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PriceSmart's (PSMT) May Comps Down on Currency Headwinds

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PriceSmart, Inc. comparable warehouse sales (comps) for the five-week period (ended Jun 2, 2019) for 40 warehouse clubs fell 0.9%, following a 0.5% decline in April. Comps for March, February and January dropped 1%, 1.9% and 1.4%, respectively. We note that foreign currency exchange rate fluctuations adversely impacted comps by 3.9%.

For the 39-week period (ended Jun 2, 2019), comps declined 1.3%. Foreign currency exchange rate fluctuations negatively impacted comps by 3.3%.

Nevertheless, net merchandise sales increased 0.8% to $251 million from $248.7 million in the year-ago period. However, the metric was adversely impacted by currency rate fluctuations to the tune of $9.6 million or 3.8%. In the preceding month, the company posted net merchandise sales growth of 0.9%, while for March the metric inched up 0.1%. In February, it remained flat and improved 0.3% in January.

Net merchandise sales advanced 0.4% to $2,322.6 million for the nine months (ended May 31, 2019) from $2,312.2 million in the same period last year. Foreign currency exchange rate fluctuations hurt net merchandise sales by $77.1 million or 3.3%.

We note that comparable net merchandise sales in the second quarter of fiscal 2019 dipped 0.9%. Adverse currency fluctuations negatively impacted comparable net merchandise sales by 3.7%.

Brighter Side of the Story

Despite weak comps performance, this Zacks Rank #2 (Buy) company’s total sales grew 1.8% to $839.6 million on a year-over-year basis in the second quarter of fiscal 2019. Total revenues included a $9.9 million contribution from the Aeropost acquisition. Net merchandise sales rose 0.5%. PriceSmart’s strategy to sell limited products at lower prices has helped it generate member loyalty and higher sales.

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