BJ’s Wholesale Club Holdings, Inc (NYSE: BJ) has maintained a strategy that is based on transformation ever since business conditions came under pressure from the virus outbreak. The recent increase in the company’s e-commerce sales underscores the relevance of those efforts.

Read management/analysts’ comments on BJ’s Q2 2020 earnings

The warehouse club chain had an upbeat start to the year in terms of stock performance and almost doubled its market value since then. Experts are of the view that the uptrend would continue in the coming months. The modest valuation makes the stock an attractive investment option, though a near-term pullback cannot be ruled out. The consensus target price represents a 23% upside.

Comps Surge

BJ’s witnessed a consistent uptick in comparable-store sales, driven mainly by a marked increase in traffic to its digital platform due to the growing adoption of online shopping. When the company reports its third-quarter results on November 19, earnings and revenues are expected to increase to $0.64 per share and $3.7 billion respectively compared to last year.

But the management sees no room for complacency, given the challenging market conditions, and is busy executing an extensive capital spending plan that covers almost all areas of the business, including geographical expansion, merchandise, membership, and e-commerce. Also, it is focused on enhancing customer experience through initiatives like raising omnichannel capabilities, streamlining assortment, and expanding the own-brands portfolio.

Digital Push

Complementing the growth initiatives, the management recently strengthened the leadership team by appointing Home Depot (HD) veteran Monica Schwartz as senior vice president and chief digital officer, to take forwards the online shift.

“In this environment, we will look for additional opportunities to accelerate our transformation, remake our balance sheet, and drive step-change levels of profitable growth. We hope to look back on this turbulent period as our moment in time to radically improve our business,” said BJ’s CEO Lee Delaney on the latest earnings conference call.

Both revenues and the bottom-line expanded in the second quarter and topped Wall Street’s expectations, as they did in the previous quarter. Adjusted earnings nearly doubled to 77 cents aided by lower operating costs and strong sales performance. Revenues advanced 18% to around $4 billion.

Peer Performance

The performance of rival store operator Costco Wholesale Corp. (COST) in the most recent quarter was almost similar, with all the business metrics registering double-digit annual growth. E-commerce sales surged a whopping 90% and total comparable sales grew at a record pace of 11%.

From BJ’s Q2 2020 earnings conference call:

“…I believe that we have turned the corner from merely reacting to the pandemic, to proactively transforming our business to enable a much brighter future for the Company. We have a radically different company than we had just six short months ago. In many areas of the Company, we are now years ahead of our — of how we thought our transformation would evolve, and we are actively looking for ways to increase the pace of progress.”

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The stock reached an all-time high in August after the blockbuster second-quarter results, before retreating to the pre-peak levels in the following weeks. The shares have gained about 50% in the past twelve months. They closed the last trading session down 1%.