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PriceSmart's (PSMT) Robust Online Efforts & Comps Drive Stock

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PriceSmart, Inc.’s (PSMT - Free Report) shares have rallied 30.3% in the past six months, thanks to robust business strategies, including efforts to boost members’ experience. Markedly, the company is committed toward enhancing online capabilities and developing innovative ways to better serve its members. It is progressing well with the technology-enabled shopping like the Click & Go contactless shopping program, which offers online ordering. Moreover, the curbside-pickup service is impressive.

We note that delivery options through Click & Go are currently available across all of the company’s markets. The company had also introduced the option to select certain dates and windows of time for curbside pickup and delivery, which is likely to help it offer more convenience to members. Encouragingly, the Click & Go service, including curbside pickup and delivery, accounted for roughly 3.2% of the overall net merchandise sales for February.

Going forward, management believes that Click & Go curbside and delivery services will be significant alternative shopping tools. In addition, PriceSmart’s impressive sales performance continued in February despite pandemic uncertainties. Buoyed by the strength, this membership-shopping warehouse club operator has outperformed the industry’s 8.4% rise. Let’s delve deeper.


Sales Data

PriceSmart’s net merchandise sales in February rose 1.3% to $258.7 million from $255.5 million a year ago. However, currency-rate fluctuations negatively impacted the metric by $7.8 million or 3.1%. Further, e-commerce penetration accounted for 3.2% of the overall net merchandise sales.

Apparently, comparable net merchandise sales (comps) for the five-week period ended Feb 28, 2021, edged up 2.8% for 45 warehouse clubs. However, comps were hurt by foreign-currency fluctuations to the tune of $9.3 million or 3%. Comps growth was flat with the prior month. Except for December, when comps declined 1.7%, the metric increased 5.6%, 4.1% and 0.3%, respectively, for November, October and September.

We note that both sales and comps increased in February, beating pandemic restrictions across some of the company’s markets and one less sales day in the month this year when compared to the prior leap year. Also, February sales were marred by management’s decision to temporarily lower merchandise levels imported into Trinidad on persistent limitations.

Encouragingly, fiscal year to date including six months ended Feb 28, 2021, net merchandise sales rose 5.2% to $1,736.8 million from $1,650.5 million in the year-ago period. Foreign currency fluctuations hurt the metric by 3.4% or $54.7 million. For the 26-week period ended Feb 28, 2021, comps jumped 2.3% year over year, with foreign-currency fluctuations affecting the metric by 3.3% or $53.2 million.

During February, the company introduced PriceSmart Pharmacy in Costa Rica and is encouraged about receiving the incremental membership benefit in this market. Currently, the company operates 47 warehouse clubs across 12 countries and one U.S. territory.

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