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PriceSmart (PSMT) Reports 1.7% Comp Decline for December

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Zacks Equity Research
·4 min read
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PriceSmart, Inc. PSMT delivered soft comparable net merchandise sales (comps) for December. Comps for the four weeks ended Dec 27, 2020, dipped 1.7% for 43 warehouse clubs. Comps were hurt by foreign-currency fluctuations of $9.2 million or 2.9%. However, the company reported comps growth of 3.2%, 4.1% and 0.3% in the preceding three months.

We note that comps mainly declined in Costa Rica, Panama, and Colombia, where coronavirus cases and related limitations were mounting. The metric was also hurt by sales transferred from existing clubs to the recently opened ones in Panama and Colombia. Also, in the month under review, the company lost nearly 14 club days to closures, where in-club shopping was restricted. Moreover, sales fell in the Trinidad market, mainly owing to management’s decision to limit U.S. merchandise imports on inadequate U.S. dollar liquidity. Nonetheless, PriceSmart is making alternative solutions to lessen the current illiquidity challenges.

Net merchandise sales for the aforesaid month grew 2.8% to $372.6 million from $362.3 million in the year-ago period. However, currency rate fluctuations negatively impacted the metric by $10.5 million or 3.1%. For the 17-week period ended Dec 27, 2020, comps jumped 2% year over year, with foreign-currency fluctuations adversely affecting the metric by 3.3% or $36.2 million.

What’s More?

Markedly, management remains committed to enhancing online capabilities and developing innovative ways to better serve its members. PriceSmart is progressing well with technology-enabled shopping like Click & Go contactless online service. Encouragingly, the Click & Go service, including curbside pickup and delivery, accounted for 2.8% of the overall net merchandise sales in December.

In fact, delivery through Click & Go has now been available across all its markets, and the demand for delivery has been increasing as part of the total Click & Go sales. Management believes that Click & Go curbside and delivery services are expected to be significant alternative shopping tools and boost Members’ value.

In early December, PriceSmart inaugurated a warehouse club at Usaquen locality, situated in the heart of a densely-populated area of Bogota. This club is expected to boost sales with greater convenience and reinforce the company’s foothold in the market. Management also declared plans to progress with the construction of two clubs, each in Guatemala and Jamaica. Currently, the company operates 47 warehouse clubs across 12 countries and one U.S. territory.

A day before releasing the sales data for December, PriceSmart reported its first-quarter fiscal 2021 results. It delivered stellar results for the quarter, owing to gains from its Click and Go shopping program, curbside pickup and delivery options. Also, the company remains keen on improving the operating efficiencies, whereas making prudent investments.

Coming to figures, total first-quarter revenues rose 8.1% to $877.4 million, while net merchandise sales moved up 7.7% to $838.4 million. Foreign currency exchange rate translations hurt net merchandise sales by $27.4 million or 3.5%. Quarterly comps moved up 3.6% for the 13-week period, ended Nov 29, 2020, including the foreign-currency adverse impacts of $27 million or 3.5%. Moreover, operating income rose 45% to $44.5 million. As a result, the company’s earnings increased 40.6% year over year to 90 cents per share in the fiscal first quarter.

 


 

PriceSmart remains committed to enhancing member experience by expanding its omni-channel endeavors, including advancing online capabilities. A glimpse at the membership-shopping warehouse club operator’s performance reveals that its shares have gained 39.8% in the past three months compared with the industry’s 10.4% growth.

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