PriceSmart (PSMT) Q2 Earnings Surpass Estimates, Stock Down

PriceSmart, Inc. PSMT delivered second-quarter fiscal 2019 results, wherein both top and bottom lines came ahead of the Zacks Consensus Estimate, with the latter marking its third consecutive beat. However, comparable net merchandise sales (comps) declined due to foreign currency headwinds. Also, the bottom line fell slightly from the year-ago period.

We note that PriceSmart’s shares lost 1.3% during yesterday’s after-market trading session. Moreover, this Zacks Rank #5 (Strong Sell) stock has plunged 21.1% in the past six months against the industry’s growth of 8.5%.

Q2 in Detail

The company’s adjusted earnings came in at 88 cents a share, which outpaced the Zacks Consensus Estimate of 56 cents. However, the bottom line slipped 1.1% from the adjusted earnings of 89 cents in the year-ago period. Including one-time items, earnings for the reported quarter were 79 cents, up 68.1% year over year.

PriceSmart, Inc. Price, Consensus and EPS Surprise

PriceSmart, Inc. Price, Consensus and EPS Surprise | PriceSmart, Inc. Quote

Total revenues grew 1.8% to $854.4 million from $839.6 million in the prior-year quarter. Further, the top line surpassed the Zacks Consensus Estimate of $853 million.

Net merchandise sales rose 0.5% year over year to $820.3 million, including adverse currency impacts of about 3.6%. Meanwhile, export sales plunged 25.1% to $6.8 million, whereas membership income climbed 1.1% to $12.8 million. Other revenues and income came in at $14.5 million compared with $1.1 million in the year-ago quarter.

Comps dipped 0.9%, with currency fluctuations having a negative impact of 3.7%.

Operating income declined 2.1% to $36.5 million, while operating margin contracted marginally by 10 basis points to 4.3%. Operating margins were hurt by higher expenses. Warehouse club and other operations expenses came in at $75.7 million, up 5.2% from the year-ago quarter. General and administrative expenses increased 23.3% to roughly $25 million.

As of Feb 28, 2019, the company had 41 warehouse clubs in operation compared with 40 clubs in February 2018.

Other Financial Aspects

PriceSmart ended the quarter with cash and cash equivalents of $90.3 million and long-term debt (including current portion) of $26.2 million. The company’s shareholders’ equity was $773.2 million, excluding non-controlling interests.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.