Q1 2024 PriceSmart Inc Earnings Call
[music].
Good afternoon, everyone.
Good afternoon, everyone, and welcome to the Price Smart Inc. earnings release, conference call for the first quarter of fiscal year 2024.
The price Smart Inc. Earnings release conference call for the first quarter of fiscal year, 'twenty 'twenty four which.
November 30th 2023.
After remarks from our company's representatives, Robert Price and Jerome Chief Executive Officer, and Michael McClary, Chief Financial Officer.
After remarks from our company Representatives, Robert price interim Chief Executive Officer and me.
Michael Mccleary, Chief Financial Officer, you will be giving a number to be key to ask questions as time permits.
Speaker Change: We will be giving an opportunity to ask questions as time
Speaker Change: As a reminder, this conference call is limited to one hour and is being recorded today, Wednesday, January 10th, 2021.
As a reminder, this conference call is limited to one hour and is being recorded today Wednesday February 10 2024.
Speaker Change: A digital replay will be available following the conclusion of today's conference call through January 17, 2024 by dialing 1-877-674-7070 for domestic callers or 1-416-764-8692.
At digital replay will be available following the conclusion of today's conference call through January 17th 2024 by dialing 1877677070 for domestic callers.
141676 for 692 for international callers and by entering the replay access code 833 cute H two followed by the pound key.
Speaker Change: international callers and by entering the replay access code 83325.
Speaker Change: For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Michael McClary. Please proceed. Thank you.
For opening remarks, I would like to turn the call over to price Smarts, Chief Financial Officer, Michael Macquarie. Please proceed sir.
Michael McCleary: Thank you, Operator, and welcome to Pricemart, Inc.'s earnings call for the first quarter of fiscal year 2024, which ended on November 30, 2023. We will be discussing the information that we provided in our earnings press release and our TINQ, which were both released yesterday afternoon, January 9, 2024. Also in these remarks,
Thank you operator, and welcome to price Mart, Inc. Earnings call for the first quarter of fiscal year 2024, which ended on November 32023, well.
We will be discussing the information that we provided in our earnings press release, and our 10-Q, which were both released yesterday afternoon January nine 2024.
Also in these remarks, we refer to non-GAAP financial measures.
You can find a reconciliation for non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our 10-Q.
Michael McCleary: You can find a reconciliation for our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release in our 10-Q.
Michael McCleary: These documents are available on our investor relations website at investors.pricemart.com, where you can also sign up for email alerts.
These documents are available on our Investor relations website at Investor.
Investors that price spot Dot com, where you can also sign up for email alerts.
Michael McCleary: 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.
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.
Michael McCleary: Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate, and some other expressions.
Looking statements include but are not limited to statements containing the words expect.
Believe plan will.
May should estimate and some other expressions.
Michael McCleary: All forward-looking statements are based on current expectations and assumptions as of today, January 10, 2024. 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-K .
All forward looking statements are based on current expectations and assumptions as of today January 10th 2020 for these.
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-K.
Michael McCleary: the quarterly report on Form 10-Q filed yesterday, 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 quarterly report on Form 10-Q filed yesterday and other filings with the SEC, which are accessible on the Sec's website at Www Dot SEC Dot Gov.
This may be updated from time to time.
The company undertakes no obligation to update forward looking statements made during this call.
Michael McCleary: The company undertakes no obligation to update forward-looking statements made during this call.
Speaker Change: Now we'll turn the caller over to Robert Price. Price marks interim chief executive office.
Now I will turn the call over to Robert price price parts interim Chief Executive Officer.
Robert Price: Thank you, Michael. I also want to express my sincere thanks and appreciation to our employees, both here in the United States and in the countries where we operate our business.
Thank you Michael I also want to express my sincere, thanks, and appreciation to our employees both here in the United States and in the countries, where we operate our business.
Robert Price: Overall, I am very pleased with our sales and earnings results.
Overall, I am very pleased with our sales and earnings results.
Robert Price: I especially commend our operations and buying teams for their outstanding performance.
I, especially commend our operations and buying teams for their outstanding performance.
Robert Price: I also want to highlight our December sales.
I also want to highlight our December sales.
Robert Price: $511 million, the highest sales month in our company's history.
$511 million, the highest sales month in our company's history.
Robert Price: These record sales were made possible by the coordinated efforts of our buyers.
These record sales were made possible by the coordinated efforts of our buyers.
Robert Price: Pricemark club employees and our logistics team members
Price Smart club employees and our logistics team members finally, I would like to congratulate our long time team member Paul Kovalevsky on his recent appointment as executive Vice President and Chief merchandising officer of price Smart.
Robert Price: Finally, I would like to congratulate our long-time team member, Paul Kowalewski, on his recent appointment as Executive Vice President and Chief Merchandising Officer of PricewaterhouseCoopers.
Robert Price: Now, Michael will continue with his presentation.
Now Michael will continue with his presentation.
Thank you Robert.
Michael: We had a strong first quarter as both total revenues and net merchandise sales exceeded $1.1 billion.
We had a strong first quarter as both total revenues and net merchandise sales exceeded $1 1 billion.
Michael: Net merchandise sales increased by 10.7% or 6.8% in constant currency.
Net merchandise sales increased by 10, 7% or six 8% in constant currency.
Michael: and comparable net merchandise sales increased by 8% or 4.3% in constant currency.
And comparable net merchandise sales increased by 8% or four 3% in constant currency.
Michael: segment in Central America where we had 29 quads per quarter in, net merchandise sales increased 11.3% or 6.4% in constant currency.
By segment.
In Central America, where we had 29 clubs at quarter end net merchandise sales increased 11, 3% or six 4% in constant currency.
Michael: with a 9.1% increase in comparable net merchandise sales or 4.3% in constant current.
With a nine 1% increase in comparable net merchandise sales or four 3% in constant currency.
Michael: all of our markets in Central America had positive comparable net merchandise sales growth.
All of our markets in Central America had positive comparable net merchandise sales growth.
Our Central America segment contributed approximately 550 basis points.
Michael: Our Central America segment contributed approximately 550 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the first quarter.
A positive impact to the growth in total consolidated comparable net merchandise sales for the first quarter.
This segment includes three new clubs following the opening of our third warehouse club in El Salvador, and May 2023, and our sixth warehouse club in Guatemala in November 2023.
Michael: This segment includes two new clubs following the opening of our third warehouse club in El Salvador in May 2023 and our sixth warehouse club in Guatemala in November 2023.
Michael: in the Caribbean, where we had 14 crabs at quarter end.
In the Caribbean, where we had 14 clubs at quarter end.
Michael: Net merchandise sales increased 6.4% or 8.6% in constant currency.
Net merchandise sales increased six 4% or eight 6% in constant currency.
Michael: and comparable non-merchandise sales increased 6% or 8.2% in constant currency.
Comparable net merchandise sales increased 6% or eight 2% in constant currency.
Michael: Our Caribbean region contributed approximately 180 basis points of positive impact to the growth and total consolidated comparable and emerging life scales for the quarter.
Our Caribbean region contributed approximately 180 basis points.
Positive impact to the growth in total consolidated comparable net merchandise sales for the quarter.
Michael: In Colombia, we had 10 clubs open at the end of our first quarter, following the opening of our El Poblado Club in Medellin on September 1st.
In Colombia, we had 10 clubs open at the end of our first quarter. Following the opening of our L. Hobo Auto club on September one.
Michael: Net merchandise sales in Colombia increased 19.3% or 4% in constant currency.
Net merchandise sales in Colombia increased 19, 3% or 4% in constant currency and comparable net.
Michael: and comparable net merchandise sales increased 7.1% or decreased 7.2% in constant currency.
Merchandise sales increased seven 1% or decreased seven 2% in constant currency.
Michael: Columbia contributed approximately 70 basis points of positive impact to the growth in total comparable net merchandise sales for the quarter.
Colombia contributed approximately.
Many basis points of positive impact.
The growth in total consolidated comparable net merchandise sales for the quarter.
In terms of merchandise categories.
Michael: When comparing our first quarter sales to the same period in the prior year, our foods category grew approximately 7 percent. Our non-foods category increased approximately 9 percent.
When comparing our first quarter sales for the same period in the prior year, our foods category grew approximately 7% our non foods category increased approximately 9%.
Michael: Our food services and bakery categories increased approximately 7%. And our health services, including optical, audiology, and pharmacy, increased over 600%.
Our food services and bakery categories increased approximately 7% and our health services, including optical audiology and pharmacy increased over 600%.
Michael: Membership accounts grew 3.8% versus the prior year to 1.82 million accounts with a 12-month renewal rate of 87.4% as of the end of our first quarter.
Membership accounts grew three 8% versus the prior year to $1 eight 2 million accounts with a 12 month renewal rate of 87, 4% as of the end of our first quarter.
Michael: Platinum membership accounts are 9.3% of our total membership base as of November 30th, 2023, an increase from 7.9% as of November 30th, 2022.
Platinum membership accounts or nine 3% of our total membership base as of November 30 of 2023, an increase from seven 9% as of November 32022.
Michael: Membership income for the first quarter was $17.7 million, an increase of 11.7% over the same period last year.
Membership income for the first quarter was $17 7 million on.
An increase of 11, 7% over the same period last year.
Michael: In the first quarter of fiscal year 2024, we raised the annual membership fee for two cards by $5 for all membership types in most markets.
In the first quarter of fiscal year 2024, we raised the annual membership fee for two cards by $5 for our membership types in most markets.
Michael: We expect ESP increases to also take place in most of the remaining countries on a staggered basis during the remainder of fiscal 2024.
We expect these increases to also take place and most of the remaining countries on a staggered basis during the remainder of fiscal 2024.
Hello gross margin from net merchandise sales increased $15 9 million or approximately nine 6% versus the same quarter of the prior fiscal year.
Michael: Total gross margin from net merchandise sales increased $15.9 million or approximately 9.6% versus the same quarter of the prior fiscal year.
Michael: with a slight decrease in rate from 16.2% to 16.1%, primarily from the removal of our COVID premium and reduction of our FX premium.
With a slight decrease in rate from 16, 2% to 16, 1%.
Primarily from the removal of our Covid premium and reduction of our FX premium.
Michael: During the quarter, our average sales ticket grew by 2.3% and transactions grew 8.2% versus the same prior year period.
During the quarter, our average sales take rate grew by two 3% and transactions grew eight 2% versus the same prior year period.
Michael: The average price per item increased approximately 4.5% 0 over year with average items for basket decreasing up approximately 2.2% compared to the same period of the prior year.
The average price per item increased approximately four 5% year over year with average items per basket decreasing approximately two 2% compared to the same period of the prior year.
Michael: Total SG&A expense increased to 12.5% of total revenue for the first quarter of fiscal year 2024.
Total SG&A expense increased to 12, 5% of total revenue for the first quarter of fiscal year 2024.
Michael: compared to 12.3% for the first quarter of the fiscal year 2023, primarily due to higher competition
Compared to 12, 3% for the first quarter of fiscal year 2023.
Primarily due to higher compensation expense.
Michael: Operating income for the quarter increased 4.8% from the same period last year to $58.2 million.
Operating income for the quarter increased four 8% from the same period last year to $58 2 million.
Michael: We recorded a $2.1 million net loss in total other expense net in the first quarter of fiscal year 2024 compared to a $6.2 million net loss in total other expense net in the same period last year, primarily due to a decrease in other expense of $2.4 million driven by a decrease in unrealized foreign currency losses compared to the prior year period.
We recorded a $2 $1 million net loss and total other expense net in the first quarter of fiscal year 2024, compared to $6 $2 million net loss and total other expense net in the same period last year, primarily due to a decrease in other expense by $2 $4 million driven by a decrease in unrealized foreign currency losses.
Compared to the prior year period.
Michael: as well as higher interest income of 1.7 million because of significantly more investments of surplus cash at higher yields.
As well as higher interest income of $1 7 million because of significantly more investments of surplus cash at higher yields.
Michael: Our effective tax rate for the first quarter of fiscal year 2024 came in lower than last year at 32.3% versus 33.3% a year ago, primarily attributable to fewer evaluation allowances on deferred tax assets from foreign tax credits that are no longer deemed recoverable. On a go forward basis, we estimate our annualized effective tax rate will be approximately 32%.
Our effective tax rate for the first quarter of fiscal year 2024 came in lower than last year at 32, 3% versus 33, 3% a year ago, primarily attributable to fewer valuation allowances on deferred tax assets from foreign tax credits that are no longer deemed recoverable on a go forward basis, we estimate our app.
<unk> effective tax rate will be approximately 32%.
Michael: That income increased 15.5% for the first quarter of fiscal 2024, coming in at $38 million, or $1.24 per diluted share.
Net income increased 15, 5% for the first quarter of fiscal 2024.
In at $38 million.
$1 24 per diluted share.
Michael: compared to $32.9 million, or $1.05 per diluted share in the comparable prior year period. Adjusted net income, which was the same as net income for the first quarter of fiscal year 2024, increased 8.6% to $38 million, or an adjusted $1.24 per diluted share, compared to adjusted net income of $35 million, or $1.12 per diluted share in the comparable prior year period.
<unk> to $32 9 million.
Or a $1 five per diluted share in the comparable prior year period.
Adjusted net income, which was the same as net income for the first quarter of fiscal year 2024 increased eight 6% to $38 million or an adjusted $1 24 per diluted share compared to adjusted net income of $45 million or $1 12 per diluted share in the comparable prior year period.
Michael: Adjusted a bit down for the first quarter of fiscal year 2024 was $77.8 million compared to $75.2 million in the same period last year.
Adjusted EBITDA for the first quarter of fiscal year, 2024 was $77 8 million.
Compared to $75 2 million in the same period last year.
Michael: Moving on to our strong balance sheet, we ended the quarter with cash, cash equivalents, and restricted cash totaling $186.9 million.
Moving on to our strong balance sheet, we ended the quarter with cash cash equivalents and restricted cash totaling $186 9 million.
Michael: From a cash flow perspective, net cash provided by operating activities totaled $41.1 million for the first quarter of fiscal year 2024, compared to $30.5 million for the same prior year period.
From a cash flow perspective.
Net cash provided by operating activities totaled $41 1 billion for the <unk>.
First quarter of fiscal year, 2024, compared to $30 5 million in prior year period.
Michael: Shifts in working capital generated from changes in our merchandise inventory and accounts payable positions for the first quarter of fiscal year 2000.
Shifting working capital generated from changes in our merchandise inventory and accounts payable positions for the first quarter of fiscal year 2024 <unk>.
Michael: contributed $16 million of cash flow compared to the same prior year period.
<unk> contributed $16 million of cash flow compared to the same prior year period.
Average inventory per club.
Michael: Average inventory per club decreased by approximately $200,000 or 2% and inventory days on hand decreased by approximately 4 days or 7% for the first quarter of fiscal year 2024 versus the same period in 2023.
Increased by approximately $200000 or 2%.
Inventory days on hand decreased by approximately four days or 7% for the first quarter of fiscal year 2024 versus the same period in 2023.
Michael: Primary year-over-year driver of the decrease of inventory per club is from selling through the remaining portion of overstocked soft line items carried over from fiscal year 2022, combined with efforts by our team to improve inventory management and flow.
The primary year over year driver of the decrease of inventory per club is from selling through the remaining portion of overstock soft line items carried over from fiscal year 2022, combined with efforts by our team to improve inventory management and Paul.
Michael: Net cash used in investing activity increased by $8.6 million for the first quarter of fiscal year 2024 compared to the prior year, primarily as a result of an increase in additions to property and equipment.
Net cash used in investing activities increased by $8 6 million for the first quarter of fiscal year 2024.
Prior to the prior year, primarily as a result of an increase in additions to property and equipment.
Michael: Net cash used in financing activities during the first quarter of fiscal 2024 increased by $89.2 million, primarily from the finalization of our stock buyback program during the quarter and lower proceeds from long-term bank borrowings compared to the same period a year ago.
Net cash used in financing activities during the first quarter of fiscal 2024 increased by $89 2 million.
Primarily from the Finalization of our stock buyback program during the quarter and lower proceeds from long term.
Bank borrowings compared to the same period a year ago.
Michael: When reviewing our cash balances, it is important to note that as of the end of our first quarter, we had approximately $51.8 million of cash, cash equivalents, and short-term investments denominated in local currency in Trinidad and Honduras, which we could not readily convert into U.S. dollars.
When reviewing our cash balances. It is important to note that as of the end of our first quarter. We had approximately $51 8 million of cash cash equivalents and short term investments denominated in local currency and turned it Diana Honduras, which we could not readily convert into U S dollars.
Now onto our growth drivers.
Michael: Starting with Real Estate, we are thrilled to have opened our squintler club in Guatemala on November 30th, 2023.
Starting with real estate, we are thrilled to have opened Irish quite low club in Guatemala on November 30th 2023.
Michael: The Sigma Club is our 6th Club in Guatemala and our 15th Warehouse Club overall.
Disc Rattler club is our sixth club in Guatemala, and our 50 <unk> warehouse club overall.
Michael: We are currently finalizing construction of our warehouse club in Santa Ana, El Salvador, which we plan to open in February 2024. This new club will.
We are currently finalizing construction of our warehouse club in Santa Ana El Salvador, which we plan to open in February 2024.
This new club will be our fourth in El Salvador.
Michael: Once this club is open, we'll be operating 54 warehouse clubs and we are actively exploring additional locations as well.
Once this club is open we'll be operating 54 warehouse clubs and we are actively exploring additional locations as well.
Michael: Additionally, we are currently remodeling several of our high volume clubs, which are in San Pedro,
Additionally, we are currently remodeling several of our high volume clubs.
Which are in San Pedro Sula Honduras.
Michael: Santiago Dominican Republic, and Port of Spain, Trinidad and Tobago.
Santana row Dominican Republic.
<unk>, Spain, Trinidad and Tobago.
Michael: as well as expanding one of our clubs in San Salvador, El Salvador.
As well as expanding one of our clubs in San Salvador El Salvador.
We also entered into a promissory purchase agreement to acquire our cloud in beer, Brazil, Panama from our current landlord.
Michael: We also entered into a promissory purchase agreement to acquire our club in Rio Brazil, Panama from our current landlord.
Michael: Our VIA Brazil club is the club with the highest sales volume in our Panama market and we are very happy that through this acquisition we can lock in long-term certainty as to our access to and development of this key location in Panama. We expect to complete this purchase during 2021.
Our VA Brasil club is the club with the higher sales volume and our kind of our market and we are very happy that through this acquisition. We can lock in long term certainty as to our access to and development.
This key location in Panama.
We expect to complete this purchase during our second quarter.
Yeah.
Michael: Finally, we continue to actively seek ways to improve our distribution input structure to better serve our members, lower the net landed costs of our merchandise, and enhance operating efficiency.
Finally, we continue to actively seek ways to improve our distribution infrastructure to better serve our members lower the net landed cost of our merchandize and enhance operating efficiencies.
In October 2023, we relocated our distribution center in Panama more than doubling its size to approximately 120000 square feet.
Michael: In October 2023, we relocated our distribution center in Panama, more than doubling its size to approximately 120,000 square feet.
Michael: Building on the success of our Costa Rica distribution center, we believe this new facility will allow us to drive more efficiencies within our distribution network by centralizing the resaving process from local Panamanium vendors, as well as for imported merchandise into this market. We are actively reviewing similar opportunities and
Building on the success of our Costa Rica distribution Center. We believe this new facility will allow us to drive more efficiencies within our distribution network by centralizing the receiving process from local Panamanian vendors as.
As well as for our imported merchandise into this market.
We are actively reviewing similar opportunities in other markets.
Turning now to membership value.
Michael: As we've highlighted in previous calls, our private label numbers selection brand continues to be our high quality, good value alternative in these inflationary times.
As we've highlighted in previous calls our private label numbers selection brand continues to be our high quality good value alternative and these inflationary times.
Michael: During the first quarter of fiscal year 2024, our private label sales represented 27.2% of our total merchandise sales.
During the first quarter of fiscal year 2020 for our private label sales represented 27, 2% of our tour.
Merchandise sales.
Michael: That's up 130 basis points from 25.9% in the comparable period of fiscal year 2023.
That's up 130 basis points from 25, 9% in the comparable period of fiscal year 2023.
Michael: In the first quarter of 2024, we launched nearly 100 new members selection items.
In the first quarter of 2024, we launched nearly 100, new members selection items.
We also continue to focus on health services.
Michael: We currently have 51 locations with optical centers and expect to have 53 open by the end of our fiscal year.
We currently have 51 locations with optical centers and expect to have 53 opened by the end of our fiscal year.
Our optical program provides or free eye exams with every membership and we performed over 35000 eye exams during the quarter.
Michael: Our optical program provides four free eye exams with every membership and we performed over 35,000 eye exams during the quarter.
Michael: Optical services are also an important component of contributions to the committees in which our clubs are located.
Optical services are also an important component of our contributions to the communities in which our clubs are located.
Michael: in partnership with Price Philanthropies, a Prenderica Center Vision Program.
In partnership with price Philanthropies, a primary care Center vision program.
Michael: Price Smart optometrists perform eye exams and Price Philanthropies purchases the glasses from our optical centers.
Price Mart optometrist perform eye exams and price plan therapies purchases the glasses from our optical centers.
Michael: We provide both the exams and classes for children and their families, free of charge.
We provide both the exams and glasses for children and their families free of charge.
Michael: We have provided almost 61,000 screenings, 14,000 exams, and 12,000 eyeglasses to date through this program.
We have provided almost 61000 screenings 14000 exams and 12000 eyeglasses to date through this program.
Michael: We currently have pharmacy centers in all eight of our warehouse clubs in Costa Rica and three warehouse clubs in Panama. We expect to open two more pharmacies in Panama and five in Guatemala during fiscal year 2024.
We currently have pharmacy centers in all eight of our warehouse clubs in Costa Rica, and three warehouse clubs in Panama, We expect to open two more pharmacies in Panama and five in Guatemala during fiscal year 2024.
Michael: With respect to audiology centers, we currently have 25 centers open. We expect to open three additional centers in Panama and one center in each of Jamaica and Trinidad in fiscal year 2024.
With respect to ideology centers. We currently have 25 centers open we expect to open three additional centers in Panama, and one center NHL, Jamaica and Trinidad in fiscal year 2024.
Michael: Our third growth driver is providing omnichannel shopping options for our members, including sales via our app and or our desktop website.
Our third growth driver is providing omnichannel shopping options for our members, including sales via our App and our desktop web site.
Michael: We currently utilize PySmart.com, our app, and another third party last mile delivery service was to drive online fails.
We currently utilized by smart Dot com, our App and other third party last mile delivery services to drive online sales.
Michael: During the first quarter, total e-commerce sales represented a record 5% of total net merchandise sales.
During the first quarter total ecommerce sales.
Represented a record 5% of total net merchandise sales.
Michael: total e-commerce orders increased 29.4% and the average transaction value increased 1.1% versus the prior year period.
Total ecommerce orders increased 29, 4% and the average transaction value increased one 1% versus the prior year period.
As of the end of our first quarter approximately 61, 5% of our members have created an online profile.
Michael: As of the end of our first quarter, approximately 61.5% of our members have created an online profile with Frysmart.com or via our app, and 15.9% of our total membership base made a purchase on Frysmart.com or our app.
<unk> dot com or via our App and 15, 9% of our total membership base, who made a purchase on price my thought com.
Hi.
Michael: We believe that there are significant growth opportunities in our digital channel and we will continue to invest in this part of our business to provide an enhanced omni-channel experience and additional value to our members.
We believe that there are significant growth opportunities in our digital channel and we will continue to invest in this part of our business to provide enhanced omnichannel experience and additional value to our members.
Michael: Switching gears slightly, environmental and social responsibility continues to be an important component of how we approach our business.
Switching gears slightly.
Byron mental and social responsibility continues to be an important component of how we approach our business.
Michael: We do our best to incorporate practices that use natural resources responsibly.
We do our best corporate practices that use natural resources responsibly.
Michael: Just to give a quick update, we currently have seven recycling centers open with two in El Salvador, three in Honduras, and two in Guatemala.
Just to give a quick update we currently have seven recycling centers open with two in El Salvador, Honduras and term Guatemala.
Michael: On average, around 15,000 pounds of recycled material is being collected monthly in each location.
On average around 15000 pounds of recycled material is being collected monthly in each location.
Michael: We are on track to open four recycling centers in the Dominican Republic and one more in Guatemala by the end of fiscal year 2024. You can find more information about PriceMart's philanthropic and corporate social responsibility efforts on PriceMart.org.
We're on track to open for recycling centers in the Dominican Republic, and one more on Guatemala by the end of the fiscal year 2024.
You can find more information about price March philanthropic and corporate social responsibility efforts on <unk> Dot org.
Michael: Looking forward a little into our current second quarter, our Comparedland merchandise fails for the four weeks into December 31st, 2023, we're at 12.1% or 8.1% in constant currency, with both Costa Rica and Colombia contributing positively from a foreign currency exchange rate perspective.
Looking forward a little into our current second quarter.
Comparable net merchandise sales for the four weeks ended December 31, 2023 were up 12, 1% or eight 1% in constant currency.
Both Costa Rica, and Colombia, contributing positively from a foreign currency exchange rate perspective.
Michael: Our non-foods merchandise sales did extremely well in December , in large part due to a newly designed flex area in many of our clubs.
Our non foods merchandize sales did extremely well in December in large part due to our newly designed Flexitarian Mineola clubs <unk>.
Michael: These flex areas prominently display merchandise in high traffic areas of the club, such as near the entry and along the main aisle. This gives a fresher look to our members and keeps the excitement going in our club.
These flex areas prominently display merchandize and high traffic areas of the club such as near the entry and along the main aisle.
This gives a fresher look to our members and keeps the excitement going in our clubs.
Michael: In closing, in fiscal year 2024, we are focused on making shopping easier, more efficient, and more rewarding for our members. We are doing this by filling our clubs with the right merchandise geared to our members' wants and needs. We are proud of another successful quarter, a great start to our second quarter, and our team who makes all this possible.
In closing in fiscal year 2024, we are focused on making shopping easier more efficient and more rewarding for our members. We are doing this by tailoring our clubs with the right merchandize geared to our members wants or needs. We are proud of another successful quarter, a great start to our second quarter and our team that makes all this possible.
Speaker Change: Thank you for joining our call today. I will now turn the call over to the operator to take your questions.
Thank you for joining our call today I will now turn the call over to the operator to take your questions.
Yeah.
Speaker Change: Thank you. Ladies and gentlemen, should you have a question, please press the star followed by the one on your touch-tone phone. If you would like to withdraw your question, please press the star followed by the one on your touch-tone phone.
Thank you ladies and gentlemen.
Your question. Please press the star followed by the one on your Touchtone phone. If you would like to withdraw your question. Please press the star followed by the two.
Speaker Change: If you're using a speakerphone, please lift the headset before pressing any keys. One moment, please.
Using a speaker phone please lift the handset before pressing any keys one moment. Please for your first question.
Speaker Change: Your first question comes from Hector Maya from Scotiabank. Please go ahead. Hi, thank you.
Your first question comes from Exxon from Scotia.
Please go ahead.
Alright, Thank you very much for taking my questions.
Hector Maya: We are seeing that accounts payable seem to have increased by four days this quarter. Could you, could we expect this to be a structural thing and what was behind the move or did something change when negotiating with suppliers here?
We have seen that accounts payable seemed to have increased by four days. This quarter could you could we expect this to be a structural thing and.
Well what was behind the move or did something change when negotiating with suppliers.
Speaker Change: Hi, Hector, yeah, good to talk to you. Yeah, I would say nothing in particular has changed. I mean, there's been a kind of, we measure kind of our AP to inventory ratio is kind of how we look at it. Overall, obviously we monitor terms too.
Hi, Hector.
Good to talk to you.
I would say.
Nothing in particular has changed I mean, theres been a kind of a we measure kind of our AP to inventory ratio is kind of how we look at it.
Overall, obviously monitor terms too.
But I wouldn't say anything specific thats happened there could be just timing of the flow of merchandise.
But yes, we are.
Overall, we're managing kind of our APM and.
<unk> ratio is as a whole.
We have definitely seen improvements over the last over the last year.
Significantly higher.
Speaker Change: significantly higher during COVID when we asked for extended terms.
Dan covered when we asked for extended terms, we unwound a lot of that and I think it's probably just more of a reflection of where our inventory is in the pipeline, which is pretty long as you know.
Speaker Change: of where our inventory is in the pipeline.
Speaker Change: Yeah, I understand. And could you also please walk us through your views on how the Colombian market could evolve during the year? I mean, I wanted to know if the dynamic during December and how was an understanding there was a trend change after the declining comparable sales and constant currency seen during the quarter?
Yes.
Could you also please walk us through your views on how the Colombian market could evolve during the year.
I wanted to know.
The dynamic during December.
Otherwise and understanding the trends change after the declining copper wholesale still comes from crunchy.
During the quarter.
Well on the sales in particular.
You noticed that.
Speaker Change: notice that the constant currency comparable net original sales were slightly negative. We're negative during the quarter, but we do like to point out that we opened up our second club in Medellin.
The constant currency comparable net merchandise sales were slightly negative were negative during the quarter, but we do like.
I'd like to point out that we opened up our second club.
On September one so that's a contributing factor.
In December.
Speaker Change: We gave the comp sales in total, but all markets were positive comp sales in both U.S. dollars and constant currency for December .
We gave the comp sales in total, but I mean, all markets were positive comp sales in both U S dollars and constant currency for December So I don't know if that's a trend for the rest of the year or not but.
Certainly certainly bodes good.
Robert if you want to add anything about Colombia.
Okay.
Understood.
The last one.
Speaker Change: If you could share with us also if your view and further buybacks for this year have changed or if no further movements on this are on the table.
If you could share with us also.
Even further buybacks for the year as.
As James stories Nelson mentioned this on the table.
Oh.
Speaker Change: We'll be discussing all of those things in our board meeting that's coming up now, so I think it's premature.
We'll be discussing all of those things that our board meeting that's coming up now so I think it's premature.
Got it perfect. Thank you very much.
Thank you Hector.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the.
Ladies and gentlemen.
Should you have a question. Please press star followed by the one.
Your next question comes from Jon Braatz from Kansas City Capital. Please go ahead.
Speaker Change: next question on some John Brad's from Kansas City Capitol. Please go ahead.
Good morning, Robert Michael.
Speaker Change: Michael, sequentially your gross margin improved from the fourth quarter.
Michael.
Sequentially your gross margin improved from the from.
From the fourth quarter and.
Speaker Change: In the 10Q, you mentioned that food and bakery margins were higher. Can you talk a little bit about the sequential improvement in margins in the first quarter?
In the 10-Q, you mentioned that food and bakery margins were higher.
Can you talk a little bit about the sequential improvement in margins.
In the first quarter.
Yes.
Speaker Change: Yeah, I mean, I think we kind of have a similar conversation every quarter. I mean, there's a lot of moving pieces in margin, John , as you know, at any point in time, different dynamics and different markets going on. And, uh, and, uh, you know,
Think we kind of have a similar conversation every quarter I mean, theres a lot of moving pieces in margin John as you know.
And at any point in time.
Current dynamics in different markets going on.
And we ended up the year, a little bit lower last year.
Lower quarter in particular in Q4, and then it picked back up a little bit in Q1. So.
Something that we continue to monitor activity in <unk>.
Our business model is driven by margin dollars and delivering the best value to our members. So let's continue to monitor that.
Alright.
Speaker Change: Have you made any pricing changes within Columbia? I know it's been a tough market there, given the exchange rates and so on, but you were, you had taken some pricing actions. Has, are those prices, have those prices changed at all, or is this a continuation of what you've been, what you've seen? I, John , I would say that it's pretty much what we, you know, it's consistent. We haven't.
Has have you made any pricing changes within Colombia I know.
It's been a tough market there given the exchange rates and so on and you were you were.
You had had taken some pricing actions has are those prices and those prices changed at all or you just are there.
Continuation of what <unk> been what <unk> seen.
Hi, John.
John I would say that it's.
Pretty much.
That's consistent we haven't really.
And much different than what we've been doing the last six months in terms of pricing.
I think that one of the things in Colombia, just to be aware of.
The elections that happened.
John Brad: elections that happened, they had.
Yes.
So I think it really helped the country a lot in terms of.
Yeah.
Outlook and everything so I'm sure.
Speaker Change: Our sales have been good, and I'm sure everybody in Columbia is probably getting pretty good sales right now.
Our sales have been good and I'm sure everybody in Colombia, probably getting pretty good sales rate.
But as far as margins were just hanging in there and trying to be as.
How to do this we can be okay. Okay.
Speaker Change: Okay, the new Medellin store just opened up any commentary on the performance of that store and maybe also what impact it had on sort of cannibalization of sales from your other stores and the impact on the Colombian comps in the quarter.
New meta meta in storm.
Just opened up.
Any commentary on the performance of that store and maybe also what.
Impact it had on sort of cannibalization of the of sales from Europe or other stores.
The impact on the Colombian comps in the quarter.
Yes.
I think overall the new one is doing pretty much what we thought it would do in sales.
Speaker Change: I think overall the new one is doing pretty much what we thought it would do in sales. The one that was already there...
One that was already there, which we call Latin America.
Sales wise better than we thought.
Okay. Okay.
Speaker Change: Okay, okay. And lastly, how far along are you in terms of the membership price increase? I know you're going to stagger it through the year, but, you know, in the first quarter, are you, have you 25% complete now?
Lastly.
How far along are you in terms of the membership.
A price increase.
How are you going to stagger out through the year, but.
In the first quarter are you have you 25% complete now.
Speaker Change: Yeah, so yeah, kind of we looked at this, you know, market by market, because the dynamics of what's going on in different markets with some of the civil unrest we've had in some of our countries.
Yeah. So.
Yes.
We looked at this.
Market by market, because the dynamics of what's going on in different markets with some of the civil unrest. We've had in some of our countries in different different factors that have come along during the year. So we got I think we got more than half from a cash perspective, not from a P&L perspective, I see from a cash perspective charging more than half of our clubs.
<unk>.
The higher fee by the end of the quarter and most of the rest of the.
Countries are scheduled to be staggered in during Q2.
Speaker Change: Okay. And Michael, just to be sure that I heard correctly, your December comps were 12.1 and 8.1 constant currency?
Okay, and Michael just just to be sure I heard that I heard correctly Youre. Your December comps were $12, one and $8 one.
Constant currency.
Yes, Thats correct, okay. Thank you.
Okay. Thank.
Thank you Doug.
Speaker Change: And there are no further questions at this time. I will turn the call back over to Michael for closing remarks. Okay. Thank you, everybody. That wraps up.
And there are no further questions at this time I will turn the call back over to Michael for closing remarks.
Okay. Thank you everybody that wraps up our conference call for today, We hope you have a great day take care.
Michael: Ladies and gentlemen, this concludes your conference call for today. We thank you for joining and you may now disconnect your lines. Thank you. Thank you for joining us. Thank you. Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for joining and you may now disconnect your lines. Thank you.
[music].
Michael: you