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Item 1A. Risk Factors.” 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. 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.
PriceSmart has developed, implemented, and maintained a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical technology systems, data, and information. We have implemented processes and protocols designed to monitor, identify, mitigate, and prevent material risks associated with cybersecurity threats and incidents relevant to internal networks, business applications, customer-facing applications, customer payment systems, and business operations. Cybersecurity represents an important component of our overall cross-functional approach to risk management. Our cybersecurity practices are integrated into the Company's enterprise risk management ("ERM") approach, and cybersecurity risks are among the core enterprise risks identified for oversight by the Board through our annual ERM assessment. We use third-party vendors to review and test our IT systems and utilize our internal team of experienced personnel to evaluate and assess the efficacy of cybersecurity systems and to make recommendations and identify opportunities for improvements to our cybersecurity risk management program. We report the results of these assessments to our Audit Committee regularly and to our Board of Directors at least annually.
We have not identified and are not aware of any risks from cybersecurity threats, including as a result of any prior cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. Despite our security measures, however, there can be no assurance that we, or third parties with which we interact, will not experience a cybersecurity incident in the future that will materially affect us. For more information about the cybersecurity risks we face, see "Item 1A — Risk Factors — Any failure by us to maintain the security of the information we hold relating to our Company, Members, employees and vendors, could damage our reputation with them, could disrupt our operations, could cause us to incur substantial additional costs and to become subject to litigation and could materially adversely affect our operating results."Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. The Audit Committee oversees management's implementation of our cybersecurity risk management program. The Audit Committee receives quarterly reports from our CIO and SVPIS regarding any significant cybersecurity incidents, as well as any incidents with lesser impact potential. In accordance with our cybersecurity incident response plan, the Audit Committee is promptly informed by management of cybersecurity incidents with the potential to materially adversely affect the Company or its information systems. The CIO and SVPIS report quarterly to the Audit Committee and Board regarding cybersecurity risks and the status of our cyber risk management program. Our CIO and SVPIS also periodically make presentations to Board members on cybersecurity topics as part of the Board's continuing education on topics that impact our company. Our CIO, FVPIS, and/or our SVPITSS also periodically make presentations to Board members on cybersecurity topics as part of the Board's continuing education on topics that impact our company. Our Cybersecurity team informs executive management about ongoing efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means. Our Cybersecurity team informs executive management about ongoing efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means. This may include briefings from internal security personnel; sharing publicly or privately available threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and forwarding alerts and reports produced by network monitoring and security tools we deploy.
PART I
Item 1. Business
General
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. The mission 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 August 31, 2026, we had 58 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. 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 digital 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 partnership with Price Philanthropies Foundation, PriceSmart provides school supplies to approximately 140,000 children, and eye exams to 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 result in PriceSmart being a good investment for our stockholders.
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The number of warehouse clubs for each country or territory were as follows:
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, as well as our distribution centers in China. Our distribution centers, including two regional distribution centers, which are located in the United States (Miami) and Costa Rica, operate in conjunction with our local distribution centers in all of our multi-club markets throughout Latin America and the Caribbean. 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. Our operating segments are the United States, Central America, the Caribbean and Colombia.
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 December 2026.
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. The club will be built on a five-acre property and is anticipated to open in late 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.
In the first quarter of fiscal year 2027, we opened our third warehouse club in Jamaica, located in Montego Bay, approximately 100 miles west from the nearest club in the capital of Kingston and built on a five-acre property.
In addition to the club opened in Jamaica in the first quarter of fiscal year 2027, once these four new clubs are open, we will operate 63 warehouse clubs in total.
We continue to evaluate opportunities to expand our warehouse club operations in our existing markets and to assess potential entry in 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 warehouse clubs, subject to normal contingencies.
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Merchandising
A fundamental part of our value proposition is making available to our retail and business Members a selection of high-quality merchandise and services sourced within our region and from around the world, at lower prices than our competitors.
We offer merchandise and services in the following categories:
•Consumables, consisting primarily of groceries, cleaning supplies, and health and beauty aids, representing approximately 46% of our net merchandise sales;
•Fresh Foods, including meat, produce, deli, seafood and poultry, representing approximately 32% of our net merchandise sales;
•Hardlines, including electronics, large and small appliances, automotive, hardware, sporting goods, and seasonal products, representing approximately 11% of our net merchandise sales;
•Softlines, including clothing, domestics and home furnishing products, representing approximately 6% of our net merchandise sales;
•Food Service and Bakery, representing approximately 4% of our net merchandise sales; and
•Health Services, including optical, audiology and pharmacy, representing approximately 1% of our net merchandise sales. In the fourth quarter of fiscal year 2026, we discontinued our audiology services. At that time, we offered audiology services in 24 of our warehouse clubs.
Competitive Strengths
Low Operating Costs. Our club format is designed to move merchandise from suppliers to PriceSmart Members at a lower expense ratio than our competitors. We strive to achieve efficiencies in product distribution by minimizing the labor required to stock and display merchandise, limiting non-payroll operating expenses and maintaining low occupancy costs. For example, we offer a limited number of stock keeping units (SKUs) with large pack sizes, which allows us to keep shelves stocked with less labor cost than competitors that offer a greater number of SKUs. Our focus on lowering operating costs helps us provide better value and lower prices to our Members, which we believe helps generate Member loyalty and renewals, which in turn leads to increased sales.
Membership. We believe our membership concept provides a competitive advantage. Although the economies of the countries in which we operate vary significantly country-to-country, our membership across our markets tends to be concentrated in a desirable demographic with strong purchasing power. Data we can access about our Members not only provides better connectivity with our Members, but also enables us to identify and pursue additional opportunities to provide value for our Members. Membership has been a basic operating characteristic in the warehouse club industry, beginning over 50 years ago at Price Club, the first membership warehouse club business. We believe membership promotes Member loyalty, and membership fees contribute to our ability to operate our business on lower margins than conventional retailers and wholesalers. Membership fees were equal to approximately 1.8% of net merchandise sales and 38.6% of operating income in fiscal year 2026. Our Members can sign up for and renew their memberships online, which gives us another valuable digital touch point with them.
We continue to expand our product and services offerings to our Members. As of August 31, 2026, we had 55 optical locations and 26 pharmacy locations open. As of August 31, 2025, we had 55 optical locations, 22 pharmacies and 30 audiology locations open. During the fourth quarter of fiscal year 2026, the Company discontinued operations of its audiology department and reallocated the selling space to be used for merchandise. We continue to focus on services that best support our strategic objectives and growth initiatives. We believe that untapped opportunities exist to enhance the value of our membership further in various areas. We continue to explore opportunities to provide our Members with products and services that are particularly attractive to our unique membership base.
Business Members. Our product selection, larger pack sizes, and low prices appeal to both business and retail consumers. Business Members include a broad cross section of businesses such as restaurants, enterprises, and other businesses that purchase products for resale and supplies used in their businesses. Business Members include a broad cross section of businesses such as restaurants, institutions, and other businesses that purchase products for resale and supplies used in their businesses. These Business Members represent a significant source of sales and profit and provide purchasing volume that gives us better prices from our suppliers.
Worldwide Sourcing. Approximately 48.7% of our sales come from merchandise sourced in the U.S., Asia and Europe. We believe one of the primary advantages we have compared to most of our local competitors is our buying team, based both in the United States and in our markets, which sources merchandise from suppliers in the U.S. and around the world. Our buyers identify and purchase new and exciting items, including our own “Member’s Selection®” private label products. Many of these products are available only at PriceSmart in the markets in which we operate.
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New Executive Officers. PriceSmart appointed several new executive officers during fiscal year 2026.
David N. Price has served as Chief Executive Officer since September 2025 after joining the company in July 2017, and was elected as a director of the Company in February 2022. Mr. Price previously served as Executive Vice President and Chief Transformation Officer from August 2023 to August 2025, wherein he led several important areas, including Information Technology, PriceSmart.com, and Payment Solutions and Services. Prior to that role, he was the Executive Vice President and Chief of Staff to the Chairman of the Board and the Company’s Interim Chief Executive Officer, Robert Price, from December 2022 to July 2023. Between January 2022 and December 2022, Mr. Price served as Vice President for Environmental and Social Responsibility. Before that, between September 2020 and January 2022 he was Vice President for Omnichannel Initiatives and Environmental and Social Responsibility. From September 2018 to August 2020, Mr. Price worked as a Director in our E-Commerce division.
Shari G. White has served as Executive Vice President – Chief Merchandising Officer since June 2026 after joining the Company in January 2026 as Senior Vice President – Merchandising (U.S. Foods). Prior to joining the Company, Ms. White held various merchandising leadership roles at Petco, a pet specialty retailer, as well as merchandising and private label roles at Target, and marketing and brand management roles at Unilever. Ms. White holds an MBA from the Kellogg School of Management at Northwestern University and a Bachelor of Arts degree from the University of Michigan.
Shweta Bhatia has served as Executive Vice President – Chief Information Officer since July 2026 after joining the Company in May 2026 as Executive Vice President – Information Technology. Prior to joining the Company, she served as Executive Vice President & Chief Technology Officer for Advance Auto Parts, a North American automotive aftermarket parts provider, from January 2025 to August 2025. Previously Ms. Bhatia served as Senior Vice President of Technology for Dollar General Corporation, a North American chain of discount stores, from September 2022 to January 2025, Corporate Vice President, International Technology for Walmart, a large global retailer, from May 2019 to September 2022, and in several roles in the technology function at Kohl’s, a U.S. department store, from July 2007 to April 2019.
Continuous Improvement. The warehouse club industry has been operating for over 50 years, following the founding of Price Club in 1976. The world of merchandising has evolved during this period, particularly with respect to how technology impacts operational efficiencies and how consumers shop. We are leveraging technology to enhance our buying process to more efficiently source merchandise and procure products in a manner that meets current and ever-evolving Member preferences. We operate in multiple markets, many of which are relatively small, with different legal requirements, local buying opportunities, cultural norms, distribution and logistical challenges and Member preferences that require us to source the correct mix of local and imported merchandise. We believe that our future success is highly dependent on our capacity to continue to adapt and innovate to meet the needs of our current and future Members. We also have improved our inbound and outbound online communication channels, and we are using data analytics to better understand our Members’ evolving preferences.
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. During the first quarter of fiscal year 2027, we opened our third warehouse club in Jamaica, located in Montego Bay. We have acquired land for one new warehouse club and entered into leases for three new warehouse clubs. We have acquired land for two new warehouse clubs and entered into a land lease for a third new warehouse club. These warehouse clubs will be our fourth warehouse club in Jamaica, our eleventh warehouse club in Costa Rica, our eighth warehouse club in Guatemala, and our first warehouse club in Chile. Once these four new clubs are open, PriceSmart will operate 63 warehouse clubs in total. Once these three new clubs are open, PriceSmart will operate 59 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.
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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 began a parking lot expansion during the fourth quarter of fiscal year 2026 in Via Brasil, Panama. Additionally, in fiscal year 2027, we will begin the remodel of our Barbados club, a parking lot expansion of our Aranda club in Guatemala, and both a parking lot expansion and warehouse remodel of our Fraijanes club in Guatemala. 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, and in the third quarter of fiscal year 2026, we opened a distribution center in Colombia. In the first quarter of fiscal year 2026, we adapted our distribution center in Panama to handle cold merchandise and began operation of a new dry distribution center in Guatemala. We expect to open three distribution centers during fiscal year 2027, including PriceSmart-operated distribution centers in Jamaica and the Dominican Republic and a third-party-operated distribution center in Chile. We also expect to relocate and consolidate our cold regional distribution center currently located in a separate building 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 and affordably priced eyeglass frames. In select markets, we offer pharmacy services to further enrich the PriceSmart membership experience. In select markets, pharmacy services further enrich the PriceSmart membership experience. During the fourth quarter of fiscal year 2026, the Company ceased offering audiology services and reallocated the selling space to be used for merchandise.
We focus on growth of our membership base, Member renewal rates and average ticket as part of determining how Members see the value we offer. We focus on 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. Although Platinum Memberships are priced higher than our other tier, Members who choose Platinum pay more in order to get more, through exclusive benefits and enhanced rewards. 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. We believe Members can derive maximum value from their membership by becoming Platinum Members, particularly when pairing Platinum Membership with the PriceSmart co-branded credit card which offers an additional cash back incentive for Members with the card. 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 23.4% of our total membership base as of August 31, 2026, an increase from 17.9% as of August 31, 2025.
Additionally, our private-label products that we sell under the "Member’s Selection®" brand play a crucial role in enhancing the membership value proposition. We believe these products, available only at PriceSmart, deliver superior value while maintaining the high standards that our Members expect. Sourced with care and designed to meet daily needs, "Member’s Selection®" products range from pantry staples to household essentials, providing affordable alternatives without compromising on quality. In fiscal year 2026, our private label sales represented 26.9% of total merchandise sales, down from 28.1% for fiscal year 2025. This decline resulted from our decision to discontinue produce sales under the "Member’s Selection®" brand in the first quarter of fiscal year 2026 as we determined that these products no longer aligned with the value proposition we strive to deliver with our private-label products. Excluding sales of produce under the "Member’s Selection®" brand, our private-label sales, as a percentage of total net merchandise sales, increased by 20 basis points in fiscal year 2026 compared to fiscal year 2025.
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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 have continued to tailor our digital experience to try to exceed our Members expectations of how, when and where they want to shop. In fiscal year 2026, our digital channel sales reached $387.4 million, a 26.3% increase year-over-year, representing 6.7% of total net merchandise sales. We also continue to modernize our processes and technology across the organization. During fiscal year 2026, we made further progress in our migration to the RELEX supply chain and inventory management software platform. Implementation of the platform with respect to our U.S. vendor set up is substantially complete. However, implementation with respect to our local in-country vendor set up, as well as certain merchandise management components, is taking longer than originally anticipated. As a result, we no longer expect to complete the full implementation by the second quarter of fiscal year 2027 as previously anticipated, but we are continuing to work toward completing implementation as soon as practicable. We believe this upgraded technology will enhance employee productivity, improve inventory management, reduce spoilage and increase in‑stock availability in the long run.
In the first quarter of fiscal year 2027, we completed implementation of a new point-of-sale system, Elera, a Toshiba product, in Costa Rica, our second Spanish-speaking country in Central America. We are in the process of completing implementation in the Dominican Republic, our final country in the Caribbean. We are continuing the rollout of Elera in the remainder of our markets in Central America and Colombia. We believe that with this upgraded technology we can achieve faster checkout times, improve employee productivity and enhance our payment option capabilities. We believe with Elera we can achieve faster checkout times, improve employee productivity and enhance our payment option capabilities.
We completed the first phase of the implementation of Workday's human capital management system in the first quarter of fiscal year 2027. This technology upgrade is enhancing 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 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 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. Lastly, during fiscal year 2026, we will begin migrating 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 proprietary 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.
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Distribution Efficiency
We have always believed that distribution efficiency is fundamental for success in selling merchandise in our traditional clubs, and in today’s world, this principle holds especially true for purchases made online. Because PriceSmart sources merchandise from all over the world and especially from the United States, and because we are doing business in countries where infrastructure—roads and ports—is not as developed as in the United States, distribution efficiency is even more significant for us. Because PriceSmart sources merchandise from all over the world and especially in the United States, and because we are doing business in countries where infrastructure—roads and ports—is not as developed as in the United States, distribution efficiency is even more significant for us. Our ability to move products efficiently and in a timely manner from the suppliers to our Members is key to the cost structure of our business and, consequentially, to how low we can price our products for our Members.
Historically, our international suppliers and especially our U.S. suppliers have generally shipped their products to our Miami distribution facility, which operates within a Free Trade Zone, where the products are received and assigned to various containers for direct shipment to our locations. Regional and in-country suppliers have shipped directly to our locations. However, as our location sales volumes have grown, we have routed more products from international, regional and local suppliers to regional and local distribution centers.
In addition to our Miami distribution facility, we have a large regional distribution center located in the metropolitan area of San Jose, Costa Rica. This 165,000 square foot facility distributes both dry and refrigerated products primarily to PriceSmart clubs in Costa Rica and also ships some products to other clubs in Central America. In Panama City, Panama we have an approximately 120,000 square foot leased building that serves as a distribution center for our warehouse clubs in Panama. This distribution center operates in a similar way to our distribution center in Costa Rica. In the first quarter of fiscal year 2026, we adapted our distribution center in Panama to handle cold merchandise and began operations of a dry distribution center in Guatemala. In the second and third quarters of fiscal year 2026, we opened one distribution center in each of Trinidad and Colombia. Both properties are leased and are approximately 92,000 and 96,000 square feet, respectively. In some of our markets, we use distribution centers run by a third party. In the majority of our markets, we use distribution centers run by a third party. These distribution centers are part of our strategy to streamline a portion of our logistics network and, together with our plans to implement origin consolidation, we believe we will be able to lower freight costs, reduce transit time, and improve working capital by accelerating our sales conversion cycle. In addition, 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. The third-party distribution centers we opened in China during fiscal year 2026 allow us to store and consolidate merchandise by country of destination, improving efficiency and bypassing the United States and thereby avoiding U.S. tariffs on such merchandise.
PriceSmart's Membership Policy
We offer three types of memberships: Diamond, Business and Platinum.
The Diamond Membership is targeted at individuals and families. The annual fee for a Diamond Membership (entitling Members to two cards), in most markets as of August 31, 2026 was approximately $40 (excluding tax).
The Company currently offers the Platinum Membership program in all thirteen of its markets.The Company currently offers the Platinum Membership program in all thirteen of its markets, which entitles Members to two cards. Platinum Membership entitles Members to two cards. The annual fee for a Platinum Membership in most markets is approximately $80 (excluding tax). The Platinum Membership provides Members with a 2% rebate on most items, up to an annual maximum of $500. Platinum Members can apply this rebate to future purchases at the warehouse club at the end of the annual membership period. The rebate is issued annually to Platinum Members on March 1 and expires August 31. Any rebate amount not redeemed by August 31 is recognized as breakage revenue.
We promote our Business and Business Platinum Memberships by offering certain merchandise targeted primarily to businesses such as restaurants, hotels, convenience stores, offices and institutions. In most markets, our Business Members pay an annual membership fee of approximately $40, or approximately $80 for Business Platinum, for a primary and secondary membership card and approximately $10 or $15 for additional add-on membership cards based on membership type. Only businesses can qualify for a Business Membership, which permits up to three additional members.
Members can sign-up and renew their memberships as well as choose auto-renewal online.
We recognize membership income over the 12-month term of the membership. Deferred membership income was $50.6 million and $41.7 million as of August 31, 2026 and August 31, 2025, respectively. Our membership agreements provide that if our Members cancel their membership in the first 60 days, they will receive a full refund. After the initial 60-day period, Members may receive a refund for the prorated share of their remaining membership fee if they so request.
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Our Intellectual Property Rights
It is our policy to obtain appropriate intellectual property rights protection for trademarks by filing applications for registration of eligible trademarks with the U.S. Patent and Trademark Office and in certain foreign countries. We also rely on copyright and trade secret laws to protect our proprietary rights. We attempt to protect our trade secrets and other proprietary information through confidentiality and non-disclosure agreements with our employees, consultants and suppliers. There can be no assurance, however, that we will be successful in protecting our proprietary rights. While we believe that our trademarks, copyrights and other proprietary know-how have significant value, changing technology and the competitive marketplace make our future success dependent principally upon our employees’ technical competence and creative skills for continuing innovation.
Our Competition
Our international merchandising business competes with a wide range of international, regional, national and local retailers, and traditional wholesale distributors. We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability, services offered to customers, location, store hours, shopping convenience and the overall shopping experience we offer. Some of our competitors have greater resources, buying power and name recognition. In the countries in which we operate and in Chile, we do not currently face direct competition from U.S. membership warehouse club operators. However, we do face competition from various retail formats such as hypermarkets, supermarkets, convenience stores, cash and carry outlets, home improvement centers, electronic retailers and specialty stores, including those within Latin America that are owned and operated by large U.S. and international retailers, including Walmart, Inc. in Central America, Grupo Éxito in Colombia and Cencosud in South America. in Central America and Grupo Éxito in Colombia and Cencosud in South America. in Central America and Grupo Éxito in Colombia and Cencosud in South America. We have competed effectively in our markets in the past and expect to continue to do so in the future due to the unique nature of the membership warehouse club format. It is possible that additional warehouse club operators may decide to enter our markets and compete more directly with a similar warehouse club format. We also face competition from online retailers, such as Amazon Global and Mercado Libre in South America, and last-mile delivery services that serve our markets, and we expect that this type of competition will grow and intensify in the future. We also face competition from online retailers, such as AmazonGlobal and Mercado Libre in South America, and last-mile delivery services that serve our markets, and we expect that this type of competition will grow and intensify in the future. Lastly, we face competition from wholesalers selling food and/or general merchandise, which more directly competes with our business-to-business sales.
Human Capital
As of August 31, 2026, we had over 13,000 employees. Approximately 96% of our employees were employed outside of the United States, and about 1,800 employees were represented by labor unions.
Developing a Diverse Workforce Representative of Our Markets
Our ability to serve our Members and execute our business strategy depends on the talent, capabilities and engagement of our workforce. We seek to attract, develop and retain employees who reflect the cultural and social diversity of the countries in which we operate. By recruiting locally, we not only create meaningful opportunities in the communities where we do business, but also gain deeper insight into each country's operating environment and legal framework.
We are a “People First Company,” and we believe our employees are our greatest strength. We believe we provide our employees with competitive wages paired with comprehensive benefits programs that often include health and life insurance, as well as long-term savings and retirement plans, which support the financial security and overall well-being of our employees and their families. We believe we provide our employees with competitive wages paired with comprehensive benefits programs that often include health and life insurance, as well as long-term savings and retirement plans.
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Talent Development and Learning
We invest in learning, career development, internal mobility and succession planning to support the continued personal growth of our employees and the long-term strength of our leadership pipeline. Our talent development strategy is designed to give employees at all levels opportunities to build skills, pursue career growth and prepare for expanded responsibilities. During fiscal year 2026, we conducted more than 230 corporate talent development sessions, resulting in more than 8,800 participant engagements across the organization. These sessions addressed leadership development, technical and professional capabilities and employee well-being, and are designed to help employees develop the knowledge and skills needed to contribute to our operational performance and long-term business objectives.
We also continued to invest in developing women leaders through our Women@PriceSmart program, which provided career development and inclusion support through more than 70 sessions during fiscal year 2026. In addition, during fiscal year 2026, 25 high-performing women participated in our Women in Leadership Development Program. The intentional development of women leaders is designed to strengthen our succession pipeline and increase representation of women in senior leadership roles.
Engaging Our Team through Internal Events – Diversity & Inclusion
Across the countries in which we operate, we organize activities throughout the year intended to strengthen employee connection, recognition, and sense of belonging. These activities include birthday and work anniversary celebrations, employee recognition programs, volunteer initiatives, health and wellness events, and recreational activities.
During fiscal year 2026, our employees contributed approximately 17,000 volunteer hours, exceeding our annual goal by approximately 2,400 hours, supporting educational, community, environmental, vision care and food bank initiatives that builds camaraderie and promotes teamwork.
Communication and transparency are also important components of employee engagement. Regular town halls, local meetings, and digital communications provide opportunities to share business priorities, recognize milestones, celebrate achievements, and invite employee feedback. These forums help strengthen connections across our geographically dispersed workforce and allow leaders to remain closely connected to employee experiences throughout our markets.
Looking ahead, we intend to continue advancing these initiatives in alignment with our broader human capital and environmental and social responsibility strategies.Looking ahead, we will continue to expand these initiatives in line with our broader human capital and environmental and social responsibility strategies. We seek to cultivate an organizational culture that values diversity, encourages engagement, supports employee well-being, and provides employees with opportunities to develop and grow. In doing so, we aim to strengthen our workforce and enhance the value we provide to our Members, and local communities. In doing so, we believe we not only strengthen our workforce but also enhance the value we provide to our Members and local communities.
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.
Other Information
PriceSmart, Inc. was incorporated in the State of Delaware in 1994. Our principal executive offices are located at 9797 Aero Drive, Suite 100, San Diego, California 92123. Our telephone number is (858) 404-8800. Our website home page on the internet is www.pricesmart.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K.
Throughout this Annual Report, we refer to various trademarks and trade names that we use in our business. Other trademarks, service marks or trade names referred to in this Annual Report are the property of their respective owners.
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Available Information
The PriceSmart, Inc. investor relations website or internet address is https://investors.pricesmart.com. On this website we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, the proxy statements for our annual meetings of stockholders and the annual report to the stockholders as soon as reasonably practicable after electronically filing such material with or furnishing it to the U.S. Securities and Exchange Commission (SEC). Our SEC reports can be accessed through the investor relations section of our website under “SEC Filings.” Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. We will make available our annual report on Form 10-K and our annual proxy statement for the 2026 annual meeting of stockholders at the internet address https://materials.proxyvote.com/741511 as soon as reasonably practicable after electronically filing such material with or furnishing it to the SEC.
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Item 1A. Risk Factors
In evaluating the Company’s business, you should consider the following discussion of risk factors, in addition to other information contained in this report and in the Company’s other public filings with the U.S. Securities and Exchange Commission. Any such risks could materially and adversely affect our business, results of operations, cash flow, financial condition, liquidity and prospects. However, the risks described below are not the only risks facing us. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition, results of operations, cash flow and prospects.
Risks Associated with International Operations
Our financial performance is dependent on international operations, which exposes us to various risks.
Our international operations account for nearly all of our total revenues. Our financial performance is subject to risks inherent in operating and expanding our international membership warehouse club business, which include:
•changes in, and inconsistent enforcement of, laws and regulations, including those related to tariffs and taxes;
•the imposition of foreign and domestic governmental controls, including expropriation risks;
•natural disasters;
•trade restrictions, including import-export quotas and general restrictions on importation;
•difficulty and costs associated with international sales and the administration of an international merchandising business;
•crime and security concerns that can adversely affect the economies of the countries in which we operate and that require us to incur additional costs to provide additional security at our warehouse clubs;
•political instability, such as civil unrest in Panama during the third quarter of fiscal year 2025;
•product registration, permitting and regulatory compliance;
•volatility in foreign currency exchange rates;
•limitations on our ability to convert foreign currencies;
•general economic and business conditions;
•pandemics; and
•interruption of our supply chain.
These risks may result in disruption to our sales, banking transactions, operations and merchandise shipments, any of which could have a material adverse effect on our business and results of operations. Fluctuations in exchange rates for foreign currencies have and could continue to reduce the U.S. dollar value of sales, earnings and cash flows we receive from our non-U.S. markets, increase our supply costs (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets or otherwise adversely impact our business results or financial condition. 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. For more information about foreign currency exchange rate risks and risks associated with the lack of U.S. dollar availability, see "Financial and Accounting Risks – We are subject to volatility in foreign currency exchange rates and limits on our ability to convert foreign currencies into U.S. dollars."
Political and other factors in each of our markets may have significant effects on our business. For example, in the third quarter of fiscal year 2025, Panama experienced widespread protests and civil unrest against the government, driven primarily by opposition to reforms of the Social Security Fund pension system.
Risks Associated with Geopolitical and Environmental Conditions
Negative economic conditions created or exacerbated by inflation and higher interest rates could adversely impact our business in various respects.
A slowdown in the economies of one or more of the countries in which we operate or adverse changes in economic conditions affecting discretionary consumer spending could adversely affect consumer demand for the products we sell, change the mix of products we sell to a mix with a lower average gross margin, cause a slowdown in discretionary purchases of goods, adversely affect our net sales or result in slower inventory turnover and greater markdowns of inventory.
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Sales of food and groceries are especially sensitive to general changes in economic conditions. Economic conditions in our markets can be adversely affected by contractions in financial markets, increased governmental ownership or regulation of the economy, higher interest rates, high rates of inflation or deflation, higher fuel prices, increased barriers to entry such as higher tariffs and taxes, and other macroeconomic factors.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing goods in the volume typically available to us. For example, the ongoing global shortage of semiconductor chips driven by increased demand for artificial intelligence applications has affected, and may continue to affect, the availability and cost of components used in our equipment, which could result in delays or increased costs in procuring such equipment.
We are vulnerable to changes in political and economic conditions, including the effects of tariffs and/or international trade wars.
The U.S. tariff landscape remains volatile: the Supreme Court struck down IEEPA-based tariffs in February 2026, prompting the administration to shift to a temporary Section 122 surcharge, then new Section 301 duties (10%–12.5%) on goods from about 80 countries, while existing Section 232 and other Section 301 tariffs remain in effect. Given this shifting legal and statutory landscape, we cannot predict what tariffs, duties, or reciprocal measures will be in effect at any given time, how long they will remain in place, or how other countries will respond, and this uncertainty may affect our operations and our ability to supply merchandise at reasonable prices at our warehouse clubs. This might result in our having to increase prices to our Members to maintain our target margins or our not being able to obtain sufficient supplies of certain products, either of which could adversely affect our sales and profitability. Our Miami Distribution Center, which operates within a Free Trade Zone ("FTZ"), helps us avoid some of the economic risks posed by U.S. tariffs, but the use of the FTZ does not fully mitigate the impact of duties on items we purchase from U.S. vendors that are either imported finished goods or that contain significant amounts of imported inputs. We may also choose to re-route merchandise directly from the country of origin to the markets where we have warehouse clubs to bypass the impact of U.S. tariffs. In addition, our distribution centers in China allow us to ship merchandise directly from China to the countries in which we operate, bypassing the United States and thereby avoiding U.S. tariffs on such merchandise. However, if we are unable to mitigate tariff-related risks through supply chain adjustments, pricing strategies, or other measures, our financial performance and growth prospects could be negatively affected.
A decline in remittance flows to the countries where we operate could adversely impact our sales and profitability.
Remittances make up a significant portion of GDP in certain markets, including Guatemala, El Salvador, Nicaragua and Honduras. A remittance is a transfer of money by a foreign worker located in the United States to an individual or family in his or her home country. If deportations of foreign workers from the United States increase, either due to changes in immigration policy, enforcement actions, or legal challenges, it could result in fewer remittances, and the financial strain of relocation and reintegration of these workers in their home countries may further diminish their disposable income and ability to provide financial support. In addition, effective January 1, 2026, the U.S. government began imposing a 1% excise tax on remittance transfers sent from the United States to recipients in foreign countries where the sender funds the transfer with cash, a money order, a cashier's check, or other similar physical instrument, although transfers funded digitally through a bank account, debit card, or credit card are generally exempt. Implementing regulations remain proposed rather than final, so the tax's ultimate scope could still change. A decline in remittance flows, whether from reduced migration, increased deportations, or the new tax, could have a direct negative impact on the economies of several of the Latin American nations where we operate, which rely on remittances as a key source of income and poverty alleviation for millions of families, and could adversely affect consumer spending and our sales in the affected markets. If we were to lose the services of a key member of our management team or a significant number of key team members within a short period of time or if we fail to execute management transitions when members of the Company’s senior leadership retire or otherwise leave the Company, this could have a material adverse effect on our business, financial condition and results of operations.
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Our profitability is vulnerable to cost increases.
Future increases in costs, such as the cost of merchandise, wage and benefits costs, shipping rates, freight costs, fuel costs, utilities and other store occupancy costs, may reduce our profitability. For example, geopolitical tensions and the conflict involving Iran have contributed to volatility in global oil markets, and any further escalation could result in increased fuel and energy costs that adversely affect our operating expenses. We seek to adjust our product sales pricing, operate more efficiently, and increase our comparable store net sales to help offset inflation as well as currency rate changes, changes in tax rates or in the methods used to calculate or collect taxes on our sales or income and other factors that can increase costs. We might not be able to adjust prices, operate more efficiently or increase our comparable store net sales in the future to a great enough extent to offset increased costs. Substantial product cost increases and commodity price increases have and could continue to impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. Please see Part II. “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of the effect of currency rate changes, inflation and other economic factors on our operations.
We are exposed to significant weather events and other natural disaster risks that might not be adequately compensated by insurance, and we are susceptible to the long-term impacts of climate change.12Table of ContentsWe are exposed to significant weather events and other natural disaster risks that might not be adequately compensated by insurance, and we are susceptible to the long-term impacts of climate change.
Our operations are subject to volatile weather conditions and natural disasters, such as earthquakes, hurricanes and volcanic activity, which occur periodically in the regions in which our warehouse clubs and other facilities are located. Natural disasters could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or more clubs or distribution centers, limitations on store or club operating hours, the lack of an adequate work force in a market, the inability of customers and employees to reach our clubs, extended power outages and spoilage of our fresh and frozen food products, the unavailability of our digital platforms to our customers, disruption in the supply of products or increases in the costs of procuring products. For example, in October 2025, Hurricane Melissa brought catastrophic winds, flash flooding and storm surge to the island of Jamaica resulting in the closure of our Jamaica clubs for two days. Additionally, in August 2026, an earthquake impacted Colombia in the Cali and Pereira regions, which resulted in one of our clubs opening late and another club being closed for a day. The earthquake also caused damage to some inventory and necessitated repairs to the affected warehouse clubs. Future losses from business interruption may not be adequately compensated by insurance and could have a material adverse effect on our business, financial condition, and results of operations.
Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable. Physical risks include extreme storms that damage or destroy our buildings and inventory or interrupt our business operations and supply chain and temperature changes that increase the heating and cooling costs at clubs and distribution and fulfillment centers. We also may experience changes in energy and commodity prices driven by climate change as well as new regulatory requirements resulting in higher compliance and operational costs, including compliance with California's Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261), which require certain companies that do business in California, including PriceSmart, to report annually on their direct Scope 1 and 2 emissions and Scope 3 value chain emissions, and to prepare a report disclosing their climate-related financial risk and measures to reduce and adapt to that risk. We also may experience changes in energy and commodity prices driven by climate change as well as new regulatory requirements resulting in higher compliance and operational costs, including compliance with newly adopted legislation in California that will require certain companies that do business in California, including PriceSmart, to report annually on their direct Scope 1 and 2 emissions and Scope 3 value chain emissions, and to prepare a report disclosing their climate-related financial risk, as well as measures to reduce and adapt to that risk. SB 253's first reporting deadline has been postponed to November 10, 2026, and SB 261 enforcement is currently paused following an injunction from the U.S. Court of Appeals for the Ninth Circuit, pending further rulemaking and litigation. Because these requirements continue to evolve, we cannot predict their ultimate scope, timing, or cost of compliance. In addition, stakeholder expectations with respect to environmental and social matters continue to evolve. If our sustainability-related reporting, including reporting under these laws, is incomplete or fails to comply with regulatory requirements, or if we fail to meet stakeholder expectations, our business, reputation and relationships could be adversely affected.
Risks Associated with Our Members and Competition
We face significant competition.
Our international warehouse club business competes with exporters, importers, wholesalers, local retailers and trading companies in various international markets. Some of our competitors have greater resources, buying power and name recognition than we have. We also face competition from online retailers who serve our markets, and we expect that this type of competition will grow and intensify in the future.
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In the countries in which we operate and in Chile, we do not currently face direct competition from membership warehouse club operators. However, we do face competition from various retail formats such as hypermarkets, supermarkets, cash and carry outlets, home improvement centers, electronic retailers and specialty stores, including those within Latin America that are owned and operated by large U.S. and international retailers, including Walmart Inc. in Central America, Grupo Éxito in Colombia and Cencosud in South America. in Central America and Grupo Éxito in Colombia and Cencosud in South America. in Central America and Grupo Éxito in Colombia and Cencosud in South America. We have noted that certain retailers are making investments in upgrading their locations or opening new stores which may result in increased competition. Further, it is possible that other warehouse club operators may decide to enter our markets and compete more directly with us in a similar warehouse club format. Our ability to operate profitably in our markets, particularly small markets, may be adversely affected by the existence or entry of competing warehouse clubs or discount retailers.
We compete in a variety of ways, including the value and prices at which we sell our merchandise, merchandise selection and availability, services offered to Members, location, store hours, safety protocols and the shopping convenience and overall shopping experience we offer. We may be required to implement price reductions to remain competitive if any of our competitors reduce prices in any of our markets. In response to the increasing threat associated with online retailers, we are making technology investments, which may result in increases in the use of cash and reduced profitability in the near term.
Our sales could be adversely affected if one or more major international online retailers were to enter our markets or if other competitors were to offer a superior online experience.
Although online sales are currently a smaller proportion of total sales in our markets for the types of merchandise we offer than in the U.S., online shopping is becoming more prevalent in our markets as we and our competitors begin to offer more opportunities for online shopping and as delivery systems in our markets improve. While major international online retailers have not established a significant penetration in any of our markets, Amazon Global continues to expand its online marketplace and ships into most of our markets, and other regional online retailers, such as MercadoLibre, have continued to increase their presence in our markets. While major international online retailers have not established a significant penetration in any of our markets, AmazonGlobal continues to expand its online marketplace and ships into most of our markets, and other regional online retailers, such as MercadoLibre, have continued to increase their presence in our markets. We have a strategic partnership with Rappi in Colombia that allows our Members to use Rappi's platform to place online orders, but we do not have this arrangement with other online retailers. It is possible that Amazon will increase its presence or that other major international retailers, or smaller regional companies will increase their penetration of online shopping. In either case, sales through our online platform or warehouse clubs could be adversely affected.
Risks Associated with Our Merchandise Sourcing and Supply Chain
We face difficulties in the shipment of, and risks inherent in the importation of, merchandise to our warehouse clubs.
Our warehouse clubs typically import nearly half or more of the merchandise that they sell. This merchandise originates from various countries and is transported over long distances, over water and over land, which results in:
•substantial lead times needed between the procurement and delivery of products, thus complicating merchandising and inventory controls;
•the possible loss of products due to theft or potential damage to, or destruction of, ships or containers delivering goods;
•product markdowns due to the prohibitive cost of returning merchandise upon importation;
•product registration, tariffs, customs and shipping regulation issues in the locations we ship to and from;
•the possibility of business interruption due to transportation and port strikes;
•ocean freight and duty costs; and
•possible governmental restrictions on the importation of merchandise.
Civil unrest in certain countries in which we operate may adversely affect the flow of goods through those countries. For example, in the third quarter of fiscal year 2025, Panama experienced widespread protests and civil unrest against the government, driven primarily by opposition to reforms of the Social Security Fund pension system.
Moreover, each country in which we operate has different governmental rules and regulations regarding the importation of foreign products. Changes to the rules and regulations governing the importation of merchandise may result in additional delays, costs or barriers in our deliveries of products to our warehouse clubs or may affect the type of products we select to import. For example, in 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. These delays resulted in our being unable to import merchandise into Nicaragua for several weeks in June 2023.
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In addition, only a limited number of transportation companies service our regions. The inability or failure of one or more key transportation companies to provide transportation services to us, any collusion among the transportation companies regarding shipping prices or terms, changes in the regulations that govern shipping tariffs or the importation of products, or any other disruption to our ability to import our merchandise could have a material adverse effect on our business and results of operations.
Any significant interruption in the operations of our distribution centers or supply chain network could disrupt our ability to provide adequate supplies of merchandise to our warehouse clubs.
We rely on our Miami and Costa Rica regional distribution centers, China distribution centers and several smaller local distribution centers to supply merchandise to our warehouse clubs.We rely on our Miami distribution center, our regional distribution center and several smaller local distribution centers to supply merchandise to our warehouse clubs. Any interruption or failure in the operation of our distribution centers, such as disruptions due to fire, severe weather or other catastrophic events, cyberattacks, network or power outages, labor shortages or disagreements, shipping or infrastructure problems, food safety concerns, integration of new distribution centers, inability of our new distribution centers to perform as expected or contractual disputes with third-party service providers could result in increased expenses and adversely impact our ability to distribute products to our warehouse clubs. Such interruptions could result in lost sales and a loss of Member loyalty, as well as increased costs from third-party service providers.
In addition, unexpected delays in deliveries from vendors or increases in distribution and transportation costs (including through increased labor or fuel costs) could have a material adverse effect on our financial condition, results of operations and cash flows. For example, geopolitical conflict affecting the Strait of Hormuz and continued disruptions in the Suez Canal and Red Sea have led to the rerouting of significant volumes of global trade around the Cape of Good Hope, resulting in longer transit times, higher freight and fuel costs, and reduced shipping capacity. Continued or escalating disruption at these key maritime transit routes could further increase our distribution and transportation costs or delay deliveries of merchandise. Labor shortages, work stoppages or other disruptions affecting our supply chain also could negatively affect our business.
We face the possibility of operational interruptions related to union work stoppages.
We currently have unionized employees in three of our markets (Trinidad, Barbados and Panama), and 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 operations because of the U.S. dockworkers strike in October 2024. A lengthy work stoppage or significant limitation on operations could have a substantial adverse effect on our financial condition and results of operations.
Geopolitical conflict involving Iran and instability in the Strait of Hormuz could disrupt global commodity markets and our supply chain.
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 ongoing conflict involving Iran, the United States, and Israel, which began in February 2026 and has included repeated cycles of ceasefires, breakdowns, and renewed military action. The conflict has disrupted commercial shipping through the Strait of Hormuz, a critical corridor for global oil and gas transit, with maritime traffic at times dropping by nearly 95% compared to pre-crisis levels, and diplomatic efforts to reach a durable resolution have so far been unsuccessful. Continued or escalating conflict could result in sustained increases in global commodity prices, particularly fuel and energy costs, and could cause shipping and logistics disruptions. As a result, we may experience increases in transportation costs or delays in the shipment or delivery of our products, either of which could adversely affect our sales, margins, and financial results. We cannot predict how long this conflict will continue or the extent of its ultimate impact on our business.
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Risks Associated with Our Business Strategy and Operations
Any failure by us to manage our widely dispersed operations could adversely affect our business.
As of August 31, 2026, we had 58 warehouse clubs in operation, located in 12 countries and one U.S. territory (ten each in in Colombia and Costa Rica; seven each in Panama and Guatemala; six in Dominican Republic; four each in Trinidad and El Salvador; three in Honduras; two each in Nicaragua and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands). We need to continually evaluate the adequacy of our existing infrastructure, systems and procedures, financial controls, operating controls, inventory, and safety controls and make upgrades from time to time. Moreover, we are required to continually analyze the sufficiency of our inventory distribution channels and systems and may require additional or expanded facilities in order to support our operations. We may not adequately anticipate all the changing demands that will be imposed on these systems. Any failure of our systems or our inability to effectively update our internal systems or procedures as required could have a material adverse effect on our business, financial condition and results of operations.
We depend on maintaining and expanding our membership base, and any harm to our relationship with our Members could have a material adverse effect on our business, net sales and results of operations.
Membership has been a basic operating characteristic in the warehouse club industry, beginning over 50 years ago at Price Club, the first membership warehouse club business. We believe membership promotes Member loyalty, and membership fees contribute to our ability to operate our business on lower margins than conventional retailers and wholesalers. The extent to which we achieve growth in our membership base and sustain high renewal rates materially influences our profitability. Further, our net sales are directly affected by the number of membership cardholders, the frequency with which our Members shop at our clubs and online and the amount they spend, which means the loyalty and enthusiasm of our Members directly impacts our net sales and operating income. Accordingly, anything that would harm our relationship with our existing Members or our ability to continue to attract new Members could materially adversely affect our net sales, membership fee income and results of operations.
Factors that could adversely affect our relationship with our Members include: our failure to provide good value to Members on the goods and services we offer; our failure to provide the expected quality of merchandise; our failure to offer the right mix of merchandise; events that harm our reputation or the reputation of our “Member’s Selection®” brand; our failure to provide convenient online and in-store shopping; increases to our membership fees; and increased competition.
We might not identify in a timely manner or effectively respond to changes in consumer preferences for merchandise, which could adversely affect our relationship with Members, demand for our products and market share.
Our success depends, in part, on our ability to identify and respond to trends in demographics and changes in consumer preferences for merchandise. It is difficult to consistently and successfully predict the products and services our Members will demand. Failure to timely identify or respond effectively to changing consumer tastes, preferences or spending patterns could adversely affect our relationship with our Members, the demand for our products and our market share. If we are not successful at predicting sales trends and adjusting purchases accordingly, we might have too much or too little inventory of certain products. If we buy too much of a product, we might be required to reduce prices or otherwise liquidate the excess inventory, which could have an adverse effect on margins (net sales less merchandise costs) and operating income. For example, we took significant markdowns in the third quarter of fiscal year 2022 when we had excessive amounts of slow-moving inventory because of changing consumer preferences as Members began to resume buying patterns similar to our pre-pandemic sales mix. If we do not have sufficient quantities of a popular product, we might lose sales and profits we otherwise could have made. As our customers expect a more personalized experience, our ability to collect, use, retain, and protect relevant customer data is important to our ability to effectively meet their expectations. Our ability to collect and use that data, however, is subject to a number of external factors, including the impact of legislation or regulations governing data privacy, data-driven technologies such as artificial intelligence, and data security, as well as customer expectations around data collection, retention, and use.
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Future sales growth depends, in part, on our ability to successfully open new warehouse clubs in our existing and new markets.
Sales growth at existing warehouse clubs can be impacted by, among other things, the physical limitations of the warehouse clubs, which restrict the amount of merchandise that can be safely stored and displayed in the warehouse clubs and the number of Members that can be accommodated during business hours. As a result, sales growth will depend, in part, upon our acquiring suitable sites for additional warehouse clubs. Land for purchase or lease, or buildings to be leased, in the size and locations in those markets that would be suitable for new PriceSmart warehouse clubs may be limited in number or not be available or financially feasible. In this regard, we compete with other retailers and businesses for suitable locations. Additionally, local land use, environmental and other regulations restricting the construction and operation of our warehouse clubs and distribution facilities, as well as local community actions opposed to the location of our warehouse clubs or distribution facilities at specific sites, may impact our ability to find suitable locations, and increase the cost of constructing, leasing and operating our warehouse clubs and distribution facilities. We have experienced these limitations in Colombia, primarily in Bogotá, and in some of our other existing markets, which has negatively affected our growth rates in those markets. Limitations on the availability of appropriate sites for new warehouse clubs and distribution facilities in the areas targeted by us could have a material adverse effect on the future growth of PriceSmart.
New warehouse club openings may negatively impact our financial results in the short-term due to the effect of opening costs and lower sales and contribution to overall profitability during the initial period following opening. New clubs typically build their sales volume and their customer base over time and, as a result, generally have lower margins and higher operating expenses, as a percentage of net sales, than our more mature clubs. New clubs may not achieve sustained sales and operating levels consistent with our more mature store base on a timely basis or at all. In addition, in some cases, we have more than one warehouse club in a single metropolitan area, and we may open new warehouse clubs in certain areas where we already have warehouse clubs. A new warehouse club in an area already served by existing warehouse clubs may draw Members away from existing warehouse clubs and adversely affect comparable store sales performance. We operate in relatively small markets. Given the growth of our sales over the past few years, market saturation could impact the rate of future sales growth.
We intend to open warehouse clubs in new markets in the future, including Chile. The risks associated with entering a new market include potential difficulties in attracting Members due to a lack of familiarity with us and our lack of familiarity with local Member preferences. In addition, entry into new markets may bring us into competition with new competitors or with existing competitors with a large, established market presence. As a result, our new warehouse clubs might not be successful in new markets.
Failure to grow our e-commerce business through the integration of physical and digital retail channels and the investments we are making to develop a robust e-commerce platform could materially adversely affect our market position, net sales and/or financial performance.
The retail business is quickly evolving, and consumers in our markets are increasingly embracing shopping online and through mobile commerce applications.The retail business is quickly evolving, and consumers are increasingly embracing shopping online and through mobile commerce applications. As a result, the portion of total consumer expenditures with all retailers and wholesale clubs occurring online and through mobile commerce applications is increasing, and the pace of this increase could accelerate. As demonstrated by our launch of PriceSmart.com and our mobile app, we are increasing our investments in e-commerce, technology and other customer initiatives. The success of our e-commerce initiative continues to depend in large measure on our ability to build and deliver a seamless shopping experience across the physical and digital retail channels. Operating an e-commerce platform and fulfillment of online orders is a complex undertaking, and there is no assurance that the resources we have applied to this effort will result in increased revenues or improved operating performance. If we do not maintain a successful and relevant omni-channel experience for our Members, our ability to compete and our results of operations could be adversely affected. In addition, a greater concentration of e-commerce sales could result in a reduction in the amount of traffic in our warehouse clubs, which would, in turn, reduce the opportunities for cross-club sales of merchandise that such traffic creates and could reduce our sales within our clubs, materially affecting the financial performance of the physical retail side of our operations. In addition, our investments in e-commerce and technology initiatives will adversely impact our short-term financial performance, and our failure to realize the benefits of these investments may adversely impact our financial performance over the longer term.
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We are subject to risks associated with our dependence on third-party suppliers and service providers, and we have no assurances of continued supply, pricing or access to new merchandise.
We have important ongoing relationships with various third-party suppliers of services and merchandise. These include, but are not limited to, local, regional, and international merchandise suppliers, information technology suppliers, equipment suppliers, financial institutions, credit card issuers and processors, and lessors. Significant changes in the relationships or the agreements that govern the terms through which business is conducted could have a material adverse effect on our business, financial condition and results of operations. We have no assurances of continued supply, pricing or access to new merchandise, and any supplier could at any time change the terms upon which it sells to us or discontinue selling to us. One of our significant suppliers operates a warehouse club business and may in the future seek to compete with us in some of our markets. In addition, the manner in which we acquire merchandise, either directly from the supplier’s parent company or through a local subsidiary or distributor, is subject to change from time to time based on changes initiated by the supplier and for reasons beyond our control. Significant changes or disruptions in how we acquire merchandise from these suppliers could negatively affect our access to such merchandise, as well as the cost of merchandise to us and hence our Members, which could have a material adverse effect on our business and results of operations.
Our failure to maintain our brand and reputation could adversely affect our results of operations.
Our success depends on our ability to continue to preserve and enhance our brand and reputation. Damage to the PriceSmart brand could adversely impact merchandise sales, diminish Member trust, reduce Member renewal rates and impair our ability to add new Members. A failure to maintain and enhance our reputation also could lead to loss of new opportunities or employee retention and recruiting difficulties. Negative incidents, such as a data breach or product recall, can quickly erode trust and confidence, particularly if they result in adverse publicity, governmental investigations or litigation. In particular, the propagation of negative publicity on social media, whether merited or not, can have a damaging effect on our business in one or more markets. In addition, we sell many products under our private label “Member’s Selection®” brand. If we do not maintain consistent product quality of our “Member’s Selection®” products, which generally carry higher margins than national brand products carried in our warehouse clubs, our net warehouse sales and gross margin results could be adversely affected and Member loyalty could be harmed. Also, accidents or personal injuries that sometimes occur in our facilities, such as a Member slipping and falling or injuries caused by product falling from a rack, could result in negative publicity or otherwise damage the Company's reputation.
We face the risk of exposure to product liability claims, a product recall and adverse publicity.
If our merchandise, such as food and prepared food products for human consumption, medication, children's products, pet products and durable goods, do not meet or are perceived not to meet applicable safety standards or our Members’ expectations regarding safety, we could experience lost sales, increased costs, litigation or reputational harm. The sale of these items exposes us to the risk of product liability claims, a product recall and adverse publicity. The sale of these items involves the risk of illness or injury to our Members. Such illnesses or injuries could result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, manufacturing, storage, handling and transportation phases, or faulty design. In particular, we may inadvertently redistribute food products or prepare food products that are contaminated, which may result in illness, injury or death if the contaminants are not eliminated by processing at the food service or consumer level.
We generally seek contractual indemnification and proof of insurance from our major suppliers and carry product liability insurance for all products we sell to or package for our Members. However, if we do not have adequate insurance or contractual indemnification available, product liability claims relating to products that are contaminated or otherwise harmful could have a material adverse effect on our ability to successfully market our products and on our financial condition and results of operations. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that our products caused illness or injury could have a material adverse effect on our reputation with existing and potential Members and on our business, financial condition and results of operations.
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Business acquisitions or divestitures and new business initiatives could adversely impact the Company’s performance.
From time to time, we may consider acquisition opportunities and new business initiatives. Acquisitions and new business initiatives involve certain inherent risks, including the failure to retain key personnel from an acquired business; undisclosed or subsequently arising liabilities or accounting, internal control, regulatory or compliance issues associated with an acquired business; challenges in the successful integration of operations, and alignment of standards, policies and systems; future developments that may impair the value of our purchased goodwill or intangible assets; and the potential diversion of management resources from existing operations to respond to unforeseen issues arising in the context of the integration of a new business or initiative.
Failure to attract and retain qualified employees could materially adversely affect our financial performance.20Table of ContentsFailure to attract and retain qualified employees could materially adversely affect our financial performance.
Our success depends, to a significant degree, on the continued contributions of members of our senior management and other key operations, merchandising and administrative personnel. If we were to lose the services of a key member of our management team or a significant number of key team members within a short period of time or if we fail to execute management transitions when members of the Company’s senior leadership retire or otherwise leave the Company, this could have a material adverse effect on our business, financial condition and results of operations. In addition, any such departure could be viewed in a negative light by investors and analysts, which may cause our stock price to decline. We must attract, develop and retain a growing number of qualified employees, while controlling related labor costs and maintaining our core values. We compete with other retail and non-retail businesses for these employees and invest significant resources in training and motivating them. There is no assurance that we will be able to adequately attract, develop and retain highly qualified employees in the future.
Risks Associated with Technology, Data Security and Artificial Intelligence
We rely extensively on computer systems to process transactions, summarize results and manage our business. Failure to adequately maintain our systems, or disruptions to them, could harm our business and adversely affect our results of operations.
Given the high volume of individual transactions we process each year, we seek to maintain the uninterrupted operation of our business-critical computer systems. Our computer systems, including back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events such as fires, earthquakes, tornadoes and hurricanes, and errors by our employees. Our information systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. If our computer systems and backup systems are damaged or fail to function properly, we may have to make significant investments to repair or replace them, and we may suffer interruptions in our operations in the interim. Any material interruption in our computer systems could have a material adverse effect on our business or results of operations.
We depend on third-party service providers to support transaction and payment processing, data security and other technology services. Any interruption in the operations of these service providers could, in turn, have a material adverse effect on us. For example, in 2022, a third-party provider supporting our point-of-sale system became insolvent, requiring us to quickly develop and implement short-term workarounds and delaying our migration to a cloud-based system integrating in-store and online functionality.
From time to time, we make technology investments to improve or replace key information processes and systems that support our business. The risk of system disruption increases when changes are made to these processes and systems. Targeting the wrong opportunities, failing to make the right investments, or making an investment commitment significantly above or below our needs could result in the loss of our competitive position and adversely impact our financial condition and results of operations. Additionally, the potential problems and interruptions associated with implementing technology initiatives could disrupt or reduce the efficiency of our operations in the short term. These initiatives might not deliver the anticipated benefits, or they may provide them on a delayed schedule or at a higher cost. For example, we are in the midst of migrating to the Toshiba Elera point-of-sale system and if we cannot successfully implement this product, or experience significant delays, it may jeopardize our operations or result in additional costs.
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Not updating our systems on a timely basis could leave us at a disadvantage relative to our competitors. We will be at a competitive disadvantage if, over time, our competitors are more effective than we are in utilizing and integrating rapidly evolving technologies, including artificial intelligence and machine learning. Our current ERP (Enterprise Resource Planning) system is no longer supported by its developer, which could increase the risk of a disruption. In addition, newer versions of some of our other internal systems offered by the vendors offer greater functionality and reliability that we have not yet implemented. We also continue to rely on other systems we developed internally a number of years ago, and we are in the process of migrating these systems to more industry-standard technologies. Several years ago, we began evaluating options to replace our ERP system. However, we intentionally deferred this project as originally contemplated in order to more thoroughly assess our overall IT landscape. We decided that the risk, cost, and implementation cycle time of a holistic ERP system was not a sound strategy. We instead turned our focus to a coordinated program of upgrading packaged applications and replacing in-house applications with packaged applications designed to improve our capabilities with less risk, and in less time. We are continuing to work on the implementation of a packaged forecast and replenishment system (RELEX) for buying and upgrades to our packaged WMS (Warehouse Management System), TMS (Transportation Management System) and GTM (Global Trade Management) for logistics. We believe these upgrades plus several other projects, such as our point-of-sale system replacement and e-commerce/mobile application upgrade, will modernize our key revenue-generating systems and reduce the risk of disruption. However, if we are not successful with this strategy, we might be required to operate with obsolete technology and face the risk of system disruption, putting us at a disadvantage relative to our competitors.
We are developing our MOT, a unified proprietary platform intended to consolidate Member identity, transaction history, and interaction data into a single system of record across all channels and geographies. We may experience delays, operational disruptions, or may not achieve the expected improvements in Member experience, efficiency, or data insights. Any of these outcomes could adversely affect our Member retention, results of operations, and financial condition.
We have also recently implemented an integrated human resources information system for personnel, timekeeping, payroll, and other HR functions to replace older applications that rely mostly on internal support. These initiatives might not provide the anticipated benefits, may provide them on a delayed schedule or at a higher cost or may cause disruptions in our business. These initiatives might not deliver the anticipated benefits, may do so on a delayed schedule or at a higher cost, or may disrupt our business.
Any failure by us to maintain the security of the information we hold relating to our Company, Members, employees, and vendors, could damage our reputation with them, disrupt our operations, cause us to incur substantial additional costs, expose us to litigation, and materially affect our operating results.18Table of ContentsAny failure by us to maintain the security of the information we hold relating to our Company, Members, employees, and vendors, could damage our reputation with them, disrupt our operations, cause us to incur substantial additional costs, expose us to litigation, and materially affect our operating results.
We receive, retain, and transmit personal information about our Members and employees, and we entrust that information to third-party business associates, including cloud service-providers that perform activities for us. In addition, we and our third-party service providers store and maintain health-related personal information, pharmacy, and medical records in connection with our health and wellness and pharmacy businesses. We also utilize third-party service providers for a variety of reasons, including, without limitation, cloud services, back-office support, and other functions and our online operations depend on the secure transmission of confidential information over public networks, including information used for cashless payments. Each year, computer hackers, cyber terrorists, and others make numerous attempts to access the information stored in companies’ information systems. Additionally, the rapid evolution of artificial intelligence ("AI") and the integration of machine learning technologies into our internal systems may intensify our cybersecurity risks and create new risks to our business, operations, and financial condition. Cybercriminals may also leverage generative AI and other emerging technologies to develop increasingly sophisticated methods of conducting cyberattacks, which could further increase our exposure to cybersecurity threats.
The use of data by our business and our business associates is regulated in all our operating countries. Privacy and information-security laws and regulations change, and compliance with them may result in increased costs due to, among other things, system changes and the development of new processes. If we or those with whom we share information fail to comply with these laws and regulations, we could face legal risk as a result of non-compliance.
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We or our third-party service providers may be unable to anticipate one or more of the rapidly evolving and increasingly sophisticated means by which computer hackers, cyber terrorists and others may attempt to defeat our security measures or those of our third-party service providers and breach our or our third-party service providers' information systems. Such cybersecurity threats may include phishing and social-engineering schemes, ransomware and other malware, cyber-extortion, denial-of-service attacks, exploitation of known or previously unknown vulnerabilities, and attempts to gain unauthorized access to our systems or data. Error or malfeasance by our employees or consultants, faulty password management, or other irregularities may result in the defeat of our or our third-party service providers' security measures and a breach of our or our third-party service providers` information systems (whether digital or otherwise). As a result, one or more hackers, cyber terrorists or others might obtain the personal information of Members, employees and vendors that we hold or to which our third-party service providers have access, and we or our third-party service providers may not discover any security breach and loss of information for a significant period of time after the security breach occurs. Our logging capabilities, or those of third parties, are also not always complete or sufficiently detailed, affecting our ability to fully investigate and understand the scope of security events. We, or one of our third-party service providers may also be subject to a ransomware or cyber-extortion attack, which could significantly disrupt our operations. In the enterprise context, ransomware attacks involve restricting access to computer systems or vital data until a ransom is paid.
Any breach of our security measures or those of our third-party service providers and loss of our confidential information, or any failure by us to comply with applicable privacy and information security laws and regulations, could cause us to incur significant costs to protect any Members and/or employees whose personal data was compromised to restore Member and employee confidence in us and to make changes to our information systems and administrative processes to address security issues and compliance with applicable laws and regulations.
In addition, such events could have a material adverse effect on our reputation with our Members, employees, vendors and stockholders, as well as our results of operations, financial condition and liquidity; could result in the release to the public of confidential information about our operations and financial condition and performance; and could result in litigation against us or the imposition of penalties or liabilities. Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to further upgrade the security measures that we employ to guard such important personal information against cyberattacks and other attempts to access such information, resulting in a disruption of our operations.
We regularly reassess these risks in response to the evolving cybersecurity landscape, and any significant changes are promptly communicated to executive management and our Board or Audit Committee. There are no assurances that our cybersecurity risk management program, policies, controls, or procedures will be fully implemented, complied with, or effectively protect our systems and information. Despite our security measures, there can be no assurance that we, or third parties with whom we interact, will not experience a cybersecurity incident in the future that materially affects us.
Our use of artificial intelligence in our business or more rapid adoption of artificial intelligence by our competitors could result in harm to our brand and adversely affect our results of operations.
Some of our computer systems currently, and might in the future, incorporate artificial intelligence solutions, including machine learning and generative AI tools that collect, aggregate, and analyze data to assist in the operations of our business.Some of our computer systems currently, and might in the future, incorporate artificial intelligence (“AI”) solutions, including machine learning and generative AI tools that collect, aggregate, and analyze data to assist in the operations of our business. These applications may become increasingly important in our operations over time. This emerging technology presents a number of risks inherent in its use. For example, AI algorithms are based on machine learning and predictive analytics, which can create accuracy issues, unintended biases, and discriminatory outcomes that could harm our brand, reputation, business, or Members. Additionally, any investments we make in AI technologies might not actually make us more efficient. Our competitors or other third parties may incorporate AI into their businesses more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our results of operations. The technologies underlying AI are rapidly developing, and it is not possible to predict all of the legal, operational or technological risks related to the use of AI. While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or limit our ability to incorporate certain AI capabilities into our business.
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Any failure by us to protect our trademarks, trade secrets and other intellectual property, or our actual or alleged infringement of other companies’ intellectual property, could harm our business.
We depend on our brands, such as the PriceSmart name and logo, to attract Members and make sales of goods and services. We monitor and protect against activities that might infringe, dilute or otherwise violate our trademarks and other intellectual property, and rely on trademark and other laws of the United States and other countries in which we operate. We also rely on copyright, trade secret and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our trademarks, trade names, proprietary information, technologies, and processes. Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights, and we may be unable to broadly enforce all of our trademarks. Any unauthorized use of our trademarks or other intellectual property could harm our competitive position and have a material adverse effect on our financial condition, cash flows or results of operations.
Additionally, we cannot be certain that we do not, or will not in the future, infringe on the intellectual property rights of third parties. Any intellectual property infringement claims against us could be costly, time-consuming and harmful to our reputation or could result in injunctive or other equitable relief that may require us to make changes to our business, any of which could have a material adverse effect on our financial condition, cash flows or results of operations.
We may need to engage in litigation or similar activities to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of proprietary rights of others. Any such litigation, whether or not resolved in our favor, could require us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations.
We are subject to payment-related risks, including risks to the security of payment card information.
We accept payments using an increasing variety of methods, including cash, checks, wire transfers, our co-branded credit cards and a variety of other credit and debit cards. Our operations, like those of most retailers, require the transmission of information associated with cashless payments. As we offer new payment options to our Members, we may be subject to additional rules, regulations and compliance requirements, along with the risk of higher fraud losses. For certain payment methods, we pay interchange and other related card acceptance fees, along with additional transaction processing fees. We rely on third parties to provide secure and reliable payment transaction processing services, including the processing of credit and debit cards, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to fee increases by these service providers.
We are also subject to payment card association and network operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change over time. If we fail to comply with these rules or transaction processing requirements, we may not be able to accept certain payment methods. In addition, if our internal systems are breached or compromised, we may be liable for banks’ compromised card re-issuance costs, we may be subject to fines and higher transaction fees and lose our ability to accept credit and/or debit card payments from our Members, and our business and operating results could be adversely affected. Failures or disruptions in data communication and transfer services also could significantly impact our ability to transact payments to vendors and process credit and debit card transactions. Lastly, we or our customers may experience “spoofing” transactions, particularly with respect to wire transfers, which could cause us to make payments to impostor vendors or result in our not receiving timely payment from customers for merchandise we have sold.
Risks Associated with Legal and General Litigation
We face compliance risks related to our international operations.
In the United States and within the international markets where we operate, there are multiple laws and regulations that relate to our business and operations. These laws and regulations are subject to change, and any failure by us to effectively manage our operations and reporting obligations as required by applicable laws and regulations can result in our incurring significant legal costs and fines as well as disruptions to our business and operations. These laws and regulations are subject to change, and any failure by us to effectively manage our operations and reporting obligations as required by the various laws and regulations can result in our incurring significant legal costs and fines as well as disruptions to our business and operations. Such failure could also result in investors’ loss of confidence in us, which could have a material adverse effect on our stock price.
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In foreign countries in which we have operations, a risk exists that our employees, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act and the laws and regulations of other countries. We maintain policies prohibiting such business practices and have in place global anti-corruption compliance programs designed to ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our employees, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies or circumvent our compliance programs and, by doing so, violate such laws and regulations. Any violations of anti-corruption laws, even if prohibited by our internal policies, could adversely affect our reputation, business, or financial performance.
Employment-related claims and proceedings could materially impact our business, reputation, financial condition and results of operations.
Employees, former employees and job applicants may bring lawsuits or other claims against us regarding injury, hostile work environment, discrimination, wage and hour disputes, harassment or other employment issues. We may also be subject to investigations, audits and other similar actions by employment and other governmental authorities. In addition, we could be exposed to class-action claims or governmental enforcement actions arising from employment practices. Because we employ a large workforce in many countries, we are subject to numerous and differing employment and labor laws. New or revised interpretations of these laws could increase our exposure to such claims and our labor costs.
The outcome of litigation is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts. While we maintain insurance for a variety of potential claims and losses, our insurance coverage may not be sufficient, and any related insurance proceeds may not be paid timely. Regardless of their merit or outcome, employment-related claims could result in substantial costs, divert management’s attention and resources, harm our reputation and adversely affect our ability to retain qualified employees. Any of these effects could materially adversely affect our business, financial condition and results of operations.
Risks Associated with Tax and Accounting
We could be subject to additional tax liabilities or subject to reserves on the recoverability of tax receivables.
We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our consolidated provision for income taxes. In the course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We may recognize additional tax expense and be subject to additional tax liabilities due to changes in tax laws, regulations, and administrative practices and principles, including changes to the global tax framework, in various jurisdictions and any changes we make to our intercompany transaction structure. In recent years, multiple domestic and international tax proposals were proposed to impose greater tax burdens on large multinational enterprises. For example, the Organisation for Economic Co-operation and Development continues to advance proposals or guidance in international taxation, including the establishment of a global minimum tax.
We compute our income tax based on enacted tax rates in the countries in which we operate. As the tax rates vary among countries, a change in earnings attributable to the various jurisdictions in which we operate could result in an unfavorable change in our overall taxes. 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"). As a result, the Company has made and may continue to make income tax payments substantially in excess of those it would expect to pay based on taxable income, and the rules that allow the Company to obtain refunds or to offset payments that are substantially in excess of taxes payable based on taxable income are unclear or complex.
For example, in fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute in one country. Of this amount, $1.0 million is a reserve we recorded against an income tax receivable for one of the tax years for which we sought a refund and the remaining $6.2 million for the unpaid years of the dispute in which we made tax payments using the original computation based on taxable income. As part of the settlement, we will pay the minimum tax on a go-forward basis.
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Changes in tax laws, including the One Big Beautiful Bill Act, could adversely affect our effective tax rate and results of operations.
In July 2025, the United States enacted significant tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which makes permanent many provisions of the Tax Cuts and Jobs Act of 2017 and introduces additional changes affecting individuals and businesses, including continuation of the 21% federal corporate income tax rate, enhancements to bonus depreciation and expensing rules, and modifications to certain international tax provisions such as the renaming and restructuring of the Global Intangible Low-Taxed Income ("GILTI") regime as Net CFC Tested Income ("NCTI") and the Foreign-Derived Intangible Income ("FDII") deduction as Foreign-Derived Deduction Eligible Income ("FDDEI"), effective for tax years beginning after December 31, 2025, which corresponds to our fiscal year 2027. We have reviewed the OBBBA and continue to monitor and model its potential impact on our operations and effective tax rate, and based on our analysis of the Company's operating profile, the OBBBA did not have a material effect on our fiscal year 2026 results; however, this conclusion is based on current guidance and our present understanding of the law, which remains subject to further interpretation, implementing regulations, and potential legislative or regulatory changes, and our future results could differ from our current expectations if such developments occur or if our operating profile changes.
Changes in California tax law on software could increase our operating costs.
We rely on third-party software and cloud-based services to support our corporate, IT and e-commerce operations, some of which is procured through our San Diego, California headquarters. Effective January 1, 2027, California law expands sales and use tax to prewritten software and software as a service ("SaaS") products, regardless of delivery method. As a result, software we purchase for our operations may become subject to the new California tax. These costs could cause an adverse effect on our results of operations.
We are subject to volatility in foreign currency exchange rates and limits on our ability to convert foreign currencies into U.S. dollars.
As of August 31, 2026, we had a total of 58 warehouse clubs operating in 12 foreign countries and one U.S. territory, 46 of which operate under currencies other than the U.S. dollar. For fiscal year 2026, approximately 81.2% of our net merchandise sales were in foreign currencies. We may enter into additional foreign countries in the future or open additional locations in existing countries, which may increase the percentage of net merchandise sales denominated in foreign currencies.
Our consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues, and expenses of our operations outside of the U.S. from foreign currencies into U.S. dollars using exchange rates for the current period. As a result of such translations, fluctuations in currency exchange rates from period-to-period may result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be without such fluctuations in the currency exchange rates.
In addition, devaluing foreign local currencies compared to the U.S. dollar could negatively impact the purchasing power of our Members for imported merchandise in those countries. Merchandise imported into our markets is generally purchased by the Company in U.S. dollars and priced and sold in the local currency of that country. If the local currency devalues against the U.S. dollar, we may elect to increase prices in the local currency to maintain our target margins, making the products more expensive for our Members. We may also decide to reduce or modify the flow of merchandise into those markets. Depending on the severity of the devaluation and corresponding price increase (as experienced in Colombia in fiscal year 2023), the demand for, sales of, and profitability of those products could be negatively impacted.
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For example, the Colombian peso exchange rate with the U.S. dollar devalued approximately 15% on average throughout fiscal year 2023 compared to fiscal year 2022, reducing the U.S. dollar value of our sales and negatively affecting overall demand for our merchandise in Colombia during that year. In order to mitigate the significant price increase to our Members that would be required to maintain our target margins, we absorbed some of the increase in the costs of goods resulting from the devaluation and took pricing actions on certain product categories, which reduced our Total gross margin during that period until the exchange rate normalized and we were able to return to a more normalized profit margin. However, if the Colombian peso were to weaken again and we were to again absorb the costs of the devaluation or take pricing actions to lower the cost to our Members to mitigate a decrease in demand, consolidated Total gross margins could be negatively impacted. However, if the Colombia peso were to weaken again and we were to again absorb the costs of the devaluation or take pricing actions to lower the cost to our Members to mitigate a decrease in demand, consolidated Total gross margins could be negatively impacted. Additionally, the Company entered into non-deliverable forward foreign-exchange contracts in fiscal year 2026 to reduce the variability in cash flows associated with forecasted purchases of U.S. sourced inventory by effectively fixing the foreign currency exchange rates for such transactions. The appreciation of the Colombian peso resulted in losses on these contracts during fiscal year 2026, and future changes in foreign currency exchange rates could result in additional losses or otherwise adversely affect our results of operations. Refer to Part II. “Item 8. Financial Statements and Supplementary Data: Notes to Consolidated Financial Statements, Note 13 - Derivative Instruments and Hedging Activities” for additional information on our non-deliverable forward foreign-exchange contracts.
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, we 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 August 31, 2026 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $53.8 million, a decrease of $46.7 million from the peak of $100.5 million as of November 30, 2020. 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.
Volatility and uncertainty regarding the currencies and economic conditions in the countries where we operate could have a material impact on our operations in future periods.
Changes in accounting standards and assumptions, projections, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business are highly complex and involve many subjective assumptions, projections, estimates and judgments by our management. These include, but are not limited to assumptions, projections, estimates and judgements related to contingencies and litigation, income taxes, value added taxes, and long-lived assets. Changes in these rules or their interpretation or changes in underlying assumptions, projections, estimates or judgments by our management could significantly change our reported or expected financial performance.
Risks Associated with Our Equity and Capitalization
A few of our stockholders own approximately 14.1% of our voting stock as of August 31, 2026, which may make it difficult to complete some corporate transactions without their support and may impede a change in control.
Robert E. Price, the Company’s Executive Chairman of the Board, and affiliates of Mr. Price, the Company’s Chairman of the Board and Interim Chief Executive Officer, and affiliates of Mr. Price, including Price Philanthropies, The Price Group, LLC, The Robert & Allison Price Charitable Remainder Trust and various other trusts, collectively beneficially own approximately 14.1% of our outstanding shares of common stock. Of this amount, approximately 70.4% (i.e., 10.0% of our total outstanding shares) is held by charitable entities. As a result of their beneficial ownership, these stockholders have the ability to significantly affect the outcome of all matters submitted to our stockholders for approval, including the election of directors. In addition, this ownership could discourage the acquisition of our common stock by potential investors and could have an anti-takeover effect, possibly depressing the trading price of our common stock.
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The market price of our common stock may be volatile and may fluctuate significantly.
The market price of our common stock depends on factors which may be unrelated to our operating performance. There is no guarantee that our common stock will appreciate in value or maintain the price at which our stockholders have purchased their shares. If our operating results fall below expectations, the market price of our common stock could decline substantially. Any such decline may be disproportionate to any shortfall in our financial performance.
In addition, the stock market generally has experienced extreme price and volume fluctuations that have often been unrelated to the operating performance of companies. These broad market fluctuations may significantly reduce the market price of our common stock, regardless of our operating performance. Price volatility may be greater if the public float and trading volume of our common stock are low.
If securities or industry analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or downgrade our common stock, the price and trading volume of our common stock could decline.
The trading market for our common stock depends in part on the research and reports that third-party securities and industry analysts publish about us, our business, our markets and our competitors. One or more analysts could downgrade our common stock, publish inaccurate or unfavorable research about our business, or issue more favorable recommendations about our competitors, causing us to lose visibility in the financial markets. As a result, the trading price or volume of our common stock could decline.
Item 1B. Unresolved Staff Comments
None.
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Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
Our cybersecurity risk management program utilizes information and guidance derived from industry-recognized frameworks, including the International Organization for Standardization (ISO) 27001 Framework and the National Institute of Standards and Technology (NIST) Cybersecurity Framework 2.0 (CSF), specifically the NIST 800-53 and NIST 800-171 publications. While we have based our cybersecurity risk management program on these frameworks, we have not obtained these specific certifications to date. Our cybersecurity risk management program is overseen by our Chief Information Officer ("CIO") and our Senior Vice President Information Security ("SVPIS") and reviewed annually. Our cybersecurity risk management program is overseen by our Chief Information Officer ("CIO"), our First Vice President Information Security ("FVPIS") and our Senior Vice President Information Technology Shared Services (“SVPITSS”) and reviewed annually.
Our cybersecurity risk management program includes but is not limited to the following:
•risk assessments performed both internally and by external vendors to assist in the identification of material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise Information Technology (IT) environment;
•contracting with and use of third-party service providers, where deemed necessary, to assess, test, or otherwise assist with aspects of our security controls;
•cybersecurity awareness training for our employees, including targeted training and simulated phishing exercises;
•periodic testing and assessment activities, which may include penetration testing, vulnerability assessments, cybersecurity maturity assessments, and tabletop exercises;
•adoption of a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
•a risk management process for selecting and working with key service providers, suppliers, and vendors that utilizes our internal assessment of their criticality to our operations and their respective risk profiles.
We continuously monitor, assess, and strategically invest to improve the effectiveness and resiliency of our information security systems to keep abreast of the dynamic and complex cybersecurity landscape.
In the event of a potential cybersecurity incident, or a series of related cybersecurity incidents, we have cybersecurity incident response frameworks in place. These frameworks are a set of coordinated procedures and tasks that our incident response teams execute with the goal of ensuring timely and accurate identification, resolution and reporting of cybersecurity incidents both internally and externally, as necessary. We regularly test and update these frameworks to ensure timely and accurate identification, resolution, and reporting of cybersecurity incidents.
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Cybersecurity Governance
Our CIO and SVPIS collectively have over five decades of IT and cybersecurity experience. Our SVPIS spent over three decades in federal law enforcement working in cyber related roles.
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Recently Filed
Click on a ticker to see risk factors
| Ticker * | File Date |
|---|---|
| AZO | an hour ago |
| WDFC | an hour ago |
| GBX | an hour ago |
| PSMT | an hour ago |
| HSCT | 3 days ago |
| JBL | 3 days, 1 hour ago |
| AYI | 3 days, 9 hours ago |
| LNN | 4 days, 1 hour ago |
| MSM | 4 days, 2 hours ago |
| MAYS | 4 days, 8 hours ago |
| WGO | 5 days, 1 hour ago |
| PENG | 6 days ago |
| FDS | 6 days, 9 hours ago |
| AAME | 1 week, 3 days ago |
| CMC | 1 week, 3 days ago |
| LEEN | 1 week, 3 days ago |
| ACN | 1 week, 3 days ago |
| AWCA | 1 week, 3 days ago |
| CLRCF | 1 week, 3 days ago |
| ZICX | 1 week, 4 days ago |
| CMTL | 1 week, 5 days ago |
| EVOH | 1 week, 5 days ago |
| NGTF | 1 week, 6 days ago |
| SAGU | 1 week, 6 days ago |
| ADVB | 1 week, 6 days ago |
| OKMN | 1 week, 6 days ago |
| ESMC | 1 week, 6 days ago |
| MWAI | 1 week, 6 days ago |
| BRWC | 1 week, 6 days ago |
| OZVN | 1 week, 6 days ago |
| GHST | 2 weeks, 3 days ago |
| MU | 2 weeks, 3 days ago |
| ODC | 2 weeks, 4 days ago |
| VLGEA | 2 weeks, 4 days ago |
| ALDS | 2 weeks, 4 days ago |
| MGNC | 2 weeks, 5 days ago |
| COST | 2 weeks, 5 days ago |
| CVAT | 2 weeks, 6 days ago |
| IPW | 3 weeks, 3 days ago |
| LDDD | 3 weeks, 5 days ago |
| NVA | 3 weeks, 5 days ago |
| IDT | 3 weeks, 6 days ago |
| SGLY | 3 weeks, 6 days ago |
| LUVU | 3 weeks, 6 days ago |
| BNET | 3 weeks, 6 days ago |
| UEC | 3 weeks, 6 days ago |
| WSTN | 3 weeks, 6 days ago |
| CPRT | 3 weeks, 6 days ago |
| VIPZ | 3 weeks, 6 days ago |
| ZONE | 4 weeks ago |
