PRICESMART INC

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company", "we" or "our") 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 the risks detailed in this Quarterly Report under the heading “Part II. Item 1A. Risk Factors” and in the Annual Report on Form 10-K under the heading “Part I. Item 1A. Risk Factors" and "Part I Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024 filed with the United States Securities and Exchange Commission (“SEC”) on October 30, 2024. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements, except as required by law. In addition, these risks are not the only risks that the Company faces. The Company could also be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company currently considers to be immaterial.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company", "we" or "our") anticipated future revenues and earnings, adequacy of future cash flows, online and digital 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 the risks detailed in this Quarterly Report under the heading “Part II. Item 1A. Risk Factors” and in the Annual Report on Form 10-K for the fiscal year ended August 31, 2024 filed with the United States Securities and Exchange Commission (“SEC”) on October 30, 2024 under the heading “Part I. Item 1A. Risk Factors" and "Part I Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements, except as required by law. In addition, these risks are not the only risks that the Company faces. The Company could also be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company currently considers to be immaterial.

Previous wording

In March 2025, the Company announced that Robert Price has notified the Board of Directors of his intention to step down as Interim Chief Executive Officer effective August 31, 2025. David Price, the Company’s current Executive Vice President and Chief Transformation Officer and member of the Board of Directors, has been appointed Chief Executive Officer effective September 1, 2025, and Robert Price will become Executive Chairman of the Board of Directors at that time.

Current wording

In March 2025, the Company announced that Robert Price notified the Board of Directors of his intention to step down as Interim Chief Executive Officer effective August 31, 2025. David Price, the Company’s current Executive Vice President and Chief Transformation Officer and member of the Board of Directors, has been appointed Chief Executive Officer effective September 1, 2025, and Robert Price will become Executive Chairman of the Board of Directors at that time.

Previous wording

Currently, as of April 2025, we have 55 warehouse clubs in operation in 12 countries, plus the U.S. Virgin Islands, with revenues in excess of $4.9 billion in fiscal year 2024. We believe PriceSmart has become one of the most respected and trusted brands in the region. With nearly two million membership accounts and almost four million cardholders, we believe PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart’s markets.

Current wording

As of May 31, 2025, we have 55 warehouse clubs in operation in 12 countries, plus the U.S. Virgin Islands, with revenues in excess of $4.9 billion in fiscal year 2024. We believe PriceSmart has become one of the most respected and trusted brands in the countries where we operate. With nearly two million membership accounts and almost four million cardholders, we believe PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart’s markets.

Previous wording

PriceSmart sources approximately half of its merchandise from suppliers within the region, with the balance of merchandise sourced throughout the rest of the world. Product selection includes basic consumable merchandise for consumers and businesses,“Member’s Selection®” private label merchandise and unique consumable and non-consumable products that are often not otherwise available in our markets.

Current wording

PriceSmart sources approximately half of its merchandise from suppliers within Latin American and the Caribbean, with the balance of merchandise sourced throughout the rest of the world. Product selection includes basic consumable merchandise for consumers and businesses,“Member’s Selection®” private label merchandise and unique consumable and non-consumable products that are often not otherwise available in our markets.

Previous wording

PriceSmart continually focuses on innovation. In recent years, PriceSmart has added optical, audiology, and pharmacy services in many of its locations. PriceSmart provides online shopping to our Members and offers both home delivery and curbside pickup via Click & Go®. PriceSmart is making significant investments in technology to both improve the online shopping experience for its Members and to enhance operating efficiencies in its supply chain and the back office.

Current wording

PriceSmart continually focuses on innovation. In recent years, PriceSmart has added optical, audiology, and pharmacy services in many of its locations. PriceSmart provides online shopping to our Members and offers both home delivery and curbside pickup via its Click & Go® service. PriceSmart is making significant investments in technology to both improve the online shopping experience for its Members and to enhance operating efficiencies in its supply chain and the back office.

Previous wording

PriceSmart seeks to provide the best working conditions possible for our almost 12,000 employees. We seek to provide safe and pleasant working environments for our employees, along with excellent pay and benefits, including healthcare coverage and retirement benefits.

Current wording

We seek to provide safe and pleasant working environments for our over 12,000 employees, along with excellent pay and benefits, including healthcare coverage and retirement benefits.

Previous wording

In the first quarter of fiscal year 2025, we finalized execution of a land lease and plan to open our seventh warehouse club in Guatemala, located in Quetzaltenango, approximately 122 miles west from the nearest club in the capital of Guatemala City. This club is currently under construction and being built on a four-acre property and is anticipated to open in the summer of 2025. Once this new club is open the Company will operate 56 warehouse clubs.

Current wording

In April 2025, we opened a new warehouse club in Cartago, near the capital of San Jose, in Costa Rica. In the first quarter of fiscal year 2025, we finalized execution of a land lease and plan to open our seventh warehouse club in Guatemala, located in Quetzaltenango, approximately 122 miles west from the nearest club in the capital of Guatemala City. This club is currently under construction and being built on a four-acre property and is anticipated to open in August 2025.

Previous wording

We also historically exported products to a retailer in the Philippines, but effective August 31, 2024, our business relationship with that retailer ceased, except for some outstanding merchandise orders being fulfilled during the current fiscal year. However, we are exploring expansion of our export business in other markets and recently began exporting to a retailer in the Bahamas.

Current wording

We also historically exported products to a retailer in the Philippines, but effective August 31, 2024, our business relationship with that retailer ceased, except for some outstanding merchandise orders being fulfilled during the current fiscal year. We recently began exporting to a retailer in the Bahamas and may export to other countries if opportunities that complement our business model arise.

Previous wording

Currency fluctuation can be one of the largest variables affecting our overall sales and profit performance because many of our markets are susceptible to foreign currency exchange rate volatility. In the second quarter of fiscal year 2025, some markets, primarily Costa Rica, benefited from currency appreciation, which helped partially offset currency devaluations we experienced in some of the other countries where we operate, primarily Colombia and the Dominican Republic. During the first six months of fiscal years 2025 and 2024, approximately 80.0% and 79.6%, respectively, of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 49.6% and 49.4% consisted of sales of products we purchased in U.S. dollars.

Current wording

Currency fluctuation can be one of the largest variables affecting our overall sales and profit performance because many of our markets are susceptible to foreign currency exchange rate volatility. In the third quarter of fiscal year 2025, some markets, primarily Costa Rica, benefited from currency appreciation, which helped partially offset currency devaluations we experienced in some of the other countries where we operate, primarily Colombia and Honduras, when compared to the third quarter of the prior year. During the first nine months of fiscal years 2025 and 2024, approximately 80.0% and 79.5%, respectively, of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 49.3% and 49.1% consisted of sales of products we purchased in U.S. dollars.

Previous wording

A devaluation of local currency reduces the value of sales and membership income that is generated in that country when translated to U.S. dollars for our consolidated results. In addition, when local currency experiences devaluation, we may elect to increase the local currency price of imported merchandise to maintain our target margins, which could impact demand for the merchandise affected by the price increase. Alternatively, we may elect not to raise prices to fully cover the impact of the devaluation, adversely affecting our margins. For example, during fiscal year 2023, the currency in Colombia devalued approximately 15%, but we held pricing steady or took pricing actions to mitigate declines in demand, which negatively impacted our consolidated Total Gross Margin rate. We may also modify the mix of imported versus local merchandise and/or the source of imported merchandise to mitigate the impact of currency fluctuations. Information about the effect of local currency devaluations is discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Net Merchandise Sales and Comparable Sales.”

Current wording

A devaluation of local currency reduces the value of sales and membership income that is generated in that country when translated to U.S. dollars for our consolidated results. In addition, when local currency experiences devaluation, we may elect to increase the local currency price of imported merchandise to maintain our target margins, which could impact demand for the merchandise affected by the price increase. Alternatively, we may elect not to raise prices to fully cover the impact of the devaluation, adversely affecting our margins. For example, during fiscal year 2023, the currency in Colombia devalued approximately 15%, but we selectively held pricing steady or took pricing actions to mitigate declines in demand, which negatively impacted our consolidated Total gross margin percentage. We may also modify the mix of imported versus local merchandise and/or the source of imported merchandise to mitigate the impact of currency fluctuations. Information about the effect of local currency devaluations is discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Net Merchandise Sales and Comparable Sales.”

Previous wording

We continue to face the risk of political instability which may have significant effects on our business. For example, protestors set up roadblocks in Panama during October and November 2023 as a reaction to an agreement between the Panamanian government and a mining company, disrupting traffic to our clubs throughout most of the market. Roadblocks in Guatemala in October 2023 related to election protests also limited access to certain of our warehouse clubs. Civil unrest in Colombia in response to tax reform and austerity measures paralyzed significant portions of the country’s infrastructure during the third quarter of fiscal year 2021.

Current wording

We continue to face the risk of political instability which may have significant effects on our business. For example, protestors set up roadblocks in Panama during October and November 2023 as a reaction to an agreement between the Panamanian government and a mining company, disrupting traffic to our clubs throughout most of the market. In the third quarter of fiscal year 2025, Panama once again experienced widespread protests and social unrest against the government. Roadblocks in Guatemala in October 2023 related to election protests also limited access to certain of our warehouse clubs. Civil unrest in Colombia in response to tax reform and austerity measures paralyzed significant portions of the country’s infrastructure during the third quarter of fiscal year 2021.

Previous wording

Current uncertainties about increases in tariffs of imported products from countries may have an adverse effect on our Company. In April 2025, the U.S. government announced a baseline tariff of 10% on products from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits. While we are evaluating the potential impacts of these proposed tariffs, as well as our ability to mitigate their related impacts, this may affect our revenue and cost of goods. For additional information, see "Item 1A — Risk Factors —We are vulnerable to changes in the political and economic conditions such as tariffs and/or international trade wars and disruptions to remittances."

Current wording

Current uncertainties about tariffs may have an adverse effect on our Company. The U.S. government has implemented significant tariffs measures, including a baseline tariff of 10% on products from all countries and higher rates targeting specific countries. For additional information, see "Item 1A — Risk Factors —We are vulnerable to changes in the political and economic conditions such as tariffs and/or international trade wars and disruptions to remittances."

Previous wording

Changes in tax laws, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could have a material adverse effect on our financial condition and results of operations. In one of the countries where we operate, the government made changes several years ago in the method of computing minimum tax payments, under which the government sought to require retailers to pay taxes based on a percentage of sales if the resulting tax were greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). We, together with our tax and legal advisers, appealed these interpretations and litigated our cases in the country’s court system. Nevertheless, in fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute. To address the inherent risk of operating in a country in which tax legislation changes can significantly impact our low margin business model and in which our ability to successfully appeal the application of these taxes is limited, we have increased prices in this market to offset or partially offset the rise in costs to comply with the annual AMT payment. These and other challenges may persist or become more acute and could have a material adverse effect on our business and results of operations.

Current wording

Changes in tax laws, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could have a material adverse effect on our financial condition and results of operations. In one of the countries where we operate, the government made changes several years ago in the method of computing minimum tax payments, under which the government sought to require retailers to pay taxes based on a percentage of sales if the resulting tax were greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). We, together with our tax and legal advisers, appealed these interpretations and litigated our cases in the country’s court system. Nevertheless, in fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute. To address the inherent risk of operating in a country in which tax legislation changes can significantly impact our business because of our low-margin business model and in which our ability to successfully appeal the application of these taxes is limited, we have increased prices in this market to offset or partially offset the rise in costs to comply with the annual AMT payment. These and other challenges may persist or become more acute and could have a material adverse effect on our business and results of operations.

Previous wording

From time to time, we have experienced a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This impedes our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products or otherwise fund our operations. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. Additionally, we may incur significant premium costs to convert our local currencies into available tradable currencies and U.S. dollars. For instance, since fiscal year 2017, we have experienced this situation in Trinidad and have been unable to source a sufficient level of tradable currencies. We are working with our banks in Trinidad and government officials to convert all of our Trinidad dollars into tradable currencies. Our balance as of February 28, 2025 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $75.6 million, a decrease of $24.9 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. Dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency.

Current wording

From time to time, we have experienced a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This impedes our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products or otherwise fund our operations. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. Additionally, we may incur significant premium costs to convert our local currencies into available tradable currencies and U.S. dollars. For instance, since fiscal year 2017, we have experienced this situation in Trinidad and have been unable to source a sufficient level of tradable currencies. We are working with our banks in Trinidad and government officials to convert all of our Trinidad dollars into tradable currencies. Our balance as of May 31, 2025 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $73.9 million, a decrease of $26.6 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. Dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency.

Previous wording

Additionally, during fiscal year 2023, the Honduran Central Bank began limiting the availability and controlling the allocation of U.S. dollars for the conversion from Honduran lempiras to U.S. dollars. We are actively working with our banking partners and government authorities to address this situation. As of February 28, 2025, our Honduran subsidiary had approximately $1.7 million of cash and cash equivalents and short-term investments denominated in lempiras, which cannot be readily converted to U.S. dollars for general use within the Company.

Current wording

Additionally, during fiscal year 2023, the Honduran Central Bank began limiting the availability and controlling the allocation of U.S. dollars for the conversion from Honduran lempiras to U.S. dollars. We primarily acquire U.S. dollars through the Honduran Central Bank's auction and our respective allocation, along with sourcing from our banking partners. While we have seen an improvement in availability in Honduras of U.S. dollars during fiscal year 2025, we continue to monitor the situation actively, as the underlying limitations on availability of U.S. dollars persist. As of May 31, 2025, our Honduran subsidiary had approximately $2.0 million of cash and cash equivalents and short-term investments denominated in lempiras, which cannot be readily converted to U.S. dollars for general use within the Company.

Previous wording

PriceSmart exists to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. We aim to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We provide good jobs, fair wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to the communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we are increasing our tools to drive sales and operational efficiencies. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and services and, meanwhile, enhance Member experience and engagement.

Current wording

PriceSmart exists to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. We aim to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We provide good jobs, fair wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to the communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we are increasing our tools to drive sales and operational efficiencies. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and services, while simultaneously enhancing Member experience and engagement.

Previous wording

I. Invest in Adding New PriceSmart Locations, Remodeling Current PriceSmart Clubs and Opening More Distribution Centers. In April 2025, we opened a new warehouse club in Cartago, near the capital of San Jose, in Costa Rica. In the first quarter of fiscal year 2025, we finalized the execution of a land lease and have begun construction of a new warehouse club, which will be our seventh warehouse club in Guatemala, and the first in the city of Quetzaltenango. We expect to open this warehouse club in the summer of 2025. Additionally, we believe that one of the quickest and most effective ways to increase sales and profitability is to increase the size and efficiency of our existing warehouse clubs and the number of parking spaces at our high-volume locations. In the second quarter of fiscal year 2025, we completed the expansions of our warehouse clubs in San Salvador, El Salvador and Portmore, Jamaica. During fiscal year 2024, we entered into a lease agreement to relocate and extend the lease term for our Miraflores club, which is our highest selling location in Guatemala. The new warehouse will have increased sales floor square footage and a greater number of parking spaces, along with covered parking for our Members. We continue to pursue opportunities to add new warehouse clubs in our existing markets and to assess opportunities in new markets. We are enhancing our distribution and logistics network through the opening of distribution centers in China and in each of our multi-club markets, either operated by PriceSmart or through the use of third-party logistics providers. We expect to reduce landed costs and lead times (via direct shipments from Asia to our local markets) and improve our working capital. In addition to our regional distribution center in Costa Rica, we have PriceSmart-operated distribution centers in various stages of development and implementation in markets such as Guatemala, Trinidad, Dominican Republic and a cold distribution center in Panama.

Current wording

I. Invest in Adding New PriceSmart Locations, Remodeling Current PriceSmart Clubs and Opening More Distribution Centers. In April 2025, we opened a new warehouse club in Cartago, near the capital of San Jose, in Costa Rica. In the first quarter of fiscal year 2025, we finalized the execution of a land lease and have begun construction of a new warehouse club, which will be our seventh warehouse club in Guatemala, and the first in the city of Quetzaltenango. We expect to open this warehouse club in August 2025. In the third quarter of fiscal year 2025, we purchased land and plan to open our sixth warehouse club in the Dominican Republic, located in La Romana, approximately 73 miles east from the nearest club in the capital of Santo Domingo. The club will be built on a five-acre property and is anticipated to open in the spring of 2026. Once these two new clubs are open, PriceSmart will operate 57 warehouse clubs in total. Additionally, we believe that one of the quickest and most effective ways to increase sales and profitability is to increase the size and efficiency of our existing warehouse clubs and the number of parking spaces at our high-volume locations. During fiscal year 2024, we entered into a lease agreement to relocate and extend the lease term for our Miraflores club, which is our highest selling location in Guatemala. The new warehouse will have increased sales floor square footage and a greater number of parking spaces, along with covered parking for our Members. We continue to pursue opportunities to add new warehouse clubs in our existing markets and to assess opportunities in new markets. In particular, we are currently evaluating Chile as a potential new market for multiple PriceSmart warehouse clubs. We have hired local consultants to help us in this process and are actively looking for potential sites for new warehouse clubs in Chile. However, opening PriceSmart warehouse clubs in Chile remains subject to our finding appropriate sites for warehouse clubs and distribution facilities, the results of our continuing market analyses and receipt of required governmental permits, among other uncertainties. We are enhancing our distribution and logistics network through the opening of distribution centers in China and in each of our multi-club markets, either operated by PriceSmart or through the use of third-party logistics providers. We are currently in the testing phase of expanding our distribution network into China. We expect to reduce landed costs and lead times (via direct shipments from Asia to our local markets) and improve our working capital. In addition to our regional distribution center in Costa Rica, we have PriceSmart-operated distribution centers in various stages of development and implementation in key markets. In fiscal year 2026, we expect to adapt our distribution center in Panama to handle cold merchandise and open distribution centers in Guatemala, Trinidad and Dominican Republic.

Previous wording

II. Increase Membership Value. At PriceSmart, we are dedicated to attracting new Members and fostering long-term loyalty by continually enhancing the value of membership. In addition to providing low prices on merchandise, we seek to provide Members with greater convenience and an expanding range of services. This includes access to PriceSmart.com for online transactions, seamless club pickup and delivery services, and our comprehensive Well-being initiative. Members enjoy optical services with free eye exams, discounted eyeglass frames, audiology services with hearing tests, and competitive pricing on hearing aids. In select markets, pharmacy services further enrich the PriceSmart membership experience. As benefits grow and the value of being a PriceSmart Member increases, adjustments to the membership fee may be warranted. A larger membership base and higher membership fee contribute to the bottom line of the business or can be reinvested in providing better pricing to our Members. We focus on growth of our membership base, Member renewal rates and spend per Member as part of determining how Members see our value. A key driver of our membership strategy is the Platinum Membership, which is designed to offer even more value to our most engaged Members. Platinum Members enjoy exclusive benefits, including an annual cashback reward on eligible purchases, which directly translates to savings that reward loyalty and increase purchasing power. By offering tangible financial rewards, we position PriceSmart as the go-to solution for Members seeking long-term value. Platinum Members tend to demonstrate higher renewal rates and increased spending compared to other membership tiers. Platinum Membership accounts were 14.5% of our total membership base as of February 28, 2025, an increase from 9.6% as of February 29, 2024. This directly contributes to the Company's revenue growth and reinforces our commitment to providing best-in-class value for our Members. Additionally, our private-label products that we sell under the Member’s Selection® brand plays a crucial role in enhancing the membership value proposition. We believe these products, available only at PriceSmart, deliver superior value while maintaining the high standards that our Members expect. Sourced with care and designed to meet everyday needs, Member’s Selection products range from pantry staples to household essentials, providing affordable alternatives without compromising on quality. During the first six months of fiscal year 2025, our private-label sales represented 27.4% of total merchandise sales, up from 27.1% in the same period of fiscal year 2024, and we plan to continue to invest in the development of additional private-label products under the Member’s Selection® brand. By continuously enhancing our benefits and maintaining a strong focus on membership growth, renewal rates, and Member spending, we reinforce our mission to provide Members with unmatched value, whether they choose to …

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Current wording

II. Increase Membership Value. At PriceSmart, we are dedicated to attracting new Members and fostering long-term loyalty by continually enhancing the value of membership. In addition to providing low prices on merchandise, we seek to provide Members with greater convenience and an expanding range of services. This includes access to PriceSmart.com for online transactions, seamless club pickup and delivery services, and our comprehensive Well-being initiative. Members enjoy optical services with free eye exams, discounted eyeglass frames, audiology services with hearing tests, and competitive pricing on hearing aids. In select markets, pharmacy services further enrich the PriceSmart membership experience. As benefits grow and the value of being a PriceSmart Member increases, we might consider adjustments to the membership fee. A larger membership base and higher membership fee contribute to the bottom line of the business or can be reinvested in providing better pricing to our Members. We focus on growth of our membership base, Member renewal rates and average ticket as part of determining how Members see our value. A key driver of our membership strategy is the Platinum Membership, which is designed to offer even more value to our most engaged Members. Platinum Members enjoy exclusive benefits, including an annual cashback reward on eligible purchases, which directly translates to savings that reward loyalty and increase purchasing power. By offering tangible financial rewards, we believe we position PriceSmart as the go-to solution for Members seeking long-term value. Platinum Members tend to demonstrate higher renewal rates and increased spending compared to other membership tiers. Platinum Membership accounts were 16.1% of our total membership base as of May 31, 2025, an increase from 11.0% as of May 31, 2024. This directly contributes to the Company's revenue growth and reinforces our commitment to providing best-in-class value for our Members. Additionally, our private-label products that we sell under the Member’s Selection® brand plays a crucial role in enhancing the membership value proposition. We believe these products, available only at PriceSmart, deliver superior value while maintaining the high standards that our Members expect. Sourced with care and designed to meet everyday needs, Member’s Selection® products range from pantry staples to household essentials, providing affordable alternatives without compromising on quality. During the first nine months of fiscal year 2025, our private-label sales represented 27.7% of total merchandise sales, up slightly from 27.4% in the same period of fiscal year 2024, and we plan to continue to invest in the development of additional private-label products under the Member’s Selection® brand. In Central America, BAC and PriceSmart have renewed and improved an agreement offering a co-branded consumer credit card effective July 2025. Under the updated agreement, subject to certain caps, Members w…

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Previous wording

III. Drive Incremental Sales via PriceSmart.com and Enhanced Online, Digital and Technological Capabilities. We recognize the growing expectation of consumers to control their shopping experience. Consumers are more engaged than ever before and want access 24 hours a day and seven days a week. We’ve continued to tailor our digital experience to match this expectation and meet our Members when and where they want to shop. In fiscal year 2024, we completed a country-by-country roll out of our new PriceSmart.com website and mobile application (Android and iOS) to complement our in-club shopping. The website and app use a MACH or headless architecture, which is designed for speed and scalability. We can now build and release new Member-facing digital experiences without a full, end-to-end, technology redevelopment. This provides us the opportunity to continually strengthen and expand the scope of our relationship with each Member and offer new products and services in the future. Additionally, we can strengthen our data analytics around Member behavior on the website and app to better serve their preferences. Identification of delivery service areas, patterns in site searches, most viewed items and segmented homepage offerings are a few examples of the capabilities we now have through our investment in the digital experience for the Member. We are also continually finding ways to deploy technology that improves efficiency. For example, we have and will continue to enhance our order picking technology to reduce the time it takes to fulfill an order for the Member. This allows us to meet our Member's service expectations and expand our capacity for more orders.

Current wording

III. Drive Incremental Sales via PriceSmart.com and Enhanced Online, Digital and Technological Capabilities. We recognize the growing expectation of consumers to control their shopping experience. Consumers are more engaged than ever before and want access 24 hours a day and seven days a week. During the third quarter, total net merchandise sales through digital channels increased 19.8% versus the same period in the prior year and represented a record high of $79.0 million or 6.1% of total net merchandise sales. We’ve continued to tailor our digital experience to match this expectation and meet our Members when and where they want to shop. In fiscal year 2024, we completed a country-by-country roll out of our new PriceSmart.com website and mobile application (Android and iOS) to complement our in-club shopping. The website and app use a MACH or headless architecture, which is designed for speed and scalability. We can now build and release new Member-facing digital experiences without a full, end-to-end, technology redevelopment. This provides us the opportunity to continually strengthen and expand the scope of our relationship with each Member and offer new products and services in the future. Additionally, we can strengthen our data analytics around Member behavior on the website and app to better serve their preferences. Identification of delivery service areas, patterns in site searches, most viewed items and segmented homepage offerings are a few examples of the capabilities we now have through our investment in the digital experience for the Member. We are also continually finding ways to deploy technology that improves efficiency. For example, we have and will continue to enhance our order picking technology to reduce the time it takes to fulfill an order for the Member. This allows us to meet our Member's service expectations and expand our capacity for more orders.

Previous wording

Financial highlights for the second quarter of fiscal year 2025 included:

Current wording

Financial highlights for the third quarter of fiscal year 2025 included:

Previous wording

•Net merchandise sales increased 5.8% over the comparable prior-year period. We ended the second quarter of fiscal years 2025 and 2024 with 54 warehouse clubs. Net merchandise sales - constant currency increased 7.0% over the comparable prior-year period.

Current wording

•Net merchandise sales increased 8.0% over the comparable prior-year period. We ended the quarter with 55 warehouse clubs compared to 54 warehouse clubs at the end of the third quarter of fiscal year 2024. Net merchandise sales - constant currency increased 9.5% over the comparable prior-year period.

Previous wording

•Comparable net merchandise sales (that is, sales in the 53 warehouse clubs that have been open for more than 13 ½ calendar months) for the 13 weeks ended March 2, 2025 increased 6.7%. Comparable net merchandise sales - constant currency for the 13 weeks ended March 2, 2025 increased 7.9%.

Current wording

•Comparable net merchandise sales (that is, sales in the 54 warehouse clubs that have been open for more than 13 ½ calendar months) for the 13 weeks ended June 1, 2025 increased 7.0%. Comparable net merchandise sales - constant currency for the 13 weeks ended June 1, 2025 increased 8.5%.

Previous wording

•Membership income for the second quarter of fiscal year 2025 increased 12.8% to $20.9 million over the comparable prior year period.

Current wording

•Membership income for the third quarter of fiscal year 2025 increased 13.4% to $21.9 million over the comparable prior-year period.

Previous wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 5.0% over the prior-year period, and merchandise gross profits as a percent of net merchandise sales were 15.6%, a decrease of 10 basis points or 0.1% from the same period in the prior year.

Current wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 9.4% over the prior-year period, and merchandise gross profits as a percent of net merchandise sales were 15.8%, an increase of 20 basis points or 0.2% from the same period in the prior year.

Previous wording

•Operating income for the second quarter of fiscal year 2025 was $65.3 million, an increase of 2.6%, or $1.7 million, compared to the second quarter of fiscal year 2024.

Current wording

•Operating income for the third quarter of fiscal year 2025 was $56.2 million, an increase of 12.7%, or $6.3 million, compared to the third quarter of fiscal year 2024.

Previous wording

•We recorded a $5.1 million net loss in total other expense in the second quarter of fiscal year 2025 compared to a $7.1 million net loss in total other expense in the same period last year. This decrease in total other expense was primarily due to a decrease in other expense, net of $1.7 million, primarily driven by a decrease in unrealized losses in value of U.S. dollar denominated monetary assets and liabilities in several of our markets.

Current wording

•We recorded a $7.2 million net loss in total other expense in the third quarter of fiscal year 2025 compared to a $2.9 million net loss in total other expense in the same period last year. This increase in total other expense was primarily due to an increase in other expense, net of $5.0 million, primarily driven by an increase in unrealized losses in value of U.S. dollar denominated monetary assets and liabilities in several of our markets.

Previous wording

•Our effective tax rate decreased in the second quarter of fiscal year 2025 to 27.2% from 30.5% in the second quarter of fiscal year 2024. The decrease in the effective tax rate is primarily related to our implementation of certain tax optimization initiatives at the end of fiscal year 2024.

Current wording

•Our effective tax rate decreased in the third quarter of fiscal year 2025 to 28.4% from 30.8% in the third quarter of fiscal year 2024. The decrease in the effective tax rate is primarily related to our implementation of certain tax optimization initiatives at the end of fiscal year 2024.

Previous wording

•Net income for the second quarter of fiscal year 2025 was $43.8 million, or $1.45 per diluted share, compared to $39.3 million, or $1.31 per diluted share, in the second quarter of fiscal year 2024.

Current wording

•Net income for the third quarter of fiscal year 2025 was $35.2 million, or $1.14 per diluted share, compared to $32.5 million, or $1.08 per diluted share, in the third quarter of fiscal year 2024.

Previous wording

Financial highlights for the six months ended February 28, 2025 included:

Current wording

Financial highlights for the nine months ended May 31, 2025 included:

Previous wording

•Net merchandise sales increased 6.8% over the comparable prior year period. We ended the first six months of fiscal years 2025 and 2024 with 54 warehouse clubs. Net merchandise sales - constant currency increased 7.6% over the comparable prior year period.

Current wording

•Net merchandise sales increased 7.2% over the comparable prior-year period. We ended the first nine months of fiscal year 2025 with 55 warehouse clubs compared to 54 warehouse clubs at the end of the first nine months of fiscal year 2024. Net merchandise sales - constant currency increased 8.2% over the comparable prior-year period.

Previous wording

•Comparable net merchandise sales (that is, sales in the 53 warehouse clubs that have been open for greater than 13 ½ calendar months) for the 26 weeks ended March 2, 2025 increased 6.2%. Comparable net merchandise sales - constant currency for the 26 weeks ended March 2, 2025 increased by 7.1%.

Current wording

•Comparable net merchandise sales (that is, sales in the 54 warehouse clubs that have been open for greater than 13 ½ calendar months) for the 39 weeks ended June 1, 2025 increased 6.5%. Comparable net merchandise sales - constant currency for the 39 weeks ended June 1, 2025 increased by 7.6%.

Previous wording

•Membership income increased 13.3% to $41.1 million over the comparable prior-year period.

Current wording

•Membership income increased 13.3% to $63.0 million over the comparable prior-year period.

Previous wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 5.7% over the comparable prior year period and total gross margins as a percent of net merchandise club sales were 15.7%, a decrease of 20 basis points or 0.2%, from the same period in the prior year.

Current wording

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 6.9% over the comparable prior year period and total gross margins as a percent of net merchandise club sales were 15.7%, a decrease of 10 basis points or 0.1%, from the same period in the prior year.

Previous wording

•Selling, general and administrative expenses increased 8.5% compared to the first six months of fiscal year 2024, primarily due to investments in technology.

Current wording

•Selling, general and administrative expenses increased 8.5% compared to the first nine months of fiscal year 2024, primarily due to investments in technology.

Previous wording

•Operating income was $123.5 million, an increase of 1.4%, or $1.7 million, compared to the first six months of fiscal year 2024.

Current wording

•Operating income was $179.8 million, an increase of 4.7%, or $8.0 million, compared to the first nine months of fiscal year 2024.

Previous wording

•We recorded a $12.4 million net loss in total other expense in the first six months of fiscal year 2025 compared to a $9.2 million net loss in total other expense in the same period last year. The increase in total other expense was primarily due to an increase in other expense, net of $3.0 million, primarily driven by an increase in total foreign currency transaction losses.

Current wording

•We recorded a $19.6 million net loss in total other expense in the first nine months of fiscal year 2025 compared to a $12.1 million net loss in total other expense in the same period last year. The increase in total other expense was primarily due to an increase in other expense, net of $8.0 million, primarily driven by an increase in total foreign currency transaction losses.

Previous wording

•Our effective tax rate decreased for the first six months of fiscal year 2025 to 26.9%, as compared to the effective tax rate for the first six months of fiscal year 2024 of 31.4%. The decrease in the effective tax rate is primarily related to our implementation of certain tax optimization initiatives at the end of fiscal year 2024.

Current wording

•Our effective tax rate decreased for the first nine months of fiscal year 2025 to 27.3%, as compared to the effective tax rate for the first nine months of fiscal year 2024 of 31.3%. The decrease in the effective tax rate is primarily related to our implementation of certain tax optimization initiatives at the end of fiscal year 2024.

Previous wording

•Net income for the first six months of fiscal year 2025 was $81.2 million, or $2.66 per diluted share, compared to $77.3 million, or $2.54 per diluted share, in the comparable prior year period.

Current wording

•Net income for the first nine months of fiscal year 2025 was $116.3 million, or $3.80 per diluted share, compared to $109.8 million, or $3.62 per diluted share, in the comparable prior-year period.

Previous wording

(1)Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues and foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily U.S. dollars) for the three and six months ended February 28, 2025 and February 29, 2024.

Current wording

(1)Primarily consists of transaction costs of converting the local currencies into available tradable currencies in some of our countries with liquidity issues and foreign currency losses or gains due to the revaluation of monetary assets and liabilities (primarily U.S. dollars) for the three and nine months ended May 31, 2025 and May 31, 2024.

Previous wording

COMPARISON OF THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2025 AND FEBRUARY 29, 2024

Current wording

COMPARISON OF THE THREE AND NINE MONTHS ENDED MAY 31, 2025 AND MAY 31, 2024