BJ's Wholesale Club Inc. (BJ), the No. 3 U.S. warehouse club operator, Tuesday posted a 13.8 percent increase in quarterly profit, helped by improved merchandise and operations.

But the company's stock fell 1.8 percent as a larger-than-expected rise in U.S. producer prices in October raised inflation fears and pulled down retail stocks.

Earnings rose to $23.2 million, or 33 cents per share, in the third quarter ended Oct. 30, from $20.4 million, or 29 cents per share, a year earlier

Analysts on average forecast 31 cents a share, according to Reuters Estimates.

Sales rose 9.8 percent to $1.8 billion. Sales at stores open at least year, a key measure for a retailer, rose 6.1, helped slightly by gasoline sales.

BJ's operates gas stations at 80 of its 153 warehouse clubs. As gasoline prices (search) have surged this year, some consumers have moved to warehouse clubs from traditional gas stations in order to save money.

The company expects same-store sales (search) to rise 5 percent to 7 percent in the fourth quarter, including a 1 percent boost from gasoline sales.

By month, same store sales are expected to be up 2 percent to 4 percent in November, 6 percent to 7 percent in December and 7 percent to 9 percent in January, company executives said during a conference call with analysts.

Total sales are expected to be up 9 percent to 11 percent. Analysts on average had forecast an 11 percent increase, according to Reuters Estimates. The company has not been able to open new clubs as quickly as expected, Michael Wedge, chief executive, said when asked about the lower sales guidance.

Earnings for the year are expected to be $1.65 to $1.69 per share, including one-time items.

In 2005, same-store sales are expected to be up 4 percent to 6 percent, with earnings per share of $1.83 to $1.90, the company said.

BJ's shares were down 55 cents at $30.04 on Tuesday on the New York Stock Exchange.