Why PriceSmart, Inc. (NASDAQ: PSMT) stock is under pressure

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PriceSmart, Inc. (NASDAQ: PSMT) stock fell over 0.1% on 9th January, 2019 (Source: Google finance) after the company announced that for the month of December 2018, net merchandise sales increased 0.9% to $347.1 million from $344.2 million in December a year earlier. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $11.6 million or 3.3% versus the same prior year one-month period.

Why PriceSmart, Inc. (NASDAQ: PSMT) stock is under pressure

For the fiscal year to date, which includes the four months ended December 31, 2018, net merchandise sales increased 0.5% to $1,094.5 million from $1,089.6 million for the four months ended December 31, 2017.  Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $30.1 million or 2.8% versus the same prior year four-month period. There were 41 warehouse clubs in operation December 31, 2018 and 40 warehouse clubs in operation at December 31, 2017.

For the four weeks ended December 30, 2018, comparable net merchandise sales for the 40 warehouse clubs open at least 13 1/2 months increased 0.4%, compared to the same four-week period last year.  Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $10.3 million or 3.3% versus the same prior year period.

Moreover, for the four weeks ended December 30, 2018, comparable net merchandise sales for the 40 warehouse clubs open at least 13 1/2 months increased 0.4%, compared to the same four-week period last year.  Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $10.3 million or 3.3% versus the same prior year period.

The Company recorded operating income for the first quarter of the fiscal year 2019 of $24.7 million, as compared to operating income of $33.2 million in the prior year. Net income attributable to PriceSmart was $14.6 million, or $0.48 per diluted share, in the first quarter of the fiscal year 2019. Net income in the first quarter of the fiscal year 2018 was $22.5 million, or $0.74 per diluted share. The first quarter fiscal 2019 earnings were negatively impacted by $3.9 million or $0.13 per share from costs associated with Aeropost and omnichannel development initiatives in addition to being negatively impacted by $3.6 million or $0.13 per share from the separation related costs associated with the resignation of our former Chief Executive Officer by mutual agreement with the Company’s board. U.S. Tax reform positively impacted earnings by $1.7 million or $0.05 per share.

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