PriceSmart(US:PSMT)2024-04-10 18:31Financial Data and Key Metrics Changes - The company declared an annual cash dividend of $1.16 per share, a 26% increase from last year's $0.92 per share dividend, reflecting confidence in cash-generating activities [1] - For the first half of fiscal year 2024, net merchandise sales increased by 11.9% or 8% in constant currency, with comparable net merchandise sales increasing by 8.4% or 4.7% in constant currency [26] - Net income for the second quarter of fiscal year 2024 was $39.3 million or $1.31 per diluted share, compared to $31.3 million or $1.02 per diluted share in the same period last year [52] Business Line Data and Key Metrics Changes - In Central America, net merchandise sales increased by 12.4% or 8.8% in constant currency, with an 8.1% increase in comparable net merchandise sales [26] - In the Caribbean, net merchandise sales increased by 7.2% or 8.9% in constant currency, with comparable net merchandise sales increasing by 6.3% or 8% in constant currency [31] - In Colombia, net merchandise sales increased by 34.5% or 11% in constant currency, with comparable net merchandise sales increasing by 20.7% [32] Market Data and Key Metrics Changes - Membership accounts grew by 5% year-over-year to almost 1.9 million accounts, with a strong 12-month renewal rate of 88.3% [48] - Total gross margin for the second quarter decreased by 30 basis points to 15.7% compared to 16% in the same quarter last year [49] - The average price per item increased approximately 3.9% year-over-year, while average items per basket decreased approximately 1.4% [35] Company Strategy and Development Direction - The company plans to open a new warehouse club in Costa Rica in early 2025, which will be its 9th club in the country [2] - The company is focusing on enhancing its digital channel, with total orders placed online increasing by 26.6% [4] - The implementation of a new tool called RELEX aims to modernize supply chain management and improve inventory planning [81] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in Colombia's political and financial environment, contributing positively to business operations [7] - The company is optimistic about growth opportunities in El Salvador, Guatemala, and Jamaica, with a focus on sourcing production closer to its markets [10][87] - Management acknowledged challenges in meeting demand during high sales volumes, particularly in December, but emphasized effective inventory management [25][62] Other Important Information - The company expects annualized after-tax savings of approximately $1.1 million from the acquisition of the Via Brasil club in Panama [38] - Total SG&A expenses decreased to 12.2% of total revenues for the second quarter, down from 12.6% in the prior year [36] - The company is remodeling several high-volume clubs and expanding its presence in various markets [79] Q&A Session Summary Question: What challenges did the company face in meeting demand during December? - Management acknowledged that high sales volumes exceeded expectations, creating operational stress but did not result in significant additional expenses [62] Question: What is the outlook for new openings in markets like El Salvador and Guatemala? - Management expressed confidence in growth opportunities in these regions, supported by improved sourcing strategies [10][87] Question: Can you elaborate on the increase in general and administrative expenses? - The increase was attributed to higher compensation costs and non-recurring professional fees, with ongoing investments in IT and management [11][70]