管理層發言
Good morning or good afternoon, everyone. Welcome to PriceSmart Inc.'s earnings release conference call for the third quarter of fiscal year 2026, which ended on May 31, 2026. After remarks from our company's representatives, David Price, Chief Executive Officer, and Gualberto Hernandez, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Thursday, July 9, 2026. A digital replay will be available shortly following the conclusion of the call through Thursday, July 16, 2026, by dialing 1-800-770-2030 for domestic callers or 1-647-362-9199 for international callers and entering replay access code 5898084#. For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Gualberto Hernandez. Please proceed, sir.
Thank you, operator. Welcome to PriceSmart Inc.'s earnings call for the third quarter of fiscal year 2026, which ended on May 31, 2026. We will be discussing the information that we provided in our earnings press release and our Form 10-Q, which were both released yesterday on July 8, 2026. Also in these remarks, we refer to non-GAAP financial measures. You can find a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures in our earnings press release and our Form 10-Q. These documents are available on our investor relations website at investors.pricesmart.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the company's anticipated plans, revenues, and related matters. Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, should, estimate, and other expressions. All forward-looking statements are based on current expectations and assumptions as of today, July 9, 2026. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10-K, the quarterly report on Form 10-Q filed yesterday, and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update forward-looking statements made during this call. I will turn the call over to David Price, PriceSmart's Chief Executive Officer.
Thank you, Gualberto. Good morning, everyone. Thank you for joining us today. We are happy with the strong results from the third quarter. These results reflect the strength of our offering, the loyalty of our members, and the dedication and passion of every employee across our 14 countries who show up every day to do right by our members and to live our values. I want to take a moment to sincerely thank each of them. Their hard work and creativity is the foundation of everything we do. We've delivered these results against the backdrop of continued global uncertainty, currency volatility, evolving trade policy, and broader macroeconomic pressures that every multinational is navigating right now. Our team stayed focused and disciplined, and I'm proud of how they executed. We're encouraged by how the business is trending as we move into the final quarter of the fiscal year. Before I get into the financial highlights, I want to share a few important leadership updates. We are pleased to welcome Shweta Bhatia as our new Chief Information Officer. Shweta brings more than 25 years of leadership experience across major global retailers and has a strong track record of improving operations, strengthening teams, and driving meaningful business impact. Her people-centered, collaborative approach aligns closely with our culture, and her expertise in retail operations, modernization, data, and AI will support our next phase of growth. We also want to thank Wayne Sadin for his leadership and meaningful contributions to PriceSmart during his time with us. Wayne, we are grateful for everything you brought to this company. We are also excited to welcome Sherry White, who joined us in January and, as of June 1, has made the transition to Chief Merchandising Officer. Sherry brings deep merchandising experience from Petco, Target, and Unilever. Since joining PriceSmart, Sherry has made an immediate and meaningful impact on our merchandising organization, and this appointment reflects our confidence in her leadership and vision for the road ahead. Paul Kovaleski has assumed the role of Executive Vice President, Other Businesses, with oversight of pharmacy, optical, audiology, food service, bakery, and tire center. Paul has been with PriceSmart for many years and has made significant contributions across both merchandising and operations. We are excited about what this expanded scope means for those categories going forward. With that, let's turn to the highlights from the quarter. During the third quarter, net merchandise sales and total revenue reached almost $1.5 billion. Net merchandise sales increased by 12.5%, or 8.5% in constant currency. Comparable net merchandise sales increased by 10.7%, or 6.9% in constant currency. Three of our recent club openings, Cartago, Quetzaltenango, and La Romana, are not yet included in our comparable sales numbers. During the first nine months of our fiscal year, net merchandise sales reached almost $4.3 billion, and total revenue was almost $4.4 billion. Net merchandise sales increased by 11%, or 8.6% in constant currency. Comparable net merchandise sales increased by 8.8%, or 6.4% in constant currency. During the third quarter, our average sales ticket grew by 5%, and transactions grew 7.1% versus the same prior year period. The average price per item increased 6% year-over-year, while average items per basket decreased 1%. As we mentioned on the second quarter call, the timing of Semana Santa shifts each year. This year, it fell earlier than it did in the prior year. For a cleaner apples-to-apples view, it's worth looking at the eight-week period that captures Semana Santa in both years. For the eight weeks ended April 26, 2026, comparable net merchandise sales increased 11.2%, or 7.5% in constant currency. Let's take a look at our regions. First, in Central America, where we had 32 clubs at quarter end, net merchandise sales increased 10.6%, or 7.7% in constant currency. Comparable net merchandise sales increased 7.9%, or 5.2% in constant currency. Our Central America segment contributed approximately 480 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the third quarter. Second, in the Caribbean, where we had 15 clubs at quarter end, net merchandise sales increased 6.8%, or 6.2% in constant currency. Comparable net merchandise sales increased 6.2%, or 5.6% in constant currency. Our Caribbean region contributed approximately 170 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the third quarter. In Colombia, where we had 10 clubs at quarter end, net merchandise sales increased 35.3%, or 18.6% in constant currency. Comparable net merchandise sales increased 35.7%, or 18.9% in constant currency. Colombia contributed approximately 420 basis points of positive impact to the growth in total consolidated comparable net merchandise sales for the quarter. The increase is driven in part by the appreciation of the Colombian peso when compared to the same period last year, among other operational and market-driven impacts. In terms of merchandise categories, when comparing our third quarter sales to the same period in the prior year, our foods category grew approximately 12.5%, and our non-foods category increased approximately 12.3%. On the non-food side, we reconfigured our sales floor in our warehouse club layouts to enhance the visibility of our soft line offerings. Since making these changes, we have continued to see the benefits with improved sales performance in these categories. New product innovation and seasonal events also continue to play a strong role in our sales growth. We saw notable momentum from a range of limited time and seasonal offerings: apparel, housewares, small appliances, and sporting goods, which reinforces the treasure-hunt experience our members come to our clubs for. The 2026 FIFA World Cup is also a major global moment, and we always like to share in that excitement in our warehouse clubs and online with special merchandise and savings for that event. It's an occasion that naturally brings members together, and we see it as a meaningful opportunity to drive engagement and showcase our value. We built out a broader assortment around it: food, beverage, electronics, and soccer-themed offerings, along with digital campaigns featuring match schedules, watch parties, and credit card promotions in select markets. We've also seen our members share content around these promotions organically, which is really the modern version of word of mouth, and it reinforces the kind of community feel that's always been at the heart of PriceSmart. In moving on to other merchandise categories, our food service and bakery category increased approximately 12.6%, and our health services, including optical, audiology, and pharmacy, increased approximately 14.3%. Next, let's turn to membership. We continued to grow our membership base with accounts increasing 8.6% year-over-year to over 2.1 million accounts. We saw particularly strong account growth in Colombia, up 11.6%, driven in part by the stronger peso, and Colombia has been one of our market leaders in Platinum Membership sign-ups as well. We also reintroduced an auto-renewal program and are seeing strong adoption across most of our markets. As Latin America and the Caribbean become increasingly digital, auto-renewal is one of the ways we're actively reducing friction in the member experience. For the quarter, membership income increased 17.6% over the prior year period, and Platinum upgrades have been a significant contributor to that growth. This tier is built for our most engaged members. Annual cash back on eligible purchases reinforces loyalty and encourages higher spending. As of May 31, Platinum accounts represented 21.3% of our total membership base, up from 16.1% in the same period last year. Our Smart Platinum promotions, which we typically run in March and November, have resonated well with our members and have given them a clear moment to see and act on that value. Membership income as a percentage of revenue held steadily at 1.7% in the third quarter, consistent year-over-year and indicative of a resilient membership base. Our 12-month renewal rate was 90.5% as of May 31, a new all-time high for the second consecutive quarter, a result that we're really proud of. I'll now highlight our progress in real estate, supply chain transformation, and technology, and how these investments are strengthening our ability to better serve members and continue growing the business. We are excited to announce that in the third quarter, we executed a lease for our first warehouse club in Chile, which will be in Comuna Las Condes in Santiago. This club will be located within the Mallplaza Los Dominicos shopping center and is anticipated to open in the spring of 2027. This will be our first warehouse club located within a mall setting and will offer excellent accessibility and a retail environment that will resonate with the quality and value-focused members we will serve in Chile. This club establishes the foundation for what we believe can become a meaningful multi-club market over time. In addition to our planned warehouse at Mallplaza Los Dominicos, we have entered into executory agreements to acquire land for two additional potential warehouse club sites in Chile. I would like to provide additional color on the scope of our investment in this market. We expect to spend approximately $100 million in capital expenditures on our first three warehouse clubs and our central offices in Chile over the next several fiscal years. This represents our first phase of investment, and we see potential for future phases given the opportunity that we see in the market. We have also begun building a strong team in Chile, including an experienced country general manager and a local buying team that we're really excited about. To date, we have approximately 20 employees operating out of leased office space as we plan for a larger, permanent central office. Consistent with our approach in other markets, we intend to offer a mix of local and imported goods. We also see an opportunity to meaningfully grow exports out of Chile. We already import a variety of products from Chile into our existing markets, and we believe we can grow that business further. In terms of growth in our existing markets, in the fourth quarter of fiscal year 2026, we purchased land for our 11th club in Costa Rica in Santo Tomás de Santo Domingo in the Heredia province. This club is approximately four miles east from our nearest club in Heredia and will be built on a six-acre property with an anticipated opening in the spring of 2027. While the new location is geographically close, the reality is that traffic congestion in Heredia is significant and meaningfully reduces mobility in the city. Consumer demand in this market continues to exceed expectations and supports the need for an additional warehouse club in this part of the city. We see a clear need for both clubs to effectively serve members, reduce travel time, and capture the full growth potential of the region. In addition to these two new clubs, we have also previously announced four other warehouse clubs currently in our pipeline: our new club in Ciudad Quesada, Costa Rica, which is scheduled to open next month; two clubs in Jamaica, one in Montego Bay and the other on South Camp Road in Kingston; and a new club in Villa Nueva, Guatemala. Once these six new clubs are opened, we will operate 63 warehouse clubs in total. We also recently opened our sixth warehouse club in the Dominican Republic in La Romana in May 2026. We are proud to have incorporated sustainable design practices into that build and are encouraged by its initial performance since opening. In addition to new club growth, we plan to initiate warehouse and parking lot expansions, as well as remodeling projects in fiscal 2026 and 2027 for our Vía Brasil, Panama, and Barbados clubs. On the supply chain front, a central part of our transformation strategy is optimizing distribution to support our value proposition on price. Currently, we operate major distribution centers in Miami, Costa Rica, Panama, Trinidad, and Guatemala. During the third quarter, we began operations at a new distribution center in Colombia. This facility is especially important for us. It is in Bogotá, a prime and highly strategic location from a logistics standpoint. Establishing our DC there allows us to take advantage of the strong concentration of local production in that region, and it underscores how significant Colombia has become within our long-term strategy and how much room for growth we still see in that market. In addition, we plan to open a distribution center in Jamaica during fiscal year 2026 and in the Dominican Republic during fiscal year 2027. We also expect to relocate and consolidate our Miami cold regional distribution center into our existing Miami regional dry facility during fiscal year 2027, which will help us better leverage space, reduce redundancy, and improve efficiency across both operations. Alongside these new distribution centers, in the second quarter, we completed our implementation of our third-party distribution centers in China to consolidate merchandise sourced in the country. These DCs have already helped reduce landed cost and lead times through direct shipments from Asia to our local markets, which is exactly what we were looking for. Our vision for our global distribution center network is to help improve product availability, reduce lead times, and lower landed costs, among other efficiency gains. Alongside our physical footprint, we are continuing to make progress on the rollout of the RELEX forecasting and replenishment platform and expect to complete the full implementation in the second quarter of fiscal year 2027. We completed onboarding our U.S.-sourced inventory procurement process, and now we are focused on our local goods procurement process. We are taking the time to ensure we implement RELEX correctly and set up our teams for long-term success. This thoughtful approach has extended the timeline slightly, but it reflects our commitment to getting the transition right. During the third quarter of fiscal year 2026, we progressed further in our multi-phase implementation of the E2open global trade management platform, which is designed to improve automation, trade compliance, and controls across global import and export operations. Over time, we expect it to improve data visibility and support the scalability of our international business. Moving on to other ways we're enhancing membership. Private label penetration on a comparable basis, excluding a reclassification of the produce category, increased 40 basis points in the first nine months of FY 2026, reflecting continued progress toward our long-term goal of growing this part of our business. Using our updated methodology, penetration of private label was 26.7% of total merchandise sales. Recent additions like macadamia nuts, honey, and private label coffee, all from Guatemala, demonstrate our focus on delivering exceptional value across key everyday categories and our ability to leverage unique local suppliers in our markets. In addition, we are in the process of developing a new membership platform that internally we are calling the Membership Omnichannel Transformation, MOT. We plan to use this unified platform to manage the full membership life cycle across all channels and serve as our central system of record for member identity, transactions, and interactions. We expect MOT to replace several legacy processes with one consistent, auditable framework and ensure that activities like enrollment, renewal, upgrades, and both in-club and digital transactions are low friction and provide consistent and clean member data across our markets. Down the road, we believe MOT will enable personalized communications, targeted promotions, and a frictionless sign-up and renewal experience for our members. Now let's turn to our digital and technology growth pillar. In the third quarter, digital channel sales reached $99.6 million, our highest dollar volume to date, up 26.2% year-over-year and representing 6.9% of total net merchandise sales. Orders placed directly through our website or app grew 20.3%, with average transaction value up 4.4%. As of May 31, 75.8% of our members had created an online profile, and 27.1% of members had made a purchase through pricesmart.com or our app. We are encouraged by the continued momentum in digital engagement and will keep investing in this channel. On the club technology front, we completed implementation of our new point-of-sale system, ELERA, across all English-speaking Caribbean markets and one of our Spanish-speaking countries, and we are continuing the rollout across our remaining Spanish-speaking markets. Early indicators show ELERA is delivering faster checkout times, improved productivity, and expanded payment options for our members, tangible improvements to the in-club experience. On the back-office side, we made meaningful progress on our implementation of Workday's human capital management system, rolling out phase 1 of the project this past quarter. This is part of our broader effort to modernize our HR infrastructure, improving usability for employees, driving greater efficiency and compliance, and supporting scalable growth through a more integrated data environment. Before I turn it over to Gualberto, I want to address a few geopolitical topics. Across our region, we are seeing several political transitions, including Colombia's recent presidential elections, with a new administration set to take office in August. Along with recent leadership changes in Chile, Costa Rica, and Honduras, these developments are being accompanied by early signs of a more market-oriented and business-friendly approach in these markets. While it is still too early to assess the full direction and pace of policy changes, we are closely monitoring potential implications for the operating environment and overall business climate. At the same time, the global geopolitical environment remains complex and fluid. Trade policy uncertainty and ongoing tensions in the Middle East continue to affect key cost drivers, including fuel, freight, and energy. These pressures have contributed to inflation across many of our markets, which in turn is impacting consumer purchasing power and increasing price sensitivity. Lastly, I want to provide a brief preview of our June sales. Looking forward into our current fourth quarter, our comparable net merchandise sales for the four weeks ended June 28, 2026 were up 11.2%, or 6.5% in constant currency. With that, I'll turn it over to Gualberto to walk you through the financial details.
Thank you, David. Continuing with the income statement, total gross margin for the quarter as a percentage of net merchandise sales increased 20 basis points to 16% versus Q3 last year. This increase is primarily due to improved margins in our non-foods category. Our strategy remains the same and our philosophy continues to be identifying cost savings and operational efficiencies and passing on those savings to the members to ensure the lowest possible price. Total revenue margins improved 30 basis points to 17.7% of total revenue from 17.4% in the same period last year. This was mainly driven by the increase in our total gross margin, as I just mentioned, and good results in membership renewals and Platinum growth, as called out by David. On overhead costs, total SG&A expenses increased slightly to 13.3% of total revenues for the third quarter of fiscal year 2026, compared to 13.2% for the third quarter of fiscal year 2025. It was primarily due to higher warehouse club and other operations costs. In particular, warehouse club and other operations costs increased to 9.7% of total revenue from 9.6% in the same period last year, primarily due to expenses related to supporting our launch in Chile. General and administrative expenses decreased to 3.5% of total revenue from 3.6% in the same period last year, primarily due to the absence of one-time expenses we had in the third quarter of fiscal year 2025 related to the relocation of the San Diego corporate headquarters. SG&A is an important metric that we monitor closely. These expenses can fluctuate from quarter to quarter based on the timing of necessary investments to support the business. Our focus remains on making thoughtful, disciplined decisions that position the company for long-term growth and operational strength. Operating income for the third quarter of fiscal year 2026 increased 16.7% from the same period last year to $65.6 million, or 4.4% as a percentage of revenue versus 4.3% in the prior year period. Operating income for the first nine months of fiscal year 2026 increased 13.5% from the same period last year to $204 million, or 4.7% as a percentage of revenue versus 4.6% in the prior year period. Below the operating income line, in the third quarter of fiscal year 2026, we recorded a $10.5 million net loss in total other expense, an increase from a $7.2 million net loss in total other expense in the same period last year. The primary cause is a result of additional foreign currency transaction costs. In terms of income tax, our effective tax rate for the third quarter of FY 2026 decreased slightly to 28%, compared to 28.4% for the third quarter of FY 2025. For the nine months ended May 31, 2026, our effective tax rate is almost in line at 27.4%, compared to 27.3% for the comparable prior year period. Finally, net income for the third quarter of FY 2026 was $39.7 million, or $1.28 per diluted share, an increase of 12.3%, up from $35.2 million, or $1.14 per diluted share in the third quarter of FY 2025. Adjusted EBITDA for the third quarter of FY 2026 was $90.4 million, compared to $79 million in the same period last year, a growth of 14.5%. Net income for the first nine months of FY 2026 was $128.9 million, or $4.18 per diluted share, an increase of 10%, up from $116.3 million, or $3.80 per diluted share in the first nine months of FY 2025. Adjusted EBITDA for the first nine months of FY 2026 was $277 million, compared to $245.1 million in the same period last year, a growth of 13%. Moving on to our balance sheet. We ended the quarter with cash equivalents and restricted cash totaling $254.6 million, plus approximately $113.7 million of short-term investments, typically held in certificates of deposit. When reviewing our cash balances, it is important to know that as of May 31, 2026, we had TTD 44.1 million of cash equivalents and short- and long-term investments denominated in local currency in Trinidad, which we could not readily convert into U.S. dollars. Turning to cash flow. Net cash provided by operating activities reached $192.2 million for the first nine months of FY 2026, an increase of $13.1 million versus the prior year period. The increase is primarily driven by a $17.5 million increase in net income without non-cash items and $4.6 million of other net positive changes in various operating assets and liabilities. This is partially offset by shifts in working capital, mainly due to higher overall inventory balances, which consumed $9 million of cash used in operating activities. Inventory levels are trending higher than they have been in the past, as we're taking a more deliberate approach to ensure we're in a stronger in-stock position, particularly in non-foods, so we can better meet member demand and support sales momentum. Additionally, in the third quarter, the company entered into non-delivered forward foreign exchange contracts to mitigate foreign currency exchange rate risk associated with forecasted U.S. dollar-denominated inventory expenditures in our Colombian subsidiary. These contracts are designated as cash flow hedges and are intended to reduce exposure to currency fluctuations while providing greater predictability around expected inventory costs in Colombia and support more stable pricing. Net cash used in investing activities increased by $93.3 million for the first nine months of FY 2026 compared to the prior year, 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, 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, mainly due to the sale of our product distribution center in Guatemala, and $1.1 million of cash received due to the proceeds from the dissolution of our joint venture. Net cash used in financing activities increased by $4.9 million for the first nine months of fiscal year 2026 compared to the prior year, primarily due to a $19.8 million increase in repayments of short-term bank borrowings net of proceeds, a $3.1 million increase in the 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. This was partially offset by a $20.3 million increase in proceeds from long-term bank borrowings net of repayments. Looking ahead, we remain focused on sustainable growth, operational excellence, and delivering exceptional value to our members. While macroeconomic conditions across our region remain dynamic, our diversified geographic footprint and disciplined operating model position us well for the remainder of the fiscal year. We appreciate the continued support of our members, employees, and shareholders, and we thank our teams for their ongoing efforts. Thank you for joining our call today. I will now turn the call over to the operator to take your questions. Operator, you may now start taking our callers' questions.
分析師問答
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question, again, press star one. We do ask that you limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from John Braatz with Kansas City Capital. Please go ahead.
Morning, everyone.
Morning, John. Hey, John.
David, just want to start with your Chile expansion. Obviously, this is your first new market since Colombia, I think, in 2011. Chile is obviously a different market. It's smaller, but the GDP per capita is maybe two times that of Colombia. I guess my question is, how are you approaching Chile maybe versus Colombia? It took a while to scale up in Colombia and achieve a decent level of profitability. Can you compare the two markets and how you're approaching it? Now, I don't think you were necessarily with the company at the time when the Colombia expansion began, but obviously you had people there that were. Can you talk a little bit about Chile versus Colombia?
Yeah, I'd be happy to talk about that, John. I think it's a good question. It's something we've thought about and looked at really closely internally. We, of course, always want to learn from experiences that we've had. There's a lot of things that are different between the two markets. Like you referenced, they're dramatically different in size. They're quite dramatically different in GDP per capita, while the GDPs in the aggregate are actually quite similar. Colombia is kind of multinucleate from a city standpoint, while Chile does have multiple cities. A vast majority, around 50%, of the population is in Santiago with a major port around an hour and a half away versus multiple ports in Colombia. On the other hand, Chile is on the Pacific and several thousand more miles away than Colombia. There are factors that back in the mid-2000s impacted Colombia significantly. You may recall that when we opened Barranquilla, the peso was about 1,800 to the dollar. I would describe that first location as a strong success. We went back and looked at the data; we had big sign-ups of memberships, people were flying from Bogota to shop and send those goods back home. What happened was that there was a significant devaluation in the peso, where it got well over 4,000 to the dollar. That was a big hit to us, but also a big hit to all consumers in Colombia and to multinationals. Since that time, many multinationals have exited Colombia, and we've learned from the experience and adapted our approach. For sure, we don't want Chile to take that long. I'd say there are several things we've learned and are applying. One is we're building up our local team and taking the time to make sure we have the right team locally from a management standpoint and the right buyers. We know that's critical. We know there will be a mix of local and imported goods. You have to give before you get in this business. It's important for us to focus on pricing and ensure a great value proposition for the member. That will take time to get scale and volume, and having multiple locations will help. We aim to do right by the member and be a trusted value provider in Chile.
Thank you, David. When you think about Chile, when would you first begin? Two things. Number one, are the locals familiar with membership clubs? Secondly, when might you first begin accepting new memberships in the Santiago store?
Sure. There is not a membership warehouse club today in Chile, but there are several related points. For many people in the region, especially middle and upper income consumers, it's not uncommon to travel to the U.S. to visit family and shop; Costco is a place where people tend to stop. That being said, there are a number of membership-like or subscription programs for other retailers and services. For example, there's Uber One, Jumbo Prime, and others. People are not unfamiliar with paying a membership fee for a subscription service. We have an annual fee versus a monthly fee, and we like to think about our fee being saved and earned for the member by the value they get on their purchases. So paying an annual membership will be somewhat new, but I am not concerned about the reception of the concept because subscription and membership ideas already exist in the market. We have not announced when we're going to start selling memberships. We typically start selling memberships several months before opening a new club. We always do that, actually. When we open a new club, even in a new market or a new part of a city, we'll start selling memberships at least three months before, if not more. It really depends on how much cannibalization there would be from other clubs. In this case, since it's the first club in Chile, we'll probably start a little earlier because it's a brand-new concept.
Okay, thank you. One last question. In the quarter, you were able to reduce your Trinidad balances quite sharply. The currency transaction costs were $8.5 million versus $3.7 million a quarter ago. Was there just an opportunity that arose to take advantage of it, or is this something that we might see more of?
Hi, John, this is Gualberto. Yes, you're right. We sourced more U.S. dollars in Trinidad in this quarter. That allowed us to reduce the position of TTD 44.1 million of trapped cash in Trinidad. If you compare to last quarter, we had lower transactional costs versus the same quarter of the prior year for that reason. We are strategic and opportunistic in sourcing our dollars. We only buy when we believe we can obtain a relatively good transaction cost to access these U.S. dollars. There are no changes in policy or strategy. We continue to look for options to get access to dollars in different ways. We have strong partnerships with our financial institutions and internally we are evaluating other avenues. For now, no major change in our policy. These results will continue to fluctuate from quarter to quarter, depending on the availability of U.S. dollars in the market.
Okay, thank you.
Thank you, John.
Your next question comes from the line of Héctor Maya with Scotiabank. Please go ahead.
Hola, David, Gualberto. Buen día. Buen día. Muy bien. Muchas gracias. Thank you for taking my questions. First, on Colombia, could you please share a few details on why operating income declined despite the comp? Then I have a follow-up, if I may.
Héctor, please, is the question about Colombia profitability?
Yeah. On why the operating income declined despite the comp.
Colombia has a higher running operating cost in general compared to our other markets. In the quarter, it's a bit of the mix of warehouse expenses that have been going up. This is not something we see as a long-term trend. We are working closely on the evolution of every line in the P&L, in particular Colombia, being such a strategic and key market for us. We're tracking closely and working hard to get back in line.
One factor to note, Héctor, is that we've seen several policy changes in Colombia. We mentioned on earlier calls the minimum wage change; we were already well above it, but we aim to pay a premium versus other retailers as part of our commitment to pay ethical wages at all levels. Another change is the reduction in the standard work week from 44 to 42 hours, which affects scheduling and labor costs. Those are components of what we're seeing in Colombia.
In particular, the reduction in allowable work hours is impacting the warehouse cost line I mentioned.
Yes, exactly.
Got it.
Hope that helps shed a little light there.
Yeah, perfect. Also, if I may, are you seeing better TTD to USD conversion conditions? Would that reduce the need to charge a premium on goods in the country looking ahead?
No, we're not seeing any material change in the conditions in the market. It continues at the same level of illiquidity. We're following closely every macroeconomic announcement and evolution in Trinidad. I'm not in a position to say that would change. We continue to include a premium in our cost to cover for this. We're also evaluating internally ways to reduce our need for U.S. dollars in Trinidad or to get more creative, always complying with regulations, to access those dollars. The market is difficult to predict, and we don't see any reason to believe it will change materially in the short term.
It's a tough situation for sure.
Got it. Understand.
It changes quarter to quarter. We don't see any change in the underlying long-term trend.
Yeah.
Got it. Last one, could you quantify the impact that Chile is having on warehouse club SG&A, and how should we think about this impact over the coming quarters?
In this quarter, we are already investing in pre-opening expenses for Chile. As disclosed in the Form 10-Q and discussed earlier, it's about a 10 basis point impact to SG&A in this quarter from pre-opening expenses in Chile.
Got it.
That concludes our question and answer session. I would now like to turn the conference back over to Gualberto Hernandez for closing comments.
Okay. Thank you, operator. Thank you, everybody, for joining this call. It's very important we continue this communication, and we enjoy every one of our interactions. Thank you very much. Have a good day.
Thanks, everyone.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.