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SeekingAlpha  Jul 12  Comment 
Benzinga  Jul 10  Comment 
Following the market opening Friday, the Dow traded up 1.07 percent to 17,735.99 while the NASDAQ climbed 1.14 percent to 4,978.67. The S&P also rose, gaining 1.05 percent to 2,072.80. Leading and Lagging Sectors Telecommunications...
Benzinga  Jul 10  Comment 
Some of the stocks that may grab investor focus today are: PriceSmart, Inc. (NASDAQ: PSMT) reported weaker-than-expected earnings for its fiscal third quarter, but the company's revenue exceeded analysts' estimates. PriceSmart shares fell 0.49...
Motley Fool  Jul 9  Comment 
The warehouse retailer beat Wall Street's sales targets, but came up short on profits.
Benzinga  Jul 9  Comment 
Three companies were reporting earnings on Thursday afternoon, after the bell. Shares of PriceSmart, Inc. (NASDAQ: PSMT) are marginally down, to $91.835, after the company surpassed revenue expectations but missed on the earnings front. Sales...
Benzinga  Jul 9  Comment 
Shares of PriceSmart, Inc. (NASDAQ: PSMT) fell almost 0.6 percent on Thursday morning, ahead of the announcement of the company’s third quarter financial results, scheduled for after the market close. According to Estimize, the company is...




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PriceSmart is the largest membership warehouse club operator in Central America and the Caribbean. The company has four types of merchandise: sundries, food, hardlines, and softlines but it also receives revenues from membership holders.[1] PriceSmart operates 26 stores with the majority of them in Costa Rica (5) and Columbia Panama (4).[2] However, because most of its operations are based globally, PSMT exposes itself to international risk. In addition, with many of its larger competitors looking to expand globally into PSMT's markets, PSMT's revenues can be negatively affected with its disadvantage in brand name recognition and company size.

Business Growth

Net sales increased 11.5% to $1.40 billion. Net income increased 16.5% to $49.3 million.[3] These positive results are attributed to PSMT's expansion during the year with acquisition of real estate and new store openings.[4]

Trends and Forces

PSMT's global presence exposes it to international risks

PSMT's sales consist almost entirely of its international operations with 27 warehouse clubs operating outside of North America. In addition, PSMT is continuously looking to expand its operations in its current geographic region, such as its acquisition of a new Costa Rica warehouse club and property in Panama and Trinidad in FY 2009.[5] As a result, with global operations, PSMT is exposed to risks such as foreign exchange rates, changes in tariff and tax laws, trade restrictions, political/economic/social conditions in these foreign countries, etc.

PSMT faces significant competition in the form of internationally expanding North American retailers

Although PSMT is the largest warehouse distributor in Central America and the Caribbean, it is not the largest globally. Instead, its direct competitors, such as Walmart, Costco, and Target are all significantly larger and rank 1st, 8th, and 9th in largest global retailers by revenue.[6] In addition, these stores have moved to expand internationally; for example, with Walmart having successfully penetrated Brazil, Costa Rica, and other parts of Central America and with Costco and Target looking to expand internationally as well. As a result, these competitors have greater resources, buying power, and name recognition, which could draw PSMT's current customers. In turn, this could negatively impact PSMT's revenues.[7]

Competitors

  • Costco Wholesale (COST) is currently the largest membership warehouse chain the US. While this may not directly interfere with PSMT's current locations, it can become competition as PSMT looks to expand internationally.[8]
  • Wal-Mart (WMT) has Sam's Club as a warehouse chain equivalent which is not as big as Costco Wholesale (COST) but serves similar discounted and bulk products.[9]

However, PSMT differentiates itself from its competition through smaller store sizes, lower membership fees, and tailored merchandise according to local preferences.[10]

References

  1. http://www.pricesmart.com/Investor/IR_Intro%20to%20PSMT.pdf
  2. http://www.pricesmart.com/Investor/Annual-Reports/2010AnnRpt.pdf
  3. http://www.pricesmart.com/Investor/Annual-Reports/2010AnnRpt.pdf
  4. http://www.pricesmart.com/Investor/News-Releases/110910.htm
  5. http://www.sec.gov/Archives/edgar/data/1041803/000104180310000041/form10k.htm
  6. http://www.nxtbook.com/nxtbooks/nrfe/stores_globalpowers0109/
  7. http://www.sec.gov/Archives/edgar/data/1041803/000104180310000041/form10k.htm
  8. http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-homeprofile
  9. http://www3.samsclub.com/NewsRoom/AboutUs/Facts
  10. http://www.pricesmart.com/Investor/
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