updated 3/7/2007 4:57:26 PM ET 2007-03-07T21:57:26

BJ’s Wholesale Club Inc. said Wednesday its fourth-quarter profit plunged 77 percent, but a stronger-than-expected sales gain in February helped lift shares of the nation’s third-biggest retail warehouse club.

BJ’s reported the widely expected decline in quarterly earnings as its new chief executive offered details of merchandise and pricing changes he hopes will spur a turnaround. Disappointing sales led his predecessor to abruptly resign in November.

BJ’s profit tumbled to $11.9 million, or 18 cents per share, for the quarter ended Feb. 3 from $51.6 million, or 76 cents per share, in the year-ago period.

Revenue at Natick-based BJ’s grew 13 percent to $2.43 billion from $2.14 billion a year ago.

Same-store sales, or sales in stores open at least one year, rose 1.5 percent during the quarter.

BJ’s announced separately that same-store sales rose at a 3 percent clip in February under the management of Herb Zarkin, who was named interim CEO in November and given the post permanently on March 1. In January, Zarkin said BJ’s would close 46 of its money-losing in-store pharmacies, as well as two of BJ’s ProFoods Restaurant Supply locations.

UBS analyst Neil Currie said in a research note that the February sales performance beat Wall Street expectations of a 1.7 percent gain, offering signs of a possible turnaround from the disappointing fourth quarter.

“All things considered, this was expected to be a messy quarter, and indeed it was,” Currie said.

Restructuring costs shaved 44 cents pBOSer share off earnings — including expenses for closing the pharmacies and restaurant supply stores, as well as asset impairment, severance and a higher credit card claim reserve.

The profit totaled 59 cents a share, excluding those costs and stock-based compensation expenses and income from an extra week in the latest quarter.

Analysts polled by Thomson Financial expected net income of 66 cents per share.

BJ’s shares rose 63 cents, or 2 percent, to close at $31.53 on the New York Stock Exchange. They have traded in a 52-week range of $25.18 to $34.04.

Zarkin said Wednesday he will try to slowly turn the company around by reducing the number of brands and sizes BJ’s carries to open up shelf space for additional product lines.

Zarkin also plans to eliminate certain BJ’s-branded private label items in cases where it might be more profitable to offer a single product from a non-BJ’s brand, rather than taking up shelf space with both brands.

BJ’s also may reduce the number of items carrying big price tags but low profit margins, such as flat-panel televisions, and emphasize higher-margin jewelry and apparel.

“I don’t want anybody to believe a miracle is going to occur tomorrow morning or next week,” Zarkin told analysts in a conference call. “But you should see improvements on a quarterly basis.”

BJ’s also plans to draw shoppers to items available temporarily at bargain prices. Such so-called “treasure hunt” items are more common at Costco Wholesale Corp., one of BJ’s larger rivals along with Wal-Mart Stores Inc.’s Sam’s Club.

Zarkin’s predecessor, Mike Wedge, resigned after a 34 percent drop in third-quarter profit.

Since taking over, the 68-year-old Zarkin has returned former BJ’s executives who worked with him when he was top executive at Waban Inc. before that firm spun off BJ’s in 1997. He retains the chairman title he held before he returned as BJ’s CEO.

In its current fiscal year ending Feb. 2, 2008, BJ’s expects earnings per share of $1.60 to $1.70, with a profit of 18 cents to 22 cents per share in the first quarter — in line with analysts’ expectations.

BJ’s, with more than 20,000 employees and nearly $8 billion in 2005 revenue, operates 172 warehouse clubs in 16 states, stretching from Maine to Florida, with the heaviest concentration in the Northeast.

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