PriceSmart's Q1 2026 Earnings Call: Contradictions on Chile Strategy, Tariff Impact, and Expansion Plans Unveil Shifting Narratives for Investors

Date of Call: January 8, 2026

Financials Results

• Revenue: $1.4B (net merchandise sales and total revenue), up 10.6% YOY (9.5% constant currency)
• EPS: $1.29 per diluted share, up 6.6% YOY from $1.21
• Gross Margin: 15.9%, unchanged YOY
• Operating Margin: Operating income of $62.9M, up 8% YOY

Business Commentary:

Here are the key themes extracted from the earnings call transcript, focusing on data trends and the reasons behind them:

• Strong Sales and Membership Growth:
• Net merchandise sales and total revenue reached almost $1.4 billion during the first quarter, increasing 10.6% (9.5% constant currency) year-over-year. Comparable net merchandise sales grew 8% (6.9% constant currency).
• Membership accounts grew 6.7% year-over-year to over 2 million, with a strong 12-month renewal rate of 89.3%. Platinum membership accounts, the premium tier, grew to 19.3% of the total base from 14% a year ago.

• Reasons: Resilient consumer demand and outstanding execution. Membership growth and Platinum expansion driven by targeted promotional campaigns and strategic focus on high-value member relationships.

• Geographic Performance and Contribution:

• Colombia (10 clubs): Net merchandise sales increased 27.8% (15% constant currency) and comparable sales grew 27.9% (14.7% constant currency), contributing 320 basis points to consolidated comparable growth.
• Central America (32 clubs): Comparable sales grew 5.4% (5.1% constant currency), contributing 320 basis points.
• Caribbean (14 clubs): Comparable sales grew 5.6% (7.7% constant currency), contributing 160 basis points.

• Reasons: Colombia's strength driven by favorable peso, strong consumer confidence, and excellent local team/product development. Central America and Caribbean markets showed broad-based positive growth.

• Supply Chain and Infrastructure Investments:

• Advanced supply chain initiatives: Cold storage operations started in Panama; new distribution centers planned in Trinidad, Colombia, and Dominican Republic in FY2026. Migrating to RELEX forecasting platform (full implementation on track for FY2026) and e2open global trade management platform.
• Real estate expansion: Four new clubs planned (Dominican Republic, Jamaica x2, Costa Rica), with total clubs to reach 60. Also, warehouse and parking expansions planned in Portmore, Jamaica and Barbados.

• Reasons: These investments are aimed at improving product availability, reducing lead times, lowering costs, boosting productivity, and positioning the company for sustained growth.

• Digital Channel Growth and Technology Upgrades:

• Digital channel sales reached $89.8 million, up 29.4% year-over-year, representing 6.6% of total net merchandise sales (highest contribution to date).
• Completed ELERA point-of-sale system rollout in English-speaking Caribbean; began migration of mobile app to native architectures; started implementing Workday HR system.

• Reasons: Continued opportunity in digital channels and enhancing the member experience through technology upgrades.

• External Environment and Risks:

• Addressed several external factors: U.S. import tariffs do not currently apply to most merchandise (due to regional sourcing and free trade agreements). No impact yet from changing remittance patterns. Monitoring Venezuela situation but no immediate impact seen. December comps decelerated due to transitory factors (Honduras election, Panama weather, supply chain out-of-stocks).
• Reasons: Proactive supply chain adjustments and diversified sourcing strategy mitigate tariff and currency risks. Strong brand position and operational execution help overcome short-term disruptions.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'strong results,' 'solid sales performance,' 'outstanding execution,' and 'great confidence in our future.' They noted 'positive trends across many of our markets as we enter calendar 2026' and that 'investments we're making...are positioning us for sustained growth.'

Q&A:

• Question from Jonathan Braatz (Oppenheimer): Specifically, when you look at Honduras and Panama, were the comps positive despite these issues in the month of December?
  Response: Management did not share country-level comp details but indicated Honduras has recovered post-election and Panama is performing well in the dry season.

• Question from Jonathan Braatz (Oppenheimer): Can you speak a little bit about Colombia? Anything you can put your finger on as to the strength there?
  Response: Strength attributed to a strong peso improving purchasing power/sentiment, consumer confidence, and excellent local team execution in item development.

• Question from Jonathan Braatz (Oppenheimer): Could there be pressure on the Colombian economy if there is more migration from Venezuela?
  Response: Management declined to speculate, stating consumer demand is strong in Colombia and there is a good brand position.

• Question from Jonathan Braatz (Oppenheimer): Why did the cash balance in Trinidad increase from ~$60M to ~$80M in the first quarter?
  Response: Attributed to high season post-Christmas leading to more cash on hand, with no material change in conditions.

• Question from Héctor Maya López (Scotiabank): On Chile, what have you learned so far...? And on Colombia, how concerned are you about the minimum wage hikes?
  Response: Chile is competitive and digitalized but sees no club models, which is optimistic. For Colombia, they pay a living wage above minimum and see no issue with policy.

• Question from Héctor Maya López (Scotiabank): Also on warehouse and parking expansions...where do you see the most potential here?
  Response: Expansions improve member experience, flow, and sales efficiency, but specific country-level impact details were not shared.

Contradiction Point 1

Strategic Assessment of the Chilean Market

There is a significant shift in the characterization of Chile's competitive landscape and strategic appeal. The narrative evolves from highlighting favorable, stable, and uniquely attractive qualities (strong middle class, political stability, trade relations) to emphasizing intense, pre-existing competition and a hyper-digitalized environment with no direct club models. This change in tone could impact investor perception of expansion risk and reward.

Could you explain the strategic rationale for choosing Chile over other markets for future openings, your assessment of its market potential, and how open you are to considering other opportunities in the region? - Héctor Maya López (Scotiabank Global Banking and Markets, Research Division)

2025Q3: Chile was considered due to its strong middle class, favorable U.S.-Chile trade/tax relations, and political/economic stability compared to current markets. - Robert E. Price(CEO)

What have you learned so far about market dynamics and competition in Chile, and have there been any unexpected developments? - Héctor Maya López (Scotiabank)

20260108-2026 Q1: Entering Chile: The market is **very competitive and highly digitalized** with high consumer expectations... There are **no direct club models** in Chile, only wholesale 'Mayorista' models. - David Price(CEO)

Contradiction Point 2

Tariff Impact on Merchandise

This represents a material change in the company's risk assessment regarding a potential headwind. The statement shifts from a confident, data-backed assertion that any tariff impact is negligible (de minimis) to a more cautious admission of lacking specific data and being unable to speculate on the economic impact. This change in certainty could affect financial modeling and investor confidence in management's forward-looking statements.

Have any countries where PriceSmart operates imposed a 10% reciprocal tariff on U.S. merchandise? Can merchandise from China be shipped directly to San Jose and Panama warehouses to avoid tariffs? How much of PriceSmart's merchandise might be impacted by tariffs? - Jon Braatz (Kansas Capital)

2025Q2: The impact of potential tariffs is considered de minimis, but there is an acknowledgment that cost shifts from suppliers could occur if tariffs are significant. - Robert Price(CEO)

Could increased Venezuelan migration strain the Colombian economy? - Jonathan Braatz (Oppenheimer)

20260108-2026 Q1: The company does not have specific data to speculate on the economic impact of Venezuelan migration. However, current consumer demand in Colombia remains strong... - David Price(CEO)

Contradiction Point 3

Strategy and Timing for New Store Openings

This is a clear change in corporate communication strategy regarding expansion plans. The company moves from a specific, public disclosure of being in "various stages of due diligence and permitting for up to six new locations" to a blanket policy of not sharing country-by-country comp details and, by implication, not disclosing specific opening timelines or locations. This shift from transparency to guardedness could signal uncertainty or a change in strategic priority.

Will there be any new store openings in 2026? - Jon Braatz (Kansas Capital)

2025Q2: However, in the most recent 10-Q filing, PriceSmart disclosed being in various stages of due diligence and permitting for up to six new locations. This is the highest number of disclosed potential locations since the practice began... - Michael McCleary(CFO)

Were the December comps positive despite the issues in Honduras and Panama? - Jonathan Braatz (Oppenheimer)

20260108-2026 Q1: The company does not typically share country-by-country comp details. - David Price(CEO)