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PriceSmart Inc. Earnings Flat Despite Sales Jump

By Demitri Kalogeropoulos - Jul 9, 2015 at 5:48PM

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The warehouse retailer beat Wall Street's sales targets, but came up short on profits.

International warehouse club PriceSmart (PSMT -0.19%) today posted results for its fiscal third quarter. Overall, the retailer beat Wall Street's revenue forecast, while coming up just shy on earnings. 

Source: PriceSmart.

Here's a big-picture look at how the results stacked up against analysts' expectations:

Metric Expected Actual
Revenue $688 million $697 million
Profit $0.72 per share $0.70 per share

Source: Yahoo! Finance and PriceSmart's financial filing.

Sales and profits
Total revenue improved by 13%, as PriceSmart booked big sales gains -- up 13% -- along with a nice boost in membership fees -- up 17%. Sales were pushed higher by an extra three warehouses in the mix compared to last year: PriceSmart ended the quarter with 36 locations across Latin America and the Caribbean.

Steadily rising customer traffic also helped. The retailer logged monthly comparable-store sales gains of 7.3%, 0.2%, and 2.4% for March, April, and May, respectively. PriceSmart's fiscal fourth quarter is off to a positive start on this metric: Comps rose by 2.6% for the month of June.

Net income this quarter was flat, at $21 million. Investors might call that result a win, though, given that currency swings, particularly with the Colombian Peso, cleaved $0.16 out of per-share earnings in the prior quarter. There was no mention of exchange-rate fluctuations in today's announcement, which suggests that PriceSmart enjoyed a more normal sales environment during the last few months.

What to watch for
Meanwhile, PriceSmart announced that it opened a warehouse in Panama on July 25, upping its presence there to five locations. As the retailer's oldest market, and the economy with the highest expected growth rate in Central America, Panama is an attractive target for more store investments. 

CEO Jose Luis Laparte and his management team will hold a conference call with analysts at 9 a.m. Friday to add more context to these results. Investors tuning in should listen for updates on how PriceSmart's business is performing in its different markets. Last quarter, for example, it logged 6% higher sales in Central America, a 4% boost in the Caribbean, and a 126% spike in Columbia.

Laparte also typically provides important business metric updates in his quarterly chat, including membership renewal rates. Any improvement over the prior quarter's 85% rate would be good news for the company.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends PriceSmart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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