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E-commerce Strength to Fuel Costco's (COST) Q4 Earnings

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Costco Wholesale Corporation’s (COST - Free Report) fourth-quarter fiscal 2021 results, slated to release on Sep 23 after the closing bell, are likely to reflect strength in e-commerce sales. Consumers’ increased shift to online purchasing owing to the coronavirus outbreak seems to have worked in favor of Costco.

A Look at E-commerce Sales

Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether offline or online. The company’s acquisition of Innovel Solutions — a leading provider of third-party end-to-end logistics solutions (now called Costco Logistics) — has boosted its e-commerce capabilities and aided it to sell "big and bulky" items.

To drive its online sales, the company in collaboration with Uber Technologies launched a grocery delivery pilot in 25 locations across Texas. This allows members to get on-demand grocery delivery within hours, using Uber and Uber Eats mobile apps. The company is also on path to gradually provide curbside pickup facility to customers.

Costco has been gradually expanding its e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia. The company has been ramping up investments in the wake of rising competition from the likes of Dollar Tree (DLTR - Free Report) , Dollar General (DG - Free Report) and Target (TGT - Free Report) .

We note that e-commerce comparable sales rose 2.8% during the retail month of August. This followed an increase of 7.4% and 20.8% in July and June, respectively. Last year in August, Costco registered an increase of 101.9% in e-commerce comparable sales, thanks to pandemic-driven online demand.

Impressively, Costco in its recent August sales release highlighted that for the 16 weeks fourth quarter ended Aug 29, 2021, e-commerce comparable sales increased 11.2%.

How Are Estimates Shaping Up?

The Zacks Consensus Estimate for Costco’s fourth-quarter revenues is pegged at $62,812 million, indicating an improvement of 17.7% from the prior-year reported figure. The consensus mark for earnings per share has increased by a couple of cents over the past seven days to $3.55. The figure suggests growth of roughly 13.4% from the year-ago period.

Costco has an Earnings ESP of +0.11% and a Zacks Rank #2 (Buy).

The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

An Overall Picture

Costco’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. In fact, the company’s strategy to sell products at discounted prices has helped draw customers, who have been seeking both value and convenience amid the ongoing crisis. Cumulatively, these factors have been aiding this operator of membership warehouses in registering impressive sales run.