PORT OF SPAIN, Trinidad, Thursday April 20, 2017 – American warehouse shopping giant PriceSmart is spending US$12 million to shore up its troubled operations in Trinidad and Tobago, despite a 9.6 decline in net sales there.
In a clear signal that it had no plans of shutting shop in the twin-island republic, the company revealed in its April 6 United States Securities and Exchange Commission (SEC) filing that it had secured the loan with the US-based Citibank. The agreement provides for a US$12 million loan to be repaid in eight quarterly principal payments plus interest.
The move comes on the heels of concerns raised by the company that its operations were being severely hampered by the unavailability of US dollars in Trinidad.
PriceSmart, which operates four outlets in the capital Port of Spain, reported that the problem had also forced the company to slash its shipments to the country for the first three months of fiscal year 2017 by approximately 20 per cent, resulting in significant loss in earnings.
It however noted a slight improvement in recent weeks, but said that lingering challenges remained.
“Most recently, we have been able to improve our sourcing of tradeable currencies which has allowed for a more normalized flow of imported merchandise as we enter the third fiscal quarter. However, the illiquidity situation remains in that market, and we have not been able to fully address the level of dollar-denominated liabilities.
“Going forward, we could again find ourselves in a position that requires us to limit shipments from the US to Trinidad in line with our ability to exchange TT dollars for tradeable currencies or to reduce our exposure to a potential devaluation,” the company said.
PriceSmart said the weak performance in Trinidad had affected its regional numbers.
“Many of our Caribbean markets experienced sales declines in the quarter and six month periods (ended February 28) compared to a year ago, with only Jamaica and USVI recording year-on-year growth for the second quarter,” the company reported.
It noted that Trinidad and Tobago consumers could face a hike in prices, saying it “was adjusting prices to suit the new costs of foreign currency. “
“We also incurred higher transaction costs associated with converting TT dollars into available tradeable currencies such as Euros or Canadian dollars before converting them to US dollars. While that situation continues in Trinidad, we have taken that additional cost into consideration in our pricing model,” it said.