PriceSmart 3Q15 Earnings Call Notes

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EPS flat thanks to Colombian peso

“Earnings per share for the third quarter of fiscal year 2015 were $0.70 per share, the same as the year ago quarter. The devaluation of the Colombian peso again negatively impacted our overall consolidated results, but not to the same degree as in the first two quarters. ”

Lower renewal rate in Colombia

“We continue to see good member sign-ups in our Bogotá, Medellín and Pereira clubs and even in our existing clubs in Baranquilla and Cali. However, despite a high level of new member sign-ups and overall membership account growth in Colombia, we are also seeing a lower renewal rate in this country compared to other countries where we operate. We attribute those lower rates to different factors. Clearly, some of that relates to devalue peso and the higher prices on the imported merchandise which will feature in our clubs.’

Foreign exchange loss mitigated by efforts taken by the company

“On our last call, we spoke at length about the P&L charge that occurs when a devaluing currency lead to substantial level of U.S. dollar liabilities as was the case in quarters one and two. I am happy to report that the efforts taken by the company to provide the necessary financing and remove the U.S. dollar exposure resulted in a minimal foreign currency loss in Colombia in the quarter.”

Tend to borrow in local currencies

W”e have various currencies. We tend to borrow in local currency and sometimes, we will borrow in U.S. dollars and then we will have a swap that will convert it to local currency. And so it’s – what we have done in the last – over the last year is we have got a fair amount of that. So, we have really reduced any exposure we have on the debt side to change with an exchange rate in the currencies in which we borrow.”