• Total Revenue: Almost $1.4 billion for Q2 FY2025.
• Net Merchandise Sales: Over $1.3 billion for Q2 FY2025; increased by 5.8% or 7% in constant currency.
• Comparable Net Merchandise Sales: Increased by 6.7% or 7.9% in constant currency for Q2 FY2025.
• Gross Margin: Decreased 10 basis points to 15.6% of net merchandise sales.
• Operating Income: Increased 2.6% to $65.3 million for Q2 FY2025.
• Net Income: $43.8 million or $1.45 per diluted share for Q2 FY2025.
• Membership Accounts: Grew 4.1% to over 1.9 million accounts with a 12-month renewal rate of 87%.
• SGNA Expenses: Increased to 12.4% of total revenues for Q2 FY2025.
• Cash and Short-term Investments: $145.5 million in cash equivalents and restricted cash; $116.9 million in short-term investments.
• Net Cash Provided by Operating Activities: $126.4 million for the first six months of FY2025.
• Store Locations: 55 warehouse clubs in operation; opened 9th club in Costa Rica.
• Digital Sales: Increased 19.3% to $76.2 million, representing 5.7% of total net merchandise sales.

• Warning! GuruFocus has detected 2 Warning Sign with PCYO.

Release Date: April 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Net merchandise sales increased by 5.8% in the second quarter, with a 7% increase in constant currency.
• Membership accounts grew by 4.1% to over 1.9 million, with a 12-month renewal rate of 87%.
• The company opened its 9th warehouse club in Costa Rica, contributing to its expansion strategy.
• Digital channel sales increased by 19.3%, reaching a record high of $76.2 million.
• The effective tax rate decreased to 27.2% from 30.5% a year ago, due to tax optimization initiatives.

Negative Points

• Total gross margins decreased by 10 basis points to 15.6% compared to the previous year.
• SGNA expenses increased to 12.4% of total revenues, primarily due to planned technology investments.
• The company faces challenges from ongoing tariff issues, particularly with products sourced from Asia.
• Average inventory per club increased by 9.4%, leading to higher inventory days on hand.
• Cash equivalents and short-term investments in certain countries are not readily convertible to US dollars, impacting liquidity.

Q & A Highlights

Q: Can you provide more details on the impact of tariffs on your merchandise, particularly those sourced from Asia? A: Robert Price, Interim CEO, explained that currently, they are not aware of any reciprocal tariffs imposed by countries they operate in. Historically, merchandise from Asia has been routed through Miami, but they are shifting to direct shipments to their distribution centers in Costa Rica and Panama to reduce costs and time to market. This strategy should mitigate the impact of tariffs.

Q: Are there any new store openings planned beyond the upcoming Guatemala location? A: Michael McCleary, CFO, stated that while they have not announced specific new store openings, they have up to six locations in various stages of due diligence and permitting. This is the highest number of potential new locations they have disclosed, indicating possible future expansion.

Q: How is PriceSmart handling the potential cost pressures from the new international trade landscape? A: Michael McCleary mentioned that PriceSmart is leveraging its operations within free trade zones in the US and Costa Rica, which provide significant advantages. They are also working on supply chain diversification, cost management, and expanding China consolidation efforts to minimize cost impacts.

Q: What is the status of your digital sales and omni-channel strategy? A: Michael McCleary reported that digital channel sales increased by 19.3% in the second quarter, reaching a record high of $76.2 million. They continue to invest in digital capabilities, including launching online pharmacy services and enhancing their app and website to improve the omni-channel shopping experience.

Q: Can you elaborate on the growth of your membership base and the platinum membership strategy? A: Michael McCleary highlighted that membership accounts grew by 4.1% to over 1.9 million, with a renewal rate of 87%. The platinum membership, which offers exclusive benefits, has increased to 14.5% of the total membership base, up from 9.6% the previous year, driven by promotional campaigns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.