FOLLOWING its announcement that it would be opening a third warehouse club in El Salvador last July, PriceSmart Inc has announced that it will be opening a fourth location in the Central American country as it aims to grow its footprint in Latin America and the Caribbean.

The international membership shopping business purchased land in Santa Ana on which it plans to build and open a new store in early 2024. The club will be built on a five-acre property and is 40 miles west of the club based in the capital of San Salvador. PriceSmart will also be opening its third location next month which is a small format club in San Miguel which is 100 miles east of the capital.

“We’ve done well in El Salvador in terms of the two locations we have, and I think as we were thinking about cities outside of San Salvador, we recognise that there are these two cities that are pretty sizeable cities that also receive a lot of remittances from the United States. And we believe that we probably have been a little tardy in opening in those two cities. So, I think it’s really a recognition that there are more opportunities in El Salvador than what we have up to now taken advantage of,” said co-founder, chairman and interim Chief Executive Officer (CEO) Robert Price in the company’s earnings call held on Tuesday.

PriceSmart opened its current Salvadoran locations in 1999 and 2000 with the company focusing on other markets over the last two decades. With the addition of its new Medellín, Colombia, location to be opened in summer 2023 and Escuintla, Guatemala, location in fall 2023, PriceSmart will have 54 locations in 2024 when combined with the two new Salvadoran clubs. Its new Colombian location would be its 10th and sixth club in Guatemala when opened.

PriceSmart’s newly committed investments come at a time when El Salvador’s President Nayib Bukele looks to grow the country and welcome more international investment. El Salvador’s homicide rate has drastically fallen from 105 murders per 100,000 inhabitants to eight homicides per inhabitants in 2022. The country has made Bitcoin an official currency alongside the United States dollar and Bukele has proposed a bill to eliminate all taxes on technology innovations as well as computing and communications hardware manufacturing.

These developments come after an International Monetary Fund (IMF) Article IV mission in February where the economy was noted to have expanded by 2.8 per cent in 2022 despite adverse shocks. There was mention of the fact that the unprecedented drop in crime, strong remittances, and increased tourism revenues contribution to improved economic activity with real GDP (gross domestic product) growth in 2023 set to be 2.4 per cent.

PriceSmart’s Central American segment which also includes Costa Rica, Nicaragua and Panama saw revenue rise 13 per cent to US$694.21 million for its second quarter (December to February) with net profit coming in 20 per cent higher at US$46.44 million. US$28.31 million was spent on capital for the six months with segment assets at US$959.06 million.

PriceSmart’s overall second quarter revenue grew 10 per cent to US$1.14 billion with net merchandise sales at US$1.11 billion. The foods category had an 11 per cent rise while the other non-food category growing 10 per cent. The second quarter net income marginally declined to US$31.35 million. However, these earnings were impacted by the US$7.75-million separation costs associated with former CEO Sherry Bahrambeygui on February 3. Adjusted net profit for the quarter after removing the one-time costs resulted in US$38.54 million. With respect to the overall six-month period, US$64.25 million in net profit became US$71.45 million after adjustments, a 18 per cent increase above the US$60.52 million in the prior period.

Membership across its 50 clubs grew to 1.77 million members with an 88 per cent renewal rate at the end of the second quarter. Its platinum membership segment also hit 145,287 members which is a significant improvement relative to the 77,909 members at the end of August 2020. Membership income for the overall six months rose seven per cent to US$32.07 million.

While PriceSmart has noted improved business in Jamaica since the opening of its Portmore location last April, comparable net sales declined six per cent for the six-month period due to sales transfers from the Red Hills Road location in its calculations. PriceSmart has not provided an update on its third club in Jamaica which is likely to be in St James. It received approvals from the National Environmental and Planning Agency in March 2020 for a Catherine Hall location, but sources from the municipal corporation indicate there is interest in Ironshore. PriceSmart currently has a bakery at Fairview, St James.

PriceSmart’s total assets grew four per cent in the first six months to US$1.89 billion with its current assets hitting US$836.77 million. Total liabilities and shareholders equity closed the period at US$842.26 million and US$1.04 billion, respectively.

With an adjusted US$1.25 earnings per share (EPS) over the actual US$1.02 EPS, PriceSmart beat analyst’s estimates of US$0.88 for the quarter. This sent the stock price up 11 per cent on Tuesday to US$78.77 with it being up closing Thursday at US$77, up 25 per cent year to date. This leaves PriceSmart with a market capitalisation of US$2.39 billion.

While the CEO search continues, it plans to invest in remodelling current PriceSmart clubs, opening more distribution centres, increase the membership and service offerings and drive more incremental sales via its website. New distribution centre locations are currently being explored as it seeks to optimise efficiencies and reduce supply chain risk. It also intends to begin programs with the Global Food Banking network in El Salvador, Colombia, and Nicaragua over the next few quarters.

“Since December of 2022 I have taken a more active management role, while officially taking on the interim CEO role in early February. My takeaways from these past few months include my appreciation for the way in which our management team is taking responsibility for their various areas of responsibility. My other main takeaway is how much opportunity we continue to have to grow our business in a healthy way for the long-term benefit of our members, our employees, our shareholders and for the communities in which we do business. For me, personally, I am grateful to be leading a company that does so much for so many people,” Price closed.