PriceSmart's Sept Sales Rise Y/Y

Zacks

San Diego-based retail warehouse stores operator, PriceSmart, Inc. (PSMT) recently announced net sales for September 2012. The company reported 14.1% growth in net sales to $167.0 million for the month, continuing with its trend of reporting double-digit growth.

PriceSmart reported 10.0% year-over-year increase in comparable warehouse sales for 28 warehouse clubs for the four weeks ended September 30, 2012.

The company had previously reported a 12.3% year-over-year increase in net sales for the month of August 2012. For its third quarter of 2012, PriceSmart reported 17.4% growth in net sales. However, the company’s earnings of 52 cents per share missed the Zacks Consensus Estimate by 8 cents in the third quarter of 2012.

The company had 29 warehouse clubs in operation at the end of September 2012, same as the year-ago period.

PriceSmart, which competes with Family Dollar Stores Inc. (FDO), is involved in the operation of membership shopping warehouses in international markets. The company sells basic consumer products of good quality at low prices.

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, which offset low margins and earn profits.

The company is scheduled to release its fourth quarter and fiscal 2012 results on October 30, 2012.  The Zacks Consensus Estimates for the fourth quarter and fiscal 2012 are pegged at 53 cents and $2.21 per share, respectively.

We appreciate the double-digit growth in sales achieved by the company and we expect the trend to continue owing to the upcoming holiday season. However, volatile foreign exchange is matter of concern. PriceSmart carries a Zacks #3 Rank in the near term (Hold rating). We currently have a Neutral recommendation on the stock.

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