Retail warehouse stores operator,
), slumped 8% after it announced lower-than-expected
first-quarter fiscal 2014 results on Jan 9.
The Zacks Rank #4 (Sell) company reported adjusted earnings of
71 cents per share in the first quarter of fiscal 2014 (ended Nov
30, 2013), missing the Zacks Consensus Estimate of 73 cents by
2.7%. A slowdown in comps, muted margins and a higher tax rate
hurt the bottom line in the quarter.
Earnings grew 7.6% from the prior-year quarter figure of 66
cents due to year-over-year growth in revenues and operating
The company reported total revenue of $605.6 million in the
first quarter, up 13.1% from the prior-year quarter. Revenues,
however, missed the Zacks Consensus Estimate of $611 million by
almost 1% which, we believe, was the result of sluggish comps.
Comps grew 7.9% in the quarter, much weaker than a respective
9.3% and 9.2% in the previous two quarters - fourth and
third quarters of fiscal 2013.
Net warehouse club sales increased 12.6% to $589.7 million in
the quarter. Sales grew 14.2% in Latin America and 9.4% in
Caribbean. Membership income increased 20.8% to $9.2 million in
the quarter benefiting from the fee increase in Jun 2012.
In terms of product categories, while candy, seasonal candy,
gourmet deli, fresh seafood, bakery, fashion apparel, computers
and toys showed double-digit growth, the company is facing
challenges in the electronics and small appliances category.
Electronic sales declined in low single-digits in the
Warehouse gross profit margin declined 54 basis points (bps)
to 14.5% in the quarter due to decline in warehouse club margins.
Operating margin declined 19 bps in the quarter to 5.5% due to
sluggish sales and gross margin weakness.
Dec 2013 Results
Concurrent with the first-quarter results, PriceSmart also
announced net and comparable warehouse club sales for the month
of December. Net warehouse club sales grew 10.7% to $280.8
million for the month.
Further, PriceSmart reported 6.7% growth in comps for 29
warehouse clubs for the four weeks ended Dec 29, 2013.
PriceSmart's comps have been slowing down since Oct 2013.
PriceSmart is involved in the operation of membership shopping
warehouses in international markets. It had 32 warehouse clubs in
operation at the end of Dec 2013.
Other Stocks to Consider
A better-ranked stock in the retail/discount industry is
The TJX Companies, Inc.
) carrying a Zacks Rank #2 (Buy). In the broader retail sector
ConAgra Foods, Inc.
Green Mountain Coffee Roasters, Inc.
), both carrying a Zacks Rank #2, are also worth a look.
CONAGRA FOODS (CAG): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
PRICESMART INC (PSMT): Free Stock Analysis
TJX COS INC NEW (TJX): Free Stock Analysis
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