Pricesmart ((PSMT)) has held its Q3 earnings call. Read on for the main highlights of the call.

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Pricesmart’s latest earnings call struck an upbeat tone as management highlighted strong sales growth, firmer margins, and expanding membership metrics. Executives acknowledged currency volatility, higher inventory, and cost pressures in Colombia, yet framed these as manageable headwinds against a backdrop of disciplined investment in digital capabilities, new clubs, and regional distribution infrastructure.

Robust Top-Line Performance

Net merchandise sales for Q3 approached $1.5 billion, rising 12.5 percent year over year or 8.5 percent in constant currency. Total revenue also neared $1.5 billion, while nine‑month net merchandise sales reached almost $4.3 billion, up 11 percent or 8.6 percent in constant currency, underscoring sustained demand across the portfolio.

Traffic, Pricing, and Basket Dynamics

Customer traffic remained healthy, with transactions climbing 7.1 percent and the average sales ticket increasing 5 percent versus a year ago. The average price per item rose 6 percent, while items per basket slipped 1 percent, indicating shoppers are paying more per item but slightly trimming unit volumes per trip.

Regional Performance Highlights

Central America posted net merchandise sales growth of 10.6 percent or 7.7 percent in constant currency, contributing a sizable 480 basis points to consolidated comparable sales. The Caribbean added 6.8 percent growth or 6.2 percent in constant currency, while Colombia stood out with sales up 35.3 percent, or 18.6 percent in constant currency, boosted partly by peso appreciation.

Broad-Based Category and Service Strength

Both foods and non‑foods delivered double‑digit gains, with foods up about 12.5 percent and non‑foods up around 12.3 percent year over year. Services also performed well, as food service and bakery expanded roughly 12.6 percent and health services, including optical, audiology, and pharmacy, advanced about 14.3 percent.

Membership Growth and Quality

Membership accounts increased 8.6 percent to more than 2.1 million, driving membership income up 17.6 percent compared with last year. Higher‑value Platinum accounts now represent 21.3 percent of the base, versus 16.1 percent a year ago, and the 12‑month renewal rate reached a record 90.5 percent, signaling strong customer engagement.

Accelerating Digital Channel Performance

Digital channel sales climbed 26.2 percent to a record $99.6 million, accounting for 6.9 percent of net merchandise sales. Orders via the website and app grew 20.3 percent, while the average transaction value rose 4.4 percent, and nearly three‑quarters of members have online profiles, with more than a quarter having made online purchases.

Margin Expansion and Profitability

Total gross margin improved 20 basis points to 16 percent of net merchandise sales, and total revenue margin increased 30 basis points to 17.7 percent of revenue. Operating income in Q3 rose 16.7 percent to $65.6 million, or 4.4 percent of revenue, while net income reached $39.7 million, and adjusted EBITDA grew 14.5 percent to $90.4 million.

Building Out Supply Chain and Distribution

Pricesmart opened a new distribution center in Bogotá and plans additional facilities in Jamaica during fiscal 2026 and the Dominican Republic in fiscal 2027. The company completed a third‑party distribution setup in China to cut landed costs and lead times and continues rolling out RELEX and E2open tools to optimize inventory and trade management.

Strategic Real Estate Expansion

Management finalized a lease for its first club in Chile at Mallplaza Los Dominicos in Santiago and secured agreements for two more Chile locations. It also purchased land for an eleventh club in Costa Rica and outlined a pipeline of six new clubs, which will lift the total club count to 63 once all sites are operational.

Operational and Technology Upgrades

Leadership changes included appointing a new chief information officer and promoting the chief merchandising officer, aligning talent with growth plans. The ELERA point‑of‑sale system is now in place across the English‑speaking Caribbean and other markets, Workday HCM phase one has launched, and private label penetration reached 26.7 percent of merchandise sales.

Foreign Currency and FX Cost Burden

Other expense rose to a net loss of $10.5 million in Q3, up from $7.2 million last year, mainly from higher foreign currency transaction costs. The company continues to hold Trinidad and Tobago dollar‑denominated cash and investments that are difficult to convert to U.S. dollars, contributing to FX‑related earnings drag.

Inventory Buildup and Cash Use

Management intentionally raised inventory levels, especially in non‑food categories, to improve in‑stock positions and customer experience. This working capital shift consumed an additional $9 million of operating cash year to date, reflecting the cost of holding more goods ahead of demand.

Pre-Opening and Club Operating Cost Pressure

Selling, general, and administrative expenses ticked up to 13.3 percent of total revenue from 13.2 percent a year earlier, driven by higher warehouse and operations costs. Spending tied to preparations for the Chile launch added around 10 basis points to SG&A in the quarter, illustrating the near‑term cost of future growth.

Colombia Margin Challenges Amid Growth

Despite Colombia’s strong sales momentum, operating income in the market declined due to rising running and warehouse costs. Local labor regulations, including minimum wage changes and a shorter legal workweek from 44 to 42 hours, have increased operating expenses and put pressure on margins in that country.

Higher Investing Cash Outflows

Net cash used in investing activities grew by $93.3 million year to date versus the prior year, reflecting Pricesmart’s expansion push. Property and equipment spending increased by $42.5 million, and the firm stepped up purchases of short‑ and long‑term investments linked to new clubs and distribution centers.

Persistent FX Liquidity Risks in Trinidad

Management described ongoing illiquidity and unpredictability in converting Trinidad and Tobago dollars into U.S. dollars, which complicates capital mobility. The company remains opportunistic in sourcing U.S. currency and charges a premium to cover FX access costs, while seeing no clear signs of near‑term market improvement.

Guidance and Strategic Outlook

Looking ahead, management noted that comparable net merchandise sales grew 11.2 percent, or 6.5 percent in constant currency, for the four weeks ended June 28, keeping momentum into Q4. The plan includes opening six more clubs to reach 63 locations, investing around $100 million in Chile’s first three clubs and office, and completing key logistics and tech milestones through fiscal 2027.

Pricesmart’s earnings call painted a company balancing strong growth with prudent investment and targeted risk management. While FX volatility, higher costs in Colombia, and heavier capital spending weigh on near‑term cash flows, the combination of robust comps, rising membership income, digital expansion, and a growing club footprint underpins a constructive medium‑term story for investors.