What happened
PriceSmart (PSMT 0.59%) shareholders beat the market this week as the stock gained 10% through Thursday trading. That's as compared to a 1% increase in the wider market, according to data provided by S&P Global Market Intelligence. The boost added to a good rally for the international warehouse club retailer's stock, which is up nearly 30% so far in 2023.
It was powered by a warm reception on Wall Street to PriceSmart's fiscal second-quarter earnings report.
So what
PriceSmart said on Wednesday that comparable-store sales rose by a solid 9% for the selling period that ran through late February. This result marked an acceleration from the prior quarter's 5% boost and included both higher club sales and rising membership fees.
PriceSmart executives highlighted improvements they've made so far in fiscal 2023 around merchandising and the broader shopping experience. "Our focus continued to be on the basics: inventory flow, in stock position, new products, expenses, and [e-commerce] sales," Interim CEO Robert Price said in a press release.
These initiatives helped push operating income to $54 million from $48 million a year earlier.
Now what
Investors are excited about the prospects for continued customer traffic growth in key markets like Colombia and Costa Rica. PriceSmart is slowly adding to its base of stores, too, which now sits at 50 warehouse clubs spread across a dozen countries in Latin America and the Caribbean. Risks to the business include economic downturns or major currency swings, which have hurt sales trends in recent years to varying degrees.
Still, these mostly positive factors have investors believing that PriceSmart can boost sales at a high-single-digit percentage range in 2023 while earnings expand at a slightly faster pace. Given those brightening forecasts, it's no surprise that the retailing stock has been beating the market this year.
