PriceSmart Inc. (NASDAQ:PSMT) Q2 2019 Earnings Conference Call Transcript

Apr 10, 2019 • 10:00 am ET

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PriceSmart Inc. (NASDAQ:PSMT) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions)

The first question today comes from Jon Braatz with Kansas City Capital. Please go head.

Analyst
Jon Braatz

Good morning, Sherry, Maarten.

Executive
Sherry S. Bahrambeygui

Good morning

Executive
Maarten O. Jager

Good morning

Analyst
Jon Braatz

Sherry, Maarten, in your 10-Q , you talked about pricing actions to drive sales. Is this -- two questions. Is this in response to some new competitive pressures? And can you talk a little bit about the pace of that going forward. Will it be similar to what you're -- what we're seeing now or might ease up a little bit, little thoughts on -- few thoughts on the future?

Executive
Maarten O. Jager

Yes, I mean, we have taken some pricing actions, as we released in -- mentioned in the 10-Q in part because of market factors. As we've talked about, we've had economic and geopolitical influences. Yes, competitors of course are always active, but we maintain a very strong vigilance about pricing umbrella versus competitors. And we have also worked to take some actions on inventory, which represented some incremental markdowns on our inventory.

Analyst
Jon Braatz

Okay. And then secondly, Maarten, I know you don't want to starve Aeropost from with -- starve Aeropost, you want to continue to grow that business. How do you see the spending on Aeropost going forward from the second quarter level -- loss per share of $0.14?

Executive
Sherry S. Bahrambeygui

Yes, I think, I'd like to take that Jon because -- with Aeropost, we've got, as it was envisioned, sort of a basket of different components, and really the vision for Aeropost was that over time, as we got a deeper understanding of their capabilities, and what they -- and how they would be able to be a driver for PriceSmart's core business, we've been -- the lines have become blurred. And as a result, a good chunk of what you maybe seeing as part of Aeropost is -- there's the three components, there is the acquisition cost, there is the -- actually four components. There is the cost associated with the ongoing operations of casillero which was not a primary driver for us to acquire the company. But nonetheless came to us with some components that have value like logistics, infrastructure, post-order transaction knowhow, reverse logistics opportunities and various other outposts and markets that we -- where we exist and other locations. And then there is the -- the marketplace portion that Aeropost has, which has been a sort of a resource of information for us that has helped us better inform our planning, and with the deliberate approach of trying to minimize mistakes, when we build on our pricesmart.com site, and then there is the investment in pricesmart.com, as well as merging and blending the technology and the talent into the core of our business, which is what I referred to earlier with regard to the senior executive from Aeropost who is now responsible for member experience in our company.

So the categories in terms of trying to decide how you characterize some of those expenses