Price Co., operators of the Price Club chain of discount warehouses, said profits for its first quarter ended Dec. 20 grew 36% over the comparable quarter last year, while sales were up 24%.
Comparable store sales, or those at stores open at least one year, were up only 2.2%. Analysts attributed the low rate of growth to Price Co. having opened several stores in existing markets over the last year, leading to "self-cannibalization," according to Ed Weller, a partner at Montgomery Securities in San Francisco.
Price, which now operates 37 Price Clubs in the United States, reported net income of $30.9 million on sales of $1.3 billion for its first quarter, compared with net income of $22.8 million on sales of $1.03 billion over the same three months last year.
Ward Lindenmayer, a retail analyst with Sutro & Co. of San Francisco, said Price's lower comparable store sales did not necessarily mean that Price was being hurt by competition. Rather, the lower growth resulted from new stores being opened to improve service to Price Club members in existing markets, he said.