On July 10, 2024, Pricesmart Inc (PSMT, Financial) released its 8-K filing for the fiscal third quarter of 2024, which ended on May 31, 2024. Pricesmart Inc is principally engaged in operating U.S.-style membership shopping warehouse clubs that offer consumer goods at low prices. The company is headquartered in San Diego, California, United States, and operates stores in Latin America and the Caribbean, with Central America contributing over half of its net warehouse club sales. The company's revenue consists of net warehouse club sales from merchandise sales, membership income from annual membership fees, export sales, and other income, with net warehouse club sales accounting for the majority of the company's total revenue.
Performance Overview
For the third quarter of fiscal year 2024, Pricesmart Inc (PSMT, Financial) reported total revenues of $1.23 billion, representing a 12.1% increase compared to $1.10 billion in the same period last year. Net merchandise sales grew by 11.6% to $1.19 billion from $1.07 billion in the prior year period. However, the company reported earnings per diluted share of $1.08, falling short of the analyst estimate of $1.12.
Comparable net merchandise sales for the 50 warehouse clubs that have been open for more than 13 ½ calendar months increased by 7.8% for the 13-week period ended June 2, 2024, compared to the same period last year. On a constant currency basis, comparable net merchandise sales increased by 5.6%, with foreign currency exchange rate fluctuations positively impacting sales by 2.2%.
Financial Achievements and Challenges
Pricesmart Inc (PSMT, Financial) recorded operating income of $49.9 million for the third quarter, up from $43.1 million in the prior year period. Net income increased by 9.9% to $32.5 million, or $1.08 per diluted share, compared to $29.6 million, or $0.94 per diluted share, in the third quarter of fiscal year 2023. Adjusted EBITDA for the quarter was $71.0 million, compared to $63.9 million in the same period last year.
Despite the revenue growth, the company faces challenges such as foreign currency exchange rate fluctuations and increased operating expenses. The positive impact of foreign currency exchange rate fluctuations on net merchandise sales was $27.3 million, or 2.5%, compared to the same period last year. However, the company must continue to manage these fluctuations to maintain profitability.
Key Financial Metrics
Important metrics from the income statement, balance sheet, and cash flow statement include:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenues | $1.23 billion | $1.10 billion |
| Net Merchandise Sales | $1.19 billion | $1.07 billion |
| Operating Income | $49.9 million | $43.1 million |
| Net Income | $32.5 million | $29.6 million |
| Earnings Per Diluted Share | $1.08 | $0.94 |
Year-to-Date Financial Results
For the first nine months of fiscal year 2024, Pricesmart Inc (PSMT, Financial) reported total revenues of $3.69 billion, a 12.0% increase compared to $3.29 billion in the same period last year. Net merchandise sales increased by 11.8% to $3.59 billion from $3.21 billion in the prior year period. Net income for the first nine months increased by 17.0% to $109.8 million, or $3.62 per diluted share, compared to $93.8 million, or $3.01 per diluted share, in the first nine months of fiscal year 2023.
Conclusion
Pricesmart Inc (PSMT, Financial) demonstrated solid revenue growth and improved profitability in the third quarter of fiscal year 2024. However, the company missed the analyst estimate for earnings per share, highlighting the need for continued focus on managing operating expenses and foreign currency fluctuations. Investors will be keen to see how Pricesmart Inc (PSMT) navigates these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from Pricesmart Inc for further details.
