PriceSmart (PSMT, Financial) experienced a rollercoaster day, initially hitting 52-week highs before sharply declining, breaching March and April's lows. Despite impressive Q2 (Feb) earnings and sales, alongside a notable jump in same-store sales and a $1.00 special dividend, the stock's early gains quickly faded post-market opening. This suggests that PSMT's Q2 performance, despite being solid, failed to sustain investor enthusiasm after a significant +30% surge since November.
Key financial highlights include:
- A 13.1% year-over-year revenue increase to $1.29 billion, outpacing the previous quarter's 10.6% growth, driven by an 8.8% rise in comparable net merchandise sales.
- Membership income rose by 14.6% year-over-year, reflecting strong membership growth as consumers seek value in an inflationary context, compared to Costco (COST, Financial) which saw an 8.2% increase in membership fee income.
- Despite potential for higher sales, PSMT faced challenges in meeting high demand in December, a key sales month, without incurring extra expenses.
- Gross margins decreased slightly by 30 basis points year-over-year to 15.7%, attributed to the removal of a COVID premium and reduced liquidity premiums in Trinidad.
- Earnings per share (EPS) improved by 4.8% year-over-year to $1.31, buoyed by stronger than anticipated revenue growth, with a 2.7% increase in average sales ticket and a 10% rise in transactions.
- PSMT is expanding its footprint, acquiring land for its ninth club in Costa Rica, marking its 55th store and a 10% increase from the previous year.
Despite a decent quarter, PSMT's performance was tempered by inflationary pressures and holiday season challenges. However, the company's trajectory remains positive, buoyed by consumer value-seeking in inflationary times and a special dividend declaration, signaling confidence in its future cash flows.
