PRICESMART ANNOUNCES FISCAL 2022 THIRD QUARTER OPERATING RESULTS AND PLANS FOR THIRD WAREHOUSE CLUB IN EL SALVADOR

NET MERCHANDISE SALES GREW 16.5%
COMPARABLE NET MERCHANDISE SALES GREW 12.8%
MEMBERSHIP BASE ACHIEVED RECORD LEVEL
STRONG RENEWAL RATE OF 88.9%

SAN DIEGO, July 11, 2022 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT), operator of 50 warehouse clubs in 12 countries and one U.S. territory, today announced results for the fiscal third quarter of 2022, which ended on May 31, 2022.

"For the third quarter of this fiscal year, our net merchandise sales grew to almost $1 billion.  Our comparable net merchandise sales increased 12.8% over last year, even after taking into account a negative currency impact of 2.2%. Once again, our Membership base set a new record, with a base of over 1.75 million accounts. We also opened our 50th club in Portmore, Jamaica during the quarter.

"However, like many other retailers, we have not been spared the impact of global supply chain disruption and abrupt shifts in consumer demands. Our hardlines and other non-foods categories are characterized by a higher penetration of imported items that tend to correlate with discretionary spending. Due to long lead times on many of these items, commitments are made many months, if not about a year, in advance.

"Many months ago, we made strategic investments in inventory with the goal of remaining in-stock and capturing higher sales. Since then, the environment has been characterized by global supply chain disruption, including Asia port closures due to COVID, container shortages, higher freight and fuel costs, inflation, and sharp changes in consumer demands. This has disrupted the cadence and flow of that inventory, and inflation has influenced consumer behavior by shifting the demand away from discretionary and toward more essential items. As a result, we have been experiencing excess inventory, primarily in the area of hardlines.

"We have taken decisive action, and continue to do so, to swiftly sell through excess inventory and quickly rebalance our inventory mix. As a result, we have experienced higher than normal markdowns. Our plan is to handle this quickly and efficiently in order to be well-positioned for the holiday season. Although it is likely we will see some margin pressure in the fourth quarter, we believe it will be far less than the third quarter. We see this as a point in time. We have gained many new important insights. We expect soon to return to our healthy, historical margin structures.

"While dealing with short-term challenges with inventory, we are making good progress on initiatives intended to support our plans for medium and long-term growth. The team remains focused on our plan to drive growth through expansion of our global real estate footprint, by increasing the value of the membership, and by driving incremental sales through PriceSmart.com and through the creation of additional technology capabilities." 

Total revenues for the third quarter of fiscal year 2022 increased 15.1% to $1.03 billion compared to $895.3 million in the comparable period of the prior year. For the third quarter of fiscal year 2022, net merchandise sales increased 16.5% to $999.0 million from $857.5 million in the third quarter of fiscal year 2021. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $19.1 million, or 2.3%, versus the same period in the prior year.

The Company had 50 warehouse clubs in operation as of May 31, 2022 compared to 47 warehouse clubs in operation as of May 31, 2021.

Comparable net merchandise sales for the 47 warehouse clubs that have been open for greater than 13 ½ calendar months increased 12.8% for the 13-week period ended May 29, 2022 compared to the comparable period of the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $18.6 million or 2.2% versus the same period in the prior year.

The Company recorded operating income during the fiscal third quarter of $33.8 million compared to operating income of $36.0 million in the prior year period. Net income attributable to PriceSmart was $19.3 million, or $0.62 per diluted share, in the third quarter of fiscal year 2022 as compared to $22.5 million, or $0.73 per diluted share, in the third quarter of fiscal year 2021.

PriceSmart has purchased land and plans to open its third warehouse club in El Salvador, located in the city of San Miguel, approximately 100 miles east of the capital city San Salvador. The small format club will be built on a five acre property located in the Hacienda San Andrés area and is anticipated to open in the spring of 2023. In addition, we have begun construction of a smaller format warehouse club in the affluent El Poblado area of Medellín, Colombia. We expect to open this warehouse club, which will be our second club in Medellín and the Company's tenth warehouse club in Colombia, in the summer of 2023. Once these two new clubs are open, we will operate 52 warehouse clubs.

PriceSmart management will host a conference call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) on Tuesday, July 12, 2022, to discuss the financial results. Individuals interested in participating in the conference call may do so by dialing (855) 209-8211 toll free or (412) 317-5214 for international callers and asking to join the PriceSmart, Inc. call. A digital replay will be available through July 19, 2022, following the conclusion of the call by dialing (877) 344-7529 for domestic callers, or (412) 317-0088 for international callers, and entering replay passcode 6291871.

PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise and services at low prices to PriceSmart Members. PriceSmart operates 50 warehouse clubs in 12 countries and one U.S. territory (nine in Colombia; eight in Costa Rica; seven in Panama; five in the Dominican Republic and Guatemala, four in Trinidad; three in Honduras; two each in El Salvador, Nicaragua, and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands). In addition, the Company plans to open a warehouse club in San Miguel, El Salvador in the spring of 2023 and a warehouse club in Medellín, Colombia in the summer of 2023. Once these two new clubs are open, the Company will operate 52 warehouse clubs.

This press release may contain forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company" or "we") anticipated future revenues and earnings, adequacy of future cash flows, omni-channel initiatives, proposed warehouse club openings, the Company's performance relative to competitors and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "anticipated," "scheduled," "intend," and like expressions, and the negative thereof.  These statements are subject to risks and uncertainties that could cause actual results to differ materially including, but not limited to: various political, economic and compliance risks associated with our international operations, adverse changes in economic conditions in our markets, natural disasters, volatility in currency exchange rates and illiquidity of certain local currencies in our markets, competition, consumer and small business spending patterns, political instability, increased costs associated with the integration of online commerce with our traditional business, whether the Company can successfully execute strategic initiatives, our reliance on third party service providers, including those who support transaction and payment processing, data security and other technology services, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of Member or business information, cost increases from product and service providers, interruption of supply chains, novel coronavirus (COVID-19) related factors and challenges, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, which are accessible on the SEC's website at www.sec.gov, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law.

For further information, please contact Michael L. McCleary, EVP, Chief Financial Officer and Principal Accounting Officer (858) 404-8826 or send an email to [email protected].

SOURCE PriceSmart, Inc.