PriceSmart Inc continues to build on its regional reach as it delivered an earnings beat for its first quarter (September to November) when the market consensus expected compression in its bottom line.

The international membership shopping warehouse club had a record earnings per share (EPS) of US$1.05, which was seven per cent above the US$0.95 earned in the prior period and well above the US$0.89 analyst consensus. PriceSmart’s footprint increased by one with the opening of the Portmore club in April 2022 which contributed to the nine per cent increase net merchandise sales of US$1.03 billion ($156.9 billion).

PriceSmart is set to open its 51st club in San Miguel, El Salvador, in coming months and its 52nd club in Medellín, Colombia, in the summer. This would push its Colombian warehouse count to 10 and El Salvador to three warehouses.

Although PriceSmart hasn’t spoken about the development of a third warehouse in Jamaica, the Jamaica Observer reported last month that it was likely that it would submit an application to the St James Municipal Corporation for the development of an Ironshore property. Jamaica had a 6.9 per cent decline in net merchandise sales in the quarter due to sales transfers from Red Hills included in the comparable net merchandise sales calculation to Portmore not included in the current calculation.

“I am excited about re-engaging more directly in our company’s day-to-day business affairs. I have a very personal passion for PriceSmart. Our business takes place in countries that have significant economic and political challenges. You, as PriceSmart’s stockholders, can be proud of the investment you have made in our company,” said founder and Chairman Robert E Price in an earnings call last Tuesday.

Price will assume the interim chief executive officer (CEO) role on February 3 following the announcement that Sherry Bahrambeygui will resign from her role on the same date to pursue new professional and philanthropic interests. John Hildebrandt will be promoted to the role of president and chief operating officer while David Price will be promoted to executive vice-president and chief of staff to the interim CEO.

“On behalf of myself and our board of directors, I would like to express our appreciation to Sherry Bahrambeygui for her leadership during the past four years. We appreciate all of her contributions and look forward to Sherry’s continued strategic and operational input to drive the future success of PriceSmart. Our company is poised to build on Sherry’s accomplishments,” the chairman said regarding Sherry’s role as CEO since January 2019.

Sherry oversaw PriceSmart’s expansion from 41 clubs when she ascended to the role to 50 clubs at the time of her resignation. She will remain on the board and is set to receive a one-time US$7.7-million pre-tax separation charge related to her departure. Bahrambeygui’s base salary was US$1.5 million and total compensation of US$10.18 million as per 1.salary.com.

When asked by Hector Maya at Scotiabank on whether or not the new CEO will come from within and in what timeline, the chairman said, “Because the board needs to be involved and this is a key responsibility of the board, is the leadership of this company. And the resolution of this has to be done in a way that’s really got to be good, because it’s a very challenging issue to make a transition [of a] CEO. And so we’re going to take our time.”

PriceSmart’s total revenue increased by 8 per cent to US$1.05 billion with operating income rising 21 per cent to US$55.53 million. Net income attributable to shareholders increased eight per cent to US$32.91 million ($5.03 billion). Its holiday net merchandise sales in December were up 10.4 per cent with the company currently getting ready for spring with new merchandise.

With respect to the different segments, the Caribbean segment saw revenue rise 13 per cent to US$307.53 million and net profit rising 17 per cent to US$19.28 million. Trinidad & Tobago’s USD illiquidity continues to impact the company with T&T denominated cash and cash equivalents down 75 per cent from the peak of US$100.5 million in November 2020 to US$25.6 million in November 2022. The Central American operations recorded a 10 per cent increase in revenue to US$629.08 million and net profit of US$42 million.

PriceSmart’s total assets increased four per cent to US$1.89 billion with cash and cash equivalents at US$267.94 million. Total liabilities increased to US$861.56 million with shareholders equity at US$1.03 billion. The company’s stock price rallied last Tuesday on the announcement of the earnings beat which left it trading at US$70.60 on Tuesday and up 15 per cent year to date. The company’s price to earnings ratio is 20.50 times with the market capitalisation at US$2.19 billion.

A 55.1 per cent of PriceSmart’s 1.7 million members have created an online profile on the company’s website with e-commerce representing 3.9 per cent of total merchandise sales. PriceSmart is continuing to focus on its digital area especially as online purchases are 37.8 per cent higher than the average in-club purchases. The company also plans to open 30 recycling centres this year across the 12 countries and one US territory it operates in.

PriceSmart currently intends to defend itself against Click USA Inc’s claims and has not accrued a liability against their claims. Click sent notice on August 5 that it was intending to hold PriceSmart liable for losses and future claims related to breaches of a stock purchase agreement arising from the cyberattack with Aeropost Inc in April 2022. PriceSmart received an additional notice on October 17 supplementing where it estimated losses from direct and third-party claims at US$2.9 million.