PriceSmart - Earnings Call - Q1 2021

Transcript

Speaker 0

Good morning or afternoon, everyone, and welcome to PriceSmart Incorporated Earnings Release Conference Call for the 2021, which ended on 11/30/2020. After remarks from our company's representatives, Sherry Barambeghi, Chief Executive Officer and Michael McCleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Friday, 01/08/2021. A digital replay will be available following the conclusion of today's call through 01/15/2021 by dialing +1 (877) 344-7529 for domestic callers or +1 (412) 317-0088 for international callers by entering replay access code 10149960. For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Michael McCleary.

Please proceed, sir.

Speaker 1

Thank you, and welcome to the BuySmart earnings call for the 2021. We will be discussing the information that we provided in our earnings press release and our 10 Q, which were both released yesterday afternoon, 01/07/2021. You can find both documents on our Investor Relations website at investors.dicemark.com, where you can also sign up for e mail 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, will, may, should, estimate and similar expressions.

All forward looking statements are based on current expectations and assumptions as of today, 01/08/2021. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10 ks 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 Sherry Derengue, Vice Park's Chief Executive Officer.

Speaker 0

Thank you, Michael. Good day and Happy New Year, everyone. I hope that you and your families are all safe and healthy. We're pleased to discuss with you today our strong first quarter results. Despite the ongoing challenges caused by the pandemic over the past ten months, we've seen the best from our team members.

They consistently risen to the occasion with an unwavering commitment to safety of members and employees and to providing our members with the best possible shopping experience. Never before has a six rights of merchandising been more important to our business than they are today. This retail philosophy emphasizes having the right kind of merchandise in the right place at the right time in the right quantity in the right condition and at the right price. Our execution of operational efficiencies, vigilance, and discipline to these core principles is what has led us to the 7.7 growth in net merchandise sales and 3.6% growth in comparable net merchandise sales compared to the year ago period. Note that we had one additional club in operation as of November 3020 compared to the same time last year.

During the quarter, we saw a gradual relaxation of COVID related restrictions, which led to fewer club days lost compared to the prior sequential quarter, but we still experienced limitations on hours and numbers of people in the clubs. During this last quarter, we expanded last year's smart weekend event, which was held in The Caribbean to a smart week program across all of our markets and proved to be very successful. We also strengthened our digital marketing efforts and social media engagement, which has enhanced our ability to quickly grasp valuable insights from our members and more readily share with them our exciting curated items and programs. As a result of these efforts, we've been able to provide our members with a great inventory mix and reasons to visit the clubs as the number of transactions and in club traffic increased versus the prior sequential quarter. Driven in part by leadership changes in the merchandising area and restructuring over the last year, the hardlines team did a tremendous job of working with our suppliers anticipating and reacting to changes in demand.

As a result, our hardlines category experienced approximately 20% sales growth during the period compared to the prior year quarter. Leading this growth were electronics, which grew by 53%, sporting goods grew by 68%, and small appliances grew by 20%. On the food side, our buying team has done a fantastic job of ensuring our grocery, health and beauty, cleaning, and liquor departments all performed well, also with 6%, 11%, 1016% growth respectively. Now we did have challenges during the quarter with seasonal and the toys department and we attribute this in part to our decision to scale back orders of these long lead time products at the beginning of the pandemic. In our grocery and fresh categories, we continue to see an increasing demand for healthier food options from our members.

In an effort to meet this demand, we've invested in infrastructure that allows us to source high quality fresh produce through our direct farm program. This program reduces costs and improves the quality and shelf life of our produce offerings while also supporting local farmers and industry in our markets. This is also an important social priority for us. In addition, investments in our produce distribution centers have allowed us to provide farm to table produce quicker and more efficiently than we have in the past. We intend to continue to expand this program and open additional produce distribution centers throughout our market.

Although we've seen growth across most of our foods and fresh departments, a few categories lagged such as candy, snacks, and juices. A real critical part of building on our value proposition and offsetting some of the impact of pandemic related restrictions is the continued development of our omnichannel efforts. Our click and go curbside and delivery service, which represented 3.1% of our net merchandise sales during the quarter, is an important alternative for our members. Curbside pickup is available in all of our clubs and all of our markets, and we expanded delivery to all 13 markets in late October, up from just six at the August. Over the past several months, delivery has continued to become a larger portion of our total click and go sales.

Our grocery, health and beauty, and cleaning departments have done well on our ecommerce platform. We continue to grow the number of active items available to purchase online, and we intend to build our online inventory to offer an expanded selection beyond what's available in the plus. In addition, shoppers are responding favorably to our online platform for their membership. 11% of all new sign ups in q one were done online. One of the important benefits of this, having a sign up and renewals online, is that it provides the opportunity for auto renewal and auto payment.

Over time, we expect that this will lead to more efficient membership acquisition and renewal. Our investments in technology and enhancements to our systems and software also allow us to make use of about make use of valuable membership data and feedback in real time. The inbound and outbound communication channels allow us to operate our business with better information and to make optimal merchandising and business decisions quickly. That's an especially important, capability required in this environment. Turning to supply chain and inventory.

Excuse me. To supply chain and inventory, I just wanna recognize the tremendous job our team has done despite the continued challenges we faced. I had the pleasure of visiting our distribution center workers in Miami the week between Christmas and New Year, and they were hard at work committed to ensuring we're running as smoothly as possible. What the team has done to secure alternatives, including quality local sourcing to minimize out of stock and key items and hedge against currency volatility is remarkable. Due to the significant surge in demand in many of the categories we've discussed, we've seen some shipping container shortages at the point of origin out of Asia, and we've had some slowdown in supply flow in Central America due to the devastating hurricanes at an iota.

We expect to be able to work through these challenges and continue to identify and develop local high quality inventory alternatives as needed. We continue to increase our focus on inventory management, Increased SKU discipline and order management has helped reduce our average inventory per club in the first quarter by an average of approximately $500,000 per club versus the comparable prior year quarter. Markdowns were significantly less this quarter compared to the same period last year, and our inventory was clean, far less in terms of spoilage. We were the place to go for many nonfood categories in our markets as our competitors weren't able to source the same level of merchandise in those areas such as laptops, tablets, and television. We've also expanded our offering of high quality, high value private label member selection products.

Private label will continue to be a focus area given the ability to offer high quality merchandise at lower prices and given the impact of our brand value in our markets. Especially during this last quarter, we appreciated more than ever that we have optionality with our in country distribution centers. This has proven to significantly mitigate supply chain disruption risk. Now turning to membership. Our total number of membership accounts decreased 3.8% during the 2021 when compared to the comparable prior year period.

However, we saw a 1.5% increase in our membership accounts since just 08/31/2020 as in in club traffic improved. Our trailing twelve month renewal rate was 81.986.1% for the periods ended 11/30/2020 and November 3039 respectively. Historically, our members would renew their membership at the register, and due to the pandemic, traffic has slowed down. Colombia had the largest membership percentage decline followed by Central America and The Caribbean. However, our 81.9% trailing twelve month renewal rate has improved significantly from the low of 80.5% at the August as restrictions have eased up.

And as noted before, we've seen an encouraging increase in membership sign ups and renew renewals completed online. We're enhancing the value of our membership through the rollout of optical centers with 21 locations open at the end of the quarter, up from 17 at the August, and we're on track for approximately having optical in three quarters of our clubs by the end of this fiscal year. The membership includes no charge vision exams for up to four family members and excellent prices on optical products. As PriceSmart seeks to enhance the quality of life for our members, we believe additional services that attend to our members' well-being provide an opportunity for us to further strengthen our relationship and enhance membership value in a fundamental way. As you can see, we're quite focused on member experience.

I'm proud to say that we've been vigilant about precautionary measures and have maintained high standards of cleanliness and safety. This has also deepened the trust of our members, and in my view, it's highlighted us as leaders in our markets. Now I'd like to give a brief update about our real estate and construction activities. On December 4, just a couple weeks ago or a little over a month ago, we safely celebrated the grand opening of our Ussakan club. This was the second time since the pandemic began that our leadership team and international executives were able to effectively and remotely support our local team's opening of a new club.

The Usa Can Club is strategically located in the heart of a densely populated area of Bogota and is poised to drive sales growth, provide greater convenience for our members, and strengthen our presence in this important market, which we believe has significant potential. Also recently, we announced plans to build two new warehouse clubs, one in Guatemala City, Guatemala expected to open in the 2021, and the other in Portmore, Jamaica, a suburb of Kingston expected to open in the 2022. We're excited about the potential for both of these locations, and this will be our fifth club in Guatemala and follows the successful opening of our fourth warehouse club, San Cristobal, in that market just a year ago. As I've noted before, new club openings are likely to initially adversely impact our comparable net merchandise sales. However, in as in these cases, we'll move forward with new club openings when we believe that in the long run, such expansion provides opportunities for growth by way of incremental membership, growth in net merchandise sales and services, leveraging potential, greater presence and prominence in our markets, and a better shopping experience for our members.

I'd like to spend a moment now on our December sales that we released earlier today. Net merchandise sales were $372,600,000 an increase of 2.8% versus a year ago with a negative FX impact of 3.1% or $10,500,000. For the four weeks ended 12/27/2020, comparable net merchandise sales decreased 1.7% with a negative FX impact of 2.9%. December sales were impacted by a return of club closure days in Panama over Christmas weekend as well as additional mobility restrictions in Panama and Colombia as infection rates have risen. We also saw sales decline year over year in Trinidad due to actions we've taken in response to US dollar illiquidity, and Michael will discuss more about that in a few minutes.

In closing, we posted strong results for Q1 and December, particularly considering the current environment we're operating in. Our commitment to refocusing our efforts on the Six Rights has really shown during this quarter and this past holiday season. Considering the challenges we encounter ranging from hurricanes and lockdowns to container shortages and foreign currency fluctuations, this team has risen to meet these challenges and is inspire is inspired to find new ways to better serve our members, which are sustainable and will carry us into the future even after the immediate pandemic crisis is a thing of the past. We know our members' consumption patterns and priorities will continue to evolve. And as we look forward to the future, we believe we have the know how, the capabilities, and the team to anticipate, react, and rise to our members' expectations.

We have the talent, resolve, and hardened commitment to our members, the markets we serve, and to this company, and we have loyal members who really count on us as a trusted source of good goods and services. A lot of families depend on us, especially in times like this, and we take that responsibility to heart. We're well positioned to propel our business forward, and that is to the credit of our wonderful team of over 10,000 employees who I sincerely thank for their stellar performance. Thank you, and I'll now turn the call over to Michael.

Speaker 1

Thank you, Sherry. Good morning or afternoon to everyone, and thanks for joining us today. Before I begin, I would like to take this opportunity to also thank our team members for their tremendous efforts and selflessness during this past quarter and holiday season. Our results are a reflection of that hard work and determination. Total revenues and net merchandise sales for the quarter were $877,400,000 and $838,400,000 respectively, representing increases of 8.17.7% over the comparable prior year period, respectively.

As a reminder, including the club we opened in Liberia in June 2020, we ended this quarter with 46 warehouse clubs compared to 45 warehouse clubs at the end of the 2020. Our comparable net merchandise sales growth was 3.6% for the thirteen weeks ended 11/29/2020. Foreign currency fluctuations had a negative impact on both net merchandise and comparable net merchandise sales of approximately $27,000,000 or three fifty basis points. By segment, in Central America, where we had 26 clubs equivalent, including three open since October 2019, net merchandise sales increased 6.2% with a 0.7 decrease in comparable net merchandise sales. Our Honduras, El Salvador and Nicaragua markets contributed approximately 150 basis points of positive impact to total comparable net merchandise sales despite the impact from the two hurricanes that hit the region during the quarter.

This contribution was offset by 190 basis point decrease coming from Panama, Costa Rica and Guatemala. Panama and Guatemala experienced sales transfers from recent club openings in most countries during the quarter, and a devaluation in Costa Rica and Cologne resulted in sales decreases in that country versus the comparable period in the prior year. In The Caribbean region, where we had 13 clubs at quarter end, total net merchandise sales grew 10.1%, with comparable net merchandise sales growth of 9.9%. Most of our markets in The Caribbean showed double digit comparable sales growth when compared to the same period in the prior year, with Trinidad and The Dominican Republic contributing two seventy basis points to our total comparable sales growth. Up to this quarter, both markets performed well in the current COVID-nineteen pandemic despite a significant foreign currency devaluation compared to the prior year period in The Dominican Republic.

However, I would like to note that in Trinidad, although sales were very strong during the quarter, we are continuing to experience challenges in converting Trinidad dollars to U. S. Dollars. As a result, during the first quarter, we began limiting shipments of goods from The U. S.

To Trinidad. We are already seeing the impact in our December sales, and we expect to continue limiting shipments during the 2021. Therefore, our Trinidad clubs are not currently carrying their usual mix and quantity of merchandise. We believe this reduction in reported merchandise will negatively impact sales in Trinidad in our second fiscal quarter by an estimated US14 million to US18 million dollars We plan to increase or decrease shipments from The US to Trinidad in line with our ability to exchange Trinidad dollars or other hard currencies. However, we are also seeking other opportunities to reduce our net use of US dollar in Trinidad such as by shifting the purchase of certain goods to local sources and seeking to increase exports of locally sourced items.

In Colombia, where we had seven clubs opened during the quarter, net merchandise sales increased 8.7% and comparable net merchandise sales increased 8.6%, contributing approximately 100 basis points of positive impact to total comparable sales. Average ticket growth compared to the prior year three month period is the primary driver of the increase in Colombia as COVID nineteen restrictions led to members buying more merchandise and fewer trips to our warehouse clubs compared to prior year period. The impact of currency on total and comparable net merchandise sales in Colombia was significant at negative 10.710.5%, respectively, for the quarter. Currency devaluation continues to be a challenge in Colombia, but we are employing different approaches in an effort to mitigate the impact, such as sourcing of locally produced goods and actively managing our foreign currency exposure rate. Turning to total gross margins.

Total gross margin on net merchandise sales came in at 16.1%, a 120 basis point improvement over the same quarter last year. The 120 basis point increase was primarily driven by a 60 basis point increase from certain pricing actions we took to offset foreign currency exchange costs and risks. In particular, we have implemented our liquidity premium in Trinidad on our U. S. Embroidered items.

The other 60 basis points increase came from more focused merchandising strategies and inventory management. Total revenue margins increased to 18% of total revenue, an increase of 110 basis points versus the same period last year. This is the result of the higher gross total gross margins of 120 basis points that I mentioned previously and higher revenue margins compared to the euro and marketplace business in the quarter of 20 basis points excuse me, partially offset by 20 basis points from lower membership income and 10 basis points from fewer margin dollars as a percentage of total revenue from our export sales business. Selling, general and administrative expenses for the quarter were 12.9% of total revenues, a decrease of 20 basis points versus the same period last year. In total, SG and A expenses increased $6,700,000 compared to the prior year, a decrease as a percentage of total revenue.

Warehouse club and other operations expenses contributed 10 basis points of the decrease as a result of lower warehouse club operation expense ratios across all of our markets. General and administrative expenses contributed the other 10 basis points to the decline. The overall improvement is primarily a result of leveraging our consolidated revenue growth. However, we continue to make investments to support our technology and talent development. Operating income was $44,500,000 or 5.1% of total revenue in the 2021 compared to $30,700,000 or 3.8% of total revenue for the same period last year.

This reflects the increase in total revenue margin primarily from net merchandise sales of 110 basis points and a 20 basis point increase due to leveraging our SG and A expenses over the comparable prior year period. Net interest expense increased $1,200,000 for the first quarter, primarily due to higher average long term loan balances to fund our capital projects and drawdowns in our short term lines of credit as part of our COVID-nineteen related efforts to secure cash. Other expenses of CAD1.5 million are primarily from costs to convert Trinidad dollars into other tradable currencies and a strengthening of the Jamaican dollar due to our U. S. Dollar denominated cash reserves designated to fund the construction of our new Fort Worth Club.

Our effective tax rate for the 2021 came in slightly higher than last year at 32.9 versus 32.2% a year ago. In our q four fiscal twenty twenty conference call, we estimated that our full year fiscal twenty twenty one effective tax rate would be 35%. However, due to our strong Q1 results, we now expect the full fiscal year twenty twenty one effective tax rate to be approximately 34%. Net income for the 2021 was $27,700,000 or $0.90 per diluted share compared to $19,700,000 or $0.64 per diluted share in the comparable prior year period. Our balance sheet remains very strong.

We ended the quarter with cash, cash equivalents and restricted cash totaling $212,400,000 an increase of $97,300,000 versus the same period a year ago. From a cash flow perspective, the $33,900,000 shift from net cash provided by to net cash used in operating activities was primarily due to decreases in working capital as our temporary extension of vendor terms negotiated as part of our initial COVID response began expiring during the quarter. It is important to note that many of these extended vendor terms will continue to revert to pre COVID terms during the 2021. Our experience with the temporary vendor term extensions has provided an opportunity to revisit terms on a more permanent basis. Net cash used in investing activities increased by $4,600,000 compared to the prior year, primarily due to the increase in investments in certificates of deposit of Trinidad dollars we have on hand while we work actively to convert those Trinidad dollars into U.

S. Dollars as availability allows, offset by less construction expenditures. The $59,500,000 change from cash provided by to cash used in financing activity is primarily the result of a net decrease in proceeds from long and short term borrowings. We continue to be vigilant about our cash position and sensitive to any changes in circumstances. While some uncertainty remains in our markets about the extent and duration of the pandemic, we have confidence in our ability to continue our operations successfully while also continuing to invest in the future.

In this context, we currently expect to completely pay down our remaining short term lines of credit, which we accessed as part of our initial COVID-nineteen response during the second and third quarters of this fiscal year. To wrap up, we are very pleased with our strong start to fiscal twenty twenty one. We believe our commitment to the six rights of merchandising and the investments that we are making in talent, real estate and our digitally enabled omnichannel platform have positioned us well for the future. In addition, our balance sheet, liquidity and cash flow remain strong, providing a solid foundation for driving same store sales and future growth, which we believe will benefit our members and stockholders alike. Thank you all for your support during these times of uncertainty.

We believe that we are on the right path for continued success. I will now turn the call over to the operator to take your questions. Operator, you may now take our callers' questions.

Speaker 0

We will now begin the question and answer session. Our first question today comes from Rodrigo Echiguere with Scotiabank.

Speaker 2

Thank you. Happy New Year and congrats on the results. I know you touched on December sales, but can you go over the main drivers of same store sales in December? And also any thoughts on how sustainable that gross margin expansion in the previous quarter would be in the context of December sales, please? Thank you.

Speaker 0

Well, good happy New Year, Rodrigo. December sales, the same store sales as we've mentioned before were impacted by the fact that we had additional clubs that were transferring sales from existing clubs. And I think it's also important to remember that this December is comping against, you know, a holiday season last December where there was no COVID. So what what we we we did is when the pandemic first came about, we did cut back on some seasonal and some items that, we felt would be more discretionary, and and that did impact sales to some degree. And as people shifted a lot of their focus to essentials, during this holiday season, we think that may have had something to do with it.

The just in terms of the margin, our effort is always to try to continue to find the inefficiencies in the process and eliminate them and reduce them so that we can provide the best value to the member possible. Our margins, you know, when you think about it, it's it's difficult to assign a specific margin to all areas of our business as you understand. For example, our other business has a higher margin structure, and we're doing more efforts to source and vertically integrate so that we can provide better quality merchandise and services to our members at a lower cost, but that might require a different margin structure. So while our mandate is to continually drive the best possible value for the member in terms of pricing. The margin structure may vary among the different areas of our business as we become more dynamic and more entrepreneurial and find better ways to source better materials, better merchandise, and better services for our members.

Speaker 2

Got it. So it sounds like it's definitely a structural change in in in in that direction. I guess the other question is related to the in country distribution efforts, which seem to be very important and which makes sense to me. Just wondering what's the, you know, if if we think about, you know, ten years down the road, how do you, foresee the the whole distribution, platform shape shaping up. I mean, do you foresee having many more distribution centers in country and and a lower inventory being held at in in in Florida?

Speaker 0

We believe that, having distribution centers in country provides tremendous benefits for a number of reasons. Previously, when when most of our imports would come from, and and still come from China and have and go through Miami, there'd be longer lead times often. And when there's basically one direction of flow, there's more risk involved. By having multiple distribution centers throughout our markets and as as we gain leverage and concentration in in various markets, it gives us optionality that allows us to go direct. That's one.

The other is that we're finding more and more opportunities in our markets to be able to, source merchandise, quality merchandise, to support our efforts to vertically integrate and expand our private label and to curate unique and exciting items that can then be shared amongst our different markets. And so having the merchandise closer to our our retail operations, is certainly a benefit and also the ability to hold merchandise and distribution centers and pulse them into the clubs, as opposed to trying to thread the needle with long lead times, and get the exact right amount directed to each and every club, it does provide an opportunity for us to be more efficient. So we see some some significant benefits in, expanding our distribution center and basically decentralizing the structure in a way that we've got more presence among our various markets. And then there's there's also the online part of it, as well, which which benefits from having these, regional distribution centers.

Speaker 1

Yeah. That that was exactly my question. So that that that makes more sense, as well from from that perspective. Great.

Speaker 2

Right. Well, that's that's it on my end. Thank you. Happy New Year, and and congrats on the results.

Speaker 0

Thank you, Rodrigo. Happy New Year to you too. Our next question comes from John Bratz with Kansas City Capital.

Speaker 3

Good morning, Michael, Sherry.

Speaker 0

Good morning.

Speaker 3

I'm looking at Trinidad. Michael, net asset position monetary asset position at the end of the fourth quarter was 4,800,000.0 You went to a net monetary liability of $14,400,000 And if you look at your strategy, what you're doing in Trinidad, it sounds like you're limiting sales, but you're increasing prices to compensate for the additional risk. Given that strategy, would your net monetary liability position increase in the subsequent quarters? Or would it stay about the same?

Speaker 1

John, yes, great question. Actually, wouldn't say we're trying to limit sales in Trinidad. I'd start off there. Are limiting the exports of U. S.

Goods into Trinidad to the extent people with local items. We certainly are doing our best to do that. And, you know, as long as it applies with, you know, complies with our quality and and pricing philosophy. But as far as the liability itself, that's, you know, I think we generally, we're trying to maintain a balance around that level, within a range. Right?

Because we're essentially saying, that the exports from The US, which which would generate more liability, should be in line with what we're able to to convert in US dollars. It's not a perfect equation because Okay. Because of these things like that. But we're generally toward trying to manage that within a, let's say, a regional that liability within that reasonable range. Okay.

Speaker 3

Okay. With the strengthening energy markets, is the situation in Trent would you think the Trinidad situation might improve a little bit with that country being heavily tied to the energy sector?

Speaker 1

Certainly, that's the number one source of U. S. Dollars is the energy sector. There's several different levels of of the energy sector that they participate in. And so but, yeah, definitely raising, you know, rising consumption and rising prices in the energy sector should definitely help.

At the same time, as I mentioned, we're also looking to increase our ability to export goods out of Trinidad. If we can buy them in Trinidad dollars and export in other markets and sell them in U. Dollars, that gives us more U. Dollars to be able to import merchandise to sell more clubs.

Speaker 3

Yes. Yes. Okay. Okay. On the gross margin front related to Trinidad, that was up that accounted for about, you said, about 50 basis points improvement in your overall gross margin.

With the strategy in place the way it is, would you continue to expect a bump in consolidated gross margins related to your actions in Trinidad?

Speaker 1

Yeah. I mean, it's obviously kind of anathema to the business model to be to be charging this premium, but but also at the same time, we're we're we're catching the risk here that that we haven't Yes. Replaced one before. But but, generally, we we thought it was prudent to to price ahead of it. So, you know, hopefully, this as long as we we thought it was important to call it out as a component because to the extent that this situation ends up resolving itself, and it would help the factoring end would go down.

But we do foresee it for foreseeable future until the situation starts to set.

Speaker 3

One last question. Sherry, you mentioned in December, were some additional lockdowns, if you wanna call it, and and things that restricted your hours of operation. Has that improved or worsened as we moved into the new year? Has have things changed at all?

Speaker 0

It varies from market to market, but we are seeing additional, as a result of a rise in cases, additional restrictions. For example, governments have been keeping people home, especially because of the holidays for Christmas and New Year's that whole weekend. A couple of our markets restricted people from any circulation.

Speaker 1

Mhmm.

Speaker 0

And and we're concerned about large gatherings and and rapid spread. So, we see this as an ongoing, dynamic that we just have to be prepared for and and utilize our alternative modes of shopping and different ways to, get merchandise to our members. But it's certainly it's not resolved here, and it's not resolved there. So it's still an ongoing dynamic.

Speaker 3

Okay. Is it is it more Panama and Colombia that has been impacted the most?

Speaker 0

That's where we've seen it the most. Yeah.

Speaker 3

Okay. Okay. Alright. Thank you, Sherry.

Speaker 0

Thank you, John. This concludes our question and answer session, and I'd like to turn the call back over to Sherry Baranbeghi for any closing remarks. Just wanted to thank everyone for your steadfast commitment and, to our company and most especially to thank our employees who have really demonstrated, a tremendous commitment to each other and to taking care of our members. So wishing everybody a good start to the new year. The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect.