PriceSmart Reports Mixed 1Q

Zacks

Retail warehouse stores operator PriceSmart, Inc. (PSMT) recently reported first quarter fiscal 2013 results along with net sales and comparable sales figures for the month of December 2012.

Quarter Details

PriceSmart reported adjusted earnings (excluding special items) of 66 cents per share in the first quarter of fiscal 2013, surpassing the Zacks Consensus Estimate of 63 cents by 4.8%. Earnings grew 40.4% from the prior-year quarter earnings of 47 cents, driven by solid top-line growth.

The company reported total revenue of $535.3 million in the first quarter, up 12.1% from the prior-year quarter due to 11.8% rise in net warehouse club sales to $523.6 million in the quarter. Revenue, however, lagged the Zacks Consensus Estimate of $537 million by 0.3%. The company had 30 operating clubs at the end of November 30, 2012, compared with 29 in the prior-year period.

The company has cash and cash equivalents of $84.4 million as of November 30, 2012, compared with $91.2 million as of August 31, 2012.
 
December 2012 comparable sales

Concurrent with first quarter results, PriceSmart also announced net sales for December 2012. The company reported 11.6% growth in net sales to $253.7 million for the month, continuing with its trend of reporting double-digit growth.

The company reported 13.7% year-over-year increase in comparable warehouse sales for 29 warehouse clubs for the four weeks ended December 30, 2012. The company had previously reported a 13.2% year-over-year increase in net sales for the month of November 2012.

San Diego-based PriceSmart has been reaping the benefits of a shift in consumer preference. Consumers are shifting toward lower-priced brands and private-label merchandise sold by the company due to slow economic recovery, low employment level and reduced consumer spending. This business model helps PriceSmart to consistently generate strong sales, earn profits and offset low margins.

PriceSmart carries a Zacks Rank #4 (Sell), whereas its competitor, Family Dollar Stores Inc. (FDO) carries a Zacks Rank #5 (Strong Sell).

Volatile foreign exchange is a matter of concern, as the company has significant international presence.


 

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