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PriceSmart Inc.'s (PSMT) July 2014 Comps Improve from June

Zacks Equity Research

Shares of retail warehouse stores operator PriceSmart, Inc. (PSMT) rose 1.4% after its comparable warehouse sales data for Jul 2014 improved from the previous month.

Net warehouse club sales for July grew 5.4% to $198.6 million.

Further, PriceSmart reported 1.8% comps growth for 31 warehouse clubs for the four weeks ended Jul 27. June comps were better than 1% reported in June but weaker than 2.3% and 4.6% reported in May and April, respectively.

PriceSmart’s comps have been soft in all the months so far this year – 1.8% in July, 1.0% in June, 2.3% in May, 4.6% in April, 1.9% in March, 5.3% in February and 8.4% in January. In fact, the company’s comps have been declining since Oct 2013 — from high teen/low double-digit comps in 2012 and high single-digit in 2013 — due to weak purchasing power of consumers and slower economic and retail activity in the countries where PriceSmart operates.

Last month, PriceSmart reported dismal quarterly results. While the company missed the Zacks Consensus Estimate for revenues in the third quarter of fiscal 2014, it barely managed to meet the consensus mark for earnings. Comps were quite weak during the quarter.

PriceSmart is involved in the operation of membership shopping warehouses in international markets. It has stores in 12 countries in Latin America and the Caribbean. However, its corporate, U.S. buying operations and distribution centers are primarily located in the United States. The company had 33 warehouse clubs in operation at the end of July 2014.

Other Stocks to Consider

PriceSmart carries a Zacks Rank #4 (Sell). Better-ranked stocks in the retail sector are Burlington Stores, Inc. (BURL), The Men's Wearhouse, Inc. (MW) and Foot Locker, Inc. (FL). While Burlington Stores and The Men's Wearhouse sport a Zacks Rank #1 (Strong Buy), Foot Locker has a Zacks Rank #2 (Buy).

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