Q1 2021 PriceSmart Inc Earnings Call
Good morning, or afternoon, everyone and welcome to Pricesmart Inc. earnings release Conference call for the first the school quarter of 2021 of which ended on November Thirtyth 2020. After remarks from our company's representative share a bear and baking Chief Executive Officer, and Michael Mccleary.
The 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 January eight 2021, and a digital replay will be available. Following the conclusion of todays call through January 15, 2021 by dialing 18773 Forks force.
Seven five to nine for domestic callers or one four of one Q3 of 170 088 for international callers by entering replay access code 10149 960.
Opening remarks, I would like to turn the call over the price Smarts Chief Financial Officer, Michael Mcclary. Please proceed sir.
Thank you and welcome to the price where earnings call for the first quarter of fiscal year 2020 more.
And we'll be discussing the information that we provided in our earnings press release and our 10-Q.
The results released yesterday afternoon January 7th 2021.
You can find both documents from our Investor Relations website.
And that's true dot price Mark Dot com.
And you can also sign up for in dollars.
As a reminder, all statements made on this conference call each day much of the historical facts.
Our forward looking statements concerning the Companys anticipated.
Revenues and related matters.
Forward looking statements include but are not limited to statements containing the words expect believe may should estimate and similar expressions.
All forward looking statements.
Based on current expectations and assumptions as of today January 2021.
These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed and the company's most recent annual report on form 10-K, and other filings with the FCC, which are accessible on the and she sees website <unk>.
Yeah. The W. W actually see dark out.
These risks maybe update us 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 share the and baby and sports Chief Executive Officer.
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 challenge of caused by the pandemic over the past 10 months, we've seen the data from our team members.
They consistently relative to the occasion and 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 fixed price of merchandising and more important to our business than they are today.
This retail philosophy at the size of having the right kind of merchandise and the right place at the right time, and the right quantity and the right conditions and at the right price.
Our execution of operational efficiencies vigilant and disciplined to these core principle is what has led us to the 7.7% gross and net merchandise sales and 3.6% growth and comparable net merchandise sales compared to the year ago period.
Note that we had one additional called and operation as of November Thirtyth 2020, compared to the same time last year.
During the quarter, we saw the gradual relaxation of Cobiz related restrictions, which led to fewer club day blocked compared to the prior sequential quarter, but we still experienced limitations on the hours and numbers of people and the club.
During this last quarter, we expand the last years Smart weekend event, which was held in the Caribbean towards Smart week program across all of our markets and prove to be very successful.
We also strengthened our digital marketing efforts and social media engagement, which of enhanced our ability to quickly graph the valuable insights from our members and more readily share with them, our exciting curated items and programs.
Oh the results of these efforts we've been able to provide our members with a great inventory net and reasons to visit the club and the number of transactions and and 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 hard line category experienced approximately 20% sales growth during the period compared to the prior year quarter.
Leading the growth, where 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% 10 per cent and 16% growth respectively.
Yeah, we did have challenges during the quarter was seasonal and the toys departments 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.
And our grocery and fresh categories, we continue to see an increasing demand for healthier food options from our members and.
In an effort to meet the demand we've invested in infrastructure that allows us to source of high quality fresh produce through our direct farm program. This program to reduce the cost and improve the quality and shelf life of our produce offering while also supporting local farmers in the industry and our market is.
This is also and important social priority for us.
In addition, the investments and our prototype distribution center, it's of allowed us to provide farm to table Proteus quicker and more efficiently than we have and the path.
We intend to continue to and this program and open additional produce distribution centres throughout our markets.
Although we've seen growth across most of our food and fresh departments. The few categories lagged the such of Candy snacks and juices.
Oh real critical part of building on our value proposition and offsetting some of the impact of pandemic related restrictions and the continued development of our omni channel efforts.
Our click and Doe curbside and delivery service, which represented 3.1% of our net merchandise sales during the quarter is an important alternative for our members per.
The upside pickup is available and all of our club and all of our markets and we expanded the Liberty to all 13 markets and late October up from just six at the end of 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 of 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 and expanded selection beyond whats available in the cloud.
In addition, the shoppers are responding favorably to our online platform for their memberships.
11% of all of you sign ups and Q1, we're done online.
One of the important benefits of the having the sign up and renewals on line is that it provides the opportunity for auto renewal and the auto pay much.
Overtime, we expect that this will lead to more efficient membership acquisition and renewal.
Our investments in technology and enhance the tour systems and software also allow us to make use of about make use of valuable membership data and feedback and real time.
The inbound and outbound communication channel.
Allow us to operate our business with better information and to make optimal merchandising and business decisions quickly.
South and especially important oh, the capability required and this environment.
Turning to supply chain and inventory.
Turning to supply chain and and mature I just want to recognize the tremendous job. Our team has done despite the continued challenges we face.
I had the pleasure of visiting our distribution center workers and Miami the week between Christmas and new years, and they were hard at work committed to ensuring we're running it smoothly as possible.
What the team has done to secure alternative including quality of local sourcing to minimize the out of stock and key items and hedge against currency volatility is remarkable.
Due to the significant surge in demand and many of the categories. We discussed we see some shipping container shortages at the point of origin out of Asia, and and we've had some slow down and supply flow and Central America due to the devastating hurricanes and a and iota.
We expect to be able to work through these challenges and continue to identify and develop local high quality inventory alternative as needed.
We continue to increase our focus on inventory management.
Increased skew discipline and order management helped reduce our average and Detroit per club and the first quarter by an average of approximately $500000 per club versus the comparable prior year quarter.
Mark Downs were significantly less this quarter compare it compared to the same period last year.
And our inventory was clean far less in terms of spoilage we.
We were the place to go from many non food categories and our markets as our competitors Werent able to source of the same level of merchandise and those areas such as laptops tablets and television.
We've also expanded our offer and of high quality high value private label member selection of products.
Hi that label will continue to be of 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 the last quarter, we appreciate it more than ever that we have optionality with our in country distribution centers the.
This is proven to significantly mitigate supply chain disruption risk.
Now turning to the membership our total number of membership the count decreased 3.8 per cent during the first quarter of fiscal year 2021, when compared to the comparable prior year period. However.
However, we saw a 1.5 per cent increase and our membership the count [laughter] just August 31, 2020 as income and club traffic improved our.
Our trailing 12 month renewal rate was 81.9% and 86.1 per cent for the periods ended November 30, 2020, and November 32019, respectively.
Historically, our members would renew their membership at the register and due to the pandemic traffic has slowed down Columbia had the largest membership percentage decline followed by Central America and the Caribbean. However are 81.9 per cent trailing 12 month renewal rate has improved significantly from the low of the 80.5 per cent at the end of March.
Yes, as restrictions and he stopped.
And as noted before we've seen and encouraging increase and membership sign ups and renewed renewals completed on line.
We are enhancing the value of our memberships and never shipped through the rollout of optical centers with 21 locations open at the end of the quarter up from 17 at the end of August and we're on track for approximately having optical and three quarters of our clubs.
By the end of the fiscal year.
The membership includes no charge vision exams for up to four family members and excellent price is non optical products.
That's price where it seeks to enhance the quality of life for our members. We believe additional services the tend to our members well being and provide an opportunity for us to further strengthen our relationships and enhance membership value and its fundamental way.
As you can see we're quite focused on member experience.
I'm proud to say that weve been vigilant about precautionary measures and of maintain high standards of the cleanliness and safety.
This is also deepened the trust of our members and in my view and highlighted the us as leaders in our markets.
Now I'd like to give a brief update about a real day construction activity on.
On December 4th just a couple of weeks ago or the little over a month ago, we safely celebrated the grand opening of our the canned club the.
It was the second time since the pandemic began that our leadership team and international executives were able to effectively and remotely support our local teams opening of the new club that.
The second cloud the strategically located in the heart of the 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.
Oh, So recently, we announced plans to build two new warehouse clubs, one and Guatemala City Guatemalan expected to open in the fall 2021, and the other important more Jamaica, a suburb of Kingston expected to open in the spring of 2022 works.
We're excited about the potential for both of these locations and this will be our fifth club and Guatemala and follows the successful opening of our fourth warehouse clubs and Crystal ball and 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, and as in these cases will move forward with new club openings and 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 and our market and a better shopping experience for our members.
I'd like to spend a moment now and our December sales that we released earlier today net.
The merchandise sales were $372.6 million and increase of 2.8% versus the year ago with the negative FX impact of 3.1% or $10.5 million.
For the four weeks ended December 27, 2020 comparable net merchandise sales decreased 1.7% with the negative FX impact of 2.9%.
December sales were impacted by a return of club closure days and Panama over Christmas weekend, as well as the additional mobility restrictions and Panama and Colombia as infection rates have risen.
We also saw sales decline year over year, and Trinidad due to actions Weve taken in response to the U.S. dollar the illiquidity and Michael will discuss the more it stopped out.
And a few minutes.
In closing we posted strong results for Q1 and December, particularly considering the current environment that we're operating and our commitment to refocusing our efforts on the fixed price that's really shown during this quarter and this past holiday season, considering the challenges, we encounter ranging from hurricanes and locked down to container shortages and.
Foreign currency fluctuations the.
The team has risen to meet these challenges and isn't by his inspired to find new ways to better serve our members, which are sustainable and will carry us into the future of even after the immediate pandemic crisis is the thing of the past we.
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 tour of members expectations, we have the talent resolve and hard and commitment to our members the markets, we serve and to this company and we.
How loyal members, you're really count on that though the trusted source of good goods and services.
A lot of families depend on us.
Lastly in times like this.
And we take that responsibility to heart, we're well positioned to propel our business forward and it's that is to the credit of our wonderful team of over 10000 employees, who I sincerely thing where the stellar performance. Thank you and I'll now turn the call the over to Michael.
Thank you share good morning, or afternoon to everyone and thanks for joining us today.
And again I would like to take this opportunity also.
Our team members for the tremendous efforts and selflessness during this past quarter and holiday season.
Our results are a reflection of that hard work and the journey.
Total revenues and net merchandise sales for the quarter were $877.4 million and $838.4 million respectively Records.
Representing increases of 8.1% and 7.7% over the comparable from your current respectively.
As a reminder of what in the clubs we opened the boy's area and June 2020, we ended this quarter with 46 warehouse clubs compared to 40 more hardware helps Forbes at the end of the first quarter from schools for me 20.
Our comparable net merchandize sales growth was 3.6 from sense of of 13 weeks and that November 29 of 2024.
Foreign currency fluctuations had a negative impact on both net merchandise and comparable net merchandise sales and unfortunately, the $27 million or 350 basis points.
By segment and Central America, where we had 26 called the program, including three of them since October of 2019 net.
And merchandise sales increased 6.2% like the 0.7 per cent decrease and comparable net merchandise sales.
Or and the rest El Salvador and the current markets contributed approximately 150 basis points from August of inside of the total comparable net merchandise sales. Despite the impact from the two hurricanes and if the region during the quarter.
This contribution was offset by 190 basis point decrease coming from the animal off the street and one of them all.
And the long Guatemala, Rx net sales transfers from recent Hoboken, and the most countries during the quarter.
And the devaluation of the Costa Rica, and Cologne resulted in sales decreased from that country versus the comparable period and from here.
And the Caribbean region, where we had 13 clubs at quarter end total net merchandise sales grew 10.1%.
The real net merchandise sales growth of 9.9%.
Most of our markets and the Caribbean show double digit comparable sales growth when compared to the same period and the earlier.
The Trinidad and the Dominican Republic, contributing 270 basis points to our total comparable sales growth.
Up to this quarter, both markets performed well and the current hold the 19 funds and the despite.
Despite the significant foreign currency devaluation compared with her and her group and the diminished.
Oh.
However, I would like to note that in Trinidad although sales were very strong during the quarter Americans and into experience challenges and converting turned and dollars to the U.S. dollar.
As a result during the first quarter and began limit and shipments of goods from the rest of true that we.
We're already seeing the impact and our December sales and we expect the continue limiting shipments during the second quarter fiscal 2021.
Therefore, our generic called smart currently carrying the usual index and quality of merchandise.
We believe this reduction and imported merchandise will negatively impact sales and turned it on and our second fiscal quarter by an estimated 14 to 18 million U.S. dollars.
The time to increase or decrease shipments from the rest of Trinidad in line with our ability to exchange tremendous amount of dollars or other hard currencies.
However, we are also seeking other opportunities to reduce our net use of yours or internet of such as by shifting the purchase of showed the goods and local sources and seeking the increase exports of welcome and sourced part of.
And Columbia, 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 and Thats the total comparable sales.
Average ticket growth compared to the power of your three month group and is the primary driver of the increase in Colombia, and it's called the 19 restrictions loved the members line more merchandise and you're kind of store and warehouse force Berg from the free.
The impact of currency and total and comparable net merchandise sales and on deals and the strength and they got of 10.7 and 10.5% respectively for the quarter.
Currency devaluation continues to be a challenge and Colombia, what we are employing different approaches and in an effort to mitigate the impact such and sourcing of locally produced goods and actively managing our foreign countries flow from the.
Turning to total gross margins total gross margin on that merchandise sales came in at 16.1%.
Honored and 20 basis point of grew went over the same quarter last year.
120 basis point increase was primarily driven by the 60 basis point increase from certain price and Darchinyan sort of Twox net foreign currency exchange cost and risk and the tour.
And where we have them from what it was one of the premium and true it up on our U.S. and four of our items net.
The other 60 basis points increase came from more focus merchandising strategies and inventory management.
Total revenue and margins increased from 18% of total revenue of an increase of 110 basis points versus the same per if that's true.
This is the result of the higher gross total gross margins of the 120 basis points that I mentioned previously and head of revenue margin [laughter] funeral and marketplace business and the quarter of 20 basis from.
[noise] students.
Partially offset by 20 basis points from more membership income and 10 basis points from pure margin dollar side of the percentage and from a revenue from work force from citizens.
Selling general and administrative expenses for the quarter were 12.9% of total revenue.
And decrease of 20 basis points versus the same period of last year.
And total SGN expenses increased $6.7 million compared to the prior or your line.
<unk> decreased as a percentage of total revenue from.
Warehouse club and other operations expenses contributed 10 basis points of the decrease as the result of lower warehouse club operating expense ratios across all of our markets.
General and administrative expenses contributed the other 10 basis points of the corn.
The overall improvement is primarily the result of leveraging our consolidated revenue growth.
However, we continue to make investments to support our technology and talent development.
Operating income was $44.5 million or 5.1% of total revenue and the first quarter of fiscal 2021 compared.
Compared to $30.7 million or 3.8% of total revenue for the same period last year.
This reflects the increase in total revenue and margin primarily from net merchandise sales order and 10 basis points and the 20 basis point increase due to leveraging of restaurant expenses over the comparable right of your current of.
The interest expense and increased $1.2 million from the first quarter, primarily due to higher average long term loan balances the fund our capital projects and draw Downs, and our fortune and lines of credit as part of our call the Nike and related efforts to secure cash.
Other expenses of $1.5 million, primarily from foster conversion of the dollars and two other tradable currency and the strengthening of the Jamaican dollar do floor U.S. dollar denominated cash reserves as needed to fund the construction of our loans for more color.
Our effective tax rate from the fourth quarter of fiscal 2021 came in slightly higher than last year of 32.9% for sort of 2.2% of yourself.
And our Q4 fiscal 2020 conference call, we estimated that our full year fiscal 2021 effective tax rate would be 35%.
However, due to our strong Q1 results. We now expect the full fiscal year 2021, and take the attach rate the approximately 34%.
Net income from the first quarter of fiscal 2021 was $27.7 million or 90 cents per diluted share compared to $19.7 million or 64 cents per diluted share and the comparable or your current.
Our balance sheet remains very strong we ended the quarter with cash cash equivalents unrestricted cash totaling $212.4 million, an increase of $97.3 million versus the same for the year ago.
And the cash flow perspective, and 43.9 million dollar shift from net cash provided by the net cash used in operating activities was primarily due to decreases and working capital as our temporary extension of the vendor terms negotiated as part of our mission public response began expiring during the quarter.
It is important and most of that many of these extended the under terms will continue searching reserved recall the terms during the second and third quarters in fiscal 2021.
Our experience with the temporary vender term extensions has provided an opportunity to revisit terms on a more kind of basis.
Net cash used and investing activities and increased by $4.6 million compared to the prior year, primarily due to the increased and investments and certificates of deposits alternate of dollars and have on hand, all the work actively to convert from Trinidad of dollars from into your EPS dollars as of the old old you hold all else.
Offset by the less construction expenditures.
The 59.5 million dollar change from cash provided by the cash used in financing activities is primarily the result of the net decrease the proceeds from long and short term borrowings.
We continue to be vigilant about our cash position and sensitive to any changes and circumstances.
Well some uncertainty remains in our markets about the extending the duration of the pandemic.
We have confidence and our ability to continue our offers and successfully while also continuing to invest and the future.
And this context, we currently expect the completely paid on the remaining short term lines of credit to the access as part of our initial call. The 19 response during the second and third quarters of this fiscal year.
To wrap up we are very pleased with our strong start the fiscal 2021.
We believe our commitment to the six price of merchandising and the investments and we are making in total real estate and our digitally enabled the omni channel platform has positioned us well from the future.
In addition, our balance sheet liquidity and cash flow remains strong providing a solid foundation for driving same store sales and and future growth, which we believe will benefit our members and and stockholders of like.
Thank you all for your support during these times of uncertainty we believe the we're 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.
We will now begin the question answer session to ask the question you May Press Star then one on your Touchtone phone. If you are using the speakerphone. Please pick up your handset before pressing the keys to.
The withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question today comes from Rodrigo actually Gary with Scotia Bank.
Thank you happy new year and congrats from on the results.
Touched on December sales because you go over the main drivers of Oh, the same sort of sales from December and also any thoughts on the how sustainable that.
<unk> gross margin expansion in the previous quarter would be in the context of December sales. Please. Thank you.
Well I get the happy new year Rodrigo and.
The December sales at the same store sales as we've mentioned before were impacted by the fact that we had additional clubs that we're transferring sales from the existing clubs.
And I think it's also important to remember that this December is comping against the you know a holiday season last December where there was no coated.
So what what we we did of when the pandemic first came about we did cut back on the seasonal and some items that we felt would be more discretionary.
And and that did impact sales to some degree and of people shifted a lot of their focus to essentials a during this holiday season, and we think that may have had something to do with it.
And.
The the.
The fifth in terms of the margin.
Our effort is always to try to continue to find the inefficiencies and the process and eliminate them and reduce them so that weekend.
Survived the best of value to the member of possible.
And our margin.
When you think about it and it's difficult to.
I find the specific margin to all areas of our business. If you understand for example, or other business has a higher margin structure.
On the and we're doing more efforts to source and vertically integrate so that we can provide.
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 true for the member in terms of pricing.
The margin structure of May vary among the different areas of our business as we become more dynamic and more entrepreneurial and find better ways to sort of better material better merchandise and better services for our members.
Got it and so it sounds like it's definitely a structural.
Change in that direction.
I guess the the other question is related to the in country distribution efforts, which seem to be a very.
Very important and which makes sense to me.
Just wondering what's the you know if we think about you know 10 years down the road.
How do you Oh force see the the whole distribution.
Hey platform shaped shaping up Oh, I mean, do you foresee having many more distribution centers and country and.
And the lower inventory of being held that the <unk>, Florida.
We believe that having distribution centers and country per.
Provides tremendous benefits for a number of reasons.
HM previously when when most of our imports would come from and and still come from China, and happy and go through Miami there.
There would be longer lead times, often and when there is basically one direction of flow of there's more risk and GAAP by having multiple distribution centers throughout our markets and and as we gain leverage and concentration and in various markets. It gives us optionality that allow.
Of the to go direct that's one the other is that we're finding more and more opportunities in our markets to be able to a source of merchandise quality merchandise and to support our efforts to vertically integrate and expand our private label and to cure rate and unique and exciting.
Right and 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 of into the clubs.
As opposed to try and the thread that needle, what's the long lead time and and get the exact right of Mt directed to each and every club. It does provide an opportunity for us to be more efficient. So we see some some significant benefits and expanding our distribution center and basically de centralize.
The thing.
The structure and a way that we've got more presence among our various markets.
And then and there's also the on line part of it Oh, well, which which benefits from having these the regional distribution centers yeah.
Yeah. The that was exactly my question, so that the makes more sense as well from from that perspective.
Great right well, let's go to the Mei and thank you happy new year, and and congrats and the results.
Thank you Rodrigo happy new year to true.
Our next question comes from Jon Braatz, with Kansas City capital.
Right Michael share.
Good morning, Oh, I'm looking at the Trinidad.
Oh and Michael your your your net.
Asset position monetary asset position at the end of the fourth quarter was 4.8 and went to a net monetary liability of 14.4 million and.
If you look at your strategy or what you're doing and and and Trinidad it sounds like you're you're limiting and sales, but you're increasing prices to all of you know to compensate for the additional risk.
And you know given that strategy strategy would your would your net monetary liabilities position increase and the a and the fall and the subsequent quarters or would stay about the same.
Hi, John how good the question.
Actually I wouldn't say, we're trying to limit sales and turn the I tried out there and we are winning and limiting the exports and the U.S. goods into the Trinidad to exactly what kind of <unk> like local items and much or we are doing our best and do that.
And you know as long as it as far as the complies with our volume and pricing of the philosophy of but as far as the liability itself and that's no I think generally.
We're trying to maintain a balance around that level within a range price because you're essentially saying.
And that the export from the U.S. for jet and which would generate more liabilities should be in line with what we're able to the.
To convert and the U.S. ours is not of parts with the question 'cause, okay because of the ones and things like that and we're generally toward trying to manage that within the let's say and reasonable not liabilities within a reasonable range. That's okay. Okay with.
With the strengthening energy markets is.
Is the situation and in France, and what do you think the Trinidad the situation might improve a little bit the wood with that the country being heavily tied to the energy sector.
Certainly that's that's the number one the sources of U.S. hours and energy sectors, I wasn't sort of problems and of of the energy sector. The they participate in and so but a yacht definitely reasons and rising consumption and resin prices and the energy sector should definitely help at the same time.
And as I mentioned, we're also looking to increase you know our ability to export and.
Yes, good job and of turned out of you can buy them and turn and dollars and export and other markets and slowing of stars that gives us more U.S. dollar skills. The import merchandise of some of our clubs Yep Yep, Okay. Okay, Oh on the on the gross margin from and related to trying to debt that was up and accounted for about you sort of.
Oh, what 50 50 basis points improvement and your overall gross margin.
And the strategy the in place the way. It is would you continue to expect a bump and consolidated gross margins.
Related to your actions and and and Trinidad.
Yeah, I mean, it's obviously kind of enough and want to do the small to the to be chartered and this premium freight and also at the same time, we're wearable Cessna risk here and that means that we haven't yes, and there's one before but but generally we thought it was prudent and to the price of ahead of it so hopefully as long as the retail.
It is important to call it out as the components because to the extent the situation ends up resolving itself and the most of that premium would go down, but we do force yet for the foreseeable future and some situations force first quarter sales.
Okay and one last question Gerry you.
You mentioned and in December there were some from additional Lockdowns, if you want to call it and and.
The things that restricted your hours of operation.
Has that.
Proved or worse and as we moved into the new year as head of things changed at all.
And it varies from market to the market, but we are seeing additional as a result of a rise in cases.
Ah additional restrictions.
For example, governments have been keeping people home, especially because of the holidays for Christmas and new years that whole weekend, a couple of our markets restricted people from any circulation <unk> and and were concerned about large gatherings and and wrapping up Brad.
So we see the if there's an ongoing dynamic that we just have to be prepared for and and utilize our alternative most of the shopping and different ways to get merchandise to our members.
But it certainly is.
Not resolved here and it's not resolved there and so with still and ongoing dynamic. Okay is it is it more a Panama and Colombia.
That has been impact of the most of the that's where we've seen at the mouth yeah. Okay. Okay. All right. Thank you for.
Thank you John.
This concludes our question and answer session and I'd like to turn the call back over to share a bear and bakey for any closing remarks.
It's why is the thank everyone for I guess, the steadfast commitment and a chore 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.
The good start to the new share.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.