PriceSmart's May Comps Disappoint - Analyst Blog

PriceSmart, Inc. PSMT announced net and comparable warehouse club sales for the month of May. Net warehouse club sales for the month grew 7.9% to $202.3 million.

Further, PriceSmart reported 2.3% growth in comps in 31 warehouse clubs for the five weeks ended Jun 1, 2014. May comps slowed down from the 4.6% increase reported in April.

Comps have been soft in all the months so far this year – 2.3% in May, 4.6% in April, 1.9% in March, 5.3% in February and 8.4% in January. In fact, PriceSmart's comps have been declining since Oct 2013 — from the high teen/low double-digit comps seen in 2012 and high single-digit in 2013 — due to slowing consumer traffic. Severe winter affected traffic further in the last reported quarter — second-quarter 2014. Comps grew 6.7% in the second 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 is involved in the operation of membership shopping warehouses in international markets. At the end of May 2014, the company had 33 warehouse clubs in operation.

The company is due to report third-quarter fiscal 2014 results on Jul 10. The Zacks Consensus Estimate for the quarter stands at 70 cents. We are not expecting a positive earnings beat this quarter from PriceSmart as the stock carries a Zacks Rank #3 (Hold) and a negative Earnings ESP of-5.71%.

Other Stocks to Consider

Currently, no stocks carry a Zacks Rank #1 (Strong Buy) or  #2 (Buy) in the retail discount industry as severe winter tremendously affected sales and margins in the last reported quarter. Better-ranked stocks in the broader retail sector include American Apparel, Inc. APP, Foot Locker, Inc. FL and The Men's Wearhouse, Inc. MW. All these stocks sport a Zacks Rank #2.