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PI

PRICESMART INC (PSMT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 delivered solid top-line growth: total revenues rose 7.8% to $1.26B; net merchandise sales grew 7.8% (8.2% constant currency), while diluted EPS was $1.21, down 2% YoY due to higher “Other expense” from FX conversion costs and unrealized FX losses .
  • Operating income was essentially flat at $58.3M; adjusted EBITDA increased to $79.1M (+1.7% YoY), with gross margin on net merchandise sales at 15.9% (-20bps YoY, +20bps sequentially) reflecting product mix and regional currency dynamics .
  • Membership metrics strengthened: accounts +4.8% to >1.9M, renewal rate 87.8%, Platinum penetration 14% (vs 9.3% prior-year), and digital sales hit a record $69.4M (5.7% of sales), underpinning omnichannel progress .
  • Management reiterated a full-year effective tax rate range of 27%–29% following tax optimization initiatives, and subsequently raised the annual dividend 8.6% to $1.26 per share—supportive of capital returns while funding tech and supply chain investments .
  • Estimates comparison was unavailable via S&P Global due to access limits; near-term stock reaction likely hinges on durable comp momentum (+5.7% in Q1; +6.6% for the first 4 weeks of Q2), margin resilience, and cadence of FX conversion costs . Wall Street consensus data from S&P Global was unavailable for Q1 FY2025.

What Went Well and What Went Wrong

What Went Well

  • Membership and mix: Membership accounts +4.8% YoY with renewal rate at 87.8%; Platinum penetration reached 14% (vs 9.3% prior-year), driving higher membership income and engagement .
  • Digital acceleration: Digital net merchandise sales +21.1% YoY to a record $69.4M (5.7% of sales), with order growth +12.8% and higher average transaction value, highlighting omnichannel traction .
  • Regional growth breadth: Net merchandise sales rose across regions—Central America +8.4%, Caribbean +5.4%, Colombia +10.7% (+16.1% constant currency), each contributing positive basis points to consolidated comps .

What Went Wrong

  • FX and “Other expense”: Total other expense widened to a net loss of $7.3M vs $2.1M last year, driven by higher premiums to convert local currencies and increased unrealized losses on USD monetary balances, pressuring EPS despite revenue strength .
  • Gross margin YoY compression: Gross margin on net merchandise sales declined 20bps YoY to 15.9% (category mix and regional currency factors), though improved 20bps sequentially vs Q4 .
  • Cash convertibility constraints: $81M in local currency balances (Trinidad and Honduras) at Q1-end were not readily convertible to USD, underscoring ongoing FX liquidity challenges and conversion costs .

Financial Results

Quarterly trending (last 3 quarters)

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD Billions)$1.23 $1.23 $1.26
Net Merchandise Sales ($USD Billions)~$1.20 $1.19 $1.22
Operating Income ($USD Millions)$49.9 $49.2 $58.3
Diluted EPS ($USD)$1.08 $0.94 $1.21
Adjusted EBITDA ($USD Millions)$71.0 $70.7 $79.1
Gross Margin on Net Merchandise Sales (%)15.6% 15.7% 15.9%

YoY comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025YoY Change
Total Revenues ($USD Billions)$1.17 $1.26 +7.8%
Net Merchandise Sales ($USD Billions)$1.14 $1.22 +7.8%
Operating Income ($USD Millions)$58.2 $58.3 ~flat
Net Income ($USD Millions)$38.0 $37.4 -1.6%
Diluted EPS ($USD)$1.24 $1.21 -2.4%
Adjusted EBITDA ($USD Millions)$77.8 $79.1 +1.7%
Gross Margin on Net Merchandise Sales (%)16.1% 15.9% -20bps

Estimates vs Actuals (Q1 2025)

MetricConsensusActualBeat/Miss
Total Revenues ($USD Billions)N/A (S&P Global unavailable)$1.26 N/A
Diluted EPS ($USD)N/A (S&P Global unavailable)$1.21 N/A
Adjusted EBITDA ($USD Millions)N/A (S&P Global unavailable)$79.1 N/A
Wall Street consensus data from S&P Global was unavailable for Q1 FY2025; comparisons to estimates cannot be assessed.

Segment and Regional Growth (Q1 2025)

RegionNet Merchandise Sales Growth (Reported/CC)Comparable Sales Growth (Reported/CC)Contribution to Consolidated Comps (bps)
Central America+8.4% / +7.0% +5.1% / +3.7% ~+310bps
Caribbean+5.4% / +7.9% +5.2% / +7.6% ~+150bps
Colombia+10.7% / +16.1% +10.3% / +16.2% ~+110bps

KPIs (Q1 2025)

KPIQ1 2025Prior-Year / Prior-Quarter Reference
Membership Accounts>1.9M (+4.8% YoY) ~1.9M in Q4 FY2024 (+4.7% YoY)
Renewal Rate (12-month)87.8% 87.9% Q4 FY2024
Platinum Penetration14.0% (vs 9.3% PY; 12.3% at FY2024-end) 12.3% Q4 FY2024
Digital Net Merchandise Sales$69.4M; 5.7% of sales $65.1M; 5.5% in Q4 FY2024
Average Ticket Growth+2.4% YoY +2.4% in Q4 FY2024
Transactions Growth+5.3% YoY +6.9% in Q4 FY2024
Items per Basket+2.4% YoY; price per item flat Price per item +3.1% in Q4 FY2024

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY202531–32% (FY2024 exit rate context) 27–29% Raised (lower tax rate)
DividendFY2025$1.16/share (two $0.58 payments) $1.26/share (two $0.63 payments) Raised 8.6%
Store OpeningsFY2025Cartago, CR (spring 2025) + Quetzaltenango, GT (summer 2025) Cartago opened (Q2); Quetzaltenango summer 2025 Execution progressed
Near-term Comps4 weeks ended Dec 29, 2024N/A+6.6% reported; +7.8% constant currency Positive update
Technology InitiativesFY2025RELEX operational by end FY2025; ELERA rollout beginning Q1 RELEX substantially operational by end FY2025; ELERA rollout continues Maintained/execution update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Technology (RELEX, ELERA POS)RELEX rollout in progress; new e-commerce platform rollout by country RELEX completion targeted by end FY2025; ELERA start in one country RELEX substantially operational by end FY2025; ELERA implemented in one country, broader rollout planned Execution progressing
Omnichannel/DigitalDigital sales +27% Q3; 5.5% penetration Digital sales $65.1M; 5.5% penetration Digital sales $69.4M; 5.7% penetration; orders +12.8% Improving
Supply Chain/DCsThird-party DCs in 4 markets (GUA/HND/NIC/SLV) Expanding DCs (Panama cold), planning DCs in Guatemala, Trinidad, DR; China consolidation DCs in-country under development (GUA/TRI/DR); China consolidation emphasized Network build-out
Tariffs/MacroNot highlightedNot highlightedPotential new tariff regime; mitigation via FTZ operations, sourcing mix (50% local, ~1/3 U.S.) Emerging risk; managed
Membership ValuePlatinum campaigns; fee increase impact Platinum 12.3%; renewal 87.9% Platinum 14% penetration; strong renewal; widening services (pharmacy, optical, audiology) Strengthening
Regional TrendsColombia growth strong; comps modest in CC Colombia +18.7% sales; comps +5.4% Colombia +10.7% (+16.1% CC); comps +10.3% (+16.2% CC) Broad-based momentum
FX/Conversion CostsLiquidity issues highlighted (Trinidad/Honduras balances) $82.5M local currency not readily convertible $81M local currency balances; higher conversion costs and unrealized losses Persistent headwind

Management Commentary

  • “Our overall SG&A increase as a percent of revenue was primarily related to technology investments… necessary for the future growth of the business.”
  • “Platinum accounts… represented 14% of our total membership base… due to additional focus on this important segment… promotional campaigns during fiscal 2024 and the first quarter of fiscal 2025.”
  • “Total net merchandise sales through digital channels increased 21.1%… to a record high of $69.4 million or 5.7% of total net merchandise sales.”
  • “We recorded a $7.3 million net loss in total other expense… due to premiums to convert local currencies into U.S. dollars and unrealized losses… as well as lower interest income.”
  • “We anticipate that our annualized effective tax rate for the full fiscal year will be in the range of 27% to 29%.”

Q&A Highlights

  • Currency conversion costs: ~$3.4M premiums in the quarter; management prices to recoup through margin where feasible; Trinidad balances increased while Honduras decreased; conversion timing access remains variable .
  • Export business: Philippines customer ramp-down; PriceSmart formed a dedicated export division; expects business to continue and expand to new geographies, with private label in demand .
  • Gross margin drivers: Year-over-year margin compression modest (20bps); factors included exports and aggressive pricing on electronics/big-ticket items, plus Colombian peso dynamics impacting import mix .
  • Technology ROI timeline: Significant back-office and POS investments underway; benefits expected over multiple years, with RELEX and ELERA deployments improving efficiency and in-stock positions .

Estimates Context

  • Wall Street consensus EPS, revenue, and EBITDA for Q1 FY2025 were unavailable via S&P Global due to access limits; therefore beat/miss analysis cannot be presented. Estimates-based comparisons will be updated when S&P Global access is available.

Key Takeaways for Investors

  • Top-line momentum remains healthy with broad-based regional growth and strengthening membership economics; omnichannel penetration is rising, supportive of comp durability .
  • EPS softness YoY was driven by FX-related “Other expense” rather than core operations; adjusted EBITDA growth and sequential margin improvement suggest underlying resilience .
  • Strategic investments (RELEX, ELERA, in-country DCs, China consolidation) should enhance inventory flow, reduce landed costs, and support margins through FY2025/26; watch execution milestones .
  • Tax optimization lowers the full-year ETR to 27–29%, expanding earnings capacity; dividend increase (+8.6%) signals confidence in cash generation and shareholder returns .
  • FX liquidity and conversion costs remain key swing factors; continued monitoring of local currency balances and premiums is critical for near-term EPS volatility .
  • Near-term trading: Positive comp updates (+6.6% in December; +7.8% in CC) and sequential margin uptick are supportive; lack of estimates context is a temporary limitation for beat/miss framing .
  • Medium-term thesis: Membership mix upgrade, private label expansion, and supply chain modernization underpin operating leverage; tariff risks appear manageable given sourcing mix and FTZ advantages .