Hot Retail stock to watch: PriceSmart, Inc. (NASDAQ: PSMT)

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PriceSmart, Inc. (NASDAQ: PSMT) stock surged 19.95% on September 24th, 2019 after S&P Dow Jones Indices said that it will add the company to the S&P SmallCap 600 index. The stock’s rally has raised PSMT’s market capitalization to $2.2 billion. S&P said companies in the SmallCap 600 have market caps in the range of $600 million to $2.4 billion. PriceSmart will br replacing Finisar Corp. The stock slightly corrected over 1.6% on 24th September, 2019 (as of 9:49 am GMT-4; Source: Google finance)

On the other hand, for the month of August 2019, PSMT’s net merchandise sales rose 4.5% to $259.9 million, from $248.8 million in August a year earlier. During one year that ended August 31, 2019, net merchandise sales rose 1.2% to $3,091.3 million from $3,053.8 million for the twelve months ended August 31, 2018.

Moreover, the company has delivered the 0.8% rise in the total revenues for the third quarter of fiscal year 2019 to $788.6 million compared to $782.2 million in the third quarter of the prior year. The Company had 42 clubs in operation as of May 31, 2019, vesuse 41 warehouse clubs in operation as of May 31, 2018.

Comparable net merchandise sales, for the 40 warehouse clubs that have been open for greater than 13 ½ calendar months,  had declined 0.8% for the 13-week period ended June 2, 2019 versus the same period in the prior year. The Company has reported the operating income for the third quarter of FY19 of $22.0 million, as compared to operating income of $28.4 million in the prior year period. Net income attributable to PriceSmart, Inc. was $14.1 million, in the third quarter of fiscal year 2019 compared to $18.7 million, in the same period last year. The third quarter fiscal 2019 earnings were negatively impacted due to $2.9 million from costs related to investments to expand the omni-channel capabilities, combined with net operating results of the Aeropost legacy business.

Additionally, PSMT had acquired approximately 227,000 square feet of land in Costa Rica, as the company intends to open its 46th warehouse club. This club is planned to be located within the city of Liberia, Costa Rica, which is situated in the northwestern part of Costa Rica and is about three hours from the capital city of San Jose, Costa Rica. This club will be PriceSmart’s eighth warehouse club in Costa Rica and will be built as a small-club format in this secondary city. This club is expected to open in approximately the summer of 2020.

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