August Comps Rise at PriceSmart

PriceSmart, Inc. (PSMT - Snapshot Report), the largest operator of membership warehouse clubs in Latin America and the Caribbean, recently reported a 10.0% jump in comparable warehouse sales for the month of August, 2012. This compared unfavorably with a 17.7% upside in the year-ago period, but improved from the 9.4% climb recorded last month.

The year-over-year slowdown in comps was led by a sluggish and weak global economy, resulting in lower consumer spending.

Net sales crept up 12.3% to $166.7 million during the five-week period ended September 2, 2012 from $197.7 million in the comparable period ended September, 2011.

The company’s net sales inched up 19.4% year over year in the 12 months ended August 31, 2012, to $2,000.0 million, while comparable warehouse sales for the 52-week period climbed up 14.5%.

We are optimistic about this rise in comps. Going forward, we expect the trend to continue aided by the upcoming holiday season as well as the company’s efforts to grow sales and execute merchandise plans. PriceSmart remains focused on expansion through unit growth and improving margins by controlling operating expenses.

In the recently concluded third quarter 2012, the company recorded revenue of $506.8 million, up 17.6% year over year. Net warehouse club sales surged 17.4% to $494.9 million and comparable warehouse club sales grew 12.9%.

The Zacks Consensus sales Estimates for the fourth quarter and fiscal 2012 are pegged at $519 million and $2055 million, respectively. The Zacks Consensus earnings per share (EPS) Estimates for the fourth quarter and fiscal 2012 are pegged at $2.22 and $2.74, respectively. The estimates have not budged in the last 7 days, reflecting the lack of any near-term catalysts.

PriceSmart, which competes with the likes of Family Dollar Stores Inc. (FDO - Analyst Report) and Dollar General Corporation (DG - Snapshot Report), carries a Zacks #4 Rank, which translates into a short-term Sell rating. Our long-term recommendation for the stock remains Underperform.

Founded in 1994 and headquartered in San Diego, California, PriceSmart currently operates 29 warehouse clubs in 12 countries and one U.S. territory.