BJ's Wholesale Club Inc reported a 37 percent drop in quarterly profit on Wednesday, hurt by a charge for a proposed legal settlement regarding worker pay.

The warehouse club operator also reiterated a profit forecast for the fourth-quarter, which includes the busy holiday shopping season, that could possibly exceed analysts expectations. It expects sales to rise more than they did in the third quarter, helped by demand for general merchandise.

BJ's shares fell 1.8 percent to $35.70 in premarket trading.

Warehouse clubs such as Costco Wholesale Corp , Wal-Mart Stores Inc's Sam's Club and BJ's Wholesale have attracted shoppers seeking low prices on staple items, like bread and paper towels, as the downturn pressures household budgets.

People pay an annual fee to shop in the clubs and receive discounts on everything from cartons of fresh fruit to flat panel TVs and gasoline for their cars.

But the clubs are facing greater challenges compared with a year earlier when high gas and food prices spurred their sales figures. This year, prices for gas and food have moderated.

BJ's Profit for the third quarter that ended October 31 fell to $17.7 million, or 32 cents a share, from $28.2 million, or 48 cents a share, a year earlier.

Excluding the 13 cent charge related to the proposed settlement of a legal claim, the profit was 45 cents a share, in line with the analysts' average forecast, according to Thomson Reuters I/B/E/S.

As BJ's reported earlier this month, sales rose 2 percent to $2.45 billion, while sales at its clubs open at least a year, or same-store sales, fell 2.5 percent.

In the recently completed quarter, BJ's said sales were stronger for cereal, computer equipment, frozen food, and health and beauty aids compared with a year ago. Sales were weaker for electronics, jewelry, milk, oils and shortenings, sporting goods, toys and trash bags.

For the fourth quarter, it expects net sales to increase 10.5 percent to 12.5 percent and same-store sales to rise 5 percent to 7 percent. It said it still expects fourth-quarter earnings per share of 96 cents to $1.00, compared with analysts' estimate of 97 cents.

Headed into the holiday season, the retailer said general merchandise pricing has been extremely aggressive.

(Reporting by Dhanya Skariachan and Nicole Maestri; Editing by Derek Caney, Dave Zimmerman)

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