PriceSmart(US:PSMT)2023-10-31 20:45Financial Data and Key Metrics Changes - For fiscal year 2023, total net merchandise sales exceeded $4.3 billion, with a 9% increase or 8.3% in constant currency compared to the prior year [77] - Adjusted net income for fiscal year 2023 was $126.5 million or adjusted $4.06 per diluted share, up from $103.1 million or $3.33 per diluted share in the prior year [8] - Net income for the fourth quarter was $15.4 million or $0.49 per diluted share, down from $23.3 million or $0.75 per diluted share in the same period last year [22] Business Line Data and Key Metrics Changes - In Central America, net merchandise sales increased 13.6% or 7.1% in constant currency, with comparable net merchandise sales up 11.4% or 5.2% in constant currency [4] - In Colombia, net merchandise sales increased 2.1% or 0.1% in constant currency, with comparable net merchandise sales up 2.8% or 0.6% in constant currency [19] - In the Caribbean, net merchandise sales increased 6% or 7.2% in constant currency, with comparable net merchandise sales up 5.8% or 7.2% in constant currency [54] Market Data and Key Metrics Changes - Membership accounts grew 2.5% year-over-year to 1.81 million, with a 12-month renewal rate of 86.9% [5] - The average price per item increased approximately 7.3% year-over-year, while the average items per basket decreased approximately 2.1% [20] - Total omni-channel sales increased 18% as a percentage of net merchandise sales, representing a record 4.9% of net merchandise sales [61] Company Strategy and Development Direction - The company is focused on enhancing its omni-channel shopping options and has begun migrating to a new point-of-sale system to improve efficiencies [11][62] - The company plans to open new clubs in Guatemala and El Salvador, with ongoing remodeling of high-volume clubs [24][59] - The company is committed to leveraging its assets to strengthen membership value and improve merchandise offerings, including health services [3] Management's Comments on Operating Environment and Future Outlook - Management noted that despite specific headwinds, the core business remains strong, with good growth in sales and improved expense ratios [13] - The effective tax rate for fiscal year 2023 was 35.4%, with expectations of around 32% for fiscal year 2024 [57] - Management expressed confidence in the company's strong brand reputation and its ability to build additional services for members [94] Other Important Information - The company recorded a net loss of $1.5 million in total other expenses for the fourth quarter, an improvement from a $3.5 million loss in the same period last year [7] - The company opened a new produce distribution center in Guatemala to enhance fresh produce delivery [10] - The company has initiated a share repurchase program, completing the buyback of approximately 1,007,000 shares for about $75 million [9] Q&A Session All Questions and Answers Question: What would it take for the Company to have a significantly more ambitious store opening plan? - Management indicated that entering another country might be necessary for more aggressive growth [40] Question: How much of a risk is the tax impact seen this quarter? - Management acknowledged the risk but noted that they expect to stabilize the effective tax rate around 32% for fiscal year 2024 [70] Question: What is the impact of the $5 membership fee increase? - Management believes the increase is nominal and that the perceived value of membership will outweigh the fee increase [103] Question: Can you provide an update on the situation in Guatemala and Panama? - Management stated that the situation in Guatemala has calmed down and that any impact on revenues in October was not significant [102]