PriceS­mart be­lieves it has tak­en a US$18 mil­lion hit in sales in T&T over the last few months be­cause of this coun­try’s on­go­ing for­eign ex­change woes.

PriceS­mart’s chief ex­ec­u­tive of­fi­cer Sher­ry Bahram­beygui said the com­pa­ny saw sales de­cline year-over-year in T&T due to ac­tions tak­en in re­sponse to US dol­lar liq­uid­i­ty.

“In Trinidad, al­though sales were very strong dur­ing the quar­ter, we are con­tin­u­ing to ex­pe­ri­ence chal­lenges in con­vert­ing Trinidad dol­lars to US dol­lars. As a re­sult, dur­ing the first quar­ter, we be­gan lim­it­ing ship­ments of goods from US to Trinidad. We are al­ready see­ing the im­pact in our De­cem­ber sales, and we ex­pect to con­tin­ue lim­it­ing ship­ments dur­ing the sec­ond quar­ter of fis­cal 2021,” PriceS­mart’s ex­ec­u­tive vice pres­i­dent and chief fi­nan­cial of­fi­cer Michael Mc­Cleary stat­ed.

“There­fore, our Trinidad clubs are not cur­rent­ly car­ry­ing their usu­al mix and quan­ti­ty of mer­chan­dise. We be­lieve this re­duc­tion in im­port­ed mer­chan­dise will neg­a­tive­ly im­pact sales in Trinidad in our sec­ond fis­cal quar­ter by an es­ti­mat­ed $14 mil­lion to $18 mil­lion,” he stat­ed.

PriceS­mart’s sec­ond-quar­ter runs from De­cem­ber to Feb­ru­ary.

Mc­Cleary said as a re­sult PriceS­mart plans to fluc­tu­ate its ship­ments from the US to T&T in line with the abil­i­ty to ex­change TT dol­lars or oth­er hard cur­ren­cies.

“How­ev­er, we are al­so seek­ing oth­er op­por­tu­ni­ties to re­duce our net use of US dol­lars in Trinidad such as by shift­ing the pur­chase of cer­tain goods to lo­cal sources and seek­ing to in­crease ex­ports of lo­cal­ly-sourced items,” he said.

The dif­fi­cul­ty in ac­cess­ing for­eign ex­change has re­sult­ed in a US$1.5 mil­lion bill for PriceS­mart pri­mar­i­ly as a re­sult of costs to con­vert TT dol­lars in­to “oth­er trad­able cur­ren­cies.”

“Net cash used in in­vest­ing ac­tiv­i­ties in­creased by US$4.6 mil­lion com­pared to the pri­or year pri­mar­i­ly due to the in­crease in in­vest­ments in cer­tifi­cates of de­posit of Trinidad dol­lars we have on hand, while we work ac­tive­ly to con­vert those Trinidad dol­lars in­to US dol­lars, as avail­abil­i­ty al­lows, off­set by less con­struc­tion ex­pen­di­tures,” Mc­Cleary stat­ed.

Mc­Cleary said PriceS­mart is al­so look­ing to in­crease its abil­i­ty to ex­port goods out of T&T to try and deal with the for­eign ex­change is­sue.

“If we can buy them in Trinidad dol­lars and ex­port them in­to oth­er mar­kets, and sell them in US dol­lars, that gives us more US dol­lars to be able to im­port mer­chan­dise to some of our clubs,” he said.

Bahram­beygui said last month net mer­chan­dise sales for the en­tire group grew de­spite pan­dem­ic-re­lat­ed re­stric­tions in some mar­kets and one less sales day in Feb­ru­ary this year vs last year, which was a leap year.

“Sales for the month were ad­verse­ly af­fect­ed by our de­ci­sion to tem­porar­i­ly re­duce lev­els of mer­chan­dise we im­port in­to Trinidad due to con­tin­ued lim­i­ta­tions on our abil­i­ty to con­vert lo­cal cur­ren­cy in­to US dol­lars,” Bahram­beygui said.

PriceS­mart is head­quar­tered in San Diego and owns and op­er­ates US-style mem­ber­ship shop­ping ware­house clubs in Latin Amer­i­ca and the Caribbean.

PriceS­mart op­er­ates 47 ware­house clubs in 12 coun­tries and one US ter­ri­to­ry.

There are four ware­hous­es in T&T.

Plans are al­so in place to open new ware­house clubs in Guatemala City, Guatemala and Bu­cara­man­ga, Colom­bia in the fall of 2021, and in Port­more, Ja­maica in the spring of 2022.

Once these three new clubs are open, the com­pa­ny will op­er­ate 50 ware­house clubs.

In its an­nu­al re­port PriceS­mart stat­ed that it has been ex­pe­ri­enc­ing prob­lems ac­cess­ing for­eign ex­change since 2017.

“In the past, we have ex­pe­ri­enced a lack of avail­abil­i­ty of US dol­lars in cer­tain mar­kets (US dol­lar illiq­uid­i­ty), par­tic­u­lar­ly in Trinidad. This can im­pede our abil­i­ty to con­vert lo­cal cur­ren­cies ob­tained through mer­chan­dise sales in­to US dol­lars to set­tle the US dol­lar li­a­bil­i­ties as­so­ci­at­ed with our im­port­ed prod­ucts, or oth­er­wise re­de­ploy these funds in our com­pa­ny, in­creas­ing our for­eign ex­change ex­po­sure to any de­val­u­a­tion of the lo­cal cur­ren­cy rel­a­tive to the US dol­lar,” Bahram­beygui stat­ed.

“We con­tin­ued to ex­pe­ri­ence lim­i­ta­tions on our abil­i­ty to con­vert Trinidad dol­lars to US dol­lars or oth­er trad­able se­cu­ri­ties dur­ing fis­cal 2020, with a fur­ther de­te­ri­o­ra­tion and the prob­lem be­com­ing more acute in Au­gust 2020 and in­to the first two months of fis­cal year 2021,” she stat­ed.

As of Au­gust 31, last year PriceS­mart in T&T had TT dol­lar de­nom­i­nat­ed cash and cash equiv­a­lents and short and long-term in­vest­ments mea­sured in US dol­lars of ap­prox­i­mate­ly $79.6 mil­lion.

This was an in­crease of $54.7 mil­lion from Au­gust 31, 2019 when these same bal­ances were ap­prox­i­mate­ly $24.9 mil­lion.

“The Cen­tral Bank man­ages the ex­change rate of the Trinidad dol­lar with the US dol­lar. While the re­cent­ly elect­ed gov­ern­ment has pub­licly stat­ed it has no in­ten­tion to de­val­ue the Trinidad dol­lar, the Trinidad gov­ern­ment could in the fu­ture de­cide to de­val­ue the cur­ren­cy to im­prove mar­ket liq­uid­i­ty, re­sult­ing in a de­val­u­a­tion in the US dol­lar val­ue of these cash and in­vest­ments bal­ances,” Bahram­beygui stat­ed.

“If, for ex­am­ple, a hy­po­thet­i­cal 20 per cent de­val­u­a­tion of the Trinidad dol­lar were to oc­cur, the val­ue of our Trinidad dol­lar cash and in­vest­ments po­si­tion, mea­sured in US dol­lars, would de­crease by ap­prox­i­mate­ly $15.9 mil­lion, with a cor­re­spond­ing in­crease in ac­cu­mu­lat­ed oth­er com­pre­hen­sive loss re­flect­ed on our con­sol­i­dat­ed bal­ance sheet,” she stat­ed.

Apart from the TT dol­lar de­nom­i­nat­ed cash and in­vest­ments, PriceS­mart has a US dol­lar de­nom­i­nat­ed mon­e­tary as­set po­si­tion of ap­prox­i­mate­ly $4.8 mil­lion in T&T.

“We are care­ful­ly mon­i­tor­ing the sit­u­a­tion and tak­ing steps to mit­i­gate the risks. For ex­am­ple, as liq­uid­i­ty con­di­tions have tight­ened, we have me­thod­i­cal­ly raised prices, ini­tial­ly on im­port­ed goods, and have sought to shift the pur­chase of goods to lo­cal sources, where ap­pro­pri­ate,” Bahram­beygui stat­ed.

“Ad­di­tion­al­ly, we are ac­tive­ly mon­i­tor­ing our abil­i­ty to ex­change Trinidad dol­lars for trad­able cur­ren­cies, in or­der to man­age our ex­po­sure to any po­ten­tial de­val­u­a­tion, and in ear­ly fis­cal 2021 have be­gun to lim­it ship­ments of goods from the US to Trinidad in line with this abil­i­ty. These ac­tions may re­sult in a de­crease in our sales and/or prof­itabil­i­ty in Trinidad,” she stat­ed.