PRICESMART, identified in 2015 by former Central Bank Governor Jwala Rambarran as the largest user of US dollars in Trinidad and Tobago’s retail and distribution sectors, says ongoing challenges due The limited availability of the US dollar in this country has impacted its ability to convert T&T dollars into fulfilling its obligations and supporting investments.

Despite these constraints, however, PriceSmart managed to reduce its T&T dollar holdings by half a billion dollars ($82.3 million) in less than three years, according to its annual report.

PriceSmart, headquartered in San Diego, California, owns and operates American-style shopping warehouse clubs throughout Latin America and the Caribbean.

It has four warehouse clubs in Trinidad and Tobago.

“We periodically see a lack of availability of the US dollar in certain markets (US dollar illiquidity). This can and has hindered our ability to convert local currencies obtained from the sale of goods into US dollars to settle US dollar debts associated with our imported products and to redeploy these funds within our business,” he said. .

Pricesmart said this illiquidity also increases our foreign exchange risk in the event of a devaluation of the local currency against the US dollar.

“For example, during fiscal year 2021, we experienced significant limitations in our ability to convert Trinidadian dollars into U.S. dollars or other negotiable currencies. Our August 31, 2023 balance of cash and cash equivalents denominated in Trinidadian dollars and short- and long-term investments measured in U.S. dollars was $18.2 million, a decrease of $82.3 million per year. compared to the high of $100.5 million on November 30, 2020,” PriceSmart said.

“However, as the Central Bank of Trinidad strictly manages the exchange rate of the Trinidadian dollar to the US dollar and affects the level of liquidity of the US dollar in the market through its interventions, we are subject to continued challenges in the conversion from our Trinidadian dollars to US dollars. , as well as being exposed to the risk of potential currency devaluation,” he said.

PriceSmart said that since 2017 it has been unable to source a sufficient level of foreign exchange.

He said, however, that he was working with his Trinidad and Tobago bankers as well as government officials “to convert all of our Trinidad dollars into tradable currencies.”

“Examples of significant net asset positions in U.S. dollars that expose us to foreign exchange losses if the local currency strengthens against the U.S. dollar are our subsidiaries in Trinidad, Costa Rica and Nicaragua, with balances of 35 .7 million, $35.5 million and $30.3 million. , respectively, as of August 31, 2023,” it indicates.

PriceSmart said it is required to maintain certificate of deposit and/or security deposits in Trinidadian dollars, measured in US dollars, of approximately $6.4 million with a few of its lenders as balances compensation for several loans denominated in US dollars and euros. payable over several years.

Plant sale

PriceSmart also reported a charge of $5.7 million in the fourth quarter of fiscal 2023.

It said the charge was primarily due to the revaluation of assets at its Trinidad sustainable packaging plant, reflecting its estimated fair value following the company’s decision to seek the sale of the plant.

“We planned to use the factory to increase efficiency by eliminating middlemen in packaging and labeling and manufacturing some of our packaging materials using compostable or recyclable inputs. However, we found that it was difficult to realize the economic feasibility of this activity. Therefore, we decided to refocus our efforts on our core competencies as a retailer, redeploy assets that we could use in our club businesses and seek a buyer for the remainder,” he said.

On January 31 last year, PriceSmart launched its first ever eco-friendly manufacturing facility at Point Lisas Business Park, Couva.

The 30,000 square foot facility manufactured products such as trays, plates, cutlery, cups and food containers.

The factory, which has the capacity to produce five million units per month, was PriceSmart’s first venture into the manufacturing sector.