PriceSmart (PSMT) November Comps Mark 3rd Straight Monthly Rise
Shares of PriceSmart, Inc. PSMT have jumped 3.2% since it released impressive sales numbers for November on Dec 7. Apparently, comparable net merchandise sales (comps) for the five weeks ended Nov 29, 2020, edged up 5.6% for 43 warehouse clubs. Comps were hurt by foreign currency fluctuations to the tune of $11 million or 3.5%. Notably, this marked the company’s comps’ third consecutive monthly increase, following a rise of 4.1% and 0.3%, respectively, in October and September.
Moreover, net merchandise sales during the month under review grew 7.9% to $300 million from $278.1 million a year ago. However, currency rate fluctuations negatively impacted the metric by $9.8 million or 3.4%.
Markedly, management remains committed to enhancing online capabilities and developing innovative ways to better serve its members. PriceSmart is progressing well with the technology-enabled shopping like Click & Go contactless online ordering. Management expects Click & Go curbside and delivery services to be significant alternative shopping tools and boost members’ value.
Moreover, PriceSmart has inaugurated a warehouse club in Usaquen locality, situated in the heart of a densely populated area of Bogota. This club is not far from the company’s two other clubs in the larger metropolitan area of the city. Hence, management estimates some transfer of sales from the existing clubs to the latest one. This transfer might hurt comps over the near term.
Notably, the Usaquen Club is the company's eighth warehouse club in Colombia while third in the metropolitan area of Bogota. Given the demographics and appeal of the curated selection of goods and services, the location of the club has a potential for higher membership and sales.
Nonetheless, PriceSmart is poised well to maneuver challenges and enhance members' shopping experience. CEO Sherry S. Bahrambeygui said, "Our strong start to fiscal year 2021 has been fueled by many new practices and improvements that we planned for and set into motion during our prior fiscal year.” The company has also been advancing its digital marketing efforts. Impressively, net merchandise sales grew at various categories across most markets, mainly in non-food categories like electronics.
Encouragingly, fiscal year to date including three months ended Nov 30, 2020, net merchandise sales rose 7.7% to $838.4 million from $778.7 million in the year-ago period. Foreign currency fluctuations hurt the metric by 3.5% or $27.5 million. For the 13-week period ended Nov 29, 2020, comps jumped 3.6% year over year, with foreign currency fluctuations adversely impacting comps by 3.5% or $27 million. First-quarter fiscal 2021 results are scheduled for release on Jan 7, 2021, after the closing bell.
Currently, the company operates 47 warehouse clubs across 12 countries and one U.S. territory. A glimpse at the company’s price performance reveals that shares of this membership-shopping warehouse club operator have surged 50.7% in the past six months compared with the industry’s 24% growth.
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