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01/10 03:48
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook. Financial performance is strong with revenue and income growth, but concerns exist regarding liquidity risks in Trinidad, increased SG&A expenses, and regulatory challenges in Chile. The Q&A section reveals management's lack of clarity on certain issues, such as the Chile expansion timeline and EBITDA margins. While positive developments in digital sales and membership income are noted, the overall sentiment remains balanced due to these uncertainties. Given the company's market cap, a neutral stock price movement is anticipated over the next two weeks.
Net Merchandise Sales (Q4 FY2025) $1.3 billion, increased by 9.2% year-over-year (9.1% in constant currency). Growth attributed to increased transactions (8.7%) and average sales ticket growth (0.5%).
Total Revenue (Q4 FY2025) Over $1.3 billion, increased by 9.2% year-over-year. Growth aligned with net merchandise sales.
Net Merchandise Sales (FY2025) Almost $5.2 billion, increased by 7.7% year-over-year (8.5% in constant currency). Growth driven by increased transactions (5.9%) and average ticket growth (1.7%).
Total Revenue (FY2025) Almost $5.3 billion, increased by 7.7% year-over-year. Growth aligned with net merchandise sales.
Membership Income (Q4 FY2025) $22.6 million, increased by 14.9% year-over-year. Growth driven by higher Platinum membership penetration and a $5 annual fee increase.
Digital Channel Sales (FY2025) $306.7 million, increased by 21.6% year-over-year. Growth driven by a 22.4% increase in orders and a 3.7% increase in average transaction value.
Private Label Sales (FY2025) 28.1% of total merchandise sales, up 50 basis points from 27.6% in FY2024. Growth attributed to high-quality, competitively priced products.
Gross Margin (Q4 FY2025) 15.7%, unchanged year-over-year. In dollar terms, increased by $16.9 million (9%).
Operating Income (Q4 FY2025) $52.8 million, increased by 7.2% year-over-year. Growth driven by higher revenue and stable gross margins.
Net Income (Q4 FY2025) $31.5 million or $1.02 per diluted share, increased from $29.1 million or $0.94 per diluted share in Q4 FY2024. Growth driven by higher operating income and lower foreign currency transaction costs.
Adjusted EBITDA (Q4 FY2025) $75.5 million, increased from $70.7 million in Q4 FY2024. Growth driven by higher revenue and operational efficiency.
Cash Flow from Operating Activities (FY2025) $261.3 million, increased by $53.7 million year-over-year. Growth driven by lower inventory buildup and timing of holiday seasonal buildup.
Private Label Sales: Private label sales represented 28.1% of total merchandise sales in fiscal year 2025, up from 27.6% in fiscal year 2024. Top-selling items included shredded mozzarella cheese, hypoallergenic baby wipes, and cold extracted extra virgin olive oil.
Digital Channel Sales: Digital channel sales reached $306.7 million in fiscal year 2025, up 21.6% year-over-year, representing 6% of total net merchandise sales. Orders through the website or app grew 22.4%, with an average transaction value increase of 3.7%.
New Point-of-Sale System: Implementation of the ELERA system in English-speaking Caribbean markets is expected to complete in Q1 fiscal year 2026, with rollouts in Spanish-speaking markets later in the year. This system aims to improve checkout times and expand payment options.
New Warehouse Clubs: Opened a seventh warehouse club in Guatemala in August 2025. Purchased land for new clubs in the Dominican Republic and Jamaica, with openings planned for 2026. Entering Chile with a prospective club site and a hired country general manager.
Expansion and Remodels: Plans to expand and remodel select clubs and parking lots in fiscal year 2026 to optimize the current footprint and enhance member experience.
Supply Chain Enhancements: Opened a new dry distribution center in Guatemala and adapted the Panama facility for cold merchandise. Plans to open distribution centers in Trinidad and the Dominican Republic in fiscal year 2026. Implementing third-party distribution centers in China to consolidate merchandise.
Forecasting and Replenishment System: Migration to the RELEX platform is expected to complete in fiscal year 2026, improving inventory management and operational efficiency.
Membership Growth: Membership accounts grew 6.2% year-over-year to over 2 million. Platinum membership increased to 17.9% of the total base, up from 12.3% the prior year. Membership income reached $22.6 million in Q4, a 14.9% increase year-over-year.
Technological Investments: Investments in technology include the RELEX and ELERA systems, as well as Workday's human capital management system to enhance employee experience and compliance.
Hurricane Melissa Impact: Operations in Jamaica were disrupted due to preparations for and the impact of Hurricane Melissa, leading to temporary closures of clubs and potential financial and operational setbacks.
Supply Chain Challenges: Delays in the implementation of the RELEX forecasting and replenishment system, originally planned for fiscal year 2025, could impact inventory management and operational efficiency.
Currency Liquidity Issues: In Trinidad, $59.7 million of cash and short-term investments are denominated in local currency and cannot be readily converted into U.S. dollars, posing liquidity risks. Similar challenges have been faced in Honduras in the past.
Regulatory and Permitting Risks: Expansion into Chile and other markets is subject to permitting and construction delays, which could impact the timeline for opening new clubs.
Increased SG&A Expenses: SG&A expenses have risen due to investments in technology and other one-time costs, which could pressure margins if not offset by revenue growth.
Economic and Currency Risks: Operating in multiple jurisdictions exposes the company to economic and currency fluctuations, which could impact financial performance.
Real Estate Expansion: The company plans to open three new warehouse clubs: one in the Dominican Republic (spring 2026), one in Montego Bay, Jamaica (summer 2026), and another in Jamaica (fall 2026). Additionally, the company is advancing plans to enter the Chilean market, with a country general manager hired and a prospective club site identified.
Supply Chain Enhancements: PriceSmart plans to open new distribution centers in Trinidad and the Dominican Republic during fiscal year 2026. These facilities aim to improve product availability, reduce lead times, and lower costs. The company is also implementing third-party distribution centers in China and introducing its own fleet of trucks in select countries.
Technology Upgrades: The company expects to complete the implementation of the RELEX forecasting and replenishment system in fiscal year 2026. Additionally, the ELERA point-of-sale system will be rolled out in English-speaking Caribbean markets in the first quarter of fiscal year 2026 and later in Spanish-speaking markets. A new human capital management system by Workday is also being implemented to enhance employee experience and compliance.
Digital and Omnichannel Investments: In fiscal year 2026, PriceSmart will migrate its mobile application to fully native iOS and Android architecture to improve speed, reliability, and accessibility. The company aims to enhance the digital experience and expand its omnichannel capabilities.
Membership Growth and Enhancements: The company plans to continue focusing on increasing Platinum membership penetration and enhancing membership benefits, including co-branded credit card rewards. Membership income is expected to grow further, supported by a strong renewal rate of 88.8%.
Cash dividend payments: Net cash provided by financial activities during fiscal year 2025 increased by $164.2 million, primarily driven by a $27.4 million decrease in cash dividend payments.
Repurchases of common stock: Net cash provided by financial activities during fiscal year 2025 increased by $164.2 million, primarily driven by a $66.8 million decrease in repurchases of our common stock.
The earnings call showed strong financial performance with increased sales across categories, improved revenue margins, and operational efficiency. The Q&A highlighted resolved supply chain issues and strong performance in Colombia. However, SG&A expenses rose, and management avoided some specific details. The market cap suggests moderate stock movement. Overall, the sentiment is positive, predicting a 2% to 8% stock price increase.
The earnings call presents a mixed outlook. Financial performance is strong with revenue and income growth, but concerns exist regarding liquidity risks in Trinidad, increased SG&A expenses, and regulatory challenges in Chile. The Q&A section reveals management's lack of clarity on certain issues, such as the Chile expansion timeline and EBITDA margins. While positive developments in digital sales and membership income are noted, the overall sentiment remains balanced due to these uncertainties. Given the company's market cap, a neutral stock price movement is anticipated over the next two weeks.
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