PRICESMART Inc completed the expansion of its clubs in Portmore, Jamaica, and San Salvador, El Salvador, last month as the international membership shopping business continues its initiatives to attract shoppers across Latin America and the Caribbean.

PriceSmart had announced in July that it was expanding three clubs, which include Liberia, Costa Rica. That expansion was set to have increased the sales floor space between 15-20 per cent and was meant to improve the visibility of the products and reduce restocking time. PriceSmart had just opened its Portmore location in April 2022.

While PriceSmart didn’t disclose the value of the investment in each club, it spent US$28.18 million on capital expenditure in the first quarter (September to November), with US$9.89 million attributed to its Caribbean segment. PriceSmart completed the remodelling of its clubs in San Pedro Sula, Honduras, and Santiago, Dominican Republic, during Q1 as well. It also completed the expansion of the Liberian location in Costa Rica during the fourth quarter, along with the remodelling of its Port of Spain location in Trinidad and Tobago.

PriceSmart has been pushing more in recent times to better control its distribution and logistics network while improving the member experience. To this end, it began exporting to a retailer in The Bahamas in Q4 2024, and plans to open a distribution centre in China and each of its multi-club markets which will either be opened by PriceSmart or third-party logistics providers. The company expects this initiative to reduce landed costs, lead times, and improve its working capital. PriceSmart is currently developing proprietary-operated distribution centres in Panama, Guatemala, and Trinidad.

“We’re in a pretty aggressive mode in developing these regional distribution centres. And I think for me, in my own sense of where we’re headed as a company, those distribution centres, particularly in our critical big markets, have many dividends to be paid in terms of sales, efficiencies — even to the extent of cost to build our buildings in these markets,” said PriceSmart founder and interim Chief Executive Officer Robert Price to Scotiabank’s Associate Director of Equity Research Hector Maya, on the company’s January 10 earnings call.

PriceSmart’s consolidated revenue was up eight per cent to US$1.26 billion, which is US$20 million more than the estimated market consensus. Operating profit came in at US$58.26 million, with adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of US$79.12 million. However, the company’s net profit came in two per cent lower at US$37.43 million, with an earnings per share of US$1.21, US$0.15 below market estimates.

The drop in PriceSmart’s net profit was attributed to a sharp rise in cost of goods sold on its merchandise products while its other expense line item went up 222 per cent, from US$2.13 million to US$6.86 million. That increase in the other expense was largely attributed to a rise in transaction costs of US$3.4 million to convert currencies like the Trinidad & Tobago dollar (TTD) and Honduran lempiras (HNL) to available, tradable currencies and then United States dollars (USD). PriceSmart had US$70.1 million worth of TTD and US$10.9 million of HNL at the end of November 30 that were not readily convertible to USD.

With respect to the Caribbean segment with 14 clubs, revenue improved six per cent to US$345.38 million across all markets except Barbados, with operating profit growing 12 per cent to US$26.09 million. Net profit grew 14 per cent to US$21.68 million, with total assets rising 10 per cent over the quarter from US$451.27 million to US$496.46 million.

PriceSmart saw an improvement in its Central American segment for the quarter as revenue increased nine per cent to US$760.30 million and net profit rose by five per cent to US$50.92 million across its 30 clubs. Its Colombian segment, with 10 clubs, saw an 11 per cent increase in revenue to US$142.65 million but a 44 per cent dip in net profit to US$1.51 million.

PriceSmart’s total assets were up three per cent over the quarter to US$2.09 billion, with most of this growth attributed to its US$585.85 million in merchandise inventories. Total liabilities three per cent to US$929.10 million as the company’s accounts payable increased to US$537.08 million and shareholders’ equity improved to US$1.16 billion.

Despite these relatively positive developments, PriceSmart’s stock dipped from US$93.63 on January 8 to US$83.03 at open on January 10, when it closed at US$89.67. PriceSmart closed Tuesday at US$90.45, which leaves it down two per cent year to date with a market capitalisation of US$2.77 billion.

The company plans to open its ninth Costa Rican club at Cartago in spring of 2025 while it will be opening its seventh Guatemalan club at Quetzaltenango in summer of 2025. That would push its club count to 56 when complete. The company experienced a seven per cent rise in net merchandise sales for December across all of its 54 clubs.