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PriceSmart Comps Decline for Fifth-Straight Month in August

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PriceSmart, Inc.’s soft comparable net merchandise sales (comps) trend continued for the fifth-straight month in August. Apparently, comps for the five weeks ended Aug 30, 2020 dipped 2.8% for 42 warehouse clubs. Comps were hurt by foreign-currency fluctuations to the tune of $11 million or 3.8%. Prior to this, comps had fallen 4.5%, 4.9%, 6.7% and 19.2% in the months of July, June, May and April, respectively. However, we note that the rate of decline has decelerated on a sequential basis.

Comps in August were negative across certain markets in Central America and Colombia while being positive in the Caribbean market. Although the performance at the new clubs in Guatemala and Panama were impressive, the new clubs in existing markets hurt comps owing to sales transfers from the pre-existing clubs. Further, the San Diego, CA-based company informed that roughly 90 club days were estimated to have been lost on account of closures in the last month, where in-club shopping was not allowed.

Nevertheless, PriceSmart saw a sequential improvement in net merchandise sales for the fourth month in August despite COVID-19-induced limitations. Notably, net merchandise sales during the month under review inched up 0.9% to $262.4 million from $260 million in the year-ago period. However, currency-rate fluctuations negatively impacted the metric by $10.1 million or 3.9%.

For the fiscal year to date including the 12 months ended Aug 31, 2020, net merchandise sales grew 3.2% to $3,191.8 million. The metric was hurt by foreign-currency fluctuations to the tune of $61.9 million or 2.1%. However, comps dipped 1.5% from the year-ago period for the 52-week period ended Aug 30. Foreign-currency fluctuations adversely impacted comps by $59.3 million or 1.9%.

Impressively, management is committed toward enhancing its online capabilities and developing innovative ways to better serve its members. The company is focused on boosting efficiencies, consistent with Six Rights, to offer the best value to its members. Moreover, PriceSmart has been progressing well with the technology-enabled shopping, with its 'Click & Go' contactless online ordering. Moreover, the curbside-pickup service is available across all its markets, with delivery being extended to six markets. This 'Click & Go' service, along with curbside pickup and delivery, accounted for nearly 4% of overall net merchandise sales during the month under review.

Furthermore, PriceSmart is planning to open a warehouse club in Bogota, Colombia during second-quarter fiscal 2021. Currently, the company operates 46 warehouse clubs across 12 countries and one U.S. territory. PriceSmart informed that it plans to report fourth-quarter and full-year 2020 results on Oct 29, 2020, after market close. A glimpse at the company’s price performance reveals that shares of this membership-shopping warehouse club operator have increased 25.1% in the past three months, outperforming the industry’s rally of 8%.

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