PriceSmart's January Comps Up Despite Adverse Currency Woes

PriceSmart, Inc. (NASDAQ:PSMT) reverted to its positive comparable net merchandise sales (comps) streak in January, 2020 after a decline in the metric in December, 2019. Despite adverse impacts of foreign currency fluctuations to the tune of $0.4 million, comps for the four-week period (ended Jan 26, 2020) rose 0.3% for 41 warehouse clubs.

The company had reported a comps drop of 0.1% for December. Nevertheless, the metric had inched up 0.8%, 1.4% and 0.9% in November, October and September, respectively.

Again, comps for the 21-week period (ended Jan 26) increased 0.6%. However, adverse foreign currency exchange rate fluctuations negatively impacted comps by $12.7 million.

Apart from impressive comps performance, net merchandise sales for January rose 3.9% to $254 million from $244.4 million in the year-ago period. However, the metric was affected by currency-rate fluctuations to the tune of $0.5 million. Prior to this, net merchandise sales had increased 4.3%, 7.5%, 3.7% and 1.2% for December, November, October and September, respectively.

PriceSmart’s net merchandise sales moved up 4.2% to $1,395 million year to date, which comprise five months ended Jan 31, 2020. Foreign currency had a negative impact of $13.5 million on sales.

Notably, PriceSmart is committed to the Six Rights of Merchandising strategy to enhance member shopping experience. Moreover, the company’s healthy membership renewal rate indicates its strength. Additionally, it is focusing on smaller warehouse club format. This operator of membership warehouse clubs ended first-quarter fiscal 2020 with 1.6 million accounts, while membership income rose 7.9%.

Meanwhile, the company is inclined toward new warehouse club openings and enhancing membership by offering outstanding service as well as value to members. Encouragingly, PriceSmart plans to inaugurate warehouse clubs in Liberia, Costa Rica, in summer this year. It also intends to open new warehouse clubs in Bogota, Colombia in fall 2020. Additionally, management plans to build new warehouse clubs in Portmore, Jamaica and Bucaramanga, Colombia this fall. At the end of January 2020, the company had 45 warehouse clubs in operation compared with 41 warehouse clubs at the end of January, 2019.

We note that PriceSmart’s peer — Costco Wholesale Corporation (NASDAQ:COST) — reported comps growth of 6.6% in January. Moreover, the leading retailer of casual apparel and accessories, The Buckle, Inc. (NYSE:BKE) , delivered comps growth of 7.4% for the same period.

Price Performance

Shares of this membership shopping warehouse clubs operator have gained 7.1% in the past six months compared with the industry’s 19.4% rally.

You may count on Ross Stores, Inc. (NASDAQ:ROST) from the same space. Shares of this off-price apparel retailer have advanced 15.2% in the past six months. The stock presently displays a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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