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PriceSmart Inc. (PSMT) reported strong performance for Q3 FY2025, with net merchandise sales reaching $1.3 billion and total revenue slightly over this figure. The company’s stock has shown impressive momentum, trading near its 52-week high of $124.59 and delivering a year-to-date return of 35.7%. The company demonstrated robust growth in its digital sales and private label products, alongside strategic expansion plans in Central America and the Caribbean. According to InvestingPro analysis, PriceSmart currently appears slightly overvalued relative to its Fair Value, despite maintaining strong financial health with an overall score of "GREAT."
Key Takeaways
- Net merchandise sales increased by 8%, with a 9.5% rise in constant currency.
- Digital sales grew by 19.8% year-over-year, representing 6.1% of total sales.
- Expansion plans include new clubs in Guatemala and the Dominican Republic.
- Membership accounts grew by 5.1%, reaching nearly 2 million.
- The company is exploring potential entry into the Chile market.
Company Performance
PriceSmart’s Q3 FY2025 results reflect a solid performance, with a notable increase in net merchandise sales and operating income. The company continues to expand its footprint in Central America, the Caribbean, and Colombia, with sales growth in these regions ranging from 7.5% to 10.1%. The strategic focus on digital channels and private label products is contributing to revenue growth and enhancing customer engagement.
Financial Highlights
- Revenue: Over $1.3 billion
- Net income: $35.2 million ($1.14 per diluted share)
- Adjusted EBITDA: $79 million
- Gross margin: Increased by 20 basis points to 15.8%
- Operating income: Increased by 12.7% to $56.2 million
Outlook & Guidance
Looking forward, PriceSmart plans to continue its expansion in Central America and the Caribbean, with new club openings in Guatemala and the Dominican Republic. The company is also evaluating entry into the Chilean market, citing favorable economic conditions and trade relations. The estimated annual effective tax rate is projected to be between 27% and 29%.
Executive Commentary
Michael L. McCleary, CFO, expressed enthusiasm about the company’s investments in operational efficiency, stating, "We are excited to be able to share these pivotal investments that we have made in our continued commitment to operational efficiency and excellence." David Price, the incoming CEO, emphasized a commitment to the company’s founding values: "Building on the legacy of my father and grandfather, I’m committed to leading with the same values that have guided this company from the beginning: integrity, excellence, and community."
Risks and Challenges
- Currency conversion challenges could impact financial performance, particularly in markets with volatile exchange rates.
- Supply chain disruptions, especially in regions where PriceSmart is expanding, could affect inventory and sales.
- Market saturation in existing regions may limit growth potential, necessitating successful entry into new markets like Chile.
PriceSmart’s Q3 FY2025 results highlight a company poised for continued growth through strategic expansion and innovation, with a robust Piotroski Score of 8 indicating strong financial position. For comprehensive analysis and detailed metrics, including exclusive Fair Value calculations and growth projections, investors can access the full PriceSmart research report on InvestingPro, part of their coverage of 1,400+ top US stocks.
Full transcript - PriceSmart Inc (PSMT) Q3 2025:
Conference Call Operator: Good afternoon everyone and welcome to PriceSmart Inc.’s earnings release conference call for the third quarter of fiscal year 2025, which ended on May 31, 2025. After remarks from our company’s representative, Robert E. Price, Interim Chief Executive Officer, and Michael L. McCleary, Executive Vice President, Finance, you’ll be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Monday, July 14, 2025. A digital replay will be available shortly following the conclusion of the call through July 21, 2025, by dialing 888-660-6264 for domestic callers or 646-451-73975 for international callers and entering replay access code 90598 pound. For opening remarks, I would like to turn the call over to PriceSmart’s Executive Vice President, Finance, Michael L. McCleary. Please proceed, sir.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Thank you, Operator, and welcome to PriceSmart Inc.’s earnings call for the third quarter of fiscal year 2025, which ended on May 31, 2025. We will be discussing the information that we provided in our earnings press release and our 10-Q, which were both released on July 10, 2025. Also, in these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our 10-Q. These documents are available on our investor relations website at investors.pricesmart.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the Company’s anticipated plans, revenues, and related matters.
Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate, and some other expressions. All forward-looking statements are based on current expectations and assumptions as of today, July 14, 2025. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the Company’s most recent annual report on Form 10-K, the quarterly report on Form 10-Q filed on July 10, 2025, and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These risks may be updated from time to time. The Company undertakes no obligation to update forward-looking statements made during this call. Now I will turn the call over to Robert E. Price, PriceSmart’s Interim Chief Executive Officer.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Thank you, Michael, and good day, everyone. Welcome to our third quarter earnings call. As we have previously announced, David Price will be PriceSmart’s new Chief Executive Officer effective September 1, 2025. David is very well prepared for his CEO responsibilities. I am looking forward to working with David in my role as Executive Chairman of our company. I would also like to acknowledge Michael L. McCleary for his many years of dedicated service to our company, most recently as Chief Financial Officer. With Michael’s retirement, I welcome Roberto Hernandez as PriceSmart’s new Chief Financial Officer. Roberto comes well prepared for his new responsibilities with significant senior executive financial experience, including working in the retail industry in South America. As always, I want to express my appreciation to our 12,000 employees for their dedication to PriceSmart. We are so proud of their many contributions to PriceSmart’s success.
Finally, I want to thank our stockholders for their support and continuing confidence. Now it is my pleasure to turn the meeting over to David.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: Thank you Robert and good morning everyone. Let me begin by sharing how honored I am to step into the role of CEO of PriceSmart Inc. effective September 1, 2025. Building on the legacy of my father and grandfather, Saul Price, I’m committed to leading with the same values that have guided this company from the beginning: integrity, excellence, and community. Values that are centered on our employees, members, providers, and the communities where we operate. Over the past decade, I’ve had the opportunity to work across many areas of the business, from launching and scaling our digital commerce business to advancing our sustainability efforts and more recently to partner closely with Robert E. Price and the executive team on our broader operations. These experiences have deepened my understanding of what makes PriceSmart Inc.
different: our purpose, our people, and our model, and sharpened my view of where we can go from here. As I step into this role, my priorities are grounded in our core values, prioritizing the welfare of our employees, delivering exceptional value to our members, raising the bar on execution and innovation, and driving sustainable long term results for our shareholders. As we shared in May, Roberto Hernandez joined PriceSmart Inc. as CFO on June 1. He brings strong experience in strategic finance and operations, most recently at The Estée Lauder Companies. Michael L. McCleary will be retiring after more than 20 years at PriceSmart Inc., including the.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Last five as CFOs.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: I want to thank Michael for his outstanding service and welcome Roberto to the team. Now moving on to the main factors and strategic priorities we are focused on to continue increasing sales and member value, starting with real estate. In April 2025, we opened a new warehouse club in Cartago, near the capital of San Jose in Costa Rica. Additionally, we plan to open our seventh warehouse club in Guatemala, located in Quetzaltenango, approximately 122 miles west from the nearest club in the capital of Guatemala City. This club is in the final phases of construction and is expected to open in August. In the third quarter of fiscal year 2025, we purchased land and plan to open our sixth warehouse club in the Dominican Republic, located in La Romana, approximately 73 miles east from the nearest club in the capital of Santo Domingo.
The club will be built on a five-acre property and is anticipated to open in the spring of 2026. Once these two new clubs are open, PriceSmart will operate 57 warehouse clubs. We continue to pursue opportunities to expand in our existing markets and to assess opportunities in new markets. In particular, we are currently evaluating Chile as a potential new market for PriceSmart. We have hired local consultants to help us in this process and are actively looking for potential sites in Chile. Having recently visited Chile myself, together with other members of our leadership team, I am excited about the potential opportunities this market offers us. However, opening PriceSmart in Chile remains subject to our completing our market analysis, finding appropriate sites, and securing permits. We continue to strengthen our distribution and logistics infrastructure to better serve our members.
Today we operate major distribution centers in Miami, Costa Rica, and Panama. In fiscal year 2026, we plan to upgrade our Panama DC to support cold products and to open new DCs in Guatemala, Trinidad, and the Dominican Republic. These local facilities are expected to improve product availability, reduce lead times, and lower landed costs. Along with these new DCs, we are currently testing distribution consolidation in China to streamline shipments directly to our markets. We are exploring ways to enhance logistics in our multi-club markets by utilizing a combination of PriceSmart managed and third.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Party operations in certain countries.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: We have also introduced the use of our own fleet of trucks to transport merchandise directly to the clubs and the last word on distribution and logistics. As international trade becomes more complex, our free trade zone operations in the U.S. and Costa Rica give us a strategic advantage by allowing us to consolidate and export goods without duties or tariffs. We’re actively pursuing strategies such as supply chain diversification, expanded offshore consolidation, and increased free trade zone utilization, all to improve efficiency and help offset rising costs for our members. Turning now to other ways, we are enhancing our membership beyond low prices, our private label brand Member Selection remains a key.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Part of our value proposition.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: These high quality, competitively priced products offer meaningful savings without compromising on quality. For the first nine months of FY 2025, private label sales represented 27.7% of total merchandise sales, up 30 basis points from the same period last year. In Central America, we’ve renewed and enhanced our co-branded consumer credit card with BAC, effective July 2025. The new agreement offers increased cash back rewards on purchases at PriceSmart, PriceSmart.com, BAC’s travel program and other retailers and services, adding even more value for our members. We continue to invest in omnichannel capabilities.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: To meet our members where they are.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: In Q3 digital channel sales reached $79 million, a 19.8% increase year over year, representing 6.1% of total net merchandise sales, our highest digital contribution to date.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Orders placed directly through our website or.
David Price, Incoming Chief Executive Officer, PriceSmart Inc.: App grew 16.7%, with average transaction value up 3.2%. As of May 31, 62% of our members have created an online profile and nearly one third of those have made a purchase online. We see continued opportunity in this space and will keep investing to enhance the digital experience we offer our members. We’re also modernizing our processes and technology. Taking one example, our migration to the Relex platform is well underway and expected to be substantially operational by year end. This upgrade enhances employee productivity and is designed to improve inventory management, reduce spoilage, and increase in stock availability, driving both sales and efficiency. Lastly, we recently released our Fiscal Year 2024 Sustainability Report, highlighting our commitment to environmental and social responsibility. The full report is available at investors.pricesmart.com under the ESG tab and more information can be found at pricesmart.org. With that, I’ll turn.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: It over to Michael L. McCleary for the financial review. Thank you, David. We had a strong third quarter as net merchandise sales reached almost $1.3 billion and total revenue was over $1.3 billion. During the first nine months of our fiscal year, net merchandise sales reached over $3.8 billion and total revenue was over $3.9 billion. During the third quarter, net merchandise sales increased by 8%, or 9.5% in constant currency, and comparable net merchandise sales increased by 7%, or 8.5% in constant currency. For the first nine months of the fiscal year, net merchandise sales increased by 7.2%, or 8.2% in constant currency, and comparable net merchandise sales increased by 6.5%, or 7.6% in constant currency.
By segment, in Central America, where we had 31 clubs at quarter end, net merchandise sales increased 7.5%, or 7.6% in constant currency, with a 5.7% increase in comparable net merchandise sales, or 5.9% in constant currency. All of our markets in Central America had positive comparable net merchandise sales growth. Our Central America segment contributed approximately 350 basis points of positive impact to the growth in total consolidated comparable net merchandise.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Sales for the third quarter.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: In the Caribbean, where we had 14 clubs at quarter end, net merchandise sales increased 8.2% or 9.7% in constant currency, and comparable merchandise sales increased 8.6% or 10.1% in constant currency. Our Caribbean region contributed approximately 240 basis points of positive impact to the growth in total consolidated comparable net merchandise sales.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: For the third quarter.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: In Colombia, where we had 10 clubs open at the end of our third quarter, net merchandise sales increased 10.1% or 19.3% in constant currency, and comparable net merchandise sales increased 9.9% or 19.1% in constant currency. Colombia contributed approximately 110 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. In terms of merchandise categories, when comparing our third quarter sales to the same.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Period in the prior year, our foods.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Category grew approximately 7.8%, our non foods category increased approximately 9%, our food services and bakery categories increased approximately 6.7%, and our health services including optical, audiology, and Pharmacy increased approximately 13.9%. Membership accounts grew 5.1% versus the prior year to almost 2 million accounts with a 12-month renewal rate of 88% as of May 31, 2025. A key driver of our membership strategy is the Platinum membership, which is designed to offer even more value to our most engaged members. Platinum members enjoy exclusive benefits including an annual cash back reward on eligible purchases, which directly translates to savings that reward loyalty and increased purchasing power. Platinum Accounts as of May 31, 2025, represented 16.1% of our total membership base, an increase from 11% in the prior year third quarter and 12.3% as of August 31, 2024.
This increase is due to additional focus on growing this important segment of our membership, which included Platinum promotional campaigns during fiscal years 2024 and 2025.
Total.
Gross margin for the quarter as a percentage of net merchandise sales increased 20 basis points to 15.8% and $17.5 million or approximately 9.4% versus the same prior year period. Total revenue margins increased 30 basis points to 17.4% of total revenue when compared to the same period last year. During the third quarter, our average sales ticket grew by 1.9% and transactions grew 6% versus the same prior year period. The average price per item remained relatively flat year over year, while average items per basket increased approximately 1.8% compared to the same period of the prior year. Total SG&A expenses increased to 13.2% of total revenues for the third quarter of fiscal year 2025 compared to 13% for.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: The third quarter of fiscal year 2024.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Increased 12.8% versus 12.6% for the nine month period ended in May. The 20 basis point increase of SG&A as a percentage of revenue primarily related to planned technology investments to support the future growth of our business. Operating income for the third quarter of fiscal year 2025 increased 12.7% from the same period last year to $56.2 million. Operating income for the first nine months of fiscal year 2025 increased 4.7% from the same period last year to $179.8 million. In the third quarter of fiscal year 2025, we recorded a $7.2 million net loss in total other expense compared to a $2.9 million net loss in total other expense in the same period last year. This increase is primarily driven by an increase in unrealized losses in value of U.S. Dollar denominated monetary assets and liabilities in several of our markets.
This increase was also driven by an increase in our cost of premiums to convert local currency into U.S. Dollars from $3.8 million in the prior year to $4.8 million in the current year. Our effective tax rate for the third quarter of fiscal year 2025 came in at 28.4% versus 30.8% a year ago. Our effective tax rate for the first nine months of fiscal year 2025 was 27.3% compared to 31.3% for the prior year period. The decrease in the effective tax rate is primarily related to our implementation of certain tax optimization initiatives at the end of fiscal year 2024. On a go forward basis, we estimate our annualized effective tax rate will be approximately 27% to 29%.
Net income for the third quarter of fiscal year 2025 was $35.2 million, or $1.14 per diluted share compared to $32.5 million or $1.08 per diluted share in the third quarter of fiscal year 2024. Adjusted EBITDA for the third quarter of fiscal year 2025 was $79 million compared to $71 million in the same period last year. Net income for the first nine months of fiscal year 2025 was $116.3 million or $3.80 per diluted share compared to $109.8 million, or $3.62 per diluted share in the comparable prior year period. Adjusted EBITDA for the first nine months of fiscal year 2025 was $245.1 million compared to $232.9 million in the same period last year. Moving on to our strong balance sheet, we ended the quarter with cash, cash equivalents and restricted cash totaling $183.1 million plus approximately $94 million of short term investments.
When reviewing our cash balances, it is important to note that as of May 31, 2025, we had $75.9 million of cash, cash equivalents, and short-term investments denominated in local currency in Canada and Honduras, which we could not readily convert into U.S. dollars. This is a decrease from the $77.3 million at the end of the second quarter of fiscal year 2025, driven by our ability to reduce our position in Honduran lempiras during the third quarter. While we have seen improvement in availability in Honduras of U.S. dollars during fiscal year 2025, we continue to monitor the situation actively as the underlying limitations on.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Availability of U.S. Dollars persists.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: From a cash flow perspective, net cash provided by operating activities increased $13.4 million for the first nine months of fiscal year 2025, largely due to improved operating results. Net cash used in investing activities decreased by $53.6 million for the first nine months of fiscal year 2025 compared to.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: The prior year, primarily due to a.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: $40.3 million decrease in property and equipment expenditures and a $14 million increase in proceeds from settlements and purchases of short term investments compared to the same nine month period a year ago. Net cash use in financing activities during the first nine months of fiscal year 2025 decreased by $82.4 million, primarily the result of fewer repurchases of our common stock, partially offset by an increase in repayments of and a decrease in proceeds from long term bank borrowings compared to the same period a year ago. Looking forward a little into our current fourth quarter, our comparable net merchandise sales for the four weeks into June 29, 2025 were up 7.7% in both U.S. dollars and constant currency. In closing, we are excited to be able to share these pivotal investments that we have made in our continued commitment to operational efficiency and excellence.
We believe these changes will continue to enhance the member experience, creating a mutually beneficial relationship built on trust, value, and innovation. Thank you for joining our call today. Before turning the call over for questions, we would like to request that due to the CEO and CFO transition process and due to travel schedules, we were not able to all be in the same location today. We would like to request that you direct your questions on today’s call to Robert or myself. I will now turn the call over to the operator to take your questions. Operator, you may now start picking our caller’s questions.
Conference Call Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch.
Tone.
Tone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jonathan Paul Braatz with Kansas City Capital Associates. Jonathan, please go ahead, everyone.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Michael, a question on your Trinidad funding plans that you discuss in the 10-Q. How does that help solve your convertibility issue in Trinidad? How do you see the impact on the P&L and maybe your liquidity premium that you’re charging? The last thing, I guess it’s a Trinidad, Jamaica type of transaction. Does that generate an additional currency issue when you have the conversion between Trinidad and Jamaica?
Hi, John.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Great question.
Thanks. There’s a few. There’s several different components of these transactions, right? There’s a total of up to $65 million. The cleanest and simplest, if you will, is the U.S. dollar loan for $15 million, in which we repay in Trinidad dollars.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: That obviously gives us a direct.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Connection to work on our Trinidad payables.
The other $50 million, as you brought up, there’s a piece that’s in Jamaican.
Dollars, but it’s indexed to U.S. Dollars, so there won’t be any additional exposure from the Jamaican currency.
It’s just no matter where the investors were that were subscribing to pieces of that transaction. Maximum FX exposure to this transaction would be between the Trinidad dollar and the U.S. dollar for the $50 million, not for the $15 million that we pay back in Trinidad dollars, and no additional Jamaican exposure.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: As far as the purpose.
I mean, it’s not a tool for our toolbox here, obviously, just like most of the rest of the countries where in Trinidad, about half of our merchandise is imported. Those vendors.
Conference Call Operator: Hello?
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Anybody there?
Conference Call Operator: Can you hear me? Yeah. Okay, great. It looks like you just cut off the end of your question.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: I can’t hear anybody.
Conference Call Operator: Okay, let me just see what’s going on here. One moment.
Sorry.
Looks like we got disconnected with John. I will move on to the next question from Héctor Manuel Maya López with Scotiabank Global Banking and Markets. Please go ahead.
Thank you very much, Robert. Michael, thank you for taking the question. Just wanted to ask if you could please share with us the thinking process that went into your strategic decision to consider Chile for future openings over other markets, and also to understand how you are thinking in terms of the potential for that market. To understand what was so appealing about this opportunity, and also how open you could be to considering other opportunities in the region.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Hello, operator, are we live?
Conference Call Operator: Please go ahead, operator.
Are we live now?
Yes, you are live.
Okay, did my answer to John’s question get fully answered before we cut off there?
No, it looks like John got disconnected near the end of his question.
Okay, you did not hear my answer to John’s question?
No, we did not.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Oh, okay.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: We were getting some status.
Let me try to. Is John still online?
Conference Call Operator: I’m just checking now.
Okay, do you want Héctor to ask this question again?
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: We’re going to go ahead.
Answer Héctor’s question and then I’ll go.
Back to Robert’s question.
I’m sorry, everybody, about the technical difficulties.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Héctor, I’ll respond to your—you really had two questions. I think one is the considerations that went into consider going, you know, our decision or at least almost decision, we haven’t finalized everything, to enter the market in Chile and then other markets that we might be considering. I think that would—those were your questions, is that right? I don’t know where he is now.
Héctor, is Héctor going to operator? Okay, operator, can you confirm that you heard Robert’s answer?
Conference Call Operator: Hi, yes, I heard that. I’m looking for Héctor right now just to double check.
Go ahead and proceed.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: I guess at this point.
You’re not there. Okay, why don’t we have Robert go ahead.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: Okay, regarding the considerations that went into our at least pretty possible decision to open in Chile, we haven’t really finalized everything. It’s the fact that Chile has a strong middle class. The economics are good. It has a good trade relation and tax relationship between the United States and Chile, and a very stable government. I think a lot of our countries are challenging in terms of some of the political and economic issues that we face in our countries. Chile, we believe, would be a much more stable and more developed country. We think it would be a positive market. Also, the market in Chile, we think we could do well because of the strong middle class.
As far as other markets in Latin America at the moment, we aren’t doing any serious study of any other markets, but we would continue to assess opportunities that might come up. Nothing to report really on that.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Okay, once again, do want to.
Apologize for the technical difficulties. Last few calls have been very smooth. Sorry about that. I want to go back to John’s question here. I don’t think we have him on the line anymore, but let me just try to recreate that and see if I covered the pieces of John’s question. John was asking about the Trinidad financing arrangements and how that affects our liquidity situation in Trinidad. To the extent you haven’t already heard this answer, I don’t think it went through of the up to $65 million of financing that we’ve arranged, that we expect to fund in Q4, $15 million of that is we will receive proceeds in U.S. dollars and we will repay in Trinidad dollars. That gives us a clear path.
Towards.
Converting our Trinidad dollars into U.S. dollars. The other $50 million is going to be primarily in U.S. dollars. Some of it is actually tied to Jamaican dollars. From our perspective, the liabilities in U.S. dollars are indexed to U.S. dollars. We are not introducing any third currency as far as volatility to the U.S. dollar Jamaican dollar exchange rate. It will just be U.S. dollar Trinidad for that $50 million entirely. That was just a convenience factor for certain of the investors that are part of that deal. Overall, the $50 million is just another tool in our toolbox, just like the rest of our countries. About 50% of our products that are sold in Trinidad is imported, which means we have U.S. dollar vendors primarily through PriceSmart Inc. that need to be paid.
This will allow PriceSmart to pay money up to PriceSmart Inc., who can then pay on to their vendors and give us a path to spread that conversion over several years. Last piece of the question from John was regarding the FX accrual and how we’re including the premiums for our members. That’s something that we constantly evaluate to see how much that will impact our pricing. We do consider that and we are figuring that into our calculations for next year, going to do our best to make sure that does not impact member pricing, but that’s a work in process.
Conference Call Operator: Thank you, and sorry for that technical difficulty there. I’m not sure what happened. As a reminder, if you do wish to ask a question, please press Star one. It looks like we have Héctor with a question from Scotiabank Global Banking and Markets. Héctor, please go ahead. Thank you very much.
Thank you so much, Robert, Michael, for taking my question. I was basically asking if you could please share the thinking process that went into the strategic decision to consider Chile for future openings over other markets, and also to understand how you are thinking in terms of the potential in that market. Could it be also fair to assume that now PriceSmart would be open to considering other opportunities in the region and how this could change the growth algorithm in terms of store openings in the future?
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: I answered most of that already. I don’t know if you got it.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: I did answer a.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: few minutes ago, most of your questions regarding, I think the one thing in Chile that you mentioned now about the potential for that market, I think it’s, you know, the gross domestic product in Chile is about the same as it is in Colombia, about $350 billion. The population is much smaller, so much stronger middle class. We think, you know, although a big portion of the population is located in Santiago, we feel that we could have quite a, you know, a number of PriceSmart locations in the capital and also in some of the secondary cities. The market potential, you know, it’s really hard to say, but we think it could be pretty good for us.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: So.
Robert E. Price, Interim Chief Executive Officer / Executive Chairman, PriceSmart Inc.: There’s still a work in progress as we continue to assess the market.
I understand. Sorry about that. I was also having issues to connect initially to the call, so maybe I missed that call.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: There’ll be a transcript coming out shortly, so hopefully you can catch that.
Conference Call Operator: Thank you. There are no further questions at this time. I will now turn the call over to Michael L. McCleary for closing remarks. Please continue.
Okay, once again, everybody, sorry about the technical difficulties. Hopefully, everybody was able to hear our answers clearly. I think we answered both Jonathan and Héctor’s questions, and thank you for your participation today.
Michael L. McCleary, Executive Vice President, Finance / Outgoing CFO, PriceSmart Inc.: Take care.
Conference Call Operator: Bye. Bye. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
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