PriceSmart, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Real Estate: Opened new warehouse club in Cartago, Costa Rica in April 2025. Plan to open seventh warehouse club in Quetzeltenago, Guatemala in August 2025. Purchased land in La Romana, Dominican Republic for sixth warehouse club, anticipated to open in spring 2026. Evaluating Chile as potential new market, hired local consultants, visited Chile.
• Distribution and Logistics: Plan to upgrade Panama DC in fiscal year 2026, open new DCs in Guatemala, Trinidad, and the Dominican Republic. Testing distribution consolidation in China. Utilizing own truck fleet in certain countries. Free trade zone operations in US and Costa Rica provide strategic advantage for goods consolidation and export without duties/tariffs.
• Membership and Private Label: Private label sales represented 27.7% of total merchandise sales in first 9 months of FY 2025, up 30 basis points from prior year. Renewed co-branded credit card with BAC in Central America. Digital channel sales reached $79 million, 19.8% YOY growth, 6.1% of total net merchandise sales. 62% of members had online profile, ~1/3 made online purchases.
• Technology: Migration to RELEX platform underway, expected substantially operational by year-end. Aims to enhance employee productivity, improve inventory management, reduce spoilage, and increase in-stock availability.

Segment Performance

• Central America: At quarter end, had 31 clubs. Net merchandise sales increased 7.5% or 7.6% in constant currency. Comparable net merchandise sales grew 5.7% or 5.9% in constant currency. Contributed approximately 350 basis points to consolidated comparable net merchandise sales growth.
• Caribbean: Had 14 clubs at quarter end. Net merchandise sales increased 8.2% or 9.7% in constant currency. Comparable net merchandise sales grew 8.6% or 10.1% in constant currency. Contributed approximately 240 basis points to consolidated comparable net merchandise sales growth.
• Colombia: Had 10 clubs open at quarter end. Net merchandise sales increased 10.1% or 19.3% in constant currency. Comparable net merchandise sales grew 9.9% or 19.1% in constant currency. Contributed approximately 110 basis points to consolidated comparable net merchandise sales growth. Merchandise categories: Foods grew ~7.8%, nonfood ~9%, food services/bakery ~6.7%, health services ~13.9%. Membership accounts grew 5.1% to almost 2 million, 12-month renewal rate 88%. Platinum members represented 16.1% of total membership base.

Guidance

• Comparable net merchandise sales for the 4 weeks ended June 29, 2025, were up 7.7% in both US dollars and constant currency.
• Plan to open new warehouse clubs in Guatemala and the Dominican Republic. Continue to evaluate Chile as a potential new market.

Risks

• Currency convertibility issues in markets like Trinidad, including potential impact on P&L and liquidity premium. Political and economic instability in potential new markets, such as uncertainties in Chile's market entry process.

Question and Answer

Q: Question on Trinidad funding plans that you discussed in the 10-Q. How does that help solve your conversion convertibility issue in Trinidad? And how do you see the impact on the P&L and maybe your liquidity premium that you're charging? And then lastly, does -- because -- I guess your -- it's a Trinidad, Jamaica type of transaction. Does that generate an additional currency issue when you have the conversion between Trinidad and Jamaica?

A: Jon, great question. There's a total of up to $65 million. A $15 million US dollar loan repaid in Trinidad dollars helps with turnout payables. The other $50 million has a piece in Jamaican dollars but is indexed to US dollar, so no additional Jamaican exposure. FX exposure and liquidity premium impact are evaluated, with efforts to not impact member pricing but it's a work in process.

Q: Thinking process behind considering Chile for future openings over other markets and potential for other opportunities in region.

A: Chile has a strong middle class, good economics, stable government, and favorable trade/tax relations with US. Currently, no serious study of other Latin American markets, but will assess opportunities as they arise.