So they’re staying within the higher tiers, but they’re upgrading within that. And that higher-tier credit card comes with double the lifetime value compared to the lower-tier credit card. So this is all about structural long-term growth, and it’s all about what the credit card program has been about all along is growing the quality of the membership for the long term. So it’s not going to have a meaningful change over the next two, three, six months. But over the long term, the lifetime value we’re generating will pay dividends for a long time to come.
Kate McShane: Thank you.
Operator: Thanks, Kate. Our next question comes from the line of Michael Baker from D.A. Davidson. Your line is open.
Michael Baker: Okay. Great. Thanks, guys. I want to ask you about what you’re seeing competitively in terms of price with some disinflation. It sounds like you’re investing in price and flowing that disinflation through to customers. Are you seeing that from competitors? Can you talk about price gaps. Didn’t seem to drive much incremental traffic, I guess. So, I presume your competitors are doing the same, but just curious what you’re seeing there.
Bob Eddy: Hey, Mike, thanks for the question. Our pricing metrics remain very strong. As we’ve told you, we’ve made considerable investments last year as we felt there was an opportunity to meaningfully press our advantage against some of our competitors. We’ve continued to make investments this year in pricing, and we’ve highlighted some of those in our prepared remarks. It’s also important to note that shelf prices are not the sole determinant of value in a member’s minds, right? Shelf prices are one thing, promotion is another. And we’ve continued to invest in new and innovative promotions, one of which we highlighted in our prepared remarks today. Talked a lot about the co-brand credit card and the increase in value provided to our members there.
So, we feel like we’re in a great place from an overall metrics perspective. And all of that is translated into the gains in traffic and market share that we we’ve talked about. Our competitors, I think, are acting pretty rationally at this point in time, and I don’t see that as a change. I think that’s been happening for a while now, and I would expect that to be the base case going forward. So we’re pretty proud of where we are, and we will continue to invest in ways to keep that value flowing to our members, because that underpins our entire business.
Michael Baker: Got it. Okay. That makes sense. If I could ask one more follow-up? I think it was — I didn’t know if I quite got the answer, but the — can you talk about the pace of comps throughout the quarter, please?
Laura Felice: Yeah. Hey, Mike, it’s Laura. So, as we travel through Q2, the front half of the quarter was certainly more challenging than where we exited from a comp cadence. And that’s no different than the storyline out there from everybody else. Weather was certainly an impact. We talked about that in the prepared remarks. So, May and June kind of performed similarly and July was the strongest.
Michael Baker: Even with the weather — I’m up here in Boston, it was the wettest July in a long time. Even with that poor weather in July, July was still better?
Laura Felice: Yes, that’s right.
Bob Eddy: Yes, that’s right. And to some degree, go back to what I talked about in the gas business, Mike, it’s certainly that’s a great way that we source traffic. And last year, we were definitely getting extra traffic in May and June, that was difficult to lap. So we estimate that had an impact on those months as well.
Michael Baker: Yeah, understood. Okay. Thank you.
Bob Eddy: Thanks, Mike.
Operator: Thanks, Michael. Our next question comes from the line of Mark Carden from UBS. Your line is open.
Mark Carden: Good morning. Thanks so much for taking the questions. So to start, what are you seeing in terms of initial renewals from some of your customers that signed up at discounted rates last year? Have they shifted at all from what you’ve historically seen? And how is your member growth trending from new club contributions versus existing club contributions? Thanks.
Bob Eddy: Hey, Mark, thanks for your question. As we’ve talked about a couple of times, we’re very happy with where we are from a membership perspective in growing the membership and the context beneath there with growing our higher tiers and growing engagement and growing our renewal rates. As we said, we expect to maintain our 90% renewal rate. That is a great thing for us to do. As you know, that’s an all-time high for us. And sort of 800 or 900 basis points above where we were several years ago. And over that same period of time, not only have we grown the tendered renewal rate, but we’ve grown the first year renewal rate from something around 50% to something around 70%. And we haven’t really seen a change in that trend either.
We’re doing a wonderful job engaging all of our membership, both new and tenured. Our new clubs are an integral part of what we’re trying to do here at BJ’s and growing our overall chain. We gave you a little bit of context around the importance of those new clubs and the growth that they’re providing with nearly $100 million of EBITDA for those clubs that have been opened since 2016. That really is because we are doing a wonderful job attracting, engaging and retaining the members in those clubs. We’re showing them great assortments. We are integrating the digital experience much better in our new clubs. And we’re operating those clubs very, very effectively from the day that they opened through today. So, we’re proud of our real estate strategy and our execution of that strategy.
We’re hopeful we can do even better, and we know that it’s powering our business going forward.
Mark Carden: Great. That’s helpful. And then as a follow-up, just from a wage standpoint, do you see much risk for the environment requiring another round of investments on that front?
Bob Eddy: Yes, it’s a good question. I don’t know what the future holds for us, Mark, but our team members, first and foremost, are excellent. For those listening today, thank you for being with us, and thank you for doing what you do every day to take care of our members. We’ve made considerable investments over the past several years, as you know, Mark, from following our story. We will continue to invest in our team members, both in the field, in our distribution centers, in our club support center. But as we sit here today, the dynamics are a bit different than they were a couple of years ago, right? We are fully staffed. We’re finding great talented folks that come and work for us. And our churn has decreased over the past couple of years as well.
So, we feel like we’re well positioned. We’ll continue to execute. But we know that the wage environment is dynamic and wages aren’t going to go down. So, I would expect some continued pressure as we go forward. We’ll figure out our way to manage that in the context of our overall P&L. I think we’ve shown a good track record of being able to manage through up cycles and down cycles and still hit our numbers. So, I’m very proud of what our team has been able to do this quarter. And again, thanks to those listening.
