomes out-of-date.

Such vendor rebates and allowances are recognized based on a systematic and rational allocation of the cash consideration offered to the underlying transaction that results in progress by BJ’s toward earning the rebates and allowances, provided the amounts to be earned are probable and reasonably estimable. Otherwise, rebates and allowances are recognized only when predetermined milestones are met. The Company recognizes product placement allowances as a reduction of cost of sales in the period in which the product placement is completed.

Time-based rebates or allowances are recognized as a reduction of cost of sales over the performance period on a straight-line basis. All other vendor rebates and allowances are recognized as a reduction of cost of sales when the merchandise is sold or otherwise disposed.

Cash consideration is also received for advertising products in publications sent to BJ’s members. Such cash consideration is recognized as a reduction of SG&A to the extent it represents a reimbursement of specific, incremental and identifiable SG&A costs incurred by BJ’s to sell the vendors’ products. If the cash consideration exceeds the costs being reimbursed, the excess is characterized as a reduction of cost of sales. Cash consideration for advertising vendors’ products is recognized in the period in which the advertising takes place.

Manufacturers’ Incentives Tendered by Consumers

Consideration from manufacturers’ incentives (such as rebates or coupons) is recorded gross in net sales when the incentive is generic and can be tendered by a consumer at any reseller and the Company receives direct reimbursement from the manufacturer, or clearinghouse authorized by the manufacturer, based on the face value of the incentive. If these conditions are not met, such consideration is recorded as a decrease in cost of sales.

Leases

The majority of leases are accounted for as operating leases in accordance with ASC 840, Leases. Assets subject to an operating lease and the related lease payments are not recorded on the balance sheet. Rent expense is recognized on a straight-line basis over the expected lease term. The lease term begins on the date the Company becomes legally obligated for the rent payments or takes possession of the property, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in economic penalty.

Sometimes, the Company is involved in the construction of leased clubs. In these situations, the Company evaluates whether it is deemed the owner of the club for accounting purposes. If deemed the owner of the construction project, the Company capitalizes the construction costs of the club on the balance sheet and records financing obligations equal to the cash proceeds or fair value of the assets received from the landlord. Upon the completion of the project, a sale-leaseback analysis is performed pursuant to current leasing guidance to determine if the assets and related financing obligations can be removed from the balance sheet. Assuming the assets and liabilities are removed from the balance sheet, leases are classified as either operating or capital. In some of the leases, the Company is reimbursed only a portion of the construction cost or the lease has terms that fix the rental payments for a significant percentage of the leased asset’s economic life. These items generally are considered continuing involvement which precludes removing the assets and related financing obligation from the balance sheet when construction is complete. Rent expense is not reported for any properties which are considered owned for accounting purposes. Rental payments under these leases are allocated as a reduction of the financing obligation and interest expense.

Assets recorded under capital lease and financing obligations are included in land and buildings on the balance sheet and are depreciated over their estimated useful lives using the straight-line method. As of January 28, 2017, and February 3, 2018, the gross amount of assets recorded under capital lease and financing obligations was $49.4 million. Related accumulated depreciation for these assets as of January 30, 2016, January 28, 2017 and February 3, 2018 was $8.1 million, $10.2 million and $12.2 million, respectively.

Preopening Costs

Preopening costs consist of direct incremental costs of opening or relocating a facility and are expensed as incurred.

Advertising Costs

Advertising costs generally consist of efforts to acquire new members and typically include media advertising (some of which is vendor-funded). BJ’s expenses advertising as incurred as a component of SG&A. Advertising expenses were approximately 0.4%, 0.5% and 0.6% of net sales in 2015, 2016 and 2017, respectively.

Stock-Based Compensation

The fair value of service-based employee awards is recognized as compensation expense on a straight-line basis over the requisite service period of the award. The fair value of the performance-based awards is recognized as compensation expense ratably over the service period of each performance tranche. The fair value of the stock-based awards is determined using the Black-Scholes option pricing model. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise and the associated volatility.

The estimated fair value of the Company’s stock is determined by its board of directors, with input from management and considering third-party valuations of common stock. See Note 11 for an additional description of the accounting for stock-based awards.

Earnings Per Share

Basic net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity. Basic income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity. Basic loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity.

Diluted net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the diluted weighted average number of common shares outstanding for the period.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected, scheduling of anticipated reversals of taxable temporary differences, and considering prudent and feasible tax planning strategies.

The Company records liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized on ultimate settlement. The actual benefits ultimately realized may differ from the estimates. In future periods, changes in facts, circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in income tax expense and liability in the period in which such changes occur.

Any interest or penalties incurred related to unrecognized tax benefits are recorded as a component of the provision for income tax expense.

Derivative Financial Instruments

All derivatives are recognized as either assets or liabilities on the consolidated balance sheet and measurement of these instruments is at fair value. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive income and are recognized in the consolidated statement of operations when the hedged item affects earnings. Any portion of the change in fair value that is determined to be ineffective is immediately recognized in earnings as SG&A. Derivative gains or losses included in accumulated other comprehensive income are reclassified into earnings at the time the hedged transaction occurs as a component of SG&A.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company uses a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1, quoted market prices in active markets for identical assets or liabilities.

●

Level 2, observable inputs other than quoted market prices included in Level 1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data.

●

Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Comprehensive Income

Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than with equity holders, and would normally be recorded in the consolidated statements of stockholders’ equity and the consolidated statements of comprehensive income. Other comprehensive income consists of unrealized gains and losses from derivative instruments designated as cash flow hedges, and postretirement medical plan adjustments.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued an accounting standard update that aims to simplify accounting for stock-based compensation. The changes include accounting for income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross share compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company elected to account for forfeitures as they occur rather than apply an estimated forfeiture rate to stock-based compensation expense. The Company adopted this standard update in 2017 and applied the changes prospectively.

In July 2015, the FASB issued an accounting standard update that aims to simplify the measurement of inventory. The changes include measuring inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this standard update on a prospective basis in 2017 and prior periods were not retrospectively adjusted.

In February 2018, the FASB issued an accounting standard update that allows the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The Company adopted this standard update in 2017 and applied the changes prospectively for the year ended February 3, 2018 and reclassified $432 thousand from accumulated other comprehensive income to retained earnings as of February 3, 2018.

Recent Accounting Pronouncements

In May 2014, the FASB issued a new standard that creates common revenue recognition guidance for GAAP and International Financial Reporting Standards. The new guidance supersedes most preexisting revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. The new standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The standard is effective for public entities for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years.

The Company is currently evaluating the impact that the adoption of the new standard will have on its consolidated financial statements. The Company expects that the areas impacted will include accounting for the Company’s co-branded credit card agreement, breakage using a proportional performance method, assessing certain sales promotion programs and presentation of sales returns and allowances. The Company plans to adopt the new standard using the modified retrospective adoption method.

In February 2016, the FASB issued an accounting standard update that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018. The new standard is to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the new pronouncement on its consolidated financial statements, however, the Company expects to have a material impact to its consolidated balance sheet upon adoption.

In August 2016, the FASB issued an accounting standard update that is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the

diversity in practice related to such classifications. The guidance in the accounting standard update is required to be adopted for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of the standard update on its consolidated cash flow statements.

In January 2017, the FASB issued an accounting standard update for Intangibles—Goodwill and Other, simplifying the test for goodwill impairment. Under the existing standard, when the carrying value of a reporting unit exceeds the reporting unit’s fair value, an entity would then proceed to a Step 2 goodwill impairment analysis, which requires calculating the impaired fair value by assigning the fair value of a reporting unit to all of its assets and liabilities, as if that reporting unit had been acquired in a business combination. Under the new standard a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of the reporting unit’s goodwill. The new standard is effective January 1, 2020, with early adoption permitted. The Company does not believe this will have an impact on the consolidated financial statements.

In March 2017, the FASB issued new guidance, which changes certain presentation and disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. This guidance requires entities to (1) report the service cost component of net periodic pension/postretirement benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period; (2) capitalize only the service cost component of net periodic pension/postretirement benefit cost (when applicable); and (3) present other components of net periodic pension/postretirement benefit cost separately from the service cost component and outside a subtotal of income from operations (if applicable). The standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted as of January 1, 2017. The Company is currently evaluating the impact of the standard update on its consolidated financial statements.

In May 2017, the FASB issued an accounting standard update, which provides guidance about changes to the terms or conditions of a share-based payment award requiring an entity to apply modification accounting. The standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The amendments in this standard update should be applied prospectively to an award modified on or after the adoption date, and, therefore, the Company will consider the provisions of this update in conjunction with awards issued on or after February 2, 2019, as applicable.

Related Party Transactions	6 Months Ended	12 Months Ended
Related Party Transactions	Aug. 04, 2018	Feb. 03, 2018
Related Party Transactions [Abstract]
Related Party Transactions	4. Related Party Transactions Management Agreement The Company had a management services agreement with the Sponsors for ongoing consulting and advisory services that terminated upon the consummation of the IPO. The management services agreement provided for the aggregate payment of management fees to the Sponsors (or advisory affiliates thereof) of $8.0 million per year, plus out of pocket expenses. The Company expensed $1.3 million and $2.0 million of management fees and out of pocket expenses for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively. The Company expensed $3.3 million and $4.1 million of management fees and out of pocket expenses for the first twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. Management fees and expenses are reported in Selling, general and administrative expenses (“SG&A”) in the consolidated statements of operations and comprehensive income. One of the Company’s suppliers, Advantage Solutions Inc., is controlled by affiliates of the Sponsors. Advantage Solutions Inc. is principally a provider of in-club product demonstration and sampling services, and the Company also engages them from time to time to provide ancillary support services, including for example, seasonal gift wrapping, on-floor sales assistance and display maintenance. The Company incurred approximately $10.4 million and $7.9 million of costs payable to Advantage Solutions Inc. for services rendered during the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively. The Company incurred approximately $21.4 million and $18.8 million of costs payable to Advantage Solutions Inc. for services rendered during the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. The demonstration and sampling service fees are fully funded by merchandise vendors who participate in the program. The Company believes the terms obtained or consideration paid or received, as applicable, in connection with the transactions were comparable to terms available or amounts that would be paid or received, as applicable, in arm’s-length transactions with unrelated parties.	3. Related Party Transactions Management Agreement The Company has a management services agreement with the Sponsors for ongoing consulting and advisory services. The management services agreement provides for the aggregate payment of management fees to the Sponsors (or advisory affiliates thereof) of $8.0 million per year, plus out of pocket expenses. The Company expensed $8.1 million of management fees and out of pocket expenses in 2015 and 2016 respectively, and $8.0 million of management fees and out of pocket expenses in 2017. Management fees and expenses are reported in SG&A in the consolidated statements of operations and comprehensive income. Other Relationships One of the Company’s suppliers, Advantage Solutions Inc., is controlled by affiliates of the Sponsors. Advantage Solutions Inc. is principally a provider of in-club product demonstration and sampling services, and the Company also engages them from time to time to provide ancillary support services, including for example, seasonal gift wrapping, on-floor sales assistance and display maintenance. In fiscal years 2017, 2016 and 2015 the Company incurred costs of approximately $44.8 million, $41.0 million and $10.6 million, respectively. The demonstration and sampling service fees are fully funded by merchandise vendors who participate in the program. The Company believes the terms obtained or consideration paid or received, as applicable, in connection with the transactions were comparable to terms available or amounts that would be paid or received, as applicable, in arms’-length transactions with unrelated parties. The Company determined that the related-party disclosure for Advantage Solutions Inc. was misstated in the previously issued consolidated financial statements for the fiscal years 2017, 2016 and 2015. In evaluating whether the Company’s previously issued consolidated financial statements were materially misstated, after considering both qualitative and quantitative considerations, the Company concluded that the disclosure errors were not material to any of the Company’s prior annual consolidated financial statements and therefore, amendments of previously filed reports were not required. However, the Company has revised the disclosure to correct errors incurred with Advantage Solutions Inc. to the amounts reflected above for fiscal years 2017, 2016 and 2015.

Dividend Recapitalization

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Other Liabilities Disclosure [Abstract]

Dividend Recapitalization

5. Dividend Recapitalization

On February 3, 2017, the Company distributed a $735.5 million dividend to its common stockholders. In conjunction with the dividend, the Company paid $67.5 million to stock option holders of the Company as required under the Fourth Amended and Restated 2011 Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (as further amended) (“2011 Plan”) and the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (as further amended) (“2012 Director Plan”). The payments to option holders were recorded as compensation expense in SG&A in the first quarter of fiscal 2017. The Company also paid $5.4 million to employees under retention bonus arrangements, of which $4.6 million was accrued in 2016, and the remaining $0.8 million was recognized as compensation expense in the first quarter of 2017. In order to fund these payments, the Company executed the following transactions immediately prior to the payment of the dividend:

•

Refinanced and upsized the senior secured first lien term loan facility (the “First Lien Term Loan”) to $1,925.0 million, subject to an original issue discount (“OID”) of $4.8 million.

•

Refinanced and upsized the Second Lien Term Loan to $625.0 million, subject to an OID of $6.2 million.

•

Amended and restated the senior secured asset based revolving credit and term facility the (“ABL Facility”) and borrowed $340.0 million. The maturity date on the ABL Facility was extended to February 3, 2022 and there were no changes to the material terms.

The Company paid accrued outstanding interest of $11.0 million in conjunction with the refinancing.

4. Dividend Recapitalization

On February 3, 2017, the Company distributed a $735.5 million dividend to its common stockholders. In conjunction with the dividend, the Company paid $67.5 million to stock option holders of the Company as required under the Fourth Amended and Restated 2011 Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (as further amended) (“2011 Plan”), and the 2012 Director Stock Option Plan of BJ’s Wholesale Club Holdings, Inc. (as further amended) (“2012 Director Plan”). The payments to option holders were recorded as compensation expense in SG&A in 2017. The Company also paid $5.4 million to employees under retention bonus arrangements, of which $4.6 million was accrued in 2016 and the remaining $0.8 million was recognized as compensation expense in 2017. In order to fund these payments, the Company executed the following transactions immediately prior to the payment of the dividend:

•

Refinanced and upsized the First Term Loan to $1,925.0 million, subject to an original issue discount (“OID”) of $4.8 million. The First Term Loan now matures on February 3, 2024.

•

Refinanced and upsized the Second Term Loan to $625.0 million, subject to an OID of $6.2 million. The Second Lien Term Loan now matures on February 3, 2025.

•

Amended and restated the ABL Facility and borrowed $340.0 million. The maturity date on the ABL Facility was extended to February 3, 2022 and there were no changes to the material terms.

The Company paid accrued outstanding interest of $11.0 million and capitalized debt issuance costs of $24.6 million in conjunction with the refinancing. The Company recorded a loss on the debt refinancing of $21.1 million in 2017 of which $9.8 million represents the write-off of previously capitalized deferred debt issuance costs.

Debt and Credit Arrangements

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Debt Disclosure [Abstract]

Debt and Credit Arrangements

6. Debt and Credit Arrangements

Debt consisted of the following at August 4, 2018, February 3, 2018 and July 29, 2017 (in thousands):


	August 4, 2018			February 3, 2018			July 29, 2017
ABL Facility	$	93,000		$	217,000		$	267,000
First Lien Term Loan		1,887,734			1,910,563			1,920,187
Second Lien Term Loan		—			625,000			625,000
Unamortized debt discount and debt issuance cost		(24,413	)		(40,153	)		(42,030	)
Less: current portion		(62,250	)		(219,750	)		(236,250	)

Long-term debt	$	1,894,071		$	2,492,660		$	2,533,907

ABL Credit Facility

The ABL Facility is comprised of a $950.0 million revolving credit facility and a $50.0 million term loan. The ABL Facility is secured on a senior basis by certain “liquid assets” of the Company and secured on a junior basis by certain “fixed assets” of the Company. The $50.0 million term loan payment terms are restricted in that the term loan cannot be repaid unless all loans outstanding under the ABL Facility are repaid, and once repaid, cannot be re-borrowed. The availability under the $950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the facility agreement. Interest rates under the revolving credit facility are calculated either on LIBOR plus a range of 150 to 200 basis points based on excess availability, or an alternative base rate calculation based on the higher of prime, the federal funds rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus a range of 50 to 100 basis points based on excess availability. The Company may elect one week or one, two, three, or six-month LIBOR terms. Interest on the term loan is based either on LIBOR plus a range of 300 to 350 basis points or the alternative base rate described above, plus a range of 200 to 250 basis points based on excess availability. The ABL Facility also provides a subfacility for issuances of letters of credit subject to certain fees defined in the ABL Facility agreement. The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolver.

At August 4, 2018, there was $93.0 million outstanding in loans under the ABL Facility and $46.7 million in outstanding letters of credit. At February 3, 2018, there was $217.0 million outstanding in loans under the ABL Facility and $44.2 million in outstanding letters of credit. At July 29, 2017, there was $267.0 million outstanding in loans under the ABL Facility and $43.7 million in outstanding letters of credit.

As of August 4, 2018, the interest rate on the revolving credit facility was 3.58% and borrowing availability was $672.9 million. As of February 3, 2018, the interest rate on the revolving credit facility was 3.08% and borrowing availability was $574.8 million. As of July 29, 2017, the interest rate on the revolving credit facility was 2.98% and borrowing availability was $503.9 million.

First Lien Term Loan

On February 3, 2017, the Company refinanced its First Lien Term Loan to extend the maturity date to February 3, 2024, increase the First Lien Term Loan borrowings to $1,925.0 million subject to a $4.8 million original issue discount and change the interest rate. Interest on the First Lien Term Loan is calculated either at LIBOR plus a range of 350 to 375 basis points where LIBOR is subject to a floor of zero or an alternative base rate calculation based on the higher of prime, the federal funds effective rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus a range of 250 to 275 basis points.

At August 4, 2018, the interest rate for the First Lien Term Loan was 5.60%. At February 3, 2018, the interest rate for the First Lien Term Loan was 4.95%. At July 29, 2017, the interest rate for the First Lien Term Loan was 4.97%.

Principal payments on the First Lien Term Loan are required in quarterly installments of 0.25% of the original principal amount with the balance due upon maturity on February 3, 2024. Voluntary prepayments are permitted. Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation. 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 of “liquid” assets of the Company. At August 4, 2018, there was $1,887.7 million outstanding on the First Lien Term Loan. At February 3, 2018, there was $1,910.6 million outstanding on the First Lien Term Loan. At July 29, 2017, there was $1,920.2 million outstanding on the First Lien Term Loan.

Second Lien Term Loan

On February 3, 2017, the Company refinanced the existing senior secured second lien term loan facility (the “Second Lien Term Loan”) to extend the maturity date to February 3, 2025 and increased the Second Lien Term Loan borrowings to $625.0 million, subject to a $6.2 million original issue discount. Interest was calculated either at LIBOR plus 750 basis points where LIBOR is subject to a floor of zero or an alternative base rate calculation based on the higher of the prime, the federal funds effective rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus 650 basis points. The Second Lien Term Loan had a maturity date of February 3, 2025 with the entire principal balance due on such maturity date. Voluntary prepayments were permitted. Principal payments had to be made on the Second Lien Term Loan pursuant to an annual excess cash flow calculation. The Second Lien Term Loan was subject to certain affirmative and negative covenants but no financial covenants.

On July 2, 2018, the Company paid off the Second Lien Term Loan by extinguishing the entire outstanding amount of $623.2 million. In connection with the debt extinguishment, the Company paid a $6.2 million prepayment premium. The Company recorded debt extinguishment charges of $19.2 million in conjunction with the pay down, of which $13.0 million represents the write-off of previously capitalized deferred debt issuance costs associated with the Second Lien Term Loan.

There was no balance outstanding on the Second Lien Term Loan as of the second quarter ended August 4, 2018. There was a balance of $625.0 million outstanding on the Second Lien Term Loan as of February 3, 2018 and July 29, 2017.

No interest rate is applicable for the Second Lien Term Loan as of August 4, 2018. At February 3, 2018, the interest rate for the Second Lien Term Loan was 8.95% and at July 29, 2017, the interest rate for the Second Lien Term Loan was 8.71%.

5. Debt and Credit Arrangements

Debt consisted of the following at January 28, 2017 and February 3, 2018 (in thousands):


	January 28, 2017			February 3, 2018
ABL Facility	$	55,000		$	217,000
First Lien Term Loan		1,425,273			1,910,563
Second Lien Term Loan		577,183			625,000
Unamortized debt discount and debt issuance costs		(37,338	)		(40,153	)
Less: current portion		(20,000	)		(219,750	)

Long-term debt	$	2,000,118		$	2,492,660

ABL Credit Facility

On February 3, 2017 the Company amended and restated the ABL Facility to extend the maturity date to February 3, 2022. The Company wrote-off $2.2 million of previously capitalized debt issuance costs, expensed $0.2 million of new third-party fees and capitalized $7.9 million of new debt issuance costs.

The ABL Facility is comprised of a $950.0 million revolving credit facility and a $50.0 million term loan. The ABL Facility is secured on a senior basis by certain “liquid assets” of the Company and secured on a junior basis by certain “fixed assets” of the Company. The $50.0 million term loan payment terms are restricted in that the term loan cannot be repaid unless all loans outstanding under the ABL Facility are repaid, and once repaid, cannot be re-borrowed. The availability under the $950.0 million revolving credit facility is restricted based on eligible monthly merchandise inventories and receivables as defined in the facility agreement. Interest rates under the revolving credit facility are calculated either on LIBOR plus a range of 150 to 200 basis points based on excess availability, or an alternative base rate calculation based on the higher of prime, the federal funds rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus a range of 50 to 100 basis points based on excess availability. The Company may elect one week or one, two, three, or six-month LIBOR terms. Interest on the term loan is based either on LIBOR plus a range of 300 to 350 basis points or the alternative base rate described above, plus a range of 200 to 250 basis points based on excess availability. The ABL Facility also provides a subfacility for issuances of letters of credit subject to certain fees defined in the ABL Facility agreement. The ABL Facility is subject to various commitment fees during the term of the facility based on utilization of the revolver.

At January 28, 2017, there was $55.0 million outstanding in loans under the ABL Facility and $48.0 million in outstanding letters of credit. At February 3, 2018, there was $217.0 million outstanding in loans under the ABL Facility and $44.2 million in outstanding letters of credit. As of February 3, 2018, the interest rate on the revolving credit facility was 3.08% and borrowing availability was $574.8 million.

First Lien Term Loan

On February 3, 2017 the Company refinanced its senior secured first lien term loan facility (the “First Lien Term Loan”) to extend the maturity date to February 3, 2024, increase the First Lien Term Loan borrowings to $1,925.0 million subject to a $4.8 million original issue discount and change the interest rate. Interest on the First Lien Term Loan is calculated either at LIBOR plus a range of 350 to 375 basis points where LIBOR is subject to a floor of zero or an alternative base rate calculation based on the higher of prime, the federal funds effective rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus a range of 250 to 275 basis points.

As a result of the refinancing, there was a change in the bank syndicate. The Company wrote-off $3.1 million of previously capitalized debt issuance costs, expensed $8.3 million of new third-party fees and capitalized $8.5 million of new debt issuance costs. At February 3, 2018, the interest rate for the First Lien Term Loan was 4.95%.

Principal payments on the First Lien Term Loan are required in quarterly installments of 0.25% of the original principal amount with the balance due upon maturity on February 3, 2024. Voluntary prepayments are permitted. Principal payments must be made on the First Lien Term Loan pursuant to an annual excess cash flow calculation. 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 of “liquid” assets of the Company . At February 3, 2018 there was $1,910.6 million outstanding on the First Lien Term Loan.

Second Lien Term Loan

On February 3, 2017 the Company refinanced the existing senior secured second lien term loan facility (the “Second Lien Term Loan”) to extend the maturity date to February 3, 2025 and increase the Second Lien Term

Loan borrowings to $625.0 million, subject to a $6.2 million original issue discount. Interest is calculated either at LIBOR plus 750 basis points where LIBOR is subject to a floor of zero or an alternative base rate calculation based on the higher of the prime, the federal funds effective rate plus 50 basis points or one-month LIBOR plus 100 basis points, plus 650 basis points.

As a result of the refinancing, there was a change in the bank syndicate. The Company wrote-off $4.5 million of previously capitalized debt issuance costs, expensed $2.8 million of new third-party fees and capitalized $8.2 million of new debt issuance costs. At February 3, 2018, the interest rate for the Second Lien Term Loan was 8.95%.

The Second Lien Term Loan matures on February 3, 2025 with the entire principal balance due on such maturity date. Voluntary prepayments are permitted, subject to certain prepayment premiums. Principal payments must be made on the Second Lien Term Loan pursuant to an annual excess cash flow calculation. The Second Lien Term Loan is subject to certain affirmative and negative covenants but no financial covenants. At February 3, 2018 there was $625.0 million outstanding on the Second Lien Term Loan.

Future minimum payments

Scheduled future minimum principal payments on debt as of February 3, 2018 are as follows:


Fiscal Year:	Dollars in thousands
2018	$	219,750
2019		19,250
2020		19,250
2021		19,250
2022		69,250
Thereafter		2,405,813

Total	$	2,752,563

Interest Expense, net

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Text Block [Abstract]

Interest Expense, net

7. Interest Expense, net

The following details the components of interest expense for the periods presented (in thousands):


	Thirteen Weeks Ended						Twenty Six Weeks Ended
	August 4, 2018			July 29, 2017			August 4, 2018			July 29, 2017
Interest on debt	$	37,633		$	40,441		$	79,762		$	79,312
Interest on capital lease and financing obligations		1,041			1,053			2,085			2,108
Debt issuance costs amortization		916			1,048			1,930			2,095
Original issue discount amortization		878			1,015			1,979			2,030
Loss on debt extinguishment		19,159			353			19,159			22,463
Capitalized interest		(72	)		(90	)		(157	)		(118	)

Interest expense, net	$	59,555		$	43,820		$	104,758		$	107,890

6. Interest Expense, net

The following details the components of interest expense for the periods presented (in thousands):


	Fiscal Year Ended January 30, 2016			Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Interest on debt	$	127,273		$	122,193		$	163,210
Interest on capital lease and financing obligations		5,003			4,244			4,205
Debt issuance costs amortization		7,408			7,693			4,060
Original issue discount amortization		9,440			9,398			4,403
Charges related to debt refinancing		—			—			21,061
Capitalized interest		(1,288	)		(68	)		(215	)
Unrealized loss on interest rate caps		2,257			73			—
Other interest income		—			(182	)		—

Interest expense, net	$	150,093		$	143,351		$	196,724

Intangible Assets and Liabilities

12 Months Ended

Feb. 03, 2018

Text Block [Abstract]

Intangible Assets and Liabilities

7. Intangible Assets and Liabilities

Intangible assets and liabilities consist of the following (in thousands):


	January 28, 2017
	Gross Carrying Amount			Accumulated Amortization			Net Amount
Goodwill	$	924,134		$	—		$	924,134

Intangible Assets Not Subject to Amortization:
BJ’s trade name	$	90,500		$	—		$	90,500
Intangible Assets Subject to Amortization:
Member relationships		245,000			(146,875	)		98,125
Private label brands		8,500			(3,778	)		4,722
Below market leases		120,182			(60,370	)		59,812

Total intangible assets	$	464,182		$	(211,023	)	$	253,159

Intangible Liabilities Subject to Amortization:
Above market leases	$	(30,515	)	$	12,472		$	(18,043	)


	February 3, 2018
	Gross Carrying Amount			Accumulated Amortization			Net Amount
Goodwill	$	924,134		$	—		$	924,134

Intangible Assets Not Subject to Amortization:
BJ’s trade name	$	90,500		$	—		$	90,500
Intangible Assets Subject to Amortization:
Member relationships		245,000			(163,668	)		81,332
Private label brands		8,500			(4,486	)		4,014
Below market leases		120,182			(71,152	)		49,030

Total intangible assets	$	464,182		$	(239,306	)	$	224,876

Intangible Liabilities Subject to Amortization:
Above market leases	$	(30,515	)	$	14,709		$	(15,806	)

The Company records amortization expenses of intangible assets as a component of SG&A expenses. Member relationships are amortized over a period of 15.3 years, Private label brands are amortized over 12 years and below and above market leases are amortized over the estimated benefit of the intangible asset that was created.

The Company recorded amortization expense of $31.8 million, $28.8 million and $26.0 million as a component of SG&A for the fiscal years ended January 30, 2016, January 28, 2017 and February 3, 2018, respectively. The Company estimates that amortization expense (income) related to intangible assets and liabilities will be as follows in each of the next five fiscal years (in thousands):


	Below Market Leases		Above Market Leases			Other Intangibles		Total
2018	$	8,636	$	(2,162	)	$	15,371	$	21,845
2019		7,633		(2,077	)		13,491		19,047
2020		7,117		(1,846	)		11,862		17,133
2021		6,153		(1,581	)		10,483		15,055
2022		4,507		(1,526	)		9,230		12,211

Commitment and Contingencies

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitment and Contingencies

8. Commitments and Contingencies

The Company is subject to various claims and pending or threatened lawsuits in the normal course of business. The Company is not currently a party to any legal proceedings that it believes would have a material adverse impact on its financial position, results of operations, or cash flows.

8. Commitment and Contingencies

Leases

The Company is obligated under long-term leases for the rental of real estate. In addition, generally the Company is required to pay insurance, real estate taxes and other operating expenses and, in some cases, additional rentals based on a percentage of sales in excess of certain thresholds, or other factors. Many of the leases require escalating payments during the lease term. Rent expense for such leases is recognized on a straight-line basis over the lease term. The initial primary term of the real estate leases (excluding ground leases) ranges from 5 to 25 years. Most of these leases have an initial term of 20 years. The initial primary term of the ground leases ranges from 15 to 44 years, and averages approximately 22 years. As of February 3, 2018, the Company has options to renew all but three of its leases for periods that range from 5 to 65 years, and average approximately 21 years.

Future minimum lease payments of operating leases as of February 3, 2018 were as follows (in thousands):


Fiscal Year	Dollars in Thousands
2018	$	302,622
2019		303,112
2020		292,917
2021		282,214
2022		266,405
Thereafter		1,978,138

Total	$	3,425,408

The payments above do not include future payments due under the leases for two BJ’s clubs, which closed in January 2011. Rent liabilities for the closed locations are included in current and noncurrent closed store obligations on the consolidated balance sheets.

Rental expense under real estate operating leases (including contingent rentals, which were not material) was $287.5 million in 2015, $298.1 million in 2016 and $301.9 million in 2017. These amounts do not include rental expense on equipment and equipment space of $0.8 million in 2015 and $0.7 million for both 2016 and 2017.

Future minimum lease payments of capital leases and financing obligations for arrangements that did not qualify for sale-lease back accounting as of February 3, 2018 are as follows (in thousands):


Fiscal Year	Future minimum payments
2018	$	4,791
2019		4,510
2020		4,807
2021		4,833
2022		4,894
Thereafter		39,333

		63,168
Amount representing interest		(27,466	)

Total	$	35,702

These capital lease and financing obligations are primarily included in other noncurrent liabilities on the consolidated balance sheet.

Legal Contingencies

The Company is involved in various legal proceedings that are typical of a retail business. In accordance with applicable accounting guidance, an accrual will be established for legal proceedings if and when those matters present loss contingencies that are both probable and estimable. The Company does not believe the resolution of any current proceedings will result in a material loss to the consolidated financial statements.

Discontinued Operations

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

9. Discontinued Operations

The following tables summarize the activity for the twenty-six weeks ended August 4, 2018 and July 29, 2017 associated with our discontinued operations, which consist of closing two BJ’s clubs in January 2011 (in thousands):


	Discontinued Operations-Twenty-Six Weeks ended August 4, 2018
	Liabilities February 3, 2018		Charges		Payments/ Increase			Liabilities August 4, 2018		Cumulative Charges to Date, Net
BJ’s clubs	$	8,683	$	399	$	(1,142	)	$	7,940	$	59,998

Current portion	$	2,122						$	2,122
Long-term portion		6,561							5,818

Total	$	8,683						$	7,940


	Discontinued Operations-Twenty-Six Weeks ended July 29, 2017
	Liabilities January 28, 2017		Charges		Payments/ Increase			Liabilities July 29, 2017		Cumulative Charges to Date, Net
BJ’s clubs	$	8,271	$	357	$	(923	)	$	7,705	$	57,190

Current portion	$	2,013						$	2,013
Long-term portion		6,258							5,692

Total	$	8,271						$	7,705

The charges for BJ’s lease obligations are based on the present value of rent liabilities under the relevant leases, including estimated real estate taxes and common area maintenance charges, reduced by estimated income from the potential subleasing of these properties. Charges in both periods represent accretion expense on lease obligations.

On June 12, 2014, the Company entered into a sublease agreement for one of the clubs that pays a portion of BJ’s lease obligation through the end of the lease term. The rental income received from that sublease is included

in the payments referenced in the tables above. During the second half of 2017, the Company experienced a lapse in the sublease rental income which resulted in the eviction of the current tenant. In January 2018, the Company entered into a new sublease agreement for the same property with a new tenant who will continue to pay a portion of the BJ’s lease obligation through the end of the lease term. The interruption of sublease income in the second half of 2017, and adjustment of future rental income from the new sublease agreement signed in January 2018, resulted in an additional charge of $0.7 million to the reserve. In addition, the Company lowered the estimated sublease income at the other existing closed location which resulted in an additional charge of $1.4 million to the reserve.

9. Discontinued Operations

The following tables summarize the activity for 2016 and 2017 associated with discontinued operations, which consist of closing two BJ’s clubs in January 2011 (in thousands):


	Discontinued Operations-2016
	Liabilities January 30, 2016		Charges		Payments/ Increase			Liabilities January 28, 2017		Cumulative Charges to Date, Net
BJ’s clubs	$	9,411	$	802	$	(1,942	)	$	8,271	$	56,833

Current portion	$	2,048						$	2,013
Long-term portion		7,363							6,258

Total	$	9,411						$	8,271


	Discontinued Operations-2017
	Liabilities January 28, 2017		Charges		Payments/ Increase			Liabilities February 3, 2018		Cumulative Charges to Date, Net
BJ’s clubs	$	8,271	$	2,766	$	(2,354	)	$	8,683	$	59,599

Current portion	$	2,013						$	2,122
Long-term portion		6,258							6,561

Total	$	8,271						$	8,683

The charges for BJ’s lease obligations are based on the present value of rent liabilities under the relevant leases, including estimated real estate taxes and common area maintenance charges, reduced by estimated income from the potential subleasing of these properties. Charges in both periods represent accretion expense on lease obligations.

On June 12, 2014, the Company entered into a sublease agreement for one of the clubs that pays a portion of BJ’s lease obligation through the end of the lease term. The rental income received from that sublease is included in the payments referenced in the tables above. During the second half of 2017, the Company experienced a lapse in the sublease rental income which resulted in eviction of the current tenant. In January 2018, the Company entered into a new sublease agreement for the same property which will continue to pay a portion of the BJ’s lease obligation through the end of the lease term. The interruption of sublease income in the second half of 2017, and adjustment of future rental income from the new sublease agreement signed in January 2018, resulted in an additional charge of $0.7 million to the reserve. In addition, the Company lowered the estimated sublease income at the other existing closed location which resulted in an additional charge of $1.4 million to the reserve. The income tax benefit recorded related to loss from discontinued operations was $0.4 million, $0.3 million and $1.1 million for 2015, 2016 and 2017, respectively.

The lease obligations are expected to be paid over the next seven years. The liabilities for the closed club leases are included in current and noncurrent closed store obligations on the consolidated balance sheet.

Contingently Redeemable Common Stock	6 Months Ended	12 Months Ended
Contingently Redeemable Common Stock	Aug. 04, 2018	Feb. 03, 2018
Text Block [Abstract]
Contingently Redeemable Common Stock	10. Contingently Redeemable Common Stock The Company and certain current and former management employees were party to the Management Stockholders Agreement (the “MSA”). All grants of equity by the Company to the employees were governed by the terms of individual equity award agreements and the MSA through the date of the IPO. The MSA specified certain transfer restrictions, tag-along and drag-along rights, put and call rights and various other rights and restrictions applicable to any equity held by employees. The call right permitted the Company to repurchase common stock held by an employee stockholder following a minimum holding period and prior to the expiration of a specified time period following the later of the employee’s termination of employment with the Company or acquisition of the common stock. If the employee’s employment was terminated for cause, the repurchase price was the least of (a) the fair market value as of the repurchase date, (b) the fair market value at issuance or (c) the price paid by the employee stockholder for such shares. If the employee’s employment was terminated other than for cause, the repurchase price was the fair market value as of the repurchase date. The MSA also gave the employees the ability to put any shares back to the Company at fair market value upon death or disability while actively employed. As neither death nor disability while actively employed was a certainty, the shares of common stock held by the employee stockholders were considered to be contingently redeemable common stock and were accounted for outside of stockholders’ equity until the shares of common stock were either repurchased by the Company or the put right terminated. The contingently redeemable common stock was recorded at fair value of the common stock as of the date of issuance. Because meeting the contingency was not probable, the contingently redeemable $10.4 million and $9.0 million of mezzanine equity was recorded on the Company’s consolidated balance sheet related to these agreements as of February 3, 2018 and July 29, 2017, respectively. Both the Company’s repurchase right, and the employee stockholder’s put right terminated upon the consummation of the IPO on June 28, 2018 and reclassified all contingently redeemable mezzanine equity to Common Stock on the Company’s consolidated balance sheet. As of August 4, 2018, there was no contingently redeemable Common Stock outstanding in the Company’s consolidated balance sheet. When the Company exercised its call option to repurchase shares classified outside of stockholders’ equity, it is deemed to be a constructive retirement of the contingently redeemable share for accounting purposes. The Company recorded the excess of the fair value paid to repurchase the share over the carrying value of the contingently redeemable share within additional paid-in capital, as the Company has an accumulated deficit.	10. Contingently Redeemable Common Stock The Company and certain current and former management employees are party to the Management Stockholders Agreement (the “MSA”). All grants of equity by the Company to the employees are governed by the terms of individual equity award agreements and the MSA. The MSA specifies certain transfer restrictions, tag-along and drag-along rights, put and call rights and various other rights and restrictions applicable to any equity held by employees. The call right permits the Company to repurchase common stock held by an employee stockholder following a minimum holding period and prior to the expiration of a specified time period following the later of the employee’s termination of employment with the Company or acquisition of the common stock. If the employee’s employment is terminated for cause, the repurchase price is the least of (a) the fair market value as of the repurchase date, (b) the fair market value at issuance or (c) the price paid by the employee stockholder for such shares. If the employee’s employment is terminated other than for cause, the repurchase price is the fair market value as of the repurchase date. The MSA also gives the employees the ability to put any shares back to the Company at fair market value upon death or disability while actively employed. As neither death nor disability while actively employed is a certainty, the shares of common stock held by the employee stockholders are considered to be contingently redeemable common stock and are accounted for outside of stockholders’ equity until the shares of common stock are either repurchased by the Company or the put right terminates. Both the Company’s repurchase right and the employee stockholder’s put right will terminate upon the consummation of an IPO. The contingently redeemable common stock was recorded at fair value of the common stock at the date of issuance. Because meeting the contingency is not probable, the contingently redeemable common stock is not remeasured to fair value at each reporting date. The Company has recorded $8.1 million and $10.4 million of mezzanine equity on its consolidated balance sheet related to these agreements as of January 28, 2017 and February 3, 2018, respectively. When the Company exercises its call option to repurchase shares classified outside of stockholders’ equity, it is deemed to be a constructive retirement of the contingently redeemable share for accounting purposes. The Company records the excess of the fair value paid to repurchase the share over the carrying value of the contingently redeemable share within additional paid-in capital, as the Company has an accumulated deficit.

Stock Incentive Plans

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Incentive Plans

11. Stock Incentive Plans

On June 13, 2018, the Company’s Board of Directors adopted, and its stockholders approved, the 2018 Incentive Award Plan (the “2018 Plan”). The 2018 Plan provides for the grant of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock appreciation rights, and cash awards. Prior to the adoption of the 2018 Plan, the Company granted stock-based compensation to employees and non-employee directors, respectively, under the 2011 Plan and the 2012 Director Plan. No further grants will be made under 2011 Plan or the 2012 Director Plan.

The 2018 Plan authorizes the issuance of 13,148,058 shares, including 985,369 shares that were reserved but not issued under the 2011 Plan and the 2012 Director Plan. If an award under the 2018 Plan, 2011 Plan or 2012

Director Plan is forfeited, expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2018 Plan. Additionally, shares tendered or withheld to satisfy grant or exercise price, or tax withholding obligations associated with an award under the 2018 Plan, the 2011 Plan or the 2012 Director Plan will be added to the shares authorized for grant under the 2018 Plan. The following shares may not be used again for grant under the 2018 Plan: (1) shares subject to a stock appreciation right, that are not issued in connection with the stock settlement of the SAR on its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan.

The following table summarizes the Company’s stock award activity during the twenty-six weeks ended August 4, 2018 (shares in thousands):


	Stock Options					Restricted Stock
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Grant Date Fair Value
Outstanding, February 3, 2018		8,981		$	4.00		—		$	—
Granted		2,766			16.35		2,943			22.00
Exercised/vested		(3,093	)		2.08		(1,954	)		22.00
Forfeited/canceled		(371	)		6.07		—			—

Outstanding, August 4, 2018		8,283		$	8.74		989		$	22.00

Stock-based compensation expense was $51.2 million and $2.1 million for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively.

Stock-based compensation expense was $52.1 million and $5.7 million for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively.

In connection with the IPO, the Board of Directors granted the following new awards to certain employees under the 2018 Plan, subject to vesting: stock options to purchase 2,510 shares of common stock, with an exercise price of $17.00 and restricted stock in the amount of 2,943 shares with a grant date fair value of $22.00, equivalent to the closing price of the first day of trading.

Treasury Shares Acquired on Restricted Stock Awards

Upon the vesting of 1,954 restricted stock awards, 782 shares in this year’s first six months were reacquired to satisfy employees’ tax withholding obligations. These reacquired shares were recorded as $19.1 million of treasury stock and accordingly, reduced the number of common shares outstanding by 782 shares.

11. Stock Incentive Plans

The Company grants stock-based compensation to employees and non-employee directors, respectively, under the Fourth Amended and Restated 2011 Stock Option Plan of Beacon Holding Inc. (as further amended) (“2011 Plan”), and the 2012 Director Stock Option Plan of Beacon Holding Inc. (as further amended) (“2012 Director Plan”), which as of February 3, 2018 authorizes stock awards to be granted for up to 12,068,364 shares and 350,000, respectively. As of February 3, 2018, there were 326,669 and 276,500 shares available for future grant under the 2011 Plan and the 2012 Director Plan, respectively. All grants of equity awards under the 2011 Plan and 2012 Director Plan are conditioned on the recipient executing the MSA.

The MSA also gives the employee stockholders the ability to put vested options back to the Company at fair value upon death or disability while actively employed. These awards have been classified in the consolidated balance sheet as contingently redeemable common stock and have been presented outside of stockholders’ equity. See Note 10.

Stock option awards are generally granted with 60% of the awarded options vesting over a requisite service period ranging from three to five years and 40% of the awarded options vesting upon achieving pre-determined annual EBITDA targets. The awards contain a vesting catch-up provision on the performance-based portion if cumulative EBITDA targets are achieved. All options have a contractual term of ten years. The Company recognized $2.3 million ($1.4 million post-tax), $11.8 million ($7.1 million post-tax) and $9.1 million ($5.4 million post-tax) of total stock-based compensation for 2015, 2016 and 2017, respectively. As of February 3, 2018, there was approximately $4.0 million of unrecognized compensation cost, which is expected to be recognized over the next three years.

On March 24, 2016, the Company amended the EBITDA targets on options granted prior to August 31, 2015 to make the performance targets more achievable. In addition, performance based awards that remained unvested due to not achieving EBITDA targets in prior fiscal years would vest upon achieving the new targets. The Company accounted for the modification as an improbable to probable award modification and calculated the total fair value of the modified awards to be $9.0 million, of which $7.2 million was recognized in 2016 and $1.8 million was recognized in 2017.

Presented below is a summary of stock option activity and weighted-average exercise prices for year ended February 3, 2018 (options in thousands):


	Number of securities to be issued upon exercise of outstanding options			Weighted- average exercise price		Weighted-average remaining contractual life (in years)
Outstanding, beginning of period		10,430		$	4.50
Granted		350		$	7.00
Exercised		(1,491	)	$	2.67
Forfeited		(308	)	$	4.20

Outstanding, end of period		8,981		$	4.00		6.0

Vested and expected to vest, end of period		8,981		$	4.00		6.0

Exercisable, end of period		6,965		$	3.48		5.4

The total intrinsic value of options exercised in 2015, 2016 and 2017 was $3.5 million, $1.2 million and $7.6 million, respectively. As of February 3, 2018, the total intrinsic value of options vested and expected to vest was $53.9 million. The Company received a tax benefit related to these option exercises of approximately $1.4 million, $0.5 million and $3.1 million in 2015, 2016 and 2017, respectively.

The fair value of the options was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions (no dividends were expected):


	Fiscal Year Ended January 30, 2016	Fiscal Year Ended January 28, 2017	Fiscal Year Ended February 3, 2018
Risk-free interest rate range	1.50% - 1.76%	1.35% - 1.98%	1.40% - 1.40%
Expected volatility factor	35.0%	35.0%	35.0%
Weighted-average expected option life (yrs.)	5.0	6.0	5.7
Weighted-average grant-date fair value	$1.95	$4.40	$2.51

The Company historically has been a private company and lacks certain company-specific historical and implied volatility information. Expected volatility was determined based on the historical and implied volatilities of comparable public companies. The risk-free interest rate was based on United States Treasury yields in effect at the time of the grant for notes with terms comparable to the awards. The expected option life represents an estimate of the period of time options are expected to remain outstanding based upon an average of the vesting and contractual terms of the options. Forfeitures are recorded as incurred.

Income Taxes

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The effective income tax rate is based on estimated income from continuing operations for the year as well as discrete adjustments, if any, in the applicable quarterly periods. Potential discrete adjustments include tax charges or benefits related to stock based compensations, changes in tax legislation, settlements of tax audits and changes in uncertain tax positions, among others.

The Company’s effective income tax rate from continuing operations was 73.7% and 36.0% for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively; and 682% and 36% for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. The change in the effective tax rate for the thirteen and twenty-six weeks ended August 4, 2018, is due to a reduction in the U.S. federal statutory tax rate from 35.0% to 21.0% as part of the U.S. Tax Cuts and Jobs Act (the “TCJA”) that was enacted in December 2017, and a stock option windfall tax benefit recorded in the current period. The Company projects the estimated annual effective tax rate for the year to be 27.2% excluding the tax effect of discrete events.

As of August 4, 2018, no changes had been made to the previously recorded provisional amount of $32.1 million related to the re-measurement of the Company’s deferred tax balances in its consolidated financial statements for the year ended February 3, 2018 due to the TCJA. Any changes to the provisional amounts will be recorded in the period in which the adjustments are made. These changes could arise from additional analysis, changes in assumptions or interpretations the Company has made, additional guidance that may be issued and actions the Company may take as a result of the TCJA.

12. Income Taxes

The provision (benefit) for income taxes from continuing operations includes the following (in thousands):


	Fiscal Year Ended January 30, 2016			Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Federal:
Current	$	27,096		$	42,268		$	1,976
Deferred		(17,400	)		(19,457	)		(33,219	)
State:
Current		6,381			9,230			5,220
Deferred		(4,028	)		(4,073	)		(2,404	)

Total income tax provision (benefit)	$	12,049		$	27,968		$	(28,427	)

A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:


	Fiscal Year Ended January 30, 2016			Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Statutory federal income tax rates		35.0	%		35.0	%		33.7	%
State income taxes, net of federal tax benefit		3.9			4.5			7.5
Effect of federal rate change		—			—			(136.2	)
Work opportunity and solar tax credit		(2.1	)		(1.6	)		(17.9	)
Charitable contributions		(1.4	)		(0.3	)		(1.0	)
Prior year adjustments		0.6			—			(3.2	)
Stock options		—			—			(4.8	)
Other		(3.2	)		0.9			1.2

Effective income tax rate		32.8	%		38.5	%		(120.7	)%

On December 22, 2017, the TCJA was signed into law. The TCJA includes significant changes to the Internal Revenue Code (the “Code”) impacting the taxation of business entities. The most significant change in the TCJA that impacts the Company as of February 3, 2018, is the reduction in the corporate federal income tax rate from 35% to 21% for tax years (or portions thereof) beginning after December 31, 2017. This change in the Code from the TCJA had a material impact on the financial statements in 2017.

ASC Topic 740, Income Taxes (“ASC 740”) requires the tax effects of changes in tax laws must be recognized in the period in which the law is enacted, or December 22, 2017 for the TCJA. ASC 740 also requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. Thus, at the date of enactment, the Company’s deferred taxes were re-measured utilizing the new federal income tax rate of 21%.

The US Securities and Exchange Commission (“SEC”) has recognized the complexity of reflecting the impacts of the TCJA, and on December 22, 2017 issued guidance in Staff Accounting Bulletin No 118 (“SAB 118”) which clarifies accounting for income taxes under ASC 740 if information is not yet available or complete and provides for up to a one-year period in which to complete the required analyses and accounting (the measurement period). SAB 118 describes three scenarios (or “buckets”) associated with a company’s status of

accounting for income tax reform: (1) a company is complete with its accounting for certain effects of tax reform, (2) a company is able to determine a reasonable estimate for certain effects of tax reform and records that estimate as a provisional amount, or (3) a company is not able to determine a reasonable estimate and therefore continues to apply ASC 740, based on the provisions of the tax laws that were in effect immediately prior to the TCJA being enacted.

As of February 3, 2018, the Company had not fully completed its accounting for the tax effects of the enactment of the TCJA since a complete assessment will require additional time, information, and resources than currently available to the Company. The Company’s provision for income taxes for the fiscal year ended February 3, 2018 is based in part on a reasonable estimate of the effects on its existing deferred tax balances. Specifically, the Company recorded a provisional tax amount of $32.1 million to re-measure certain deferred tax assets and liabilities as a result of the enactment of the TCJA. The Company is still analyzing certain aspects of the TCJA and refining the estimate of the expected reversal of its deferred tax balances. This can potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts.

Significant components of the Company’s deferred tax assets and liabilities as of January 28, 2017 and February 3, 2018 were as follows (in thousands):


	January 28, 2017		February 3, 2018
Deferred tax assets:
Self-insurance reserves	$	39,977	$	27,595
Rental step liabilities		28,501		21,336
Compensation and benefits		24,276		15,975
Capital lease and financing obligations		11,274		7,542
Intangible liabilities		7,338		4,408
Closed store obligations		3,363		2,421
Deferred gain amortization		8,223		5,279
Environment clean up reserve		4,401		3,312
Startup costs		5,977		3,675
Lease incentive gain		4,326		3,029
Other		19,077		13,677

Total deferred tax assets	$	156,733	$	108,249


	January 28, 2017			February 3, 2018
Deferred tax liabilities:
Fixed assets	$	116,070		$	79,388
Intangible assets		102,955			62,716
Debt costs		9,190			7,728
Capital lease and financings obligations		10,596			7,014
Other		10,822			8,477

Total deferred tax liabilities		249,633			165,323

Net deferred tax liabilities	$	(92,900	)	$	(57,074	)

The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the temporary differences become deductible. The Company has determined that it is more likely than not that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance has been recorded. In making this determination, the Company considered historical levels of income as well as projections for future periods.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Balance at the beginning of the period	$	5,084		$	4,199
Additions for tax positions taken during prior years		—			607
Additions for tax positions taken during the current year		56			43
Settlements		—			(260	)
Lapses in statute of limitations		(941	)		(232	)

Balance at the end of the period	$	4,199		$	4,357

The total amount of unrecognized tax benefits, reflective of federal tax benefits at January 28, 2017 and February 3, 2018 that, if recognized, would favorably affect the effective tax rate was $3.4 million and $3.9 million, respectively.

As of February 3, 2018, management has determined it is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by as much as $3.2 million, due to the expected resolution of state tax audits and the expiration of statute of limitations. The Company’s tax years from 2012 forward remain open and are subject to examination by the IRS and various state taxing jurisdictions.

The Company classifies interest expense and any penalties related to income tax uncertainties as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods. For the periods ended January 30, 2016 and January 28, 2017, the Company had recognized $0.3 million in interest expense in each year. For the period ended February 3, 2018, the Company recognized $0.7 million in interest expense. As of January 28, 2017, and February 3, 2018, the Company had $0.3 million and $1.0 million, respectively, of accrued interest related to income tax uncertainties.

Retirement Plans	12 Months Ended
Retirement Plans	Feb. 03, 2018
Text Block [Abstract]
Retirement Plans	13. Retirement Plans Under BJ’s 401(k) savings plans, participating employees may make pretax contributions up to 50% of covered compensation subject to federal limits. BJ’s matches employee contributions at 50% of the first six percent of covered compensation. The Company’s expense under these plans was $8.1 million, $8.7 million and $9.6 million for 2015, 2016 and 2017, respectively. The Company has a non-contributory defined contribution retirement plan for certain key employees. Under this plan, BJ’s funds annual retirement contributions for the designated participants on an after-tax basis. For the last two years, the Company’s contributions equaled 5% of the participants’ base salary. Participants become fully vested in their contribution accounts at the end of the fiscal year in which they complete four full fiscal years of service. Pretax expense under this plan was $2.3 million in 2015 and 2016, and $2.4 million in 2017.

Postretirement Medical Benefits

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Retirement Benefits [Abstract]

Postretirement Medical Benefits

13. Postretirement Medical Benefits

Net periodic benefit cost recognized for the thirteen weeks and twenty-six weeks ended August 4, 2018 and July 29, 2017 consists of the following (in thousands):


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 4, 2018			July 29, 2017			August 4, 2018			July 29, 2017
Company service cost	$	26		$	40		$	72		$	91
Interest cost		38			38			75			74
Net prior service credit amortization		(174	)		(174	)		(347	)		(347	)
Amortization of unrecognized gain		(95	)		3			(158	)		(125	)

Net periodic postretirement benefit cost	$	(205	)	$	(93	)	$	(358	)	$	(307	)

The components of net periodic benefit cost are included in the line item SG&A in the income statement.

14. Postretirement Medical Benefits

The Company has a defined benefit postretirement medical plan which covers employees who retire after age 55 with at least 10 years of service, who are not eligible for Medicare, and who participated in a Company-sponsored medical plan. Spouses and eligible dependents are also covered under the plan. Amounts contributed by retired employees under this plan are based on years of service prior to retirement. The plan was amended in 2015 to limit eligibility to only those who meet the eligibility criteria, of age and years of service, by June 30, 2017. The plan can no longer accept any new enrollees with estimated future benefit payments ending by June 30, 2027.

The Company recognizes the funded status of the postretirement medical plan in the balance sheet. The funded status represents the difference between the projected benefit liability obligation of the plan and the fair value of the plan’s assets. Previously unrecognized deferred amounts such as actuarial gains and losses and the impact of plan changes are included in accumulated other comprehensive income. Changes in these amounts in future years are adjusted as they occur through accumulated other comprehensive income. The discount rates presented in the tables below were selected by referencing yields on high quality corporate bonds, using the Citigroup Pension Yield Curve.

Obligation and Funded Status

The change in obligation and funded status of the plan at January 28, 2017 and February 3, 2018 was as follows (in thousands):


	Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Change in Obligation
Projected benefit obligation at beginning of period	$	6,182		$	5,927
Company service cost		204			182
Interest cost		142			147
Plan participants’ contributions		302			316
Net actuarial gain/(loss)		590			(392	)
Benefit payments made directly by the Company		(1,493	)		(820	)

Projected benefit obligation at end of period	$	5,927		$	5,360

Change in Plan Assets
Fair value of plan assets at beginning of period	$	—		$	—
Company contributions		1,191			504
Plan participants’ contributions		302			316
Benefit payments made directly by the Company		(1,493	)		(820	)
Fair value of plan assets at end of period		—			—

Funded status at end of year	$	(5,927	)	$	(5,360	)

The funded status of the plan as of February 3, 2018 is recognized as a net liability in other noncurrent liabilities on the consolidated balance sheet. The Company expects to contribute approximately $0.7 million to the postretirement plan in 2018.

Components of Net Periodic Benefit Cost and Amounts Recognized in Other Comprehensive Income

Net periodic postretirement benefit cost for the last three fiscal years consists of the following (in thousands):


	Fiscal Year Ended January 30, 2016			Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Company service cost	$	491		$	204		$	182
Interest cost		198			142			147

		689			346			329
Net prior service credit amortization		(229	)		(693	)		(693	)
Amortization of unrecognized gain		(490	)		(510	)		(250	)

Net periodic postretirement benefit cost	$	(30	)	$	(857	)	$	(614	)

Discount rate used to determine cost		2.76%			2.45%			2.63%
Health care cost trend rates		7.00%			7.00%			7.00%

The change in accumulated other comprehensive income (“AOCI”), gross of tax, consists of the following (in thousands):


	Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
AOCI at the beginning of period	$	(5,675	)	$	(3,882	)
Net prior service credit amortization		693			693
Amortization of net actuarial gain		510			250
Net actuarial (gain) loss for the period		590			(392	)

AOCI at the end of the period	$	(3,882	)	$	(3,331	)

The Company expects to amortize approximately $0.3 million of net actuarial gain from AOCI into net periodic postretirement benefit cost in 2018.

Assumptions

The following weighted-average assumptions were used to determine the postretirement benefit obligations:


	January 28, 2017			February 3, 2018
Discount rate		2.63	%		3.00	%
Health care cost trend rate assumed for next year		7.00	%		6.50	%
Ultimate trend rate		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2021			2024

Assumed health care cost trend rates have a significant effect on the amounts reported for the post-retirement health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects as of February 3, 2018:


Effect of 1% Increase in Medical Trend Rates (in Thousands)
Postretirement benefit obligation increases by	$	283
Total of service and interest cost increases by		20
Effect of 1% Decrease in Medical Trend Rates (in Thousands)
Postretirement benefit obligation decreases by	$	268
Total of service and interest cost decreases by		19

Cash Flows

The estimated future benefit payments for the postretirement health care plan at February 3, 2018 are (in thousands):


Fiscal Year	Future minimum payments
2018	$	733
2019		800
2020		727
2021		712
2022		734
2023 to 2027		2,717

Asset Retirement Obligations

12 Months Ended

Feb. 03, 2018

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

15. Asset Retirement Obligations

The following is a summary of activity relating to the liability for asset retirement obligations, which the Company will incur in connection with the future removal of gasoline tanks and related infrastructure from gasoline stations and are included in other noncurrent liabilities on the consolidated balance sheet (in thousands):


	Fiscal Year Ended January 30, 2016			Fiscal Year Ended January 28, 2017		Fiscal Year Ended February 3, 2018
Balance, beginning of period	$	17,018		$	10,714	$	11,846
Accretion expense		1,436			895		959
Liabilities incurred during the year		581			237		193
Change in estimated liability		(8,054	)		—		—
Settlement of existing liabilities		(267	)		—		—

Balance, end of period	$	10,714		$	11,846	$	12,998

In 2015, the Company changed its estimate of future cash flows for the removal of the gasoline tanks and other infrastructure at the stations. The revised estimate was based on the actual costs incurred in 2015 and other recent periods to remove these assets. This change in estimate resulted in a reduction to the asset retirement obligation liability of $8.1 million, of which $7.1 million was recorded as a reduction in SG&A expenses and $1.0 million was recorded as a reduction of the related net assets recorded in property and equipment on the consolidated balance sheet.

Accrued Expenses and Other Current Liabilities

12 Months Ended

Feb. 03, 2018

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

16. Accrued Expenses and Other Current Liabilities

The major components of accrued expenses and other current liabilities are as follows (in thousands):


	January 28, 2017		February 3, 2018
Deferred membership fee income	$	116,483	$	126,216
Employee compensation		80,903		82,037
Insurance reserves		41,340		40,620
Repairs and maintenance		23,758		18,260
Outstanding checks		21,713		34,002
BJ’s Perks rewards		21,125		22,736
Professional services		19,062		7,626
Fixed asset accruals		16,915		19,405
Accrued interest		10,192		25,428
Sales and use taxes		10,058		16,151
Gift card liability		10,138		10,578
Utilities, advertising and other		86,010		92,708

	$	457,697	$	495,767

The following table summarizes membership fee income activity for each of the last two fiscal years (in thousands):


	Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
Deferred MFI, beginning of period	$	117,806		$	116,483
Cash received from members		253,912			268,327
Revenue recognized in earnings		(255,235	)		(258,594	)

Deferred MFI, end of period	$	116,483		$	126,216

Other Noncurrent Liabilities

12 Months Ended

Feb. 03, 2018

Payables and Accruals [Abstract]

Other Noncurrent Liabilities

17. Other Noncurrent Liabilities

The major components of other noncurrent liabilities are as follows (in thousands):


	January 28, 2017		February 3, 2018
Workers’ compensation and general liability	$	71,243	$	72,317
Rent escalation liability		70,082		76,867
Capital leases and financing obligations		35,783		35,147
Deferred gain on sale leasebacks		18,929		17,639
Above market leases		18,043		15,806
Lease incentives		15,511		14,985
Asset retirement obligations		11,846		12,998
Postretirement medical benefit and other		30,231		21,634

	$	271,668	$	267,393

Book Overdrafts	12 Months Ended
Book Overdrafts	Feb. 03, 2018
Accounting Changes and Error Corrections [Abstract]
Book Overdrafts	18. Book Overdrafts Banking arrangements provide for the daily replenishment of vendor payable bank accounts as checks are presented. The balances of checks outstanding in these bank accounts, which represent book overdrafts, totaled approximately $62.5 million at January 28, 2017 and approximately $70.0 million at February 3, 2018. Amounts payable to merchandise vendors are included in accounts payable on the consolidated balance sheets and were approximately $40.8 million and $36.0 million at the end of 2016 and 2017, respectively. Amounts payable to non-merchandise vendors are included in accrued expenses and other current liabilities on the consolidated balance sheets and were approximately $21.7 million and $34.0 million at the end of 2016 and 2017, respectively. Changes in these balances are reflected in operating activities in the consolidated statements of cash flows.

Derivative Financial Instruments	12 Months Ended
Derivative Financial Instruments	Feb. 03, 2018
Investments, All Other Investments [Abstract]
Derivative Financial Instruments	19. Derivative Financial Instruments Interest Rate Caps Both the Company’s First Lien Term Loan and Second Lien Term Loan are subject to interest rates based on LIBOR. The Company had interest rate hedge arrangements that effectively capped a portion of its interest rate exposure on three-month LIBOR at 1.5% through March 31, 2016 (the “Interest Rate Caps”). The aggregate notional amount of the Interest Rate Caps was $1.7 billion. The Company also had a 2.5% forward cap arrangement covering $1.0 billion notional of the outstanding principal balance of the First and Second Lien Term Loans from April 1, 2016 through September 29, 2017. Hedge accounting for these arrangements was not elected and therefore all unrealized gains and losses required to value the instruments to fair value were recorded in earnings for the period of the change. Unrealized losses were $2.0 million for 2015, and not material for 2016 and 2017. Unrealized losses were recorded in interest expense in order to value the cap arrangements at fair value. Interest Rate Swaps The Company was party to two separate interest rate swap arrangements whereby the Company fixed a portion of its interest rate exposure on one-month LIBOR (the “Interest Rate Swaps”). Each of these Interest Rate Swaps was for a notional amount of $100.0 million and required us to pay the counterparty a fixed interest rate and receive from the counterparty a floating interest rate based on one-month LIBOR. On September 9, 2015, $0.3 million was paid to terminate one of the swap agreements that had an original termination date of March 10, 2016. The realized loss of $0.3 million was included in interest expense. The remaining swap agreement expired on March 30, 2016. The Company elected hedge accounting for the Interest Rate Swap agreements, and as such, the effective portion of the gains and losses was recorded as a component of other comprehensive income. There were $1.0 million of unrealized gains recorded in 2015, and immaterial amounts for 2016 and 2017. Unrealized gains were recorded in other comprehensive income on the Interest Rate Swaps.

Fair Value Measurements

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

14. Fair Value Measurements

The fair value of the Company’s debt was determined based on quoted market prices and on borrowing rates available to the Company at August 4, 2018, February 3, 2018 and July 29, 2017. These inputs are considered to be Level 2. At August 4, 2018, the fair value of total debt was $1,982.7 million compared to a carrying value of $1,980.7 million. At February 3, 2018, the fair value of total debt was $2,750.2 million compared to a carrying value of $2,752.6 million. At July 29, 2017, the fair value of total debt was $2,753.8 million compared to a carrying value of $2,812.2 million.

20. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair values of the Company’s derivative instruments are based on quotes received from third-party banks and represent the estimated amount the Company would pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparties. These inputs are considered to be Level 2.

Financial Assets and Liabilities

The gross carrying amount and fair value of the Company’s debt at February 3, 2018 are as follows (in thousands):


	Carrying Amount		Fair Value
First Lien Term Loan	$	1,910,563	$	1,908,174
Second Lien Term Loan		625,000		625,000
ABL Facility		217,000		217,000

Total Debt	$	2,752,563	$	2,750,174

The fair value of debt was determined based on quoted market prices and on borrowing rates available to the Company at February 3, 2018. These inputs are considered to be Level 2.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-recurring basis. See Note 2 for further information.

The Company believes that the carrying amounts of its other financial instruments, including cash, accounts receivable, and accounts payable approximates their carrying value due to the short-term maturities of these instruments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Earnings Per Share

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Earnings Per Share [Abstract]

Earnings Per Share

15. Earnings Per Share

The following table summarizes the computation of basic and diluted net income per share attributable to common stockholders:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	August 4, 2018		July 29, 2017		August 4, 2018		July 29, 2017
Weighted-average common shares outstanding, used for basic computation		106,914,966		88,443,279		97,734,132		88,323,926
Plus: Incremental shares of potentially dilutive securities stock options		—		3,302,290		4,997,608		—
Weighted-average number of common and dilutive potential common shares outstanding		106,914,966		91,745,569		102,731,740		88,323,926

Stock options not included in the computation of diluted earnings were 3,155,531 and 2,276,941 as of the end of the second quarter of fiscal year 2018 and the end of the second quarter of fiscal year 2017, respectively.

21. Earnings Per Share

The table below reconciles basic weighted-average common shares outstanding to diluted weighted-average common shares outstanding for 2015, 2016 and 2017:


	Fiscal Year Ended January 30, 2016		Fiscal Year Ended January 28, 2017		Fiscal Year Ended February 3, 2018
Weighted-average common shares outstanding, used for basic computation		87,869,243		88,163,992		88,385,864
Plus: Incremental shares of potentially dilutive securities
Stock options:		2,372,111		2,572,087		3,877,713

Weighted-average number of common and dilutive potential common shares outstanding		90,241,354		90,736,079		92,263,577

Stock options not included in the computation of diluted earnings were 2,681,287, 3,416,707 and 811,272 as of the end of 2015, 2016 and 2017 respectively.

Condensed Financial Information of Registrant (Parent Company Only)

12 Months Ended

Feb. 03, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of Registrant (Parent Company Only)

22. Condensed Financial Information of Registrant (Parent Company Only)

BJ’S WHOLESALE CLUB HOLDINGS, INC.

(PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

(Amounts in thousands, except per share amounts)


	Fiscal Year Ended January 28, 2017			Fiscal Year Ended February 3, 2018
ASSETS
Investment in subsidiaries	$	(339,066	)	$	(1,019,419	)

Contingently redeemable common stock, par value $0.01; 1,043 and 1,456 shares issued and outstanding:		8,145			10,438

STOCKHOLDERS’ DEFICIT
Common stock, par value $0.01; 305,000 shares authorized; 87,073 shares issued and outstanding		871			871
Additional paid-in capital		7,931			4,537
Accumulated deficit		(356,013	)		(1,035,265	)

Total contingently redeemable common stock and stockholders’ deficit	$	(339,066	)	$	(1,019,419	)

BJ’S WHOLESALE CLUB HOLDINGS, INC.

(PARENT COMPANY ONLY)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share amounts)


	Fiscal Year Ended January 30, 2016		Fiscal Year Ended January 28, 2017		Fiscal Year Ended February 3, 2018
Equity in net income of subsidiaries	$	24,104	$	44,224	$	50,301
Net income		24,104		44,224		50,301
Net income per share attributable to common stockholders’:
Basic	$	0.27	$	0.50	$	0.57
Diluted		0.26		0.48		0.54
Weighted average number of common shares outstanding:
Basic		87,869		88,164		88,386
Diluted		90,241		90,736		92,264

A statement of cash flows has not been presented as BJ’s Wholesale Club, Holdings, Inc. did not have any cash as of, or for the years ended January 30, 2016, January 28, 2017 or February 3, 2018. See Note 4 for dividends paid to parent.

Basis of Presentation

These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of BJ’s Wholesale Club

Holdings, Inc. (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the Company. The ability of BJ’s Wholesale Club Holdings, Inc.’s operating subsidiaries to pay dividends may be restricted due to terms of the subsidiaries’ first and second lien term loans and ABL credit agreements, as defined in Note 5. For example, the covenants of the ABL credit agreement restrict the payment of dividends to, among other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if there is no event of default, availability under the ABL credit agreement is greater than 15% of the lesser of the commitments under the ABL credit agreement and the borrowing base under the ABL credit agreement for 6 months following such dividend or distribution and, if availability is less than 20% of the lesser of the commitments under the ABL credit agreement and the borrowing base under the ABL credit agreement, a 1.00 to 1.00 (or higher) fixed charge coverage ratio for 12 months after giving effect to such dividend or distribution, and (iii) following this offering, a basket for up to 6.0% per annum of the net proceeds received by or contributed to the borrower’s common stock from certain of such public offerings. The covenants of the first and second lien term loan facilities restrict the payment of dividends and distributions to, among other exceptions, (i) a $25.0 million general basket, (ii) a basket for unlimited dividends and distributions if no event of default exists and the pro forma total net leverage ratio is less than or equal to 4.25 to 1.00, (iii) a “growing” basket based on, among other things, retained excess cash flow subject to no event of default and compliance with a pro forma interest coverage ratio of greater than or equal to 2.00 to 1.00, and (iv) following this offering, a basket for 6% per annum of the net cash proceeds received from such qualified IPO that are contributed to the borrower in cash. As of February 3, 2018, the amount of net income free of such restrictions and available for payment by BJ’s Wholesale Club Holdings, Inc. as dividends was $50.3 million, and the total amount of restricted net assets of consolidated subsidiaries of BJ’s Wholesale Club Holdings, Inc. was $144.0 million.

All subsidiaries of BJ’s Wholesale Club, Inc. are consolidated.

These condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method.

Subsequent Events	6 Months Ended	12 Months Ended
Subsequent Events	Aug. 04, 2018	Feb. 03, 2018
Subsequent Events [Abstract]
Subsequent Events	17. Subsequent Events On August 13, 2018, the Company amended and repriced its First Lien Term Loan (“Term Loan Amendment”) and in conjunction with the Term Loan Amendment repaid $350.0 million of the First Lien Term Loan using funds from its ABL facility.. As amended, the First Lien Term Loan has an initial principal amount of $1.54 billion and an applicable rate of 3.00% for LIBOR loans and 2.00% for base rate loans (in each case, with a 0.25% stepdown at first lien net leverage of 3.00 to 1.00), provided that until delivery of financial statements for the first full fiscal quarter ending after August 13, 2018, the applicable rate is 3.00% for LIBOR loans and 2.00% for base rate loans. The Company paid debt costs of $1.8 million and accrued interest of $1.2 million at closing. On August 15, 2018, the Company closed on the sale of the Hooksett, New Hampshire location and received proceeds of $6.6 million in exchange for all assets related to the club. The Company has no future obligations, outstanding liens or continuing involvement with this location. On August 17, 2018, the Company amended its ABL facility to extend the maturity date from February 3, 2022 to August 17, 2023 and to reduce the applicable interest rates and letter of credit fees on the facility. As amended, the applicable rate on revolving credit loans is LIBOR plus a range of 125 to 175 basis points or base rate plus a range of 25 to 75 basis points and the applicable rate on term loans is LIBOR plus a range of 200 to 250 basis points or base rate plus a range of 100 to 150 basis points, in all cases based on excess availability. The applicable rate of LIBOR and base rate loans at all levels of excess availability steps down by 12.5 basis points upon achieving total net leverage of 3.00 to 1.00. The amendment also reduced the fees applicable to letters of credit (including further stepdowns upon achieving total net leverage of 3.00 to 1.00). The amended interest rate margins and fee levels represent a reduction of between 12.5 basis points and 75 basis points from prior equivalent levels. Upon closing of the amendment and until February 1, 2019, the applicable margin for revolving loans will be set at LIBOR plus 125 basis points or base rate plus 25 basis points and the applicable margin for term loans will be set at LIBOR plus 200 basis points or base rate plus 100 basis points (including, if applicable, any stepdowns based on achieving total net leverage of 3.00 to 1.00). The Company paid debt costs of $750,000 at closing.	23. Subsequent Events The Company has evaluated subsequent events from the balance sheet date through April 18, 2018, the date at which the consolidated financial statements were available to be issued, and, with respect to the stock split described below, through June 15, 2018. Stock Split On June 15, 2018, the Company effected a seven to one stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s Contingently Redeemable Common Stock (see Note 10). Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the contingently redeemable common stock conversion ratios. In connection with the stock split, the Company effected an increase in the number of authorized common shares from 20,000,000 shares to 305,000,000 shares. 24. Subsequent Events (Unaudited) 2018 Incentive Award Plan On June 13, 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Incentive Award Plan (the “2018 Plan”). The 2018 Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs, restricted stock, dividend equivalents, stock payments, restricted stock units, or RSUs, performance shares, other incentive awards, stock appreciation rights, or SARs, and cash awards. The number of shares initially reserved for issuance under the 2018 Plan is the sum of (i) 12,162,689 and (ii) any shares which as of the effective date are available for issuance under the 2011 Plan or 2012 Director Plan, or are subject to awards under the 2011 Plan or 2012 Director Plan which are forfeited or lapse unexercised and which following the effective date are not issued under the 2011 Plan or 2012 Director Plan, provided, however, no more than 13,148,058 shares may be issued upon the exercise of incentive stock options. The shares may be authorized but unissued shares, or shares purchased in the open market. If an award under the 2018 Plan, 2011 Plan or 2012 Director Plan is forfeited, expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2018 Plan. Additionally, shares tendered or withheld to satisfy grant or exercise price or tax withholding obligations associated with an award under the 2018 Plan, the 2011 Plan or the 2012 Director Plan will be added to the shares authorized for grant. The following shares may not be used again for grant under the 2018 Plan: (1) shares subject to a stock appreciation right, or SAR, that are not issued in connection with the stock settlement of the SAR on its exercise and (2) shares purchased on the open market with the cash proceeds from the exercise of options under the 2018 Plan, 2011 Plan or 2012 Director Plan. 2018 Employee Stock Purchase Plan On June 14, 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”), which will become effective the day prior to the first day of public trading of the company’s equity securities offered in this offering. The aggregate number of shares of common stock that will be reserved for issuance under our ESPP will be equal to the sum of (i) 973,014 shares and (ii) an annual increase on the first day of each calendar year beginning in 2019 and ending in 2028 equal to the lesser of (A) 486,507 shares, (B) 0.5% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares as determined by the board of directors.

Revenue Recognition

6 Months Ended

Aug. 04, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

3. Revenue Recognition

At the beginning of fiscal year 2018, the Company adopted the provisions of ASC No. 606, Revenue from Contracts with Customers, and related amendments (“ASC 606”) using the modified retrospective adoption method. The following describes the changes to the Company’s accounting policies due to the adoption of ASC 606:

Revenue Recognition

The Company uses the five-step model to recognize revenue:

1)	Identify the contract with the customer

2)	Identity the performance obligation(s)

3)	Determine the transaction price

4)	Allocate the transaction price to each performance obligation if multiple obligations exist

5)	Recognize the revenue as the performance obligations are satisfied

Performance Obligations

The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods or services to the customer.

Merchandise sales – The Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment. At point of sale, the performance obligation is satisfied because control of the merchandise transfers to the customer. Sales of merchandise at the Company’s clubs and gas stations, excluding sales taxes, represent approximately 98% of the Company’s net sales and approximately 95% of the Company’s total revenues. Sales taxes are recorded as a liability at the point of sale. Revenue is recorded at the point of sale based on the transaction price on the merchandise tag, net of any applicable discounts, sales taxes and expected refund. For e-commerce sales, the Company recognizes sales when control of the merchandise is transferred to the customer, which is typically at the shipping point.

BJ’s Perks Rewards – The Company has a customer loyalty program called the BJ’s Perks Rewards^® Program for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company’s BJ’s Perks Rewards^® members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ’s. The Company’s My BJ’s Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ’s and 1% or 2% cash back on purchases made with the card outside of BJ’s. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued.

Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company’s clubs or the Company’s website. 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 reward dollars earned in deferred revenue at the time the reward dollars are earned.

Royalty revenue received in connection with the co-brand credit card program is variable consideration and is considered constrained until the card holder makes a purchase.

The Company’s total deferred revenue related to the outstanding BJ’s Perks Rewards^® was $12.9 million at August 4, 2018. The timing of revenue recognition of these reward dollars is driven by actual customer activities, such as redemptions and expirations. The Company recognized $22.0 million of royalty revenue in the first half of 2018. The Company expects to recognize $8.9 million of the deferred revenue at August 4, 2018 in fiscal year 2018, and the remainder will be recognized in the years thereafter.

Membership – The Company charges a membership fee to its customers. That fee allows customers to shop in the Company’s clubs, shop on the Company’s website and purchase gas at the Company’s gas stations for the duration of the membership, which is 12 months. Because the Company has the obligation to provide access to its clubs, website 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. The Company’s deferred revenue related to membership fees was $129.9 million at August 4, 2018.

Gift Card Programs – The Company sells gift cards that allow the customer to redeem the card for future purchases equal to the amount of the original purchase price of the gift card. Revenue from gift card sales is recognized upon redemption of the gift card because the Company’s performance obligation to redeem the gift card for merchandise is satisfied when the gift card is redeemed. Historically, the Company has recognized breakage under the remote model, which recognizes breakage income when the likelihood of the customer exercising its remaining rights becomes remote. Under the new guidance the Company recognizes breakage in proportion to its rate of gift card redemptions. This change in breakage recognition model resulted in a $1.8 million increase to accumulated deficit upon adoption and had an immaterial impact on the Company’s results of operations for the twenty-six weeks ended August 4, 2018. Deferred revenue related to gift cards was $8.8 million immediately after the adoption and $9.5 million at August 4, 2018. The Company recognized $21.4 million of revenue from gift card redemptions in the first half of 2018 and expects to recognize approximately $9.0 million of the second quarter deferral in fiscal year 2018.

Determine the Transaction Price

The transaction price is the amount of consideration the Company expects to receive under the arrangement. The Company is required to estimate variable consideration (if any) and to factor that estimate into the determination of the transaction price. The Company may offer sales incentives to customers, including discounts. For retail transactions, the Company has significant experience with return patterns and relies on this experience to estimate expected returns when determining the transaction price.

Returns and Refunds – The Company’s products are generally sold with a right of return and may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. The Company records an allowance for returns based on current period revenues and historical returns experience. The Company analyzes actual historical returns, current economic trends and changes in sales volume and acceptance of the Company’s products when evaluating the adequacy of the sales returns allowance in any accounting period.

Customer Discounts – Discounts given to customers are usually in the form of coupons and instant markdowns are recognized as redeemed and recorded in contra revenue accounts, as they are part of the transaction price of the merchandise sale. Manufacturer coupons that are available for redemption at all retailers are not reduced from the sale price of merchandise.

Agent Relationships

Ancillary Business Revenue – The Company enters into certain agreements with service providers that offer goods and services to the Company’s members. These service providers sell goods and services including home

improvement services, vision care and cell phones to the Company’s customers. In exchange, the Company receives payments in the form of commissions and other fees. The Company evaluates the criteria outlined in ASC 606-10-55, Principal versus Agent Considerations, in determining whether it is appropriate in these arrangements to record the gross amount of merchandise sales and related costs, or the net amount earned as commissions. When the Company is considered the principal in a transaction, revenue is recorded gross; otherwise, revenue is recorded on a net basis. The majority of the Company’s ancillary business revenue is recorded on a net basis. Commissions received from these service providers are considered variable consideration and are constrained until the third-party customer makes a purchase from one of the service providers.

Significant Judgments

Standalone Selling Prices – For arrangements that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation on a relative standalone selling price basis.

Costs Incurred to Obtain a Contract – Incremental costs to obtain contracts are not material to the Company.

Policy Elections

In addition to those previously disclosed, the Company has made the following accounting policy elections and practical expedients:

Portfolio Approach – The Company uses the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition.

Taxes – The Company excludes from the transaction price any taxes collected from customers that are remitted to taxing authorities.

Shipping and Handling Charges – Charges that are incurred before and after the customer obtains control of goods are deemed to be fulfillment costs.

Time Value of Money – The Company’s payment terms are less than one year from the transfer of goods. Therefore, the Company does not adjust promised amounts of consideration for the effects of the time value of money.

Disclosure of Remaining Performance Obligations – The Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts that are one year or less in term. Additionally, the Company does not disclose the aggregate amount of the transaction price allocated to remaining performance obligations when the transaction price is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a good or service that forms part of a series of distinct goods or services.

Disaggregation of Revenue

The Company’s club retail operations, which represent substantially all of the consolidated total revenues, are the Company’s only reportable segment. All of the Company’s identifiable assets are located in the United States. The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.

The following table summarizes the Company’s percentage of sales disaggregated by category for the thirteen and twenty-six weeks ended August 4, 2018:


Edible Grocery	23	%
Perishables	29	%
Non-Edible Grocery	21	%
General Merchandise	13	%
Gasoline and Other Ancillary Services	14	%

Assets Held for Sale	6 Months Ended
Assets Held for Sale	Aug. 04, 2018
Discontinued Operations and Disposal Groups [Abstract]
Assets Held for Sale	16. Assets Held for Sale The Company’s club in Hooksett, New Hampshire was relocated to Manchester, New Hampshire in March 2018. The Company owns the land and building at the former Hooksett, New Hampshire location and is pursuing opportunities to sell this location. During the first quarter of 2018, the Company recorded an impairment loss of $3.0 million on the fixed assets of the Hooksett, New Hampshire location in order to lower the carrying value of the fixed assets to its estimated fair value less costs to sell. This charge is included within SG&A in the income statement. At August 4, 2018, the remaining value related to the club in Hooksett, New Hampshire that is recorded as assets held for sale on the balance sheet is $6.6 million. The value of assets held for sale is based on current market conditions, prices of similar assets in similar condition and expected proceeds from the sale of the assets, representative of Level 3 inputs on the fair value hierarchy.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

Accounting Policies [Abstract]

Basis of Presentation

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 generally accepted accounting principles in the United States of America. References to “BJ’s” or the “Company” refer to BJ’s Wholesale Club Holdings, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

The consolidated balance sheet as of February 3, 2018 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the quarter ended August 4, 2018 are not necessarily indicative of future results or results to be expected for the full year ending February 2, 2019. The Company’s business, in 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.

You should read these statements in conjunction with the Company’s audited consolidated financial statements and related notes starting in page F-1 of the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on June 28, 2018 (the “Prospectus”).

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal year 2015 (“2015”) consists of the 52 weeks ended January 30, 2016, Fiscal year 2016 (“2016”) consists of the 52 weeks ended January 28, 2017, and fiscal year 2017 (“2017”) consists of the 53 weeks ended February 3, 2018.

Estimates Included in Financial Statements

Estimates Included in Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and stockholders’ equity, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these consolidated financial statements include, but are not limited to, revenue recognition; vendor rebates and allowances; estimating inventory reserves; estimating impairment assessments of goodwill, intangible assets, and other long-lived assets; estimating self-insurance reserves; estimating income taxes and equity-based compensation. Actual results could differ from those estimates.

Segment Reporting

Segment Reporting

The Company’s club retail operations, which represent substantially all of the Company’s consolidated total revenues, are the Company’s only reportable segment. All of the Company’s identifiable assets are located in the United States. The Company does not have significant sales outside the United States, nor does any customer represent more than 10% of total revenues for any period presented.

The following table summarizes the percentage of net sales by category:


	Fiscal Year
	2015 % of Total			2016 % of Total			2017 % of Total
Edible Grocery		24	%		25	%		24	%
Perishables		30	%		29	%		29	%
Non-Edible Grocery		21	%		22	%		21	%
General Merchandise		14	%		14	%		14	%
Gasoline & Other Ancillary Services		11	%		10	%		12	%

Concentration Risk

Concentration Risk

An adverse change in the Company’s relationships with its key suppliers could have a material effect on the business and results of operations of the Company. Currently, one distributor consolidates a substantial majority of perishables for shipment to the clubs. While the Company believes that such a consolidation is in its best interest overall, a prolonged disruption in logistics processes could materially impact sales and profitability for the near term.

All of the warehouse clubs are located in the eastern United States. Sales from the New York metropolitan area made up approximately 25% of net sales in 2015, 2016 and 2017.

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash held in financial institutions. The Company considers the credit risk associated with these financial instruments to be minimal. Cash is held by financial institutions with high credit ratings and the Company has not historically sustained any credit losses associated with its cash balances.

Cash and Cash Equivalents

Cash and Cash Equivalents

Highly liquid investments with a maturity of three months or less at the time of purchase are considered to be cash equivalents. Book overdrafts not subject to offset with other accounts with the same financial institution are classified as accounts payable.

Accounts Receivable

Accounts Receivable

Accounts receivable consists primarily of credit card receivables and receivables from vendors related to rebates and coupons and is stated net of allowances for doubtful accounts of $1.3 million at January 28, 2017 and $1.2 million at February 3, 2018. The determination of the allowance for doubtful accounts is based on BJ’s historical experience applied to an aging of accounts and a review of individual accounts with a known potential for write-off.

Merchandise Inventories

Merchandise Inventories

Inventories are stated at the lower of cost, determined under the average cost method, or net realizable value. The Company recognizes the write-down of slow-moving or obsolete inventory in cost of sales when such write-downs are probable and estimable. The Company writes down inventory for estimated shrinkage for the period between physical inventories based on historical results of previous physical inventories, shrinkage trends or other judgments management believes to be reasonable under the circumstances.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Buildings and improvements are depreciated over estimated useful lives of 33 years.

Interest related to the development of buildings is capitalized during the construction period. Leasehold costs and improvements are amortized over the remaining lease term (which includes renewal periods that are reasonably assured) or the asset’s estimated useful life, whichever is shorter. Furniture, fixtures and equipment are depreciated over estimated useful lives, ranging from three to ten years. Depreciation expense was $145.7 million in 2015, $149.5 million in 2016 and $138.0 million in 2017.

Certain costs incurred in connection with developing or obtaining computer software for internal use are capitalized. Capitalized software costs are included in furniture, fixtures, and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which is three to seven years. Software costs not meeting the criteria for capitalization are expensed as incurred.

Expenditures for betterments and major improvements that significantly enhance the value and increase the estimated useful life of the assets are capitalized and depreciated over the new estimated useful life. Repairs and maintenance costs on all assets are expensed as incurred.

Deferred Issuance Costs

Deferred Offering Costs

The Company capitalized certain legal, professional, accounting and other third-party fees that were directly associated with the IPO as deferred offering costs. Upon the consummation of the IPO, $47.2 million were recorded in stockholders’ deficit as a reduction of additional paid-in capital.

Deferred Issuance Costs

The Company defers costs directly associated with acquiring third-party financing. Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt and debt issuance costs associated with the ABL are recorded within other assets. Debt issuance costs are amortized over the term of the related financing arrangements on a straight-line basis, which is materially consistent with the effective interest method. Amortization of deferred debt issuance costs is recorded in interest expense and was $7.4 million in 2015, $7.7 million in 2016 and $4.1 million in 2017.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived trade name intangible assets are not subject to amortization. The Company assesses the recoverability of its goodwill and trade name annually in the fourth quarter or whenever events or changes in circumstances indicate it may be impaired. The Company has determined it has one reporting unit for goodwill impairment testing purposes.

The Company may assess its goodwill for impairment initially using a qualitative approach (“step zero”) to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and circumstances that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any impairment. The Company may also elect to initially perform a quantitative analysis instead of starting with step zero. The quantitative assessment for goodwill is a two-step assessment. “Step one” requires comparing the carrying value of a reporting unit, including goodwill, to its fair value. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and no further testing is required. If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is to measure the amount of impairment loss, if any. “Step two” compares the implied fair value of goodwill to the carrying amount of goodwill. The implied fair value of goodwill is determined by a hypothetical purchase price allocation using the reporting unit’s fair value as the purchase price. If the carrying amount of goodwill exceeds the implied fair value, an impairment charge is recorded to write down goodwill to its implied fair value and is recorded as a component of selling, general and administrative expense (“SG&A”). The Company assessed the recoverability of goodwill in 2015, 2016 and 2017 and determined that there was no impairment.

The Company assesses the recoverability of its trade name whenever there are indicators of impairment, or at least annually in the fourth quarter. If the recorded carrying value of the trade name exceeds its estimated fair value, the Company records a charge to write the intangible asset down to its estimated fair value as a component of SG&A. The Company assessed the recoverability of the BJ’s trade name and determined that its estimated fair value exceeded its carrying value and that no impairment was necessary in 2015, 2016 or 2017.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

The Company reviews the realizability of long-lived assets periodically and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Current and expected operating results and cash flows and other factors are considered in connection with management’s reviews. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows of individual clubs and consolidated net cash flows for long-lived assets not identifiable to individual clubs. Impairment losses are measured as the difference between the carrying amount and the estimated fair value of the assets being evaluated. No impairment charges were recorded in 2015, 2016 or 2017.

Asset Retirement Obligations

Asset Retirement Obligations

An asset retirement obligation represents a legal obligation associated with the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development or normal operation of that long-lived asset. The Company recognizes asset retirement obligations in the period in which they are placed in service, if a reasonable estimate of fair value can be made. The asset retirement obligation is subsequently adjusted for changes in fair value. The associated estimated asset retirement costs are capitalized in leasehold improvements and depreciated over their useful life. The Company’s asset retirement obligations relate to the future removal of gasoline tanks and related assets from gasoline stations. See Note 15 for further information on the amounts accrued.

Self-Insurance Reserves

Self-Insurance Reserves

The Company is primarily self-insured for workers’ compensation, general liability claims and medical claims. Reported reserves for these claims are derived from estimated ultimate costs based upon individual claim file reserves and estimates for incurred but not reported claims. The Company carries stop-loss insurance on its workers’ compensation and general liability claims to mitigate its exposure to large claims.

Revenue Recognition

Revenue Recognition

Revenue is recognized from the sale of merchandise, net of estimated returns, at the time of purchase by the customer in the club. In the limited instances when the customer is not able to take delivery at the point of sale, revenue from the sale of merchandise is not recognized until title and risk of loss pass to the customer. For sales of merchandise on the Company’s website, revenue is also recognized when title and risk of loss pass to the customer, which is normally at the time the merchandise is received by the customer. Sales incentives redeemable only at BJ’s, such as coupons and instant rebates, are recorded as a reduction of net sales.

The Company evaluates whether it is appropriate to record the gross amount of merchandise or service sales and related costs or the net amount earned as commission. Generally, when the Company is considered the primary obligor in the transaction, revenue is recorded at the gross sales price. If the Company is not considered the primary obligor, as in the case of third party ancillary services such as vision care, travel and insurance that are offered in club or through bjs.com, the net amount retained is recorded.

Membership fee income (“MFI”) is recognized on a straight-line basis over the life of the membership, which is typically 12 months.

The Company’s BJ’s Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ’s. The Company’s My BJ’s Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ’s and 1% or 2% cash back on purchases made with the card outside of BJ’s. Cash back is in the form of electronic awards issued in $20 increments that may be used in-club at the register and expire six months from the date issued. The Company accounts for the awards as a reduction of net sales, with the related liability classified within other current liabilities. This liability was $21.1 million in 2016 and $22.7 million in 2017.

BJ’s gift cards are available for purchase at all clubs. Revenue from gift card sales is recognized upon redemption of the gift card. Revenue from gift card and rewards breakage is recorded in net sales when the likelihood of redemption is remote and the Company does not have a legal obligation to escheat the value of unredeemed gift cards and rewards to any jurisdiction. Breakage recorded in 2015, 2016 and 2017 was not material.

The sales returns reserve, which reduces sales and cost of sales for the estimated impact of returns and also includes an estimate for membership cancellations, was $2.3 million in 2015, $3.7 million in 2016 and $3.4 million in 2017.

Warranty Programs

Warranty Programs

The Company passes on any manufacturers’ warranties to the members. In addition, BJ’s includes an extended warranty on tires sold at the clubs, under which BJ’s customers receive tire repair services or tire replacement in certain circumstances. This warranty is included in the sale price of the tire and it cannot be declined by the customers. The Company is fully liable for claims under the tire warranty program. As the primary obligor in these arrangements, associated revenue is recognized on the date of sale and an estimated warranty obligation is accrued based on claims experience. The liability for future claims under this program is not material to the financial statements.

Extended warranties are also offered on certain types of products such as electronics and jewelry. These warranties are provided by a third party at fixed prices to BJ’s. No liability is retained to satisfy warranty claims under these arrangements. The Company is not the primary obligor under these warranties, and as such net revenue is recorded on these arrangements at the time of sale. Revenue from warranty sales is included in net sales on the income statement.

Cost of Sales

Cost of Sales

The Company’s cost of sales includes the direct costs of sold merchandise, which includes customs, taxes, duties and inbound shipping costs, inventory shrinkage and adjustments and reserves for excess, aged and obsolete inventory. Cost of goods sold also includes certain distribution center costs and allocations of certain indirect costs, such as occupancy, depreciation, amortization, labor and benefits.

Presentation of Sales Tax Collected from Customers and Remitted to Governmental Authorities

Presentation of Sales Tax Collected from Customers and Remitted to Governmental Authorities

In the ordinary course of business, sales tax is collected on items purchased by the members that are taxable in the jurisdictions when the purchases take place. These taxes are then remitted to the appropriate taxing authority. These taxes collected are excluded from revenues in the financial statements.

Vendor Rebates and Allowances

Vendor Rebates and Allowances

The Company receives various types of cash consideration from vendors, principally in the form of rebates, based on purchasing or selling certain volumes of product, time-based rebates or allowances, which may include product placement allowances or exclusivity arrangements covering a predetermined period of time, price protection rebates and allowances for retail price reductions on certain merchandise and salvage allowances for product that is damaged, defective or becomes out-of-date.

Such vendor rebates and allowances are recognized based on a systematic and rational allocation of the cash consideration offered to the underlying transaction that results in progress by BJ’s toward earning the rebates and allowances, provided the amounts to be earned are probable and reasonably estimable. Otherwise, rebates and allowances are recognized only when predetermined milestones are met. The Company recognizes product placement allowances as a reduction of cost of sales in the period in which the product placement is completed.

Time-based rebates or allowances are recognized as a reduction of cost of sales over the performance period on a straight-line basis. All other vendor rebates and allowances are recognized as a reduction of cost of sales when the merchandise is sold or otherwise disposed.

Cash consideration is also received for advertising products in publications sent to BJ’s members. Such cash consideration is recognized as a reduction of SG&A to the extent it represents a reimbursement of specific, incremental and identifiable SG&A costs incurred by BJ’s to sell the vendors’ products. If the cash consideration exceeds the costs being reimbursed, the excess is characterized as a reduction of cost of sales. Cash consideration for advertising vendors’ products is recognized in the period in which the advertising takes place.

Manufacturers' Incentives Tendered by Consumers

Manufacturers’ Incentives Tendered by Consumers

Consideration from manufacturers’ incentives (such as rebates or coupons) is recorded gross in net sales when the incentive is generic and can be tendered by a consumer at any reseller and the Company receives direct reimbursement from the manufacturer, or clearinghouse authorized by the manufacturer, based on the face value of the incentive. If these conditions are not met, such consideration is recorded as a decrease in cost of sales.

Leases

Leases

The majority of leases are accounted for as operating leases in accordance with ASC 840, Leases. Assets subject to an operating lease and the related lease payments are not recorded on the balance sheet. Rent expense is recognized on a straight-line basis over the expected lease term. The lease term begins on the date the Company becomes legally obligated for the rent payments or takes possession of the property, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in economic penalty.

Sometimes, the Company is involved in the construction of leased clubs. In these situations, the Company evaluates whether it is deemed the owner of the club for accounting purposes. If deemed the owner of the construction project, the Company capitalizes the construction costs of the club on the balance sheet and records financing obligations equal to the cash proceeds or fair value of the assets received from the landlord. Upon the completion of the project, a sale-leaseback analysis is performed pursuant to current leasing guidance to determine if the assets and related financing obligations can be removed from the balance sheet. Assuming the assets and liabilities are removed from the balance sheet, leases are classified as either operating or capital. In some of the leases, the Company is reimbursed only a portion of the construction cost or the lease has terms that fix the rental payments for a significant percentage of the leased asset’s economic life. These items generally are considered continuing involvement which precludes removing the assets and related financing obligation from the balance sheet when construction is complete. Rent expense is not reported for any properties which are considered owned for accounting purposes. Rental payments under these leases are allocated as a reduction of the financing obligation and interest expense.

Assets recorded under capital lease and financing obligations are included in land and buildings on the balance sheet and are depreciated over their estimated useful lives using the straight-line method. As of January 28, 2017, and February 3, 2018, the gross amount of assets recorded under capital lease and financing obligations was $49.4 million. Related accumulated depreciation for these assets as of January 30, 2016, January 28, 2017 and February 3, 2018 was $8.1 million, $10.2 million and $12.2 million, respectively.

Preopening Costs

Preopening Costs

Preopening costs consist of direct incremental costs of opening or relocating a facility and are expensed as incurred.

Advertising Costs

Advertising Costs

Advertising costs generally consist of efforts to acquire new members and typically include media advertising (some of which is vendor-funded). BJ’s expenses advertising as incurred as a component of SG&A. Advertising expenses were approximately 0.4%, 0.5% and 0.6% of net sales in 2015, 2016 and 2017, respectively.

Stock-Based Compensation

Stock-Based Compensation

The fair value of service-based employee awards is recognized as compensation expense on a straight-line basis over the requisite service period of the award. The fair value of the performance-based awards is recognized as compensation expense ratably over the service period of each performance tranche. The fair value of the stock-based awards is determined using the Black-Scholes option pricing model. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise and the associated volatility.

The estimated fair value of the Company’s stock is determined by its board of directors, with input from management and considering third-party valuations of common stock. See Note 11 for an additional description of the accounting for stock-based awards.

Earnings Per Share

Earnings Per Share

Basic net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity. Basic income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity. Basic loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the weighted average number of common shares outstanding for the period, including contingently redeemable common stock recorded outside of stockholders’ equity.

Diluted net income per share attributable to common stockholders is calculated by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted income from continuing operations per share attributable to common stockholders is calculated by dividing income from continuing operations available to common stockholders by the diluted weighted average number of common shares outstanding for the period. Diluted loss from discontinuing operations per share attributable to common stockholders is calculated by dividing loss from discontinuing operations available to common stockholders by the diluted weighted average number of common shares outstanding for the period.

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected, scheduling of anticipated reversals of taxable temporary differences, and considering prudent and feasible tax planning strategies.

The Company records liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized on ultimate settlement. The actual benefits ultimately realized may differ from the estimates. In future periods, changes in facts, circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in income tax expense and liability in the period in which such changes occur.

Any interest or penalties incurred related to unrecognized tax benefits are recorded as a component of the provision for income tax expense.

Derivative Financial Instruments

Derivative Financial Instruments

All derivatives are recognized as either assets or liabilities on the consolidated balance sheet and measurement of these instruments is at fair value. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive income and are recognized in the consolidated statement of operations when the hedged item affects earnings. Any portion of the change in fair value that is determined to be ineffective is immediately recognized in earnings as SG&A. Derivative gains or losses included in accumulated other comprehensive income are reclassified into earnings at the time the hedged transaction occurs as a component of SG&A.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company uses a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1, quoted market prices in active markets for identical assets or liabilities.

●

Level 2, observable inputs other than quoted market prices included in Level 1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data.

●

Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Comprehensive Income

Comprehensive Income

Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than with equity holders, and would normally be recorded in the consolidated statements of stockholders’ equity and the consolidated statements of comprehensive income. Other comprehensive income consists of unrealized gains and losses from derivative instruments designated as cash flow hedges, and postretirement medical plan adjustments.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The accounting policies the Company follows are set forth in the Company’s audited financial statements for the fiscal year ended February 3, 2018 and included in the Company’s final Prospectus. There have been no material changes to these accounting policies, except as noted below for new accounting pronouncements adopted at the beginning of fiscal year 2018.

Revenue from Contracts with Customers (ASC No. 606)

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASC No. 606”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP as of its effective date.

The Company adopted the new guidance at the beginning of fiscal year 2018 using the modified retrospective adoption method and recognized the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of accumulated deficit. The new guidance was only applied to contracts not completed as of the initial date of application. Additionally, any contract that was modified prior to the adoption date has been reflected in the cumulative adjustment giving effect to the aggregate effect of all contract modifications prior to the initial application date. The impact of employing this practical expedient for contract modifications is immaterial. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to the Company’s February 3, 2018 balance sheet for the adoption of the standard update was as follows (in thousands):


	Balance as of February 3, 2018			Adjustment for new Standard			Balance as of February 4, 2018
Prepaid expenses and other current assets	$	81,972		$	7,820		$	89,792
Accrued expenses and other current liabilities		495,767			16,645			512,412
Deferred income taxes		57,074			(2,463	)		54,611
Accumulated deficit		(1,036,012	)		(6,362	)		(1,042,374	)

The impact of the adoption of the standards update on the Company’s Consolidated Statement of Operations for the thirteen and twenty-six weeks ended August 4, 2018, resulted in a decrease to cost of sales and net sales of $1.1 million and $5.7 million, respectively, due to recording the allowance for returns reserve on a gross basis. The remaining impact of the adoption of the standards on the Company’s Consolidated Statement of Operations for the thirteen weeks and twenty-six weeks ended August 4, 2018 was immaterial.

The impact of the adoption of the standards update on the Company’s Consolidated Balance Sheet as of August 4, 2018 was as follows (in thousands):


	As of August 4, 2018,
	As Reported			Balance without adoption			Effect of change
Prepaid expenses and other current assets	$	69,116		$	62,270		$	6,846
Accrued expenses and other current liabilities		473,500			457,531			15,969
Deferred income taxes		52,988			55,586			(2,598	)
Accumulated deficit		(1,033,851	)		(1,027,325	)		(6,526	)