Pricesmart Inc 2026 Q4 Earnings Call

Please proceed, sir. Thank you, operator, and welcome to PriceSmart Inc.'s earnings call for the fourth quarter of fiscal year 2026, which ended on August 31st, 2026.

We will be discussing the information that we provided in our earnings press release and our 10-K, which were both released yesterday afternoon, October 26, 2026. 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-K. These documents are available on our investor relations website at investors.pricesmart.com, or 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, October 27th, 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's report on Form 10-K filed yesterday 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 David Price, PriceSmart's Chief Executive Officer.

Thank you, Gualberto, and good morning, everyone. Thank you for joining us today. I want to begin where I always do, with a big thank you to every one of our employees across our 14 countries, including our new team in Chile. This was a demanding year. Our teams worked through currency swings, economic and trade uncertainty, and natural disasters while also rolling out new systems and processes inside the company. To our teams, your passion for serving our members is what made this year's results happen, and I'm deeply grateful. Before getting into the numbers, I want to take a moment to acknowledge the recent earthquakes that affected our communities in Colombia and Panama. Our thoughts are with everyone impacted. In Colombia, a magnitude 7.4 earthquake struck on August 10th, hitting Cali and Pereira hardest.

We lost only a minimal number of operating hours, and all of our clubs are open today. Our teams moved quickly to restore inventory so our clubs could keep serving members and neighbors when they needed us most. We temporarily opened our clubs in Pereira and Cali to non-members so more families could access essential goods. With the PriceSmart Foundation and Price Philanthropies Foundation, we have collected more than 75 tons of essential products for distribution. In Panama, where a 7.7 magnitude quake struck on October 9, our clubs came through without major impact. We launched Juntos por Panamá so members could donate in-club, and we provided critical supplies to the government's humanitarian hub. We will continue supporting recovery in both countries. I am grateful to our employees in both countries who showed up for each other and their communities with care and resilience.

Panama is where this company's story began. This month marks 30 years since we opened our first club in Panama City. Today, we serve almost 2.2 million member accounts through 59 clubs with more than 13,000 employees. Thank you to our members, our partners, and our team for three decades of trust. Now, to the numbers. Our business achieved another strong quarter and fiscal year. In the fourth quarter, net merchandise sales reached almost $1.5 billion, with total revenue exceeding $1.5 billion. Net merchandise sales increased by 13.8%, or 7.8% in constant currency. Comparable net merchandise sales in US dollars increased by 12.2%, and comparable net merchandise sales in constant currency increased by 6.2%. Three of our recent club openings, Quetzaltenango, La Romana, and Ciudad Quesada, are not yet included in our comparable sales numbers.

For the fiscal year ended August 31, 2026, total net merchandise sales reached almost $5.8 billion, and total revenues were almost $5.9 billion. Net merchandise sales increased by 11.7%, or 8.4% in constant currency. Comparable net merchandise sales increased by 9.6%, or 6.4% in constant currency for the 12-month and 52-week periods respectively. During the fourth quarter, our average sales ticket grew by 7.5% and transactions grew by 5.9%, compared with the fourth quarter of the prior fiscal year. For the full fiscal year, our average ticket grew by 4.2% and transactions grew 7.2% compared with the prior full year. Also, for the full fiscal year, the average price per item increased 5%, while average items per basket decreased 0.7% compared with the prior year. Overall, members came more often, and they spent more when they did.

Every one of our regions contributed to the growth we saw in the fiscal year. First, in Central America, where we had 33 clubs at quarter end, net merchandise sales for the fourth quarter increased 9.5%, or 5.9% in constant currency, with an 8% increase in comparable net merchandise sales, or 4.4% in constant currency. Our Central America segment contributed approximately 480 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. Second, in the Caribbean, where we had 15 clubs at quarter end, net merchandise sales for the fourth quarter increased 9.9%, or 8.4% in constant currency, and comparable net merchandise sales increased 6.7%, or 5.3% in constant currency. Our Caribbean region contributed approximately 180 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter.

Last, in Colombia, where we had 10 clubs open at the end of our fourth quarter, net merchandise sales for the fourth quarter increased 43.2%, or 15.9% in constant currency, and comparable net merchandise sales increased 44.2%, or 16.3% in constant currency. Colombia contributed approximately 560 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. Colombia's growth was again meaningfully influenced by the appreciation of the Colombian peso relative to the same period last year. Next, merchandising. Comparing our fourth quarter sales to the same period in the prior year, our foods category grew approximately 13.9%. Part of that growth comes from remodels of the fresh area in our clubs, which has given more selling space to those items. Fresh food is an important driver of visits to our clubs, and dedicating more space to those items is paying off.

Our non-foods category increased approximately 13.8%, with casual apparel posting the highest growth within non-foods. Our World Cup celebration was another great example, with TV sales up 25%. Moving to other categories. Our food service and bakery category increased approximately 13.5%. Our health services, including optical, audiology, and pharmacy, increased approximately 9.6%. One change to note, at the end of the fourth quarter, we decided to discontinue audiology services in our clubs and repurpose that space to selling merchandise. This lets us focus our health offering on optical and pharmacy, where members visit more often. Turning to our Member's Selection private label brand. This remains a powerful differentiator for PriceSmart. Private label penetration on a comparable basis, excluding a reclassification of the produce category, increased 20 basis points year over year. Using our updated methodology, penetration of private label was 26.9% of total merchandise sales.

Member's Selection remains an important focus for us. In the fourth quarter, we added several new private label items. One to highlight is our Member's Selection freeze-dried flavored coffee in Colombia, which has exceeded our expectations from the day it launched. Members choose it because it delivers quality and value that they can count on. We see this brand as a long-term competitive advantage, and we will continue to invest in expanding and improving the assortment in the years ahead. Now, membership. We serve almost 2.2 million member accounts, up 8.7% year over year, with over 4 million cardholders across our markets. Our trailing 12 months renewal rate was 90.4% for fiscal year 2026, up from 88.8% a year ago. That tells us members see the value we deliver and are choosing to renew year after year. Platinum is our premium tier designed for our most engaged members.

It costs more than our Diamond tier, and in return, members get exclusive benefits and enhanced rewards. Platinum grew from 17.9% of our membership base at the end of fiscal 2025 to 23.4% at the end of fiscal 2026, a 550 basis point shift in one year. This was driven by our teams running targeted campaigns and delivering a membership experience that earns the upgrade. Fiscal year 2026 membership income reached $100.8 million, up 17.8%, driven primarily by higher Platinum penetration. As a percentage of revenue, membership income was 1.7% in fiscal 2026, up from 1.6% in fiscal 2025. Now let me turn to the growth initiatives shaping our next chapter, starting with our club network. In August, we opened our 10th warehouse club in Costa Rica in Ciudad Quesada, about 47 miles northwest of the nearest club in San José.

The club sits on a 6-acre site with a sales floor of roughly 42,000 square feet. We built it with sustainability in mind, including LED lighting, a CO2-based cooling system, and its own wastewater treatment plant. It's still early, but we're encouraged by the initial reception from members in the area. In the first quarter of fiscal year 2027, we opened our third warehouse club in Jamaica, located in Montego Bay, approximately 100 miles west from the nearest club in the capital of Kingston. The club sits on a 5-acre site and has a sale floor of roughly 42,000 square feet. We designed and built it with similar sustainable standards as the Costa Rica club. Looking further ahead, we have four other warehouse clubs currently in our pipeline.