PriceSmart, Inc. (PSMT) Quarterly Report (10-Q)
PriceSmart, Inc. (PSMT) reported its quarterly financial results for the period ended February 28, 2025. The company’s consolidated balance sheet as of February 28, 2025, showed total assets of $1.43 billion, total liabilities of $1.14 billion, and total equity of $292.6 million. For the three months ended February 28, 2025, PSMT reported net sales of $1.23 billion, a 12.1% increase from the same period last year, and net income of $34.1 million, a 15.6% increase from the same period last year. For the six months ended February 28, 2025, PSMT reported net sales of $2.43 billion, a 12.3% increase from the same period last year, and net income of $64.3 million, a 14.5% increase from the same period last year. The company’s cash and cash equivalents increased by $23.4 million to $143.1 million during the six months ended February 28, 2025.
PriceSmart Reports Solid Financial Results for Second Quarter of Fiscal Year 2025
PriceSmart, Inc., a leading warehouse club operator in Latin America and the Caribbean, has reported its financial results for the second quarter of fiscal year 2025. The company’s performance highlights its ability to navigate the challenges of the global economy and deliver value to its members.
Overview of Financial Performance
For the three months ended February 28, 2025, PriceSmart reported total revenues of $1.36 billion, an increase of 5.6% compared to the same period in the prior year. Net merchandise sales grew by 5.8% to $1.33 billion, driven by a 3.9% increase in transactions and a 1.9% increase in average ticket.
Membership income, a key driver of the company’s profitability, increased 12.8% to $20.9 million, reflecting the $5 increase in membership fees implemented in fiscal year 2024 and continued growth in the member base. As of February 28, 2025, PriceSmart had nearly 1.93 million member accounts, a 4.1% increase from the prior year period.
Total gross margin as a percentage of net merchandise sales was 15.6%, a decrease of 10 basis points compared to the second quarter of fiscal year 2024. This slight decline was offset by a 12.8% increase in membership income, resulting in a flat total revenue margin of 17.1%.
Selling, general and administrative (SG&A) expenses increased by 7.0% compared to the prior year period, primarily due to investments in technology to support the company’s growth and digital initiatives. As a percentage of total revenues, SG&A expenses increased by 20 basis points to 12.4%.
Operating income for the second quarter of fiscal year 2025 was $65.3 million, an increase of 2.6% compared to the same period in the prior year. Net income for the quarter was $43.8 million, or $1.45 per diluted share, compared to $39.3 million, or $1.31 per diluted share, in the second quarter of fiscal year 2024.
Segment Performance
PriceSmart’s operations are divided into four reportable segments: Central America, Caribbean, Colombia, and the United States.
The Central America segment, which includes Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua, and Panama, reported a 5.4% increase in net merchandise sales for the second quarter. This segment contributed 60.6% of the company’s total net merchandise sales. Comparable net merchandise sales in Central America increased 5.6% during the quarter.
The Caribbean segment, which includes the Dominican Republic, Trinidad, Jamaica, Barbados, and the U.S. Virgin Islands, saw a 6.4% increase in net merchandise sales, contributing 28.0% of total net merchandise sales. Comparable net merchandise sales in the Caribbean increased 8.3% during the quarter.
The Colombia segment reported a 6.6% increase in net merchandise sales, contributing 11.4% of total net merchandise sales. Comparable net merchandise sales in Colombia increased 8.6% during the quarter.
The United States segment, which includes the company’s corporate headquarters and U.S. buying operations, reported a decrease in operating income of $1.7 million, primarily due to investments in technology.
Impact of Currency Fluctuations
As a multinational enterprise, PriceSmart is exposed to changes in foreign currency exchange rates, which can have a significant impact on its reported financial results. The company uses “constant currency” metrics to provide a better understanding of its underlying business performance.
For the second quarter of fiscal year 2025, the effects of currency fluctuations within PriceSmart’s markets had a negative impact of approximately $14.7 million, or 120 basis points, on net merchandise sales. This was primarily driven by the devaluation of the Colombian peso and the Dominican peso against the U.S. dollar, partially offset by the appreciation of the Costa Rican colón.
When adjusting for the impact of foreign currency, PriceSmart’s consolidated net merchandise sales growth was 7.0%, and comparable net merchandise sales growth was 7.9% for the quarter.
Outlook and Growth Initiatives
PriceSmart is focused on three key drivers of growth: expanding its physical footprint, increasing membership value, and enhancing its digital and technological capabilities.
In April 2025, the company opened a new warehouse club in Cartago, Costa Rica, and is currently constructing a new club in Quetzaltenango, Guatemala, which is expected to open in the summer of 2025. PriceSmart continues to pursue opportunities to add new warehouse clubs in its existing markets and assess potential new markets for expansion.
To increase membership value, PriceSmart is enhancing its benefits and services, such as optical, audiology, and pharmacy services, as well as its online shopping platform, PriceSmart.com, and delivery options. The company is also focused on growing its Platinum Membership program, which offers additional benefits and a 2% annual cash-back reward.
Regarding digital initiatives, PriceSmart has completed the rollout of its new PriceSmart.com website and mobile application, which use a modern, scalable architecture to enable the company to continuously improve the member experience and expand its online offerings. The company is also investing in technology to improve operational efficiency, such as enhanced order picking capabilities.
Conclusion
PriceSmart’s solid financial performance in the second quarter of fiscal year 2025 demonstrates the company’s ability to navigate the challenges of the current economic environment. The company’s focus on expanding its physical footprint, enhancing membership value, and investing in digital capabilities positions it well for continued growth and success in the Latin American and Caribbean markets.
Despite the headwinds of currency fluctuations, PriceSmart’s underlying business fundamentals remain strong, with increases in net merchandise sales, membership income, and operating income. The company’s commitment to providing its members with high-quality merchandise and valuable services at competitive prices has been a key driver of its success.
As PriceSmart looks to the future, investors can expect the company to continue its strategic initiatives to drive long-term growth and profitability, while maintaining its focus on delivering exceptional value to its members and the communities it serves.
