Retail warehouse stores operator,
) beat the Zacks Consensus Estimate for earnings while delivering
in-line revenues for the second quarter of fiscal 2014 helped
only by some special gains. Comps and margins, however, remained
soft during the quarter.
The Zacks Rank #4 (Sell) company reported adjusted earnings of
93 cents per share in the second quarter of fiscal 2014 (ended
Feb 28, 2014), beating the Zacks Consensus Estimate of 87 cents
by almost 7%. Earnings grew 13.4% from the prior-year quarter.
Foreign exchange transaction gains and lower interest expenses
pulled up earnings in the quarter.
The company reported total revenue of $674.4 million in the
first quarter, up 11.0% from the prior-year quarter. Revenues
were almost in line with the Zacks Consensus Estimate of $675
Net warehouse club sales increased 11.0% to $657.2 million in
the quarter. Membership income increased 13.9% to $9.5 million in
the reported quarter.
Comps grew 6.7% in the quarter, weaker than 7.9%, 9.3% and
9.2% in the first quarter of 2014 and fourth and third quarters
of fiscal 2013, respectively. PriceSmart's comps have been
declining since Oct 2013 due to slowing consumer traffic. We
believe severe winter affected traffic further in the second
Warehouse gross profit margin decreased 19 basis points (bps)
to 14.5% in the quarter due to decline in warehouse club margins.
Operating income was $39.4 million, up 8.2% year over year.
However, operating margin decreased 16 bps due to reduction in
net warehouse margins.
March 2014 Results
Concurrent with the second-quarter results, PriceSmart also
announced net and comparable warehouse club sales for the month
of March. Net warehouse club sales for the month grew 5.7% to
Further, PriceSmart reported 1.9% growth in comps for 32
warehouse clubs for the four weeks ended Mar 30, 2014. March
comps are significantly lower than 6.7%, 8.4% and 5.3% reported
in Dec 2013, Jan 2014 and Feb 2014, respectively.
PriceSmart is involved in the operation of membership shopping
warehouses in international markets. It had 32 warehouse clubs in
operation at the end of Mar 2014.
Other Stocks to Consider
Better-ranked stocks in the retail sector are
Foot Locker, Inc.
American Apparel, Inc.
Belle International Holdings Limited
). All the stocks carry a Zacks Rank #2 (Buy).
AMER APPAREL (APP): Free Stock Analysis
BELLE INTL HLDG (BELLY): Get Free Report
FOOT LOCKER INC (FL): Free Stock Analysis
PRICESMART INC (PSMT): Free Stock Analysis
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