PSMT 10-K & 10-Q changes, risk factors and insider trading

•political instability, such as civil unrest in Panama during the third quarter of fiscal year 2025 and in Colombia in 2022 and 2021 as well as anti-government protests in Panama and Guatemala in 2023 and civil unrest in Colombia in 2022 and 2021;

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 risks we face,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."

Negative economic conditions created or exacerbated by inflation,inflation and higher interest rates could adversely impact our business in various respects.

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. 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. Although we have seen recent inflationary pressures subsiding, 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,Operations” of this Form 10-K for further discussion of the effect of currency rate changes, inflation and other economic factors on our operations.

In the countries in which we operate,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 and Grupo Éxito in Colombia and Cencosud in Colombia.South America. We have noted that certain retailers are making investments in upgrading their locations or opening of 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.

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, AmazonGlobal continues to expand its online marketplace and ships into most of our markets.markets, However,and other regional online retailers, such as MercadoLibre, have continued to increase their presence in our markets. InWe thehave casea ofstrategic partnership with Rappi in Colombia,Colombia wethat have a partnership with them in whichallows our Members canto use theirRappi's platform to place online orders;orders, however,but we do not have this mayarrangement not be the case forwith other online retailers. It is possible that Amazon will increase its presence or that other major international retailers will establish a direct presence,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.

Our operations are subject to volatile weather conditions and natural disasters, such as earthquakes, hurricanes and volcanic activity, which are encounteredoccur 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 early fiscal year 2018, operations at our USVI warehouse club were adversely affected by Hurricanes Irma and Maria. The warehouse club was closed for nine days, and after re-opening, the warehouse club operated with limited hours for 16 days due to a government-imposed curfew. Damaged and destroyed roads restricted traffic flow, adversely affecting customer access for some time after the hurricane. 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 risk and operational costs.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.

Civil unrest in certain countries in which we operate may adversely affect the flow of goods through those countries. For example, protestors set up roadblocks in Panama during October and November 2023 as a reaction to an agreement between the Panamanian government and a mining company, disrupting traffic to our clubs throughout most of the market. In the third quarter of fiscal year 2025, Panama once again experienced widespread protests and social unrest against the government. Roadblocks in Guatemala in October 2023 relating to election protests also limited access to certain of our warehouse clubs. Civil unrest in Colombia in response to tax reform and austerity measures paralyzed significant portions of the country’s infrastructure as roadblocks and riots disrupted normal economic activity during the third quarter of fiscal year 2021.

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. InFor addition,example, onlyin aMay limited2023, numberdisputes ofwith transportationNicaraguan companiescustoms serviceand ourtax regions.authorities Theresulted inabilityin 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, changesdelays in the regulationsissuance thatof governour shippingimportation tariffsclearance orand general delays in the importationcustoms ofinspection products,process. orThese anydelays otherresulted disruption toin our abilitybeing unable to import our merchandise couldinto haveNicaragua afor materialseveral adverseweeks effectin onJune our business and results of operations.2023.

We are subject to payment relatedpayment-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 paymentfee cardincreases 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 withby these rulesservice 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.providers.

As of August 31, 2024,2025, we had 5456 warehouse clubs in operation, located in 12 countries and one U.S. territory (ten in Colombia; eightnine in Costa Rica; seven each in Panama; six inand Guatemala; five 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 will 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 will beare 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.

Our membership provides a competitive advantage. Membership has been a basic operating characteristic in the warehouse club industry, beginning over 4849 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.

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.

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.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 mightintend to open warehouse clubs in new markets in the future.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.

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 increasingincreasing, and the pace of this increase could accelerate. As demonstrated by our launch of our PriceSmart.com and our mobile app and the upgrade of our point-of-sale system, 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 guarantee 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.

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. WeThe 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 package and market fresh produce products within our markets, so we may be exposed to additional risk of product liability and adverse publicity if those fresh food products are contaminated, which may result in illness, injury or death if the contaminants are not eliminated by processing at our packaging service centers.

We rely extensively on computer systems to process transactions, summarize results and manage our business. Failure to adequately maintain our systemssystems, or disruptions ofto our systemsthem, could harm our business and adversely affect our results of operations.

Given the high numbervolume of individual transactions we haveprocess 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, internal or external 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 back-upbackup systems are damaged or ceasefail to function properly, we may have to make significant investments to fixrepair 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 thirdthird-party partyprovider that supportedsupporting our point-of-sale system became insolvent, which requiredrequiring us to quickly develop and implement short-term workarounds and delayeddelaying 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 ourkey information processes and systems that are key to managingsupport our business. The risk of system disruption increases when system changes are undertaken.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 providedeliver the anticipated benefitsbenefits, or they may provide them on a delayed schedule or at a higher cost. For example, we haveare begunin the midst of migrating to the Toshiba Elera™ point-of-sale system, which is a Toshiba product,system and if we are not able tocannot successfully implement this product, or experience significant delays, it may jeopardize our operations or result in additional costs.

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 uswe are in their utilizationutilizing and integration ofintegrating rapidly evolving technologies, including artificial intelligence and machine learning technologies.learning. Our current ERP (Enterprise Resource Planning) system is no longer supported by theits developer of the software,developer, which could increase the risk of a system disruption. In addition, there are newer versions available from the vendors of some of our other internal systems offeringoffered 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) and, 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 replacement,application upgrade, will modernize our key revenue-generating systems and reduce the risk of disruption. However, if we are not successful inwith this strategy, we might be required to operate with obsolete technology and willface bethe subject to risksrisk of system disruption, which would putputting us at a disadvantage relative to our competitors.

We have also begun evaluation of aimplementing modern financialpackage managementHuman applicationCapital andManagement an integrated human resources information systemsystems for timekeeping,time payroll& andattendance other(UKG), core HR functions (Workday), and payroll to replace older applications that rely mostlyprimarily on internal support. These initiatives might not providedeliver the anticipated benefits, may providedo themso on a delayed schedule or at a higher costcost, or may cause disruptions indisrupt our business.

Any failure by us to maintain the security of the information that we hold relating to our Company, Members, employeesemployees, and vendors, could damage our reputation with them, could disrupt our operations, could cause us to incur substantial additional costscosts, andexpose us to become subject to litigationlitigation, and could materially affect our operating results.

We receive, retain, and transmit personal information about our Members and employeesemployees, 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.functions In addition,and our online operations depend uponon the secure transmission of confidential information over public networks, including information permittingused for cashless payments. Each year, computer hackers, cyber terrorists, and others make numerous attempts to access the information stored in companies’ information systems. The increased use of remote work infrastructure has also increased cybersecurity risk, as remote work continues even post COVID-19.post-COVID-19. Additionally, the rapid evolution of artificial intelligence 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.

The use of data by our business and our business associates is regulated in all of our operating countries. Privacy and information-security laws and regulations change, and compliance with them may result in costincreased increasescosts due to, among other things, systemssystem 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 be subjected toface legal risk as a result of non-compliance.

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. CyberError threatsor aremalfeasance rapidlyby evolvingour 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 area becomingbreach increasinglyof sophisticated.our or our third-party service providers` information systems (whether digital or otherwise). As cybera threats evolve and become more difficult to detect and successfully defend against,result, one or more hackers, cyber terrorists or others might defeat our security measures or those of our third-party service providers and 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. WeOur 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 may 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. Error or malfeasance by our employees and consultants, faulty password management or other irregularities may result in a defeat of our or our third-party service providers’ security measures and breach our or our third-party service providers’ information systems (whether digital or otherwise).

Any breach of our security measures or those of our third-party service providers and loss of our confidential information, which could be undetected for a period of time, 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 and 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 further 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. We have not identifiedidentified, and are not aware ofof, 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 whichwhom we interact, will not experience a cybersecurity incident in the future that will materially affectaffects us.

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 developmentoperations of our services and products and in the use of internal tools that support 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 customers.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.

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,personnel. andIf we were to lose the lossservices of anya suchkey personsmember 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.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 or to execute management transitions when members of the Company’s senior leadership retire or otherwise leave the Company, which could have a material adverse effect on our business, financial condition and results of operations. We do not maintain life or disability insurance for our key executives.future.

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 ("OECD") continues to advance proposals or guidance in international taxation, including the establishment of a global minimum tax.

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.

From time to time, we have experienced a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This impedes our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products or otherwise fund our operations. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. Additionally, the Companywe 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. For instance, during fiscal year 2021, we experienced significant limitations on our ability to convert Trinidad dollars to U.S. dollars or other tradable currencies. Our balance as of August 31, 20242025 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $60.2$59.7 million, a decrease of $40.3$40.8 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. Dollardollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency. While we are currently able to source substantially all the U.S. dollars that we need in Honduras, we faced similar U.S. dollar liquidity challenges in Honduras during fiscal year 2023 through much of fiscal year 2025 and the Central bank still has strict controls there on the availability of U.S. dollars.

PriceSmart, headquartered in San Diego, California, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise and services at low prices to our Members. We operate 5456 warehouse clubs in 12 countries and one U.S. territory (ten in Colombia; eightnine in Costa Rica; seven each in Panama; six inand Guatemala; five 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). WeAdditionally, havethe purchasedCompany land and planplans to open ourone ninthnew warehouse club in CostaLa Rica,Romana, locatedDominican in Cartago, approximately 10 miles east from the nearest club in the capital of San Jose. The club will be built on a six-acre property and is anticipated to openRepublic in the spring of 2025. Additionally, we expect to formalize a land lease in the first quarter of fiscal year 20252026, and build our seventhone warehouse club in Guatemala,Montego locatedBay inand Quetzaltenango, approximately 122 miles west from the nearest club in the capital of Guatemala City. This club will be builtone on aSouth four-acreCamp propertyRoad, and is anticipated to openJamaica in the summer and fall of 2025.2026, respectively. Once these twothree new clubs are open, we will operate 5659 warehouse clubs in total. Additionally, we are continuing to advance our planned expansion into Chile, which we have identified as a potential market for multiple PriceSmart warehouse clubs. Our corporate headquarters, U.S. buying operations and regional distribution centers are located primarily in the United States. Our operating segments are the United States, Central America, the Caribbean and Colombia. All intercompany balances and transactions have been eliminated in consolidation.

PriceSmartPriceSmart's existspurpose is to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. We aim to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We provide good jobs, fair wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to the communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we are increasing our tools to drive sales and operational efficiencies. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and servicesservices, and,while meanwhile,simultaneously enhanceenhancing Member experience and engagement.

Our sales and profits vary from market to market depending on general economic factors, including GDP growth; consumer preferences; foreign currency exchange rates; political and social conditions; local demographic characteristics (such as population growth); the number of years we have operated in a particular market; and the level of retail and wholesale competition in that market. The economies of many of our markets are dependent on foreign trade, tourism, remittances from foreign workers located in the United States to individuals or family members in their home countries, and foreign direct investments. Uncertain economic conditions and slowdown in global economic growth and investment may impact the economies in our markets, causing significant declines in GDP and employment and devaluations of local currencies against the U.S. dollar.

Although we have seen recent inflationaryInflationary pressures subsiding,could substantialsignificantly impact product cost increasescosts, and commodity price increases have and could continue toagain impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. EventsFor example, the COVID-19 pandemic resulted, directly or indirectly related to COVID-19 resultedindirectly, in market and supply-chain disruptions, which increased the complexity of managing our inventory flow and business and resulted in substantial inventory markdowns on certain non-food product categories in the third quarter of fiscal year 2022. In addition, shipping and freight rates increased dramatically during that time. Similar challenges could reoccur in the future. While supply chains and transportation rates have normalized, we continue to work to hold down and/or mitigate the price increases passed on to our Members while maintaining the right inventory mix to grow sales. One key factor has been our expanded network of distribution centers, which has facilitated alternative shipping routes, increased merchandise throughput, and provided flexibility to mitigate our supply chain challenges and risks more effectively.

A devaluation of local currency reduces the value of sales and membership income that is generated in that country when translated to U.S. dollars for our consolidated results. In addition, when local currency experiences devaluation, we may elect to increase the local currency price of imported merchandise to maintain our target margins, which could impact demand for the merchandise affected by the price increase. However,Alternatively, we may elect not to raise prices to fully cover the impact of the devaluation, adversely affecting our margins. For example, during fiscal year 2023, the currency in Colombia devalued approximately 15%, but we selectively held pricing steady or took pricing actions to mitigate declines in demanddemand, thatwhich negatively impacted our consolidated Total Grossgross Marginmargin rate.percentage. We may also modify the mix of imported versus local merchandise and/or the source of imported merchandise to mitigate the impact of currency fluctuations. Information about the effect of local currency devaluations is discussed further in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Net Merchandise Sales and Comparable Sales.”

We continue to face the risk of political instability which may have significant effects on our business. For example, protestors set up roadblocks in Panama during October and November 2023 as a reaction to an agreement between the Panamanian government and a mining company, disrupting traffic to our clubs throughout most of the market. In the third quarter of fiscal year 2025, Panama once again experienced widespread protests and social unrest against the government. Roadblocks in Guatemala in October 2023 relatingrelated to election protests also limited access to certain of our warehouse clubs. Civil unrest in Colombia in response to tax reform and austerity measures paralyzed significant portions of the country’s infrastructure as roadblocks and riots disrupted normal economic activity during the third quarter of fiscal year 2021.

Changes in tax laws, increases in the enacted tax rates, adverse outcomes in connection with tax audits in any jurisdiction, or any change in the pronouncements relating to accounting for income taxes could have a material adverse effect on our financial condition and results of operations. In one of the countries where we operate, the government made changes several years ago in the method of computing minimum tax payments, under which the government sought to require retailers to pay taxes based on a percentage of sales if the resulting tax were greater than the tax payable based on a percentage of income (Alternative Minimum Tax or "AMT"). We, together with our tax and legal advisers, appealed these interpretations and litigated our cases in the country’s court system. Nevertheless, in fiscal year 2023, we recorded a $7.2 million charge to settle the minimum tax payment dispute. To address the inherent risk of operating in a country in which tax legislation changes can significantly impact our lowbusiness marginbecause of our low-margin business model and in which our ability to successfully appeal the application of these taxes is limited, we have increased prices in this market to offset or partially offset the rise in costs to comply with the annual AMT payment. These and other challenges may persist or become more acute and could have a material adverse effect on our business and results of operations.

From time to time, we have experienced a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This impedes our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products or otherwise fund our operations. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. Additionally, the Company may incur significant premium costs to convert our local currencies into available tradable currencies and U.S. dollars. For instance, since fiscal year 2017, we have experienced this situation in Trinidad and have been unable to source a sufficient level of tradable currencies. We are working with our banks in Trinidad and government officials to convert all of our Trinidad dollars into tradable currencies. For instance, during fiscal year 2021, we experienced significant limitations on our ability to convert Trinidad dollars to U.S. dollars or other tradable currencies. Our balance as of August 31, 20242025 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $60.2$59.7 million, a decrease of $40.3$40.8 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. Dollardollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency. In July 2025, the Company entered into financing transactions to provide our Trinidad subsidiary with additional U.S. dollar liquidity needed to meet its operational needs and help reduce the shortfall in U.S. dollar sourcing due to continued illiquid foreign exchange conditions in that market. Refer to Part II. “Item 8. Financial Statements and Supplementary Data: Notes to Consolidated Financial Statements, Note 11 - Debt” for additional information.

•Total revenues increased 9.6%8.6% over the comparable prior year period.

•Net merchandise sales increased 9.5%9.2% over the comparable prior year period. We ended the quarter with 5456 warehouse clubs compared to 5154 warehouse clubs at the end of the fourth quarter of fiscal year 2023.2024. Net merchandise sales - constant currency increased 9.3%9.1% over the comparable prior year period.

•Comparable net merchandise sales (that is, sales in the 5154 warehouse clubs that have been open for greater than 13 ½ calendar months) forand the 13 weeks ended September 1, 2024 increased 6.2%. Comparablecomparable net merchandise sales - constant currency for the 13 weeks ended SeptemberAugust 1,31, 20242025 increased 6.0%.7.5%.

•Total gross margins (net merchandise sales less associated cost of goods sold) increased 11.1%9.0% over the prior year,year period, and merchandise gross profits as a percent of net merchandise sales remained constantunchanged at 15.8%15.7% comparedfrom tothe same period in the prior year.

•Selling, general and administrative expenses increased $51.2$16.5 million inor 10.1% compared to the fourth quarter of fiscal year 2024 or 8.9% compared to fiscal year 2023,2024, primarily due to higherinvestments compensationin cost,technology, professionalsuch fees,as depreciationthe expense,RELEX and bankElera fees.projects.

•Operating income wasfor $220.9the millionfourth inquarter of fiscal year 2024,2025 was $52.8 million, an increase of 19.7%,7.2%, or $36.4$3.6 million, compared to the fourth quarter of fiscal year 2023.2024.

•We recorded a $19.5$6.4 million net loss in total other expense, net in the fourth quarter of fiscal year 20242025 compared to a $15.3$7.4 million net loss in total other expense, net in the same period last year primarily due to ana increasedecrease of $3.5 million ofin other expense, whichnet isof $1.0 million primarily driven by a decrease in foreign currency conversion transaction losses, and an increase of $1.9 million in interest expense, partially offset by an increase of $1.2 million in interest income.costs.

•Adjusted netNet income for the fourth quarter of fiscal year 20242025 was $138.9$31.5 million, or an adjusted $4.57$1.02 per diluted share, compared to adjusted net income of $126.5$29.1 million, or an adjusted $4.06$0.94 per diluted share, for the fourth quarter of fiscal year 2023. Fiscal year 2023 included a negative impact of $0.30 per diluted share for costs related to the reserve for the AMT settlement.2024.

•Adjusted EBITDA for the fourth quarter of fiscal year 20242025 was $303.6$75.5 million compared to $275.7$70.7 million in the priorsame period last year.

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with U.S. GAAP (Generally Accepted Accounting Principles). In addition to relevant GAAP measures, we also provide non-GAAP measures including adjusted net income, adjusted net income per diluted share, adjusted EBITDA, net merchandise sales - constant currency and comparable net merchandise sales - constant currency because management believes these metrics are useful to investors and analysts by excluding items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. However, these non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I. “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2025. There have been no material changes in the Company’s risk factors from those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2025.

As of FebruaryMay 28,31, 2026, we had 5657 warehouse clubs in operation in Central America, the Caribbean and Colombia. In addition, we are continuing to advance our planned expansion into Chile, which we believe is a promising new market for our Company. We believe PriceSmart has become one of the most respected and trusted brands in the countries where we operate, and with over two million membership accounts, and over four million cardholders, we believe PriceSmart is an essential part of the shopping experience for consumers and small businesses in PriceSmart’s markets.

PriceSmart sources approximately half of its merchandise from suppliers within Latin America and the Caribbean, with the balance of merchandise sourced throughoutfrom the restUnited ofStates theand world.globally. Product selection includes basic consumable merchandise for consumers and businesses, “Member’s Selection®” private label merchandise and consumable and non-consumable products that are often not otherwise available in our markets.

PriceSmart continually focuses on innovation. Beyond in-club shopping, our Members can shop via our mobile app or online at PriceSmart.com, both of which offer home delivery and curbside pickup via our Click & Go® service. PriceSmart is making significant investments in technology both to improve the online shopping experience for its Members and to enhance operating efficiencies in itsthe supply chain and the back office.

We seek to be an outstanding place to work and provide safe and pleasant working environments for our almostover 13,000 employees, along with excellent pay and benefits, including healthcare coverage and retirement benefits.

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 resultresults in PriceSmart being a good investment for our stockholders.

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 throughout Latin America and the Caribbean.markets. Our corporate headquarters, U.S. buying operations and support service center offices are located in the United States. Lastly, we have additional support service centers in some of our markets. Our operating segments currently are the United States, Central America, the Caribbean and Colombia.

In the first quarter of fiscal year 2026, we purchased land for our third warehouse club in Jamaica, located in Montego Bay, approximately 100 miles west from the nearest club in the capital of Kingston. The club will be built on a five-acre property and is anticipated to open in the summerfall of 2026.

In the second quarter of fiscal year 2026, we purchased land and plan to open our tenth warehouse club in Costa Rica, located in Ciudad Quesada, approximately 47 miles northwest from the nearest club in the capital of San Jose. The club will be built on a six-acre property and is anticipated to open in the summer ofAugust 2026.

In the first quarter of fiscal year 2026, we executed a land lease for our fourth warehouse club in Jamaica, located on South Camp Road (Kingston), approximately six miles southeast from the nearest club in the capital of Kingston. The club willis beunder builtconstruction on a three-acre property and is anticipated to open in the winter of 2026.2026-27.

In the third quarter of fiscal year 2026, we executed a land lease for our eighth warehouse club in Guatemala, located in Villa Nueva, approximately 13thirteen miles south from the nearest club in the capital of Guatemala City, subject to thenecessary permits being obtained. The club will be built on a five-acre property and is anticipated to open in the springwinter of 2027.

Once these fivesix new clubs are open, the Company will operate 6163 warehouse clubs.

Our sales and profits vary from market to market depending on general economic factors, including Gross Domestic Product ("GDP") growth; consumer preferences; foreign currency exchange rates; political and social conditions; local demographic characteristics (such as population growth); the number of years we have operated in a particular market; and the level of retail and wholesale competition in that market. The economies of many of our markets are dependent on foreign trade, tourism, remittances from foreign workers located in the United States to individuals or family members in their home countries, and foreign direct investments. Uncertain economic conditions and a slowdown in global economic growth and investment may impact the economies in our markets, causing significant declines in GDP and employment and devaluations of local currencies against the U.S. dollar.

Inflationary pressures could significantly impact product costs, and commodity price increases have and could again impact our financial results and could lead to reduced sales, fewer units sold, and/or margin pressure. For example, we are monitoring the disruptionresolution of the global oil supply through the Strait of Hormuz and the conflict between the U.S. and Iran have driven up commodity prices and increased inflationary pressures, potentially affecting our costs and the affordability of our merchandise for our Members. We are monitoring developments with respect to the ongoing military conflict with IranIran, including the impact on global commodity prices and potential shipping and logistics disruptions. We may experience increases in transportation costs or delays in the shipment or delivery of our products.

Currency fluctuation can be one of the largest variables affecting our overall sales and profit performance because many of our markets are susceptible to foreign currency exchange rate volatility. As of FebruaryMay 28,31, 2026, some markets, primarily Colombia and Costa Rica, benefited from currency appreciation, which was partially offset by currency devaluations we experienced in some of the other countries where we operate, primarily Honduras, when compared to FebruaryMay 28,31, 2025. During the first sixnine months of fiscal years 2026 and 2025, approximately 80.9%81.0% and 80.0%, respectively, of our net merchandise sales were in currencies other than the U.S. dollar. Of those sales, 48.8% and 49.6%49.3% consisted of sales of products we purchased in U.S. dollars.

Current uncertainties about U.S. tariffs and reciprocal tariffs may have an adverse effect on our Company. On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Power Act (the "IEEPA Decision"). There remains significant uncertainty regarding the implementation of the IEEPA decision. In addition,However, immediately following the IEEPA decision, the U.S. government initiated new tariffs under alternativeSection authorities.122 of the Trade Act of 1974, which were struck down by the U.S. Court of International Trade and are currently under appeal. Our Miami Distribution Center, which operates within a Free Trade Zone ("FTZ"), has helped us avoid potential economic risks, and as a result, we did not pay tariffs and are not owed a refund.

In July 2025, the United States enacted significant tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent many provisions of the Tax Cuts and Jobs Act of 2017 and introduces additional changes affecting individuals and businesses. Key business related provisions include the continuation of the 21% federal corporate income tax rate, enhancements to bonus depreciation and expensing rules, and modifications to certain international provisions, including Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income deductions. The OBBBA also includes other targeted measures, including a 1% excise tax on foreign remittances.

From time to time, we have experienced a lack of availability of U.S. dollars in certain markets (U.S. dollar illiquidity). This impedes our ability to convert local currencies obtained through merchandise sales into U.S. dollars to settle the U.S. dollar liabilities associated with our imported products or otherwise fund our operations. This illiquidity also increases our foreign exchange exposure to any devaluation of the local currency relative to the U.S. dollar. Additionally, the Company may incur significant premium costs to convert our local currencies into available tradable currencies and U.S. dollars. For instance, since fiscal year 2017, we have experienced this situation in Trinidad and have been unable to source a sufficient level of tradable currencies. We are working with our banks in Trinidad and government officials to convert all of our Trinidad dollars into tradable currencies. Our balance as of FebruaryMay 28,31, 2026 of Trinidad dollar denominated cash and cash equivalents and short and long-term investments measured in U.S. dollars was $76.9$44.1 million, a decrease of $23.6$56.4 million from the peak of $100.5 million as of November 30, 2020. However, as the Trinidad central bank strictly manages the exchange rate of the Trinidad dollar with the U.S. dollar and affects the level of U.S. dollar liquidity in the market through its interventions, we are subject to continued challenges in converting our Trinidad dollars to U.S. dollars, as well as being exposed to the risk of a potential devaluation of the currency. In July 2025,2025 and again in the third quarter of fiscal year 2026, the Company entered into financing transactions to provide our Trinidad subsidiary with additional U.S. dollar liquidity needed to meet its operational needs and help reduce the shortfall in U.S. dollar sourcing due to continued illiquid foreign exchange conditions in that market. While we currently expect to convert increased amounts of Trinidad dollars going forward, the timing and availability of U.S. dollars remains uncertain, and we may incur significant premium costs to complete such conversions.

While we are currently able to source substantially all the U.S. dollars that we need in Honduras, we faced similar U.S. dollar liquidity challenges in Honduras during fiscal year 2023 through much of fiscal year 2025, and the central bank still has strict controls therein onplace that impact the availability of U.S. dollars.

During thefiscal period,year 2026, our Costa RicanRica subsidiary recognized unrealized foreign currency losses primarily related to the revaluation of U.S. dollar-denominated assets and liabilities held in that market. Our balance as of FebruaryMay 28,31, 2026 of U.S. dollar-denominated cash and cash equivalents, short-term investments, and other assets and liabilities in our Costa Rican subsidiary was $101.6$76.5 million. Refer to “Management’s Discussion & Analysis – Other Expense, Net” for additional information.

PriceSmart's purpose is to improve the lives and businesses of our Members, our employees and our communities through the responsible delivery of the best quality goods and services at the lowest possible prices. We aim to serve as a model company, which operates profitably and provides a good return to our investors, by providing Members in emerging and developing markets with exciting, high-quality merchandise sourced from around the world and valuable services at compelling prices in safe U.S.-style clubs and through PriceSmart.com. We prioritize the well-being and safety of our Members and employees. We believe we provide good jobs, excellent wages and benefits and opportunities for advancement. We strive to treat our suppliers right and empower them when we can, including both our regional suppliers and those from around the world. We try to conduct ourselves in a socially responsible manner as we endeavor to improve the quality of the lives of our Members and their businesses, while respecting the environment and the laws of all the countries in which we operate. We also believe in facilitating philanthropic contributions to the communities in which we do business. We charge Members an annual membership fee that enables us to operate our business with lower margins than traditional retail stores. As we continue to invest in technological capabilities, we believe we are enhancing our capabilities to drive sales, operational efficiencies, and provide a better Member experience. We believe we are well positioned to blend the excitement and appeal of our brick-and-mortar business with the convenience and additional benefits of online shopping and services, while simultaneously enhancing Member experience and engagement.

Financial highlights for the secondthird quarter of fiscal year 2026 included:

•Net merchandise sales increased 9.9%12.5% over the comparable prior year period. We ended the quarter with 5657 warehouse clubs compared to 5455 warehouse clubs at the end of the secondthird quarter of fiscal year 2025. Net merchandise sales - constant currency increased 7.8%8.5% over the comparable prior-year period.

•Comparable net merchandise sales (that is, sales in the 54 warehouse clubs that have been open for more than 13 ½ calendar months) for the 13 weeks ended MarchMay 1,31, 2026 increased 7.6%.10.7%. Comparable net merchandise sales - constant currency for the 13 weeks ended MarchMay 1,31, 2026 increased 5.5%.6.9%.

•Membership income for the secondthird quarter of fiscal year 2026 increased 16.9%17.6% to $24.5$25.7 million over the comparable prior-year period.

•Selling, general and administrative expenses increased 12.7%13.4% compared to the firstthird six monthsquarter of fiscal year 2025, primarily due to investmentsincreases in technologywarehouse club and compensationother ofoperations our Chief Executive Officer.costs. Selling, general and administrative expenses as a percentage of total revenues in the firstthird six monthsquarter of fiscal year 2026 increased to 12.9%13.3% from 12.6%13.2% in the same period last year.

•Operating income for the firstthird six monthsquarter of fiscal year 2026 was $138.3$65.6 million, an increase of 12.0%,16.7%, or $14.8$9.4 million, compared to the firstthird six monthsquarter of fiscal year 2025.

•We recorded a $16.0$10.5 million net loss in total other expense in the firstthird six monthsquarter of fiscal year 2026 compared to a $12.4$7.2 million net loss in total other expense in the same period last year. This increase in total other expense was primarily due to an increase in other expense, net of $2.0$3.0 million, which was mainlyprimarily driven by an increase in unrealizedtotal lossesforeign incurrency valuetransaction of U.S. dollar denominated monetary assets and liabilities in several of our markets.losses.