PriceSmart has been improvizing its warehouse clubs as there lies a broader opportunity for healthy growth in secondary locations within its existing markets. Also, the company has the opportunity to drive sales within its smaller footprint. The company ended the third quarter with about 1.6 million membership account despite weathering some headwinds in many markets.
The company has invested in green initiatives including more biodegradable packaging, solar power, recycled materials for the steel superstructure and use of indigenous materials in the construction. This is likely to increase the costs and expenses related to the investments, which in turn could hurt the bottom line in the upcoming quarter.
The economic slowdown has negatively impacted the company’s business. This along with government policies intended to manage foreign currency reserves have adversely affected consumer spending. PriceSmart continues to explore ways to improve efficiency, lower costs, and ensure a good flow of merchandise to its warehouse clubs.
For the third quarter, PriceSmart posted a 25% drop in earnings due to higher costs and expenses. Total revenue moved up by 0.8% as foreign currency exchange rate fluctuations negatively impacted the merchandise sales. Comparable merchandise sales, for the 40 warehouse clubs that have been open for greater than 13 ½ calendar months, declined by 0.8%.
The company ended the third quarter with total cash of $123.5 million while total debt stood at $96.3 million. The company is more financially stable as it possesses more cash than its financial obligations. The company has a market capitalization of $2.21 billion, which showed the liabilities doesn’t pose much threat.