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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 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.
Net Merchandise Sales Net merchandise sales increased by 10.6% (9.5% in constant currency) year-over-year, driven by resilient consumer demand and strong execution by teams.
Comparable Net Merchandise Sales Comparable net merchandise sales increased by 8% (6.9% in constant currency) year-over-year, reflecting strong consumer demand and operational performance.
Average Sales Ticket The average sales ticket grew by 2.1% year-over-year, attributed to increased consumer spending.
Transactions Transactions grew 8.4% year-over-year, indicating higher customer activity.
Average Price Per Item The average price per item increased 1.8% year-over-year, while average items per basket remained flat.
Central America Net Merchandise Sales Net merchandise sales in Central America increased 9.6% (9.2% in constant currency) year-over-year, with all markets showing positive growth.
Caribbean Net Merchandise Sales Net merchandise sales in the Caribbean increased 5.7% (7.8% in constant currency) year-over-year, with all markets showing positive growth.
Colombia Net Merchandise Sales Net merchandise sales in Colombia increased 27.8% (15% in constant currency) year-over-year, driven by strong market momentum.
Foods Category Sales The foods category grew approximately 11.3% year-over-year, reflecting strong demand.
Non-Foods Category Sales The non-foods category increased approximately 7.2% year-over-year, showing steady growth.
Food Service and Bakery Category Sales The food service and bakery category increased approximately 10.1% year-over-year, driven by consumer demand.
Health Services Category Sales Health services, including optical, audiology, and pharmacy, increased approximately 17.8% year-over-year, reflecting strong growth in this segment.
Membership Accounts Membership accounts grew 6.7% year-over-year to over 2 million accounts, with a 12-month renewal rate of 89.3%.
Platinum Memberships Platinum memberships grew to 19.3% of the total membership base, up from 14% in the prior year, driven by targeted promotional campaigns.
Membership Income Membership income as a percentage of revenue increased to 1.7% from 1.6% in the prior year, supported by the growth in Platinum memberships.
Digital Channel Sales Digital channel sales reached $89.8 million, up 29.4% year-over-year, representing 6.6% of total net merchandise sales.
Gross Margin Total gross margin as a percentage of net merchandise sales remained unchanged at 15.9% year-over-year.
Total Revenue Margins Total revenue margins improved by 30 basis points to 17.7% of total revenue, driven by membership renewals and Platinum growth.
SG&A Expenses Total SG&A expenses increased to 13.1% of total revenues, up from 12.8% in the prior year, due to technology investments and CEO compensation.
Operating Income Operating income increased 8% year-over-year to $62.9 million, reflecting strong operational performance.
Net Income Net income for the quarter was $40.2 million ($1.29 per diluted share), up from $37.4 million ($1.21 per diluted share) in the prior year.
Adjusted EBITDA Adjusted EBITDA grew 9.8% year-over-year to $86.9 million, reflecting improved operational efficiency.
Cash and Short-Term Investments Cash, cash equivalents, and restricted cash totaled $249.6 million, with $114.2 million in short-term investments.
Net Cash from Operating Activities Net cash provided by operating activities increased by $32.7 million year-over-year to $71.2 million, driven by VAT recoveries and working capital improvements.
Private Label Sales: Private label sales represented 27% of total merchandise sales, with a focus on strategic product development and local relevance.
Digital Channel Sales: Digital channel sales reached $89.8 million, up 29.4% year-over-year, representing 6.6% of total net merchandise sales.
Membership Growth: Membership accounts grew 6.7% year-over-year to over 2 million accounts, with Platinum memberships increasing to 19.3% of the total base.
New Club Openings: Plans to open new clubs in the Dominican Republic, Jamaica, Costa Rica, and Chile, with a total of 60 clubs expected by the end of fiscal year 2026.
Expansion in Chile: Progress in entering the Chilean market with agreements for two prospective club sites.
Supply Chain Enhancements: New distribution centers planned in Trinidad, Colombia, and the Dominican Republic, alongside third-party centers in China to improve efficiency and reduce costs.
Technology Investments: Implementation of RELEX forecasting, e2open global trade management platform, and Workday's human capital management system to enhance operations.
Omnichannel Capabilities: Investments in digital platforms, including a migration to native mobile app architectures and enhancements to the online shopping experience.
Real Estate Optimization: Expansion and remodels of existing clubs in high-volume locations to drive sales and improve member experience.
Operational disruptions caused by Hurricane Melissa: The hurricane caused delays in the opening timeline for new clubs in Jamaica. Although existing clubs weathered the storm well, the recovery efforts and operational disruptions impacted the company's expansion plans.
Supply chain timing issues: Supply chain timing issues created out-of-stocks in several high-volume food items during December, impacting sales performance during the holiday season.
Government elections in Honduras: Elections created consumer uncertainty, which negatively impacted sales performance in the region during December.
Extended rainy season in Panama: The rainy season disrupted traffic and logistics, affecting sales and operations in the region.
Foreign currency-related losses: The company recorded a $7.2 million net loss in total other expenses due to foreign currency-related losses, which continues to be a financial challenge.
Cash restrictions in Trinidad: $80.2 million of cash, cash equivalents, and short-term investments in Trinidad could not be readily converted into U.S. dollars, limiting liquidity and financial flexibility.
Economic uncertainty in Venezuela: The company is monitoring the evolving situation in Venezuela, which could have implications for its business operations or U.S. companies operating in the region.
Real Estate Expansion: PriceSmart plans to open four new warehouse clubs in fiscal year 2026, including locations in the Dominican Republic, Jamaica, and Costa Rica. These expansions will bring the total number of clubs to 60. Additionally, the company is advancing plans to enter the Chilean market, with two prospective club sites under agreement.
Supply Chain Enhancements: New distribution centers are planned for Trinidad, Colombia, and the Dominican Republic in fiscal year 2026. These centers 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 Investments: PriceSmart is migrating to the RELEX forecasting and replenishment platform, expected to be fully implemented in fiscal year 2026. This upgrade aims to improve inventory management and operational efficiency. Additionally, the company is rolling out the ELERA point-of-sale system and Workday's human capital management system to enhance operations and employee experience.
Membership Growth: The company is focusing on growing its Platinum membership tier, which represented 19.3% of the total membership base as of November 30, 2025, up from 14% the previous year. This strategy aims to drive loyalty and increase purchasing frequency.
Digital Sales Expansion: Digital channel sales reached $89.8 million in the first quarter of fiscal year 2026, up 29.4% year-over-year. The company plans to continue investing in digital platforms to enhance the member experience.
Market Trends and Projections: The company expects continued strong performance in Colombia and positive trends across other markets as it enters calendar year 2026. However, it is monitoring potential impacts from external factors such as remittance flows and geopolitical developments in Venezuela.
The selected topic was not discussed during the call.
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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