PriceSmart Inc.

07/08/2026 | Press release | Distributed by Public on 07/08/2026 14:03

Quarterly Report for Quarter Ending May 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
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, digital and technological initiatives, proposed warehouse club and distribution center 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 the Annual Report on Form 10-K for the fiscal year ended August 31, 2025 filed with the United States Securities and Exchange Commission ("SEC") on October 30, 2025 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.
Overview
PriceSmart was founded in 1996 by Sol and Robert Price, the creators of Price Club, the original warehouse club operator. The objective of PriceSmart is to operate its warehouse club business in Central America, the Caribbean and South America at operating standards as good as, or superior to, warehouse club operations in the United States.
As of May 31, 2026, we had 57 warehouse clubs in operation in Central America, the Caribbean and Colombia. In addition, we are continuing to advance our planned expansion into Chile, which we believe is a promising new market for our Company. We believe PriceSmart has become one of the most respected and trusted brands in the countries where we operate, and with over two million membership accounts, and over four million cardholders, we believe PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart's markets.
PriceSmart sources approximately half of its merchandise from suppliers within Latin America and the Caribbean, with the balance of merchandise sourced from the United States and globally. Product selection includes basic consumable merchandise for consumers and businesses, "Member's Selection®" private label merchandise and consumable and non-consumable products that are often not otherwise available in our markets.
PriceSmart continually focuses on innovation. Beyond in-club shopping, our Members can shop via our mobile app or online at PriceSmart.com, both of which offer home delivery and curbside pickup via our Click & Go® service. PriceSmart is making significant investments in technology both to improve the online shopping experience for its Members and to enhance operating efficiencies in the supply chain and the back office.
We seek to be an outstanding place to work and provide safe and pleasant working environments for our over 13,000 employees, along with excellent pay and benefits, including healthcare coverage and retirement benefits.
PriceSmart is committed to improving the quality of life for people living in the communities in which it does business. Through a partnership with Price Philanthropies Foundation we provide school supplies to approximately 140,000 children and vision screening and eye exams for thousands of children through the Aprender y Crecer program. In addition, the PriceSmart Foundation makes grants to support youth workforce development and small business growth in PriceSmart markets.
We believe that operating our business at the highest standards, providing outstanding jobs for our employees and being good stewards of the communities in which we operate results in PriceSmart being a good investment for our stockholders.
The number of warehouse clubs for each country or territory were as follows:
Country/Territory Number of
Warehouse Clubs
in Operation as of May 31, 2025 		Number of
Warehouse Clubs
in Operation as of May 31, 2026
Anticipated
Warehouse Club
Openings in
Fiscal Year 2026
Anticipated
Warehouse Club
Openings in
Fiscal Year 2027
Colombia 10 10 - -
Costa Rica 9 9 1 1
Panama 7 7 - -
Guatemala 6 7 - 1
Dominican Republic 5 6 - -
Trinidad 4 4 - -
El Salvador 4 4 - -
Honduras 3 3 - -
Nicaragua 2 2 - -
Jamaica 2 2 - 2
Aruba 1 1 - -
Barbados 1 1 - -
U.S. Virgin Islands 1 1 - -
Chile - - - 1
Totals 55 57 1 5
Our Member-facing warehouse clubs are all located in Latin America and the Caribbean. Our two regional distribution centers located in the United States (Miami) and Costa Rica operate in conjunction with our local distribution centers in all of our multi-club markets. Our corporate headquarters, U.S. buying operations and support service center offices are located in the United States. Lastly, we have additional support service centers in some of our markets. Our operating segments currently are the United States, Central America, the Caribbean and Colombia.
In the first quarter of fiscal year 2026, we purchased land for our third warehouse club in Jamaica, located in Montego Bay, approximately 100 miles west from the nearest club in the capital of Kingston. The club will be built on a five-acre property and is anticipated to open in the fall of 2026.
In the second quarter of fiscal year 2026, we purchased land and plan to open our tenth warehouse club in Costa Rica, located in Ciudad Quesada, approximately 47 miles northwest from the nearest club in the capital of San Jose. The club will be built on a six-acre property and is anticipated to open in August 2026.
In the first quarter of fiscal year 2026, we executed a land lease for our fourth warehouse club in Jamaica, located on South Camp Road (Kingston), approximately six miles southeast from the nearest club in the capital of Kingston. The club is under construction on a three-acre property and is anticipated to open in the winter of 2026-27.
In the third quarter of fiscal year 2026, we executed a land lease for our eighth warehouse club in Guatemala, located in Villa Nueva, approximately thirteen miles south from the nearest club in the capital of Guatemala City, subject to necessary permits being obtained. The club will be built on a five-acre property and is anticipated to open in the winter of 2027.
In the third quarter of fiscal year 2026, we executed a lease for our first warehouse club in Chile in Comuna Las Condes, Santiago. The club will be located within the Mallplaza Los Dominicos shopping center and is anticipated to open in the spring of 2027.
In the fourth quarter of fiscal year 2026, we purchased land and plan to open our eleventh warehouse club in Costa Rica, located in Santo Tomas de Santo Domingo (Heredia), approximately four miles east from the nearest club in Heredia. The club will be built on a six-acre property and is anticipated to open in the spring of 2027.
Once these six new clubs are open, the Company will operate 63 warehouse clubs.
We continue to evaluate opportunities to expand our warehouse club operations in our existing markets and to assess potential entry into new markets. In Chile, in addition to our planned warehouse club in the Mallplaza Los Dominicos shopping center, we have entered into executory agreements to acquire land for two additional potential warehouse clubs, subject to normal contingencies.
Factors Affecting the Business
Overall economic trends, foreign currency exchange volatility, and other factors impacting the business.
Our sales and profits vary from market to market depending on general economic factors, including Gross Domestic Product ("GDP") growth; consumer preferences; foreign currency exchange rates; political and social conditions; local demographic characteristics (such as population growth); the number of years we have operated in a particular market; and the level of retail and wholesale competition in that market. The economies of many of our markets are dependent on foreign trade, tourism, remittances from foreign workers located in the United States to individuals or family members in their home countries, and foreign direct investments. Uncertain economic conditions and a slowdown in global economic growth and investment may impact the economies in our markets, causing significant declines in GDP and employment and devaluations of local currencies against the U.S. dollar.
Inflationary pressures could significantly impact product costs, and commodity price increases have and could again impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. For example, we are monitoring the resolution of the conflict with Iran, including the impact on global commodity prices and potential shipping and logistics disruptions. We may experience increases in transportation costs or delays in the shipment or delivery of our products.
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. As of May 31, 2026, some markets, primarily Colombia and Costa Rica, benefited from currency appreciation, which was partially offset by currency devaluations we experienced in Honduras, when compared to May 31, 2025. During the first nine months of fiscal years 2026 and 2025, approximately 81.0% and 80.0%, respectively, of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 48.8% and 49.3% consisted of sales of products we purchased in U.S. dollars.
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 a 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."
Our wallet-share capture of total retail and wholesale sales can vary from market to market due to competition and the availability of other shopping options for our Members. Demographic characteristics within each of our markets can affect both the overall level of sales and future sales growth opportunities. Certain island markets, such as Aruba, Barbados and the U.S. Virgin Islands, offer limited upside for sales growth given their overall market size.
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.
Our operations are subject to volatile weather conditions and natural disasters. For example, in October 2025, Hurricane Melissa brought catastrophic winds, flash flooding and storm surge throughout the island of Jamaica resulting in the closure of our Jamaica clubs for two days. Although our warehouse clubs were not significantly affected and we were able to manage our supply chain to keep our warehouse clubs stocked with merchandise, similar natural disasters could adversely impact our overall sales, costs and profit performance in the future.
At times we face difficulties in the shipment of, and the risks inherent in the importation of, merchandise to our warehouse clubs. One of those difficulties is possible governmental restrictions on the importation of merchandise. In late May 2023, disputes with Nicaraguan customs and tax authorities resulted in delays in the issuance of our importation clearance, and general delays in the customs inspection process. While this situation had occurred frequently prior to May 2023, we generally were able to plan around these import blockages and resume imports within a matter of days. However, the 2023 delay in obtaining importation clearance resulted in our being unable to import merchandise into Nicaragua for several weeks in June 2023. While our tax clearances and imports have returned to a normal cadence, we could see delays of imports into Nicaragua again as well as in other jurisdictions in which we operate.
Our operations depend on shipping, trucking, ports and other elements of the supply chain that often rely on unionized labor. A work stoppage or other limitation on operations from union or other labor-related matters could occur for any number of reasons, including as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiation of new collective bargaining agreements. For example, while it did not impact our export activities, we experienced a brief disruption to the flow of imported merchandise into our Miami distribution center because of the U.S. dockworkers strike in October 2024.
Current uncertainties about U.S. tariffs and reciprocal tariffs may have an adverse effect on our Company. On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Power Act (the "IEEPA Decision"). However, immediately following the IEEPA decision, the U.S. government initiated new tariffs under Section 122 of the Trade Act of 1974, which were struck down by the U.S. Court of International Trade and are currently under appeal. Our Miami Distribution Center, which operates within a Free Trade Zone ("FTZ"), has helped us avoid potential economic risks, and as a result, we did not pay tariffs and are not owed a refund.
In July 2025, the United States enacted significant tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent many provisions of the Tax Cuts and Jobs Act of 2017 and introduces additional changes affecting individuals and businesses. Key business related provisions include the continuation of the 21% federal corporate income tax rate, enhancements to bonus depreciation and expensing rules, and modifications to certain international provisions, including Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income deductions.
We have reviewed the OBBBA and continue to monitor and model its potential impact on our operations and effective tax rate. Based on our current analysis of the Company's operating profile, we do not expect material effects on our 2026 fiscal year results or to our results going forward, considering our existing tax profile. Most provisions that represent substantive changes to existing law, including adjustments to international tax regimes and certain deduction limitations, are scheduled to take effect during our fiscal year 2027.
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.
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, the Company 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, 2026 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $44.1 million, a decrease of $56.4 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. In July 2025 and again in the third quarter of fiscal year 2026, the Company entered into financing transactions to provide our Trinidad subsidiary with additional U.S. dollar liquidity needed to meet its operational needs and help reduce the shortfall in U.S. dollar sourcing due to continued illiquid foreign exchange conditions in that market. While we currently expect to convert increased amounts of Trinidad dollars going forward, the timing and availability of U.S. dollars remains uncertain, and we may incur significant premium costs to complete such conversions.
While we are currently able to source substantially all the U.S. dollars that we need in Honduras, we faced similar U.S. dollar liquidity challenges in Honduras during fiscal year 2023 through much of fiscal year 2025, and the central bank still has strict controls in place that impact the availability of U.S. dollars.
During fiscal year 2026, our Costa Rica subsidiary recognized unrealized foreign currency losses primarily related to the revaluation of U.S. dollar-denominated assets and liabilities held in that market. Our balance as of May 31, 2026 of U.S. dollar-denominated cash and cash equivalents, short-term investments, and other assets and liabilities in our Costa Rican subsidiary was $76.5 million. Refer to "Management's Discussion & Analysis - Other Expense, Net" for additional information.
Mission
PriceSmart's mission is to provide all Members an outstanding shopping experience with high quality, exciting merchandise and services at the lowest possible prices.
Purpose
PriceSmart's purpose is 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 believe we provide good jobs, excellent 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 believe we are enhancing our capabilities to drive sales, operational efficiencies, and provide a better Member experience. 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.
Growth
As we look to the future, our Company is focused on three major drivers of growth:
•Invest in Adding New PriceSmart Locations, Expanding into New Markets, Remodeling Current PriceSmart Clubs and Opening More Distribution Centers
•Increase Membership Value
•Drive Incremental Sales via PriceSmart.com and Enhanced Digital and Technological Capabilities
I.Invest in Adding New PriceSmart Locations, Expanding into New Markets, Remodeling Current PriceSmart Clubs and Opening More Distribution Centers. We continue to pursue opportunities to add new warehouse clubs in our existing markets and to assess opportunities in new markets. We have acquired land for three new warehouse clubs and entered into leases for three new warehouse clubs. These warehouse clubs will be our third and fourth warehouse clubs in Jamaica, our tenth and eleventh warehouse clubs in Costa Rica, our eighth warehouse club in Guatemala, and our first warehouse club in Chile. Once these six new clubs are open, PriceSmart will operate 63 warehouse clubs in total. In addition, in Chile, we have entered into executory agreements for two potential sites for two new warehouse clubs and are actively reviewing other potential sites. As part of our expansion into Chile, we have hired local consultants to assist us, appointed a country general manager, begun building our local team and opened a central office in Chile.
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. To support this strategy, we plan to begin warehouse club and parking lot expansions and remodels in fiscal year 2026 and 2027 in Via Brasil, Panama and Barbados. During fiscal year 2023, 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 expect to relocate our Miraflores club to this new location in the first half of calendar year 2028.
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 completed full implementation of these distribution centers in China in the second quarter of fiscal year 2026. These distribution centers have helped reduce landed costs and lead times (via direct shipments from Asia to our local markets). In addition to our regional distribution center in Costa Rica, we have PriceSmart-operated distribution centers in various stages of development and implementation in other key markets. In the second quarter of fiscal year 2026, we opened a distribution center in Trinidad. In the third quarter of fiscal year 2026, we opened a distribution center in Colombia. In addition, we plan to open a distribution center in Jamaica during fiscal year 2026 and a distribution center in the Dominican Republic during fiscal year 2027. We also expect to relocate and consolidate our cold regional distribution center into the existing regional distribution center in Miami during fiscal year 2027.
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 shopping, seamless club pickup and delivery services, and our comprehensive well-being initiative. Members enjoy optical services with free eye exams, affordably priced eyeglass frames, audiology services with hearing tests, and competitively priced hearing aids. In select markets, we offer pharmacy services to further enrich the PriceSmart membership experience. We increased the membership fee by $5 in all but one market during fiscal year 2024 and may consider further adjustments as member benefits and value continue to grow.
We focus on the growth of our membership base, Member renewal rates and average ticket as part of determining how Members see the value we offer. 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 Members can derive maximum value from their membership, particularly when paired with the PriceSmart co-branded credit card which offers an additional cash back incentive for Members with the card. Platinum Members tend to demonstrate higher renewal rates and increased spending compared to other membership tiers. Platinum Membership accounts were 21.3% of our total membership base as of May 31, 2026, an increase from 16.1% as of May 31, 2025. 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 branded 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 2026, our private-label sales represented 26.7% of total net merchandise sales, down slightly from 27.7% in the same period of fiscal year 2025. In the first quarter of fiscal year 2026, the Company discontinued selling produce under the "Member's Selection®" brand as we determined that these products no longer aligned with the value proposition we strive to deliver with our private-label products. Excluding discontinuation of produce under the "Member's Selection®" brand, our private-label sales, as a percentage of total net merchandise sales, increased by 40 basis points compared to the same period of fiscal year 2025.
Our strategy is to offer our Members a curated selection of high-quality merchandise at prices we believe consistently deliver strong value across our markets. Our model focuses on fast-turning items, with limited variations in styles, sizes, and colors to maximize efficiency and drive savings. We offer a limited number of stock keeping units ("SKUs") with large pack sizes. Our "Treasure Hunt" experience offers the best value on exclusive or one-time-buy merchandise. By continuously enhancing our benefits and maintaining a strong focus on membership growth, renewal rates, and Member spending, we provide our Members with unmatched value, no matter how, when or where they choose to shop.
III.Drive Incremental Sales via PriceSmart.com and Enhanced Digital and Technological Capabilities. We've continued to tailor our digital experience to try to exceed our Members' expectations of how, when and where they want to shop. In the third quarter of fiscal year 2026, our digital channel sales reached $99.6 million, a 26.2% increase year-over-year, representing 6.9% of total net merchandise sales. We continue to modernize our processes and technology across the organization. During the third quarter of fiscal year 2026, we made further progress in our migration to the RELEX supply chain and inventory management software platform. We expect to complete the implementation in the second quarter of fiscal year 2027. We believe this upgraded technology enhances employee productivity and is designed to improve inventory management, reduce spoilage and increase in-stock availability, driving both sales and operating efficiency.
We finalized implementing a new point-of-sale system, Elera, a Toshiba product, in all of our English-speaking markets in the Caribbean and one of our Spanish-speaking countries in Central America, and we are continuing the rollout of Elera in the remainder of our Spanish-speaking markets. We believe with this upgraded technology we can achieve faster checkout times, improve employee productivity and enhance our payment option capabilities.
In the third quarter of fiscal year 2026, we continued advancing the implementation of Workday's human capital management system to replace legacy human resource systems. This technology upgrade is designed to enhance the employee experience with modern, user-friendly tools, while improving processes and efficiencies, strengthening compliance and providing scalable, integrated data to support future growth. We also progressed further in our multi-phase implementation of the E2Open Global Trade Management platform during the third quarter of fiscal year 2026. This platform is designed to enhance automation, compliance, and controls across global import and export operations. Once fully implemented, we believe this platform will strengthen trade compliance, improve data visibility, and support scalable international growth.
During the third quarter of fiscal year 2026, we continued the migration of our mobile application to fully native iOS and Android architectures to enhance speed, reliability, and accessibility for our Members. By solidifying our digital foundation and enabling faster deployment of new features, we believe we are well positioned to deliver an outstanding shopping experience while continuing to reduce costs.
We also continued development of our Membership Omnichannel Transformation ("MOT"), a unified platform designed to streamline the full membership lifecycle across all channels and geographies. We expect MOT to consolidate member identity, transaction history, and interaction data into a single system of record, replacing fragmented legacy processes with a consistent, auditable framework. By standardizing how enrollment, renewal, upgrades, and in-club and digital transactions are processed globally, we believe MOT will improve data quality, reduce friction in the member experience, and increase operational efficiency across our teams. We also believe capturing this data through MOT will allow us analytical opportunities to better understand Member preferences and trends.
Financial highlights for the third quarter of fiscal year 2026 included:
•Total revenues increased 12.5% over the comparable prior year period.
•Net merchandise sales increased 12.5% over the comparable prior year period. We ended the quarter with 57 warehouse clubs compared to 55 warehouse clubs at the end of the third quarter of fiscal year 2025. Net merchandise sales - constant currency increased 8.5% over the comparable prior-year period.
•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 May 31, 2026 increased 10.7%. Comparable net merchandise sales - constant currency for the 13 weeks ended May 31, 2026 increased 6.9%.
•Membership income for the third quarter of fiscal year 2026 increased 17.6% to $25.7 million over the comparable prior-year period.
•Total gross margins (net merchandise sales less associated cost of goods sold) increased 14.0% over the prior year period, and merchandise gross profit as a percent of net merchandise sales was 16.0%, an increase of 20 basis points when compared to the same period in the prior year.
•Selling, general and administrative expenses increased 13.4% compared to the third quarter of fiscal year 2025, primarily due to increases in warehouse club and other operations costs. Selling, general and administrative expenses as a percentage of total revenues in the third quarter of fiscal year 2026 increased to 13.3% from 13.2% in the same period last year.
•Operating income for the third quarter of fiscal year 2026 was $65.6 million, an increase of 16.7%, or $9.4 million, compared to the third quarter of fiscal year 2025.
•We recorded a $10.5 million net loss in total other expense in the third quarter of fiscal year 2026 compared to a $7.2 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 $3.0 million, which was primarily driven by an increase in total foreign currency transaction losses.
•Our effective tax rate decreased slightly in the third quarter of fiscal year 2026 to 28.0% from 28.4% in the third quarter of fiscal year 2025.
•Net income for the third quarter of fiscal year 2026 was $39.7 million, or $1.28 per diluted share, compared to $35.2 million, or $1.14 per diluted share, in the third quarter of fiscal year 2025.
•Adjusted EBITDA for the third quarter of fiscal year 2026 was $90.4 million compared to $79.0 million in the same period last year.
Financial highlights for the nine months ended May 31, 2026 included:
•Total revenues increased 10.7% over the comparable prior year period.
•Net merchandise sales increased 11.0% over the comparable prior year period. We ended the first nine months of fiscal year 2026 with 57 warehouse clubs compared to 55 warehouse clubs at the end of the first nine months of fiscal year 2025. Net merchandise sales - constant currency increased 8.6% over the comparable prior-year period.
•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 39 weeks ended May 31, 2026 increased 8.8%. Comparable net merchandise sales - constant currency for the 39 weeks ended May 31, 2026 increased 6.4%.
•Membership income for the first nine months of fiscal year 2026 increased 16.9% to $73.6 million over the comparable prior-year period.
•Total gross margins (net merchandise sales less associated cost of goods sold) increased 12.9% over the prior year period, and merchandise gross profit as a percent of net merchandise sales was 16.0%, an increase of 30 basis points when compared to the same period in the prior year.
•Selling, general and administrative expenses increased 12.9% compared to the first nine months of fiscal year 2025, primarily due to increases in warehouse club and other operations costs. Selling, general and administrative expenses as a percentage of total revenues in the first nine months of fiscal year 2026 increased to 13.0% from 12.8% in the same period last year.
•Operating income for the first nine months of fiscal year 2026 was $204.0 million, an increase of 13.5%, or $24.2 million, compared to the first nine months of fiscal year 2025.
•We recorded a $26.5 million net loss in total other expense in the first nine months of fiscal year 2026 compared to a $19.6 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, which was mainly driven by an increase in unrealized losses in the value of U.S. dollar-denominated monetary assets and liabilities in several of our markets and an increase in interest expense, net of interest income, of $1.8 million.
•Our effective tax rate increased slightly in the first nine months of fiscal year 2026 to 27.4% from 27.3% in the first nine months of fiscal year 2025.
•Net income for the first nine months of fiscal year 2026 was $128.9 million, or $4.18 per diluted share, compared to $116.3 million, or $3.80 per diluted share, in the first nine months of fiscal year 2025.
•Adjusted EBITDA for the first nine months of fiscal year 2026 was $277.0 million compared to $245.1 million in the same period last year.
Non-GAAP (Generally Accepted Accounting Principles) Financial Measures
The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with U.S. GAAP (Generally Accepted Accounting Principles). In addition to relevant GAAP measures, we also provide non-GAAP measures including Adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency because management believes these metrics are useful to investors and analysts by excluding items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. However, these non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest expense, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including interest income and other income (expense), net. The following is a reconciliation of our Net income to Adjusted EBITDA for the periods presented:
Three Months Ended Nine Months Ended
(Amounts in thousands) May 31,
2026 		May 31,
2025 		May 31,
2026 		May 31,
2025
Net income as reported
$ 39,691 $ 35,158 $ 128,948 $ 116,346
Adjustments:
Interest expense 3,850 2,762 12,229 7,995
Provision for income taxes 15,446 13,917 48,572 43,797
Depreciation and amortization 24,778 22,757 73,027 65,386
Interest income (3,259) (2,486) (9,840) (7,441)
Other expense, net (1)
9,913 6,888 24,079 19,050
Adjusted EBITDA $ 90,419 $ 78,996 $ 277,015 $ 245,133
(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, 2026 and 2025.
Net Merchandise Sales - Constant Currency and Comparable Net Merchandise Sales - Constant Currency
As a multinational enterprise, we are exposed to changes in foreign currency exchange rates. The translation of the operations of our foreign-based entities from their local currencies into U.S. dollars is sensitive to changes in foreign currency exchange rates and can have a significant impact on our reported financial results. We believe that constant currency is a useful measure, indicating the actual growth of our operations. When we use the term "net merchandise sales - constant currency," it means that we have translated current year net merchandise sales at prior year monthly average exchange rates. Net merchandise sales - constant currency results exclude the effects of foreign currency translation. Similarly, when we use the term "comparable net merchandise sales - constant currency," it means that we have translated current year comparable net merchandise sales at prior year monthly average exchange rates. Comparable net merchandise sales - constant currency results exclude the effects of foreign currency translation. Refer to "Management's Discussion & Analysis - Net Merchandise Sales" and "Management's Discussion & Analysis - Comparable Net Merchandise Sales" for our quantitative analysis and discussion. Reconciliations between net merchandise sales - constant currency and comparable net merchandise sales - constant currency and the most directly comparable GAAP measures are included where applicable.
COMPARISON OF THE THREE AND NINE MONTHS ENDED MAY 31, 2026 AND 2025
The following discussion and analysis compares the results of operations for the three- and nine-month periods ended on May 31, 2026 with the three- and nine-month periods ended on May 31, 2025 and should be read in conjunction with the consolidated financial statements and the accompanying notes included elsewhere in this report. Unless otherwise noted, all tables present U.S. dollar amounts in thousands. Certain percentages presented are calculated using actual results prior to rounding.
Net Merchandise Sales
The following tables indicate the net merchandise club sales in the reportable segments in which we currently operate and the percentage growth in net merchandise sales by segment during the three and nine months ended May 31, 2026 and May 31, 2025:
Three Months Ended
May 31, 2026 May 31, 2025
Amount % of Net
Sales 		Increase from Prior Year Change Amount % of Net
Sales
Central America $ 868,123 59.9 % $ 83,348 10.6 % $ 784,775 60.8 %
Caribbean 379,148 26.1 24,264 6.8 354,884 27.5
Colombia 203,427 14.0 53,089 35.3 150,338 11.7
Net merchandise sales $ 1,450,698 100.0 % $ 160,701 12.5 % $ 1,289,997 100.0 %
Nine Months Ended
May 31, 2026 May 31, 2025
Amount % of Net
Sales 		Increase from Prior Year Change Amount % of Net
Sales
Central America $ 2,561,824 60.0 % $ 224,386 9.6 % $ 2,337,438 60.7 %
Caribbean 1,128,246 26.4 59,779 5.6 1,068,467 27.8
Colombia 580,954 13.6 138,448 31.3 442,506 11.5
Net merchandise sales $ 4,271,024 100.0 % $ 422,613 11.0 % $ 3,848,411 100.0 %
Comparison of Three and Nine Months Ended May 31, 2026 and 2025
Overall, total net merchandise sales grew by 12.5% for the third quarter of fiscal year 2026 and grew 11.0% for the nine-month period ended May 31, 2026. The third quarter increase resulted from a 7.1% increase in transactions and a 5.0% increase in average ticket. For the nine-month period, the increase resulted from a 7.6% increase in transactions and a 3.1% increase in average ticket. Transactions represent the total number of visits our Members make to our warehouse clubs resulting in a sale and the total number of PriceSmart.com curbside pickup via our Click & Go® service and delivery service transactions. Average ticket represents the amount our Members spend on each visit or PriceSmart.com order. We had 57 clubs in operation as of May 31, 2026 compared to 55 clubs as of May 31, 2025.
Net merchandise sales in our Central America segment increased 10.6% and 9.6%, respectively, during the third quarter and the nine months ended May 31, 2026. This increase had a 650 basis point (6.5%) and 580 basis point (5.8%) positive impact on total net merchandise sales growth for the third quarter and the nine months ended May 31, 2026. All markets within this segment had positive net merchandise sales growth for the third quarter and for the nine months ended May 31, 2026. We opened our ninth warehouse club in Costa Rica in April 2025, our seventh warehouse club in Guatemala in August 2025.
Net merchandise sales in our Caribbean segment increased 6.8% and 5.6%, respectively, during the third quarter and the nine months ended May 31, 2026. These increases had a 190 basis point (1.9%) and 160 basis point (1.6%) positive impact on total net merchandise sales growth for the third quarter and the nine months ended May 31, 2026. All markets within this segment, except USVI, had positive net merchandise sales growth for the third quarter and the nine months ended May 31, 2026. We opened our sixth warehouse club in the Dominican Republic in May 2026.
Net merchandise sales in our Colombia segment increased 35.3% and 31.3%, respectively, during the third quarter and the nine months ended May 31, 2026 due to the appreciation of the Colombian peso and an increase in the number of transactions. These increases had a 410 basis point (4.1%) and 360 basis point (3.6%) positive impact on total net merchandise sales growth for the third quarter and the nine months ended May 31, 2026.
The following table indicates the impact that currency exchange rates had on our net merchandise sales in dollars and the percentage change from the three- and nine-month periods ended May 31, 2026. When we use the term "net merchandise sales - constant currency," it means that we have translated current year net merchandise sales at prior year monthly average exchange rates. Net merchandise sales - constant currency results exclude the effects of foreign currency translation. Impact of foreign currency is the effect of currency fluctuations on our net merchandise sales.
Three Months Ended
May 31, 2026
Net Merchandise Sales Net Merchandise Sales - Constant Currency Impact of Foreign Currency Exchange Net Merchandise Sales Growth Net Merchandise Sales - Constant Currency Growth % Impact of Foreign Currency Exchange
Central America $ 868,123 $ 844,984 $ 23,139 10.6 % 7.7 % 2.9 %
Caribbean 379,148 376,907 2,241 6.8 6.2 0.6
Colombia 203,427 178,245 25,182 35.3 18.6 16.7
Consolidated total $ 1,450,698 $ 1,400,136 $ 50,562 12.5 % 8.5 % 4.0 %
Nine Months Ended
May 31, 2026
Net Merchandise Sales Net Merchandise Sales - Constant Currency Impact of Foreign Currency Exchange Net Merchandise Sales Growth Net Merchandise Sales - Constant Currency Growth % Impact of Foreign Currency Exchange
Central America $ 2,561,824 $ 2,529,620 $ 32,204 9.6 % 8.2 % 1.4 %
Caribbean 1,128,246 1,136,901 (8,655) 5.6 6.4 (0.8)
Colombia 580,954 512,406 68,548 31.3 15.8 15.5
Consolidated total $ 4,271,024 $ 4,178,927 $ 92,097 11.0 % 8.6 % 2.4 %
Overall, the effects of currency fluctuations within our markets had approximately $50.6 million and $92.1 million, or 400 basis points (4.0%) and 240 basis points (2.4%), of positive impact on net merchandise sales for the quarter and the nine months ended May 31, 2026, respectively.
Currency fluctuations had a $23.1 million and $32.2 million, or 290 basis points (2.9%) and 140 basis points (1.4%), of positive impact on net merchandise sales in our Central America segment for the quarter and the nine months ended May 31, 2026, respectively. These currency fluctuations contributed approximately 180 basis points (1.8%) and 80 basis points (0.8%) of positive impact on net merchandise sales for the third quarter and nine months ended May 31, 2026, respectively. The Costa Rican colón appreciated against the dollar as compared to the same three- and nine-month periods a year ago and was a significant factor in the contribution to the favorable currency fluctuations in this segment.
Currency fluctuations had a $2.2 million positive impact and a $8.7 million negative impact, or 60 basis points (0.6%) of positive impact and 80 basis points (0.8%) of negative impact on net merchandise sales in our Caribbean segment for the third quarter and nine months ended May 31, 2026, respectively. These currency fluctuations contributed approximately 20 basis points (0.2%) of positive impact and 20 basis points (0.2%) of negative impact on total net merchandise sales growth for the third quarter and nine months ended May 31, 2026, respectively. The positive impact for the quarter was primarily driven by the appreciation of the Dominican peso compared to the same three-month period a year ago, while the negative impact for the nine-month period was driven primarily by the devaluation of the Dominican peso compared to the same nine-month period a year ago.
Currency fluctuations had $25.2 million and $68.5 million, or 1,670 basis points (16.7%) and 1,550 basis points (15.5%), of positive impact on net merchandise sales in our Colombia segment for the quarter and the nine months ended May 31, 2026, respectively. These currency fluctuations contributed approximately 200 basis points (2.0%) and 180 basis points (1.8%) of positive impact on total net merchandise sales growth for the quarter and the nine months ended May 31, 2026, respectively. The Colombian peso appreciated significantly against the dollar as compared to the same three- and nine-month periods a year ago.
Comparable Merchandise Sales
We report comparable net merchandise sales on a "same week" basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month and quarter that is used for financial reporting purposes. This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as we experience higher merchandise club sales on the weekends. Further, each of the warehouse clubs used in the calculations was open for at least 13 ½ calendar months before its results for the current period were compared with its results for the prior period. As a result, sales related to two of our clubs opened during fiscal year 2025 and one of our clubs opened during fiscal year 2026 will not be used in the calculation of comparable sales until they have been open for at least 13 ½ months. Therefore, comparable net merchandise sales includes 54 warehouse clubs for the thirteen- and thirty-nine-week periods ended May 31, 2026.
The following tables indicate the comparable net merchandise sales in the reportable segments in which we currently operate and the percentage changes in net merchandise sales by segment during the thirteen- and thirty-nine-week periods ended May 31, 2026 and June 1, 2025 compared to the prior year:
Thirteen Weeks Ended
May 31, 2026 June 1, 2025
% Increase
in Comparable
Net Merchandise Sales 		% Increase
in Comparable
Net Merchandise Sales
Central America 7.9 % 5.7 %
Caribbean 6.2 8.6
Colombia 35.7 9.9
Consolidated comparable net merchandise sales 10.7 % 7.0 %
Thirty-Nine Weeks Ended
May 31, 2026 June 1, 2025
% Increase
in Comparable
Net Merchandise Sales 		% Increase
in Comparable
Net Merchandise Sales
Central America 6.0 % 5.5 %
Caribbean 5.3 7.4
Colombia 31.7 9.5
Consolidated comparable net merchandise sales 8.8 % 6.5 %
Comparison of Thirteen and Thirty-Nine Weeks Ended May 31, 2026 and June 1, 2025
Comparable net merchandise sales for those warehouse clubs that were open for at least 13 ½ months for some or all of the thirteen-week period ended May 31, 2026 increased 10.7%. Comparable net merchandise sales for those warehouse clubs that were open for at least 13 ½ months for some or all of the thirty-nine-week period ended May 31, 2026 increased 8.8%.
Comparable net merchandise sales in our Central America segment increased 7.9% and 6.0% for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. The positive comparable net merchandise sales growth for our Central America segment contributed approximately 480 basis points (4.8%) and 360 basis points (3.6%) of positive impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively.
Comparable net merchandise sales in our Caribbean segment increased 6.2% and 5.3% for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. These increases contributed approximately 170 basis points (1.7%) and 150 basis points (1.5%) of positive impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively.
Comparable net merchandise sales in our Colombia segment increased 35.7% and 31.7% for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. This increase contributed approximately 420 basis points (4.2%) and 370 basis points (3.7%) of positive impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively.
When we use the term "comparable net merchandise sales - constant currency," it means that we have translated current year comparable net merchandise sales at prior year monthly average exchange rates. Comparable net merchandise sales - constant currency results exclude the effects of foreign currency translation. The following tables illustrate the comparable net merchandise sales - constant currency percentage growth and the impact that changes in foreign currency exchange rates had on our comparable merchandise sales percentage growth for the thirteen- and thirty-nine-week periods ended May 31, 2026:
Thirteen Weeks Ended
May 31, 2026
Comparable Net Merchandise Sales Growth Comparable Net Merchandise Sales - Constant Currency Growth % Impact of Foreign Currency Exchange
Central America 7.9 % 5.2 % 2.7 %
Caribbean 6.2 5.6 0.6
Colombia 35.7 18.9 16.8
Consolidated comparable net merchandise sales 10.7 % 6.9 % 3.8 %
Thirty-Nine Weeks Ended
May 31, 2026
Comparable Net Merchandise Sales Growth Comparable Net Merchandise Sales - Constant Currency Growth % Impact of Foreign Currency Exchange
Central America 6.0 % 4.7 % 1.3 %
Caribbean 5.3 6.1 (0.8)
Colombia 31.7 16.1 15.6
Consolidated comparable net merchandise sales 8.8 % 6.4 % 2.4 %
Overall, the mix of currency fluctuations within our markets had 380 basis points (3.8%) and 240 basis points (2.4%) of positive impact on comparable net merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively.
Currency fluctuations within our Central America segment accounted for approximately 160 basis points (1.6%) and 80 basis points (0.8%) of positive impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. Our Costa Rica market was the main contributor to the positive impact as the market experienced currency appreciation when compared to the same period last year. This was partially offset by devaluation of currency in our Honduras market when compared to the same period last year.
Currency fluctuations within our Caribbean segment accounted for approximately 20 basis points (0.2%) of positive impact and 20 basis points (0.2%) of negative impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. Our Dominican Republic market was the main contributor as this market experienced currency appreciation for the thirteen-week period ended May 31, 2026 and currency devaluation for the thirty-nine-week period ended May 31, 2026 when compared to the same periods last year.
Currency fluctuations within our Colombia segment accounted for approximately 200 basis points (2.0%) and 180 basis points (1.8%) of positive impact on total comparable merchandise sales for the thirteen- and thirty-nine-week periods ended May 31, 2026, respectively. This reflects the appreciation of the Colombian peso's foreign currency exchange rate when compared to the same period last year.
Membership Income
Membership income is recognized ratably over the one-year life of the membership.
Three Months Ended
May 31, 2026 May 31, 2025
Amount
% of Total Operating Income
Increase from Prior Year % Change Membership
Income % to
Net Merchandise
Sales 		Amount
% of Total Operating Income
Membership income - Central America $ 14,541 $ 1,794 14.1 % 1.7 % $ 12,747
Membership income - Caribbean 6,568 751 12.9 1.7 5,817
Membership income - Colombia 4,600 1,307 39.7 2.3 3,293
Membership income - Total $ 25,709 39.2 % $ 3,852 17.6 % 1.8 % $ 21,857 38.9 %
Nine Months Ended
May 31, 2026 May 31, 2025
Amount
% of Total Operating Income
Increase from Prior Year % Change Membership
Income % to
Net Merchandise
Sales 		Amount
% of Total Operating Income
Membership income - Central America $ 41,962 $ 5,246 14.3 % 1.6 % $ 36,716
Membership income - Caribbean 18,773 1,871 11.1 1.7 16,902
Membership income - Colombia 12,853 3,500 37.4 2.2 9,353
Membership income - Total $ 73,588 36.1 % $ 10,617 16.9 % 1.7 % $ 62,971 35.0 %
Number of accounts - Central America 1,186,396 92,858 8.5 % 1,093,538
Number of accounts - Caribbean 533,708 33,924 6.8 499,784
Number of accounts - Colombia 416,239 43,194 11.6 373,045
Number of accounts - Total 2,136,343 169,976 8.6 % 1,966,367
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
The number of Member accounts as of May 31, 2026 was 8.6% higher than the number of accounts as of May 31, 2025. Membership income increased 17.6% and 16.9% over the three- and nine-month periods ended May 31, 2026, respectively, compared to the same prior year periods.
Membership income, which is recognized ratably over the 12-month term of the membership, increased in all of our segments in the three- and nine-month periods ended May 31, 2026. The consolidated increase in membership income is primarily due to an increase in the Platinum Membership base in all of our segments over the prior year as well as growth in total membership accounts. Additionally, in our Central America segment, membership income increased compared to the third quarter and the first nine months of fiscal year 2025, due to the opening of two new clubs. The Company opened its ninth warehouse club in Costa Rica in Cartago in April 2025 and its seventh warehouse club in Guatemala in Quetzaltenango in August 2025. In our Colombia segment, membership income increased compared to the third quarter and the first nine months of fiscal year 2025 due to the appreciation of the Colombian peso.
We offer the Platinum Membership program in all locations where PriceSmart operates. The annual fee for a Platinum Membership in most markets is approximately $80, depending on the market in which the Member lives. The Platinum Membership program provides Members with a 2% rebate on most items, up to an annual maximum of $500. We record the 2% rebate as a reduction of net merchandise sales at the time of the sales transaction. Platinum Membership accounts are 21.3% of our total membership base as of May 31, 2026, an increase from 16.1% as of May 31, 2025. Platinum Members tend to have higher renewal rates than our Diamond Members. During the first and third quarters of fiscal year 2026 and throughout fiscal year 2025, we ran platinum promotional campaigns, resulting in an increase in the total number of Platinum Members.
Our trailing twelve-month renewal rate was 90.5%, an all-time high for the Company, and 88.0% for the periods ended May 31, 2026 and May 31, 2025, respectively. This compares to a trailing twelve-month renewal rate of 88.8% for the twelve-month period ended August 31, 2025.
Other Revenue
Other revenue consists of miscellaneous income, which comes primarily from our interest-generating portfolio from our co-branded credit cards and advertising income for our seasonal catalog, and rental income from operating leases where the Company is the lessor.
Three Months Ended
May 31, 2026 May 31, 2025
Amount Increase from Prior Year % Change Amount
Miscellaneous income $ 3,813 $ 64 1.7 % $ 3,749
Rental income 936 240 34.5 696
Other revenue $ 4,749 $ 304 6.8 % $ 4,445
Nine Months Ended
May 31, 2026 May 31, 2025
Amount Increase from Prior Year % Change Amount
Miscellaneous income $ 11,487 $ 343 3.1 % $ 11,144
Rental income 2,828 830 41.5 1,998
Other revenue $ 14,315 $ 1,173 8.9 % $ 13,142
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
The primary driver for the increase in other revenue for the three- and nine-month periods ended May 31, 2026 was an increase in rental income primarily driven by incremental rental income generated from third-party tenants at our corporate headquarters property acquired in San Diego in the prior year.
Results of Operations
Three Months Ended
Results of Operations Consolidated May 31, 2026 May 31, 2025
Increase
(Amounts in thousands, except percentages and number of warehouse clubs)
Net merchandise sales
Net merchandise sales $ 1,450,698 $ 1,289,997 $ 160,701
Total gross margin $ 231,714 $ 203,317 $ 28,397
Total gross margin percentage 16.0% 15.8% 0.2%
Revenues
Total revenues $ 1,481,793 $ 1,317,289 $ 164,504
Percentage change from prior period 12.5%
Comparable net merchandise sales
Total comparable net merchandise sales increase 10.7% 7.0% 3.7%
Total revenue margin
Total revenue margin $ 262,219 $ 229,652 $ 32,567
Total revenue margin percentage 17.7% 17.4% 0.3%
Selling, general and administrative
Selling, general and administrative $ 196,578 $ 173,422 $ 23,156
Selling, general and administrative percentage of total revenues 13.3% 13.2% 0.1 %
Operational data
Adjusted EBITDA(1)
$ 90,419 $ 78,996 $ 11,423
(1) See "Item 2. Management's Discussion & Analysis - Non - GAAP Financial Measures" for the definition of Adjusted EBITDA and a reconciliation to GAAP net income as reported.
Three Months Ended
Results of Operations Consolidated May 31,
2026
% of
Total Revenue
May 31,
2025
% of
Total Revenue
Operating income by segment
Central America $ 62,587 4.2 % $ 53,696 4.1 %
Caribbean 24,446 1.6 21,353 1.6
Colombia 6,869 0.5 7,452 0.6
United States (3,670) (0.2) (5,341) (0.4)
Reconciling Items (1)
(24,591) (1.7) (20,930) (1.6)
Operating income - Total $ 65,641 4.4 % $ 56,230 4.3 %
(1)The reconciling items reflect the amount eliminated upon consolidation of intersegment transactions.
Nine Months Ended
Results of Operations Consolidated May 31, 2026 May 31, 2025
Increase
(Amounts in thousands, except percentages and number of warehouse clubs)
Net merchandise sales
Net merchandise sales $ 4,271,024 $ 3,848,411 $ 422,613
Total gross margin $ 683,730 $ 605,519 $ 78,211
Total gross margin percentage 16.0% 15.7% 0.3%
Revenues
Total revenues $ 4,360,050 $ 3,939,119 $ 420,931
Percentage change from prior period 10.7%
Comparable net merchandise sales
Total comparable net merchandise sales increase 8.8% 6.5% 2.3%
Total revenue margin
Total revenue margin $ 771,677 $ 682,457 $ 89,220
Total revenue margin percentage 17.7% 17.3% 0.4%
Selling, general and administrative
Selling, general and administrative $ 567,689 $ 502,697 $ 64,992
Selling, general and administrative percentage of total revenues 13.0% 12.8% 0.2 %
Operational data
Adjusted EBITDA(1)
$ 277,015 $ 245,133 $ 31,882
Warehouse clubs at period end 57 55 2
Warehouse club sales floor square feet at period end 2,774 2,687 87
(1) See "Item 2. Management's Discussion & Analysis - Non - GAAP Financial Measures" for the definition of Adjusted EBITDA and a reconciliation to GAAP net income as reported.
Nine Months Ended
Results of Operations Consolidated May 31,
2026
% of
Total Revenue
May 31,
2025
% of
Total Revenue
Operating income by segment
Central America $ 178,147 4.1 % $ 162,965 4.2 %
Caribbean 70,208 1.6 68,306 1.7
Colombia 25,570 0.6 19,156 0.5
United States 1,016 - (8,328) (0.2)
Reconciling Items (1)
(70,953) (1.6) (62,339) (1.6)
Operating income - Total $ 203,988 4.7 % $ 179,760 4.6 %
(1)The reconciling items reflect the amount eliminated upon consolidation of intersegment transactions.
The following table summarizes the selling, general and administrative expense for the periods disclosed:
Three Months Ended
May 31,
2026
% of
Total Revenue
May 31,
2025
% of
Total Revenue
Warehouse club and other operations $ 144,302 9.7 % $ 125,745 9.6 %
General and administrative 51,405 3.5 47,070 3.6
Pre-opening expenses 579 0.1 302 -
Loss on disposal of assets 292 - 305 -
Total Selling, general and administrative $ 196,578 13.3 % $ 173,422 13.2 %
Nine Months Ended
May 31,
2026
% of
Total Revenue
May 31,
2025
% of
Total Revenue
Warehouse club and other operations $ 415,581 9.5 % $ 367,832 9.4 %
General and administrative 150,455 3.5 132,669 3.4
Pre-opening expenses 626 - 617 -
Loss on disposal of assets 1,027 - 1,579 -
Total Selling, general and administrative $ 567,689 13.0 % $ 502,697 12.8 %
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
Total gross margin is derived from our Revenue - Net merchandise sales less our Cost of goods sold - Net merchandise sales and represents our sales and cost of sales generated from the business activities of our warehouse clubs. We express our Total gross margin percentage as a percentage of our Net merchandise sales.
On a consolidated basis, total gross margin as a percent of Net merchandise sales for the three and nine months ended May 31, 2026 was 16.0%, 20 basis points (0.2%) and 30 basis points (0.3%) higher than the comparable prior year periods, respectively. The increases in total gross margin for the third quarter and first nine months of fiscal year 2026 are primarily due to improved margins in our non-foods category.
Total revenue margin is derived from Total revenues, which includes our Net merchandise sales, Membership income, Export sales, and Other revenue and income less our Cost of goods sold for net merchandise sales and Export sales. We express our Total revenue margin as a percentage of Total revenues.
Total revenue margin as a percent of Total revenues for each of the three and nine months ended May 31, 2026 was 17.7%, 30 basis points (0.3%) and 40 basis points (0.4%) higher than the comparable prior year periods, respectively. The three- and nine-month increase is primarily due to increases in our warehouse sales margins as well as increases in our membership income.
Selling, general, and administrative expenses consist of warehouse club and other operations, general and administrative expenses, pre-opening expenses, and loss on disposal of assets. Selling, general and administrative expenses increased $23.2 million for the third quarter of fiscal year 2026 compared to the same prior-year period, and increased as a percentage of total revenues by 10 basis points (0.1%) to 13.3% of total revenues for the third quarter of fiscal year 2026 compared to 13.2% of total revenues for the third quarter of fiscal year 2025.
Selling, general and administrative expenses increased $65.0 million for the first nine months of fiscal year 2026 compared to the same prior-year period, and increased as a percentage of total revenues by 20 basis points (0.2%) to 13.0% of total revenues for the first nine months of fiscal year 2026 compared to 12.8% of total revenues for the first nine months of fiscal year 2025.
Warehouse club and other operations expenses increased to 9.7% and 9.5% of total revenues for the third quarter and first nine months of fiscal year 2026 compared to 9.6% and 9.4% for the third quarter and first nine months of fiscal year 2025, respectively. The increases for the third quarter and first nine months of fiscal year 2026 compared with the same periods in the prior year are primarily due to the impact of expenses related to our expansion into the Chilean market.
General and administrative expenses decreased to 3.5% of total revenues for the third quarter of fiscal year 2026 compared to 3.6% of total revenues for the third quarter of fiscal year 2025 and increased to 3.5% of total revenues for the first nine months of fiscal year 2026 compared to 3.4% of total revenues for the first nine months of fiscal year 2025. The decrease for the third quarter of fiscal year 2026 compared with the same period in the prior year is primarily due to one-time expenses we incurred in the third quarter of fiscal year 2025 related to the relocation of the San Diego corporate headquarters. The increase for the nine-month period of fiscal year 2026 compared with the same period in the prior year is primarily due to investments in technology and compensation of our Chief Executive Officer. During his tenure as our Interim Chief Executive Officer from February 2023 to August 2025, Robert Price declined any compensation for his services. Our expense related to investments in technology is expected to increase in subsequent periods as the Company begins to execute on its planned initiatives.
Operating income increased to $65.6 million (4.4% of total revenues) and $204.0 million (4.7% of total revenues) in the third quarter and first nine months of fiscal year 2026, compared to $56.2 million (4.3% of total revenues) and $179.8 million (4.6% of total revenues) for the third quarter and first nine months of fiscal year 2025, respectively.
Interest Income
Interest income represents the earnings generated from interest-bearing assets held by PriceSmart, Inc. and our wholly owned foreign subsidiaries. These assets include investments in fixed income securities and deposits held with financial institutions. The interest income is derived from the interest payments received on these assets, which serve to enhance our overall financial returns.
Three Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Interest income $ 3,259 $ 773 $ 2,486
Nine Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Interest income $ 9,840 $ 2,399 $ 7,441
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
Net interest income increased for the three and nine months ended May 31, 2026, primarily due to an increase in amounts on deposit when compared to the prior year.
Interest Expense
Three Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Interest expense on loans $ 3,160 $ 927 $ 2,233
Interest expense related to hedging activity 1,260 370 890
Interest expense on finance lease 351 351 -
Less: Capitalized interest (921) (560) (361)
Interest expense
$ 3,850 $ 1,088 $ 2,762
Nine Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Interest expense on loans $ 10,019 $ 3,102 $ 6,917
Interest expense related to hedging activity 3,520 1,405 2,115
Interest expense on finance lease 535 535 -
Less: Capitalized interest (1,845) (808) (1,037)
Interest expense
$ 12,229 $ 4,234 $ 7,995
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
Interest expense reflects borrowings and finance leases entered into by PriceSmart, Inc. and our wholly owned foreign subsidiaries to finance new land acquisition and construction for new warehouse clubs and distribution centers, warehouse club expansions, the capital requirements of warehouse club and other operations, foreign currency transactions, and ongoing working capital requirements.
Interest expense increased for the three- and nine-month periods ended May 31, 2026, primarily due to an increase in outstanding debt when compared to the prior year period. The increase in outstanding debt was primarily in our Trinidad subsidiary in which we entered into financing transactions to provide additional U.S. dollar liquidity in the fourth quarter of fiscal year 2025 and in the third quarter of fiscal year 2026.
Other Expense, Net
Other expense, net consists of currency gains or losses, as well as net benefit costs related to our defined benefit plans and other items considered to be non-operating in nature.
Three Months Ended
May 31,
2026 		May 31,
2025
Amount Change % Change Amount
Other expense, net $ 9,913 $ 3,025 43.9 % $ 6,888
Nine Months Ended
May 31,
2026 		May 31,
2025
Amount Change % Change Amount
Other expense, net $ 24,079 $ 5,029 26.4 % $ 19,050
Monetary assets and liabilities denominated in currencies other than the functional currency of the respective entity (primarily U.S. dollars) are revalued to the functional currency using the exchange rate on the balance sheet date. These foreign exchange transaction gains/(losses) are recorded as currency gains or losses. Additionally, gains or losses from transactions denominated in currencies other than the functional currency of the respective entity also generate currency gains or losses.
For the three months ended May 31, 2026, the primary driver of Other expense, net was $8.5 million of transaction costs associated with converting local currencies into available tradable currencies before converting them to U.S. dollars in some of our countries with foreign exchange liquidity issues compared to $4.8 million of transaction costs for the three months ended May 31, 2025. This was partially offset by $1.3 million of losses due to revaluation of monetary assets and liabilities (primarily U.S. dollars) compared to $2.0 million of losses for the three months ended May 31, 2025.
For the nine months ended May 31, 2026, the primary driver of Other expense, net was $9.2 million of losses due to revaluation of monetary assets and liabilities (primarily U.S. dollars) compared to $5.4 million of losses for the nine months ended May 31, 2025. The primary driver of the increase is due to the appreciation of the local currency against the U.S. dollar of our Costa Rica subsidiary. During the nine months ended May 31, 2026, our markets contributed $15.1 million of transaction costs associated with converting the local currencies into available tradable currencies before converting them to U.S. dollars in some of our countries with foreign exchange liquidity issues compared to $13.2 million of such transaction costs for the nine months ended May 31, 2025.
Provision for Income Taxes
Three Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Provision for income taxes $ 15,446 $ 1,529 $ 13,917
Effective tax rate 28.0% 28.4%
Nine Months Ended
May 31,
2026 		May 31,
2025
Amount Change Amount
Provision for income taxes $ 48,572 $ 4,775 $ 43,797
Effective tax rate 27.4% 27.3%
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
The Company's effective tax rate decreased slightly to 28.0% for the three months ended May 31, 2026 compared to 28.4% for the prior-year period and increased slightly to 27.4% for the nine months ended May 31, 2026 compared to 27.3% for the prior-year period.
Other Comprehensive Income
Three Months Ended
May 31,
2026 		May 31,
2025
Amount Change % Change Amount
Other Comprehensive Income $ 14,229 $ 12,459 703.9 % $ 1,770
Nine Months Ended
May 31,
2026 		May 31,
2025
Amount Change % Change Amount
Other Comprehensive Income $ 52,172 $ 46,452 812.1 % $ 5,720
Comparison of Three and Nine Months Ended May 31, 2026 and May 31, 2025
Other comprehensive income for the third quarter of fiscal year 2026 resulted primarily from foreign currency translation adjustments related to assets and liabilities and the translation of the statements of income related to revenue, costs and expenses of our subsidiaries whose functional currency is not the U.S. dollar. During the third quarter and first nine months of fiscal year 2026, the largest translation adjustments were related to the appreciation of the local currency against the U.S. dollar of our Costa Rica, Colombia and Dominican Republic subsidiaries. Devaluation of local currency in the future could have a similarly negative effect on other comprehensive income (loss).
LIQUIDITY AND CAPITAL RESOURCES
Financial Position and Cash Flow
Our operations have historically supplied us with a significant source of liquidity. We generate cash from operations primarily through net merchandise sales and membership fees. We use cash in operations for payments to our merchandise vendors, warehouse club and distribution center operating costs (including payroll, employee benefits and utilities), as well as payments for income taxes. Our cash flows provided by operating activities, supplemented with our long-term debt and short-term borrowings, have generally been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. We also have returned cash to stockholders through a regular semiannual dividend, a one-time special dividend in the third quarter of fiscal year 2024, and by repurchasing shares of our common stock pursuant to the stock repurchase program that completed in the first quarter of fiscal year 2024. We evaluate our funding requirements on a regular basis to cover any shortfall in our ability to generate sufficient cash from operations to meet our capital requirements. We may consider funding alternatives to provide additional liquidity if necessary. Refer to "Item 1. Financial Statements: Notes to Consolidated Financial Statements, Note 7 - Debt" for additional information regarding our available short-term facilities, short-term and long-term borrowings, and any repayments.
Repatriation of cash and cash equivalents held by foreign subsidiaries may require us to accrue and pay taxes for certain jurisdictions. If we decide to repatriate cash through the payment of a cash dividend by our foreign subsidiaries to our domestic operations, we will accrue taxes if and when appropriate.
The following table summarizes the cash and cash equivalents, including restricted cash, held by our foreign subsidiaries and domestically (in thousands):
May 31,
2026 		August 31,
2025
Amounts held by foreign subsidiaries $ 199,680 $ 222,770
Amounts held domestically 54,942 62,521
Total cash and cash equivalents, including restricted cash $ 254,622 $ 285,291
The following table summarizes the short-term investments held by our foreign subsidiaries and domestically (in thousands):
May 31,
2026 		August 31,
2025
Amounts held by foreign subsidiaries $ 113,748 $ 73,186
Amounts held domestically - -
Total short-term investments $ 113,748 $ 73,186
As of May 31, 2026, certificates of deposit with a maturity of over one year held by our foreign subsidiaries were $11.9 million and recorded within Other non-current assets on the consolidated balance sheets. As of August 31, 2025, there were no certificates of deposit with a maturity of over one year held by our foreign subsidiaries or domestically. We regularly evaluate our cash balances and invest amounts in excess of anticipated working capital requirements in short-term investments.
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. 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, 2026 of Trinidad dollar-denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $44.1 million. While we currently expect to convert increased amounts of Trinidad dollars going forward, the timing and availability of U.S. dollars remains uncertain, and we may incur significant premium costs to complete such conversions. While we are currently able to source substantially all the U.S. dollars that we need in Honduras, we faced similar U.S. dollar liquidity challenges in Honduras during fiscal year 2023 through much of fiscal year 2025, and the Central bank still has strict controls there on the availability of U.S. dollars. Refer to "Management's Discussion & Analysis - Factors Affecting Our Business" and "Quantitative and Qualitative Disclosures about Market Risk" for quantitative analysis and discussion.
Our cash flows are summarized as follows (in thousands):
Nine Months Ended
May 31,
2026 		May 31,
2025 		Change
Net cash provided by operating activities $ 192,210 $ 179,160 $ 13,050
Net cash used in investing activities (189,054) (95,788) (93,266)
Net cash used in financing activities (46,751) (41,888) (4,863)
Effect of exchange rate changes on cash and cash equivalents and restricted cash 12,926 5,324 7,602
Net increase (decrease) in cash, cash equivalents and restricted stock $ (30,669) $ 46,808 $ (77,477)
Net cash provided by operating activities totaled $192.2 million and $179.2 million for the nine months ended May 31, 2026 and May 31, 2025, respectively. For the nine months ended May 31, 2026, net cash provided by operating activities increased primarily due to a $17.5 million increase in net income without non-cash items and a $4.6 million net positive change in our various operating assets and liabilities, partially offset by shifts in working capital due to higher overall inventory balances which contributed $9.0 million of cash used in operating activities.
Net cash used in investing activities totaled $189.1 million and $95.8 million for the nine months ended May 31, 2026 and May 31, 2025, respectively. The $93.3 million increase in net cash used in investing activities is primarily due to a net increase in purchases less proceeds of short-term investments of $46.2 million, a $42.5 million increase in property and equipment expenditures to support growth of our real estate footprint due to timing in our expansion program compared to the same nine-month period a year ago, and an $11.9 million increase in purchases of long-term investments. This was partially offset by a $6.2 million increase in proceeds from disposals of property and equipment, primarily due to the sale of our produce distribution center in Guatemala, and $1.1 million of cash received due to proceeds from the dissolution of our joint venture.
Net cash used in financing activities totaled $46.8 million and $41.9 million for the nine months ended May 31, 2026 and May 31, 2025, respectively. The $4.9 million increase in net cash used in financing activities is primarily the result of an increase in repayments of short-term bank borrowings, net of proceeds, of $19.8 million, a $3.1 million increase in purchases of treasury stock upon vesting of restricted stock awards to cover employees' tax withholding obligations, and a $2.3 million increase in cash dividend payments compared to the same period a year ago. This was partially offset by an increase in proceeds of long-term bank borrowings, net of repayments, of $20.3 million. During the third quarter of fiscal year 2026, we entered into long-term loan agreements in our Trinidad subsidiary.
The following table summarizes the dividends declared and paid during fiscal years 2026 and 2025 (amounts are per share):
First Payment Second Payment
Declared Amount Record
Date 		Date
Paid 		Date
Payable 		Amount Record
Date 		Date
Paid 		Date
Payable 		Amount
2/6/2025 $ 1.26 2/18/2025 2/28/2025 N/A $ 0.63 8/15/2025 8/29/2025 N/A $ 0.63
2/5/2026 $ 1.40 2/17/2026 2/27/2026 N/A $ 0.70 8/17/2026 N/A 8/31/2026 $ 0.70
On February 5, 2026, the Company's Board of Directors declared an annual cash dividend in the total amount of $1.40 per share, with $0.70 per share paid on February 27, 2026 to stockholders of record as of February 17, 2026 and $0.70 per share payable on August 31, 2026 to stockholders of record as of August 17, 2026. The declaration of future dividends (ongoing or otherwise), if any, the amount of such dividends, and the establishment of record and payment dates is subject to final determination by the Board of Directors at its discretion after its review of the Company's financial performance and anticipated capital requirements, taking into account the uncertain macroeconomic conditions on our results of operations and cash flows.
Capital Expenditures
Capital expenditures were $144.1 million for the nine months ended May 31, 2026, of which $50.4 million and $93.7 million were for maintenance and growth expenditures, respectively. Maintenance expenditures are typically for operational fixtures and equipment, building refurbishment, solar, technology and other expenses. Growth expenditures are for new clubs, purchases of previously leased clubs, investments to move existing clubs to better locations, supply chain improvements, and major remodels and expansions.
Short-Term Borrowings and Long-Term Debt
Our financing strategy is to ensure liquidity and access to capital markets while minimizing our borrowing costs. The proceeds of these borrowings were or will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, acquisitions, dividends and repayment of existing debt. Refer to "Item 1. Financial Statements: Notes to Consolidated Financial Statements, Note 7 - Debt" for further discussion.
Future Lease and Other Commitments
We place a strong emphasis on managing future lease commitments related to various facilities and equipment that support our operations. We believe our current liquidity and cash flow projections can cover future lease commitments. As of May 31, 2026, we have signed two lease agreements which have not yet commenced. Please refer to "Item 1. Financial Statements: Notes to Consolidated Financial Statements, Note 6 - Commitments and Contingencies" for further discussion.
Derivatives
Please refer to "Item 1. Financial Statements: Notes to Consolidated Financial Statements, Note 8 - Derivative Instruments and Hedging Activities" for further discussion.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on its financial condition or consolidated financial statements.
Repurchase of Common Stock and Reissuance of Treasury Shares Related to Employee Stock Awards
At the vesting dates for restricted stock awards to our employees, we repurchase a portion of the shares that have vested at the prior day's closing price per share and apply the proceeds to pay the employees' tax withholding requirements, not to exceed the maximum statutory tax rate, related to the vesting of restricted stock awards. The Company expects to continue this practice going forward.
Shares of common stock repurchased by us are recorded at cost as treasury stock and result in the reduction of stockholders' equity in our consolidated balance sheets. We may reissue these treasury shares in the future.
Critical Accounting Estimates
The preparation of our consolidated financial statements requires that management make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require management to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Management continues to review its accounting policies and evaluate its estimates, including those related to business acquisitions, contingencies and litigation, income taxes, value added taxes, and long-lived assets. We base our estimates on historical experience and on other assumptions that management believes to be reasonable under the present circumstances. Using different estimates could have a material impact on our financial condition and results of operations.
Income Taxes
For interim reporting, we estimate an annual effective tax rate (AETR) to calculate income tax expense. Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best estimate of current and future taxes to be paid.
We are required to file federal and state income tax returns in the United States and income tax and various other tax returns in multiple foreign jurisdictions, each with changing tax laws, regulations and administrative positions. This requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. We record the benefits of uncertain tax positions in our financial statements only after determining it is more likely than not the uncertain tax positions would sustain challenge by taxing authorities, including resolution of related appeals or litigation processes, if any. We develop our assessment of an uncertain tax position based on the specific facts and legal arguments of each case and the associated probability of our reporting position being upheld, using internal expertise and the advice of third-party experts. However, our tax returns are subject to routine reviews by the various taxing authorities in the jurisdictions in which we file our tax returns. As part of these reviews, taxing authorities may challenge, and in some cases presently are challenging, the interpretations we have used to calculate our tax liability. In addition, any settlement with the tax authority or the outcome of any appeal or litigation process might result, and in some cases has resulted, in an outcome that is materially different from our estimated liability. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate. Variations in the actual outcome of these cases could materially impact our consolidated financial statements.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income.
Tax Receivables
We pay Value Added Tax ("VAT") or similar taxes, income taxes, and other taxes within the normal course of our business in most of the countries in which we operate related to the procurement of merchandise and/or services we acquire and/or on sales and taxable income. VAT is a form of indirect tax applied to the value added at each stage of production (primary, manufacturing, wholesale and retail). This tax is similar to, but operates somewhat differently than, sales tax paid in the United States. We generally collect VAT from our Members upon the sale of goods and services and pay VAT to our vendors upon the purchase of goods and services. Periodically, we submit VAT reports to governmental agencies and reconcile the VAT paid and VAT received. The net overpaid VAT may be refunded or applied to subsequent returns, and the net underpaid VAT must be remitted to the government.
With respect to income taxes paid, if the estimated income taxes paid or withheld exceed the actual income tax due, this creates an income tax receivable. In most countries where we operate, the governments have implemented additional collection procedures, such as requiring credit card processors to remit a portion of sales processed via credit and debit cards directly to the government as advance payments of VAT and/or income tax. This collection mechanism generally leaves us with net VAT and/or income tax receivables, forcing us to process significant refund claims on a recurring basis. These refund or offset processes can take anywhere from several months to several years to complete.
Minimum tax rules, applicable in some of the countries where the Company operates, require the Company 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"). This can result in AMT payments substantially in excess of taxes the Company would expect to pay based on taxable income. As the Company believes that, in one country where it operates, it should ultimately only be liable for an income-based tax, it has accumulated income tax receivables of $10.3 million and $10.5 million and deferred tax assets of $4.2 million and $3.9 million as of May 31, 2026 and August 31, 2025, respectively, in this country.
The Company's various outstanding VAT receivables and/or income tax receivables are based on cases or appeals with their own set of facts and circumstances. The Company consults and evaluates with legal and tax advisors regularly to understand the strength of its legal arguments and probability of successful outcomes in addition to its own experience handling these complex tax issues. While the rules related to refunds of income tax receivables in these countries are unclear and complex, the Company has not placed any type of allowance on the recoverability of the remaining tax receivables or deferred tax assets, because the Company believes that it is more likely than not that it will ultimately succeed in its refund requests. Similarly, we have not placed any recoverability allowances on tax receivables that arise from payments we are required to make pursuant to tax assessments that we are appealing because we believe it is more likely than not that we will ultimately prevail in the related appeals. There can be no assurance, however, that the Company will be successful in recovering all tax receivables or deferred tax assets.
Our policy for classification and presentation of VAT receivables, income tax receivables and other tax receivables is as follows:
•Short-term VAT and income tax receivables, recorded as Prepaid expenses and other current assets: This classification is used for any countries where our subsidiary has generally demonstrated the ability to recover the VAT or income tax receivable within one year. We also classify as short-term any approved refunds or credit notes to the extent that we expect to receive the refund or use the credit notes within one year.
•Long-term VAT and income tax receivables, recorded as Other non-current assets: This classification is used for amounts not approved for refund or credit in countries where our subsidiary has not demonstrated the ability to obtain refunds within one year and/or for amounts which are subject to outstanding disputes. An allowance is provided against VAT and income tax receivable balances in dispute when we do not expect to eventually prevail in our recovery of such balances. We do not currently have any allowances provided against VAT and income tax receivables.
Long-lived Assets
We evaluate quarterly our long-lived assets for indicators of impairment. Indicators that an asset may be impaired are:
•the asset's inability to continue to generate income from operations and positive cash flow in future periods;
•loss of legal ownership or title to the asset;
•significant changes in its strategic business objectives and utilization of the asset(s); and
•the impact of significant negative industry or economic trends.
Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity, which in turn drives estimates of future cash flows from these assets. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. We did not record any significant impairment charges during the third quarter of fiscal year 2026 related to the loss of legal ownership or title to assets; significant changes in the Company's strategic business objectives or utilization of assets; or the impact of significant negative industry or economic trends. Loss on disposal of assets recorded during the years reported resulted from improvements to operations and normal preventive maintenance.
Seasonality
Historically, our merchandising businesses have experienced holiday retail seasonality in their markets. In addition to seasonal fluctuations, our operating results fluctuate quarter-to-quarter as a result of economic and political events in markets that we serve, the timing of holidays, weather, the timing of shipments, product mix, and currency effects on the cost of U.S.-sourced products which may make these products more or less expensive in local currencies and therefore more or less affordable. Because of such fluctuations, the results of operations of any quarter are not indicative of the results that may be achieved for a full fiscal year or any future quarter. In addition, there can be no assurance that our future results will be consistent with past results or the projections of securities analysts.
PriceSmart Inc. published this content on July 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 08, 2026 at 20:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]