PriceSmart hit by devaluation in Jamaica
THE US-owned PriceSmart supermarket chain indicated that its Jamaican operation recorded the only dip in quarterly sales among its international network.
The discount membership shopping store blamed double-digit devaluation in Jamaica for the dip for the period ending February 2014.
"The company recorded positive sales growth in nearly all countries, the exception being Jamaica which has experienced a significant devaluation of its local currency over the past year [at] 11.7 per cent," said PriceSmart in its financial statements published this week. Comparatively the company recorded double digit sales growth in Panama, Trinidad, and Aruba.
"Colombia and Costa Rica also experienced strong sales growth, with the addition of sales of one new warehouse club in each country compared to the second quarter of fiscal year 2013, despite recent local currency devaluations in both markets," added PriceSmart.
The local currency hovers at some $109.69 to US$1. Last month other importers revealed that exchange rate dips hurt sales. But regionally, PriceSmart earned US$1.2 billion in net warehouse sales for its six-months ending February or 11 per cent higher year-on-year. The sales were not disaggregated for individual territories.
PriceSmart operates in the US and 12 other countries, with six warehouses in Costa Rica; four each in Panama and Trinidad; three each in Colombia, Guatemala and in the Dominican Republic; two each in El Salvador and Honduras; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands.,
Total net warehouse sales growth of 11 per cent during the three months ended February 28, 2014, resulted from a 10.2 per cent growth in transactions and a 0.7 per cent growth in average ticket, the company stated.
Costa Rica, at 8.6 per cent, recorded more currency depreciation than Jamaica at six per cent, followed by Colombia at 5.7 per cent
over three-months ending February.
"Foreign currencies in most of the countries where the company operates have historically devalued against the US dollar and are expected to continue to devalue," stated PriceSmart, which added that it adjusts prices on US dollar goods on a periodic basis.
It also obtains local currency loans from banks when economical, and also reduces the time between the acquisition of product in US dollars and the settlement of that purchase in local currency. It also uses cross-currency interest rate swaps and forward currency derivatives.
PriceSmart set up in Jamaica in 2003, employing some 130 persons. It invested an initial US$11 million to construct its 50,000 square-foot facility on Red Hills Road in Kingston. A large component of the store, over 3,000 products, are imported.
PriceSmart was at the centre of controversy last week after it was reported that the chain had barred Cuban shoppers from regional stores in an apparent interpretation of US laws. Washington imposed a trade and economic embargo against Havana in 1960, two years after the former President Fidel Castro overthrew the Batista regime.The embargo is enforced mainly with six statutes and the United States has consistently voted at the United Nations against the removal of the embargo.
The Cuban Ambassador to Jamaica on Wednesday rejected and condemned what he described as the anachronistic action undertaken by PriceSmart in Jamaica and other countries in the region.