PriceSmart Inc (PSMT) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to PriceSmart, Inc.'s earnings release conference call for the second quarter of FY14, the three-month and six-month periods ending on February 28, 2014.

All participants are currently in a listen-only mode. After remarks from Jose Luis Laparte, PriceSmart's President and Chief Executive Officer; and John Heffner, PriceSmart's Executive Vice President and Chief Financial Officer, you will be given an opportunity to ask questions as time permits.

(Operator Instructions)

As a reminder, this call is being recorded on Thursday, April 10, 2014. A digital replay of this call will be available through April 30, 2014, by dialing 888-203-1112 for domestic callers, or 719-457-0820 for international callers. The passcode is 9116013.

I would now like to turn the conference over to Mr. John Heffner. Please go ahead, sir.

Thank you, and welcome to our earnings call for the second quarter of FY14. I hope you'll find this to be a useful forum to review the information that we provided in our earnings press release, which included a report on our net warehouse sales for March 2014 and our 10-Q filing, which we released yesterday, April 9, 2014. You can find both the filing, as well as the press release, on our website, www.pricesmart.com.

Please note that statements made during this call may contain forward-looking statements concerning the Company's anticipated future plans, revenues, and related matters. These forward-looking statements include, but are not limited to, statements containing the words expect, believe, will, may, should, estimate, and similar expressions. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the Company's annual report on Form 10-K for the fiscal year ended August 31, 2013, filed with the Securities and Exchange Commission on October 30, 2013. We assume no obligation, and expressly disclaim any duty, to update any forward-looking statement to reflect the occurrence of events or circumstances which may arise after the date of this call.

Now, I will turn this over to Jose Luis Laparte, PriceSmart's President and Chief Executive Officer.

Good morning, everyone, and thank you for joining us in our conference call for the second quarter of FY14.

Let me start with an update on sales. Second-quarter sales came in at $657 million, representing an 11% total growth compared to the prior year. We ended this period with 32 warehouse clubs compared to 30 warehouse clubs a year ago. Comparable sales for the 13 weeks ended March 2, 2014, grew 6.7%.

When we look at the numbers by region, the Latin America region reported a 12.2% increase, and the Caribbean region an 8.7% increase. The higher increase in the Latin America region is a result of the two additional clubs, one in Cali North, Colombia, and the other one in Costa Rica in the area of La Union, Cartago.

The total net warehouse growth of 11% during the three-month period resulted from a 10.2% growth in transactions and a 0.7% growth in average ticket. We saw sales growth in nearly all countries; the exception being Jamaica, which has experienced a significant devaluation of its local currency over the past year. We also experienced a rather significant devaluation in the Costa Rican colon in February of approximately 5% compared to the average rate in January and also the year-ago period.

While over time we will adjust prices on our imported merchandise to reflect this devaluation, as new merchandise [lasts] at a higher cost, in the short term, sales that are transacted in the local currency and translated back to US dollars will do so at a lower rate, which can negatively affect sales growth. We continue to see strong sales in Panama, Trinidad, and Aruba, with each of them recording double-digit sales growth in the quarter.

In terms of merchandising categories, we recorded double-digit sales growth in different areas, including candy, seasonal candy, influenced by the December holiday sales, gourmet deli, fresh seafood, computers, fashion apparel, food service, and bakery. We had some challenges with electronics and small appliances that reported a low single-digit negative growth in the quarter; a trend that we had also during the first quarter of the fiscal year.

Moving on to membership results, I would like to mention that membership income came in at $9.5 million for the second quarter, with an increase of 13.9% versus last year. We finished the quarter with more than 1.148 million active accounts, representing an increase of 11.4% over last year. The membership renewal rate for the 12-month period ended February 28, 2014, was 85%.

Together with our second-quarter results, we also reported yesterday March sales, and I would like to make a couple of comments on that particular month. Our net warehouse sales growth for the month of March 2014 was 5.7%; and in comparable sales growth for the four weeks ending March 30, the increase was 1.9%. It is important to highlight that the effect of Easter is affecting our sales for the month that just finished, since a year ago Easter Sunday was on March 31, and this year it will be on April 20.

In our countries, and especially in the Latin America region, the celebration of Easter and the vacation period called Semana Santa drives additional traffic into our clubs, from which we benefited a year ago in March. This year, we expect to see that benefit in the current month of April. This is not entirely unusual, as Easter moves from year to year, but this year it is particularly significant, given the fact that the particular dates of the holiday in 2013 and 2014 transfer a lot of the sales from one month to the other.

Let me also make a comment about comparable sales in general, as this continues to be a very well-watched metric. We have opened new warehouse clubs in certain locations, partially served by existing clubs, to grow our overall Business and better serve our members in the long term. The two most recent warehouse clubs opened, the second club in Cali, Colombia, and the club we opened in Cartago La Union in Costa Rica, have caused a number of members who used to shop at our first Cali club or our Zapote club in Costa Rica to now shop with us in our new locations. The two clubs that are in our comparable sales base are now comping negatively, which has an impact on our overall comparable warehouse sales.

Let me now move to some other comments regarding our Business. In just three weeks, we will be opening our new warehouse club in Honduras. It will be the third in this country, and the second one in the city of Tegucigalpa. This club, that we call El Sauce, is expected to be opened on May 1, 2014.

I had a chance to visit this location just a few weeks ago, and I can tell you that our members in that country will find a great new club with more sales floor space like our newest club in Costa Rica. We also added more steel racking that will allow us to accommodate significantly more merchandise than some of the clubs we built in the early days of the Company. Again, we expect that this new club, while growing our overall sales in Honduras, will impact our total Company comparable sales, consistent with my early comments.

I am especially pleased to report that our construction team is very busy working on the three recently announced Colombia warehouse clubs that are planned to open by the end of this calendar year, hopefully sometime in November. As a reminder to all of you on the call, these clubs will be located in cities which we currently do not have warehouse clubs: Pereira, Medellin, and Bogota. This will take our total count in Colombia to six warehouse clubs. We're excited about these openings and bringing our membership warehouse club concept to these cities; particularly the major cities of Bogota and Medellin.

To finish my comments, and before I turn things back to John Heffner, I would just like to express my appreciation for the hard work of everyone on the PriceSmart team in our corporate and regional offices, distribution centers, and our 32 warehouse clubs across our many countries.

Thanks, again, for joining us today, and now John Heffner will share some additional comments before we take your questions.

Thank you, Jose Luis. Let me highlight a few additional items specific to our financial results for the second quarter before we take your questions.

Warehouse gross profit margins as a percent of net warehouse sales were 14.5%, a reduction of 19 basis points from Q2 of FY13, generally consistent with our trends over the past few quarters. Membership income grew at 13.9% on 11.4% growth in member accounts. The impact of the membership fee increase, which went into effect in June 2012, has pretty much worked its way through the membership income stream, and future growth in membership income should approximate the growth in accounts.

Similar to what we reported in Q1, warehouse club operations expenses in Q2 were essentially equal to Q2 of last year at 8.1% of net warehouse sales. We had positive leverage of expenses in many of our warehouse clubs, but this was offset by additional expenses associated with the two new warehouse clubs that were in operation in the quarter compared to Q2 of FY13. In total, SG&A expenses improved 4 basis points. Pre-opening expenses in the quarter of $340,000 were associated with our soon-to-open Tegucigalpa, Honduras warehouse club.

In addition, the warehouse club currently under construction in Bogota is on leased land. We took possession of that property in the second quarter, and began paying rent. The rental expense will be recognized in pre-opening expenses during the construction period for that club, and become warehouse operating expense upon opening of the warehouse club. This will cause us to have a bit more pre-opening expense for this club than we historically have had for clubs where we have acquired the land.

As noted in our 10-Q, we are now reporting the gain or loss on disposal of assets above operating income, whereas before it was reported after operating income, but before pre-tax income. These amounts, and they are generally losses, relate primarily to the replacement or retirement of fixed assets that have some remaining net book value in the normal course. As such, we decided it was more appropriate to include that expense in our operating income.

Operating income in the quarter was $39.4 million, or 6% of sales. The second quarter is historically our highest period of the year for operating income as a percent of sales, due to the seasonally high sales level associated with December.

As Jose Luis mentioned in his discussion on sales, the second quarter, and in particular the month of February, was a period when a number of our currencies devalued against the US dollar. However, for the quarter, we recognized a gain of $712,000 related to the foreign exchange revaluation of our monetary assets and liabilities. This largely relates to the US dollar asset balances we held in Costa Rica at the time when the colon devalued. Should the colon now strengthen, the Company would recognize a foreign exchange revaluation loss.

As we have mentioned in the past, while we cannot control the movement in exchange rates between our currencies and the US dollar, we do try to manage our exposure to those changes through various means, as detailed in our 10-Q. In the year-ago period, the Company recorded a $265,000 loss.

The other place on our financial statements which is impacted by movements in foreign exchange rates is other comprehensive income or loss, which is found in the equity section of our balance sheet. We carry the value of our significant in-country assets, such as long-term fixed assets, land, building fixtures, and the value of our inventory in local currency. These assets are translated back to US dollars at the foreign exchange rate on the balance sheet date. Reductions or gains in that carrying value related to currency translation movements are recognized in other comprehensive income or loss. Again, as a result of the currency devaluations in many of our countries, most notably Costa Rica and Colombia, we recorded a loss to other comprehensive income of $12.6 million, primarily from the revaluation of those assets on our books.

The effective tax rate in the quarter was 28.2%, a little better than the 29.4% rate in Q2 a year ago. The second quarter is generally our lowest tax-rate quarter related to the proportional level of income we recognize in our lower tax-rate countries compared to the US.

As reported in our earnings release, net income for the quarter was $28.3 million, or $0.93 per share compared to $0.82 per share in the year-ago quarter.

A few words on our balance sheet and the movement of cash in the quarter: We ended the quarter with $75.3 million in cash and cash equivalents, approximately the same as the end of the first quarter. Cash from operations generated $73 million, of which $28 million was released from inventory. We invested $41 million in land, buildings and fixtures, $17 million of which was land, and used another $28 million in financing activities, most notably the payment of a dividend to shareholders of $10.6 million. Subsequent to the end of the quarter, we entered into a loan agreement with The Bank of Nova Scotia for $34 million, and have drawn down $24 million against it to finance ongoing warehouse club construction. We will draw down the remaining $10 million within the next six months.

In addition, we closed on a long-term loan in Honduras for the equivalent of $13.8 million, although the loan is in lempiras. These funds are primarily being used to finance a new club opening in Tegucigalpa in May, and reduce our foreign exchange exposure in Honduras.

With that, Jose Luis and I would be happy to take your questions. Lisa, [can] I turn things over to you?

(Operator Instructions)

Ronald Bookbinder, The Benchmark Company.

On the membership renewal rate, while it maintained the 12-month rolling average of 85%, on a quarterly basis it looks like it had softened up a bit. Is that because of the devaluations in certain territories that could be causing a little bit of economic pressure?

No, it's been a few quarters, Ronald, that we have been reporting the 85%. We reported a little bit higher numbers, probably, what, almost a year ago, more than a year ago, but the effect of the devaluation, I don't think we have seen it yet on -- I mean, we can say Jamaica has definitely had impact on devaluation. We don't really see a big impact on renewals and the one in Costa Rica, which I highlighted at the beginning of the call and John did the same, was just recent.

We don't really see that impacting and 85% is pretty consistent with renewal rate we have seen in the last few years. Hopefully, that will not change, though, Ron.

Okay. If you look at what the quarter must have been, I was calculating that the quarter must have been at about an 80% renewal rate, which was down from the prior two quarters to average out that 85%.

I guess I don't know how to make that math, maybe you're catching me out. We're 85%. Annual renewal rate is the way to look at it and we've been holding steady at 85% for quite some time I think now.

At least for three, four quarters.

Yes.

Okay. On the comp, yes, it's totally understandable, Semana Santa shifting three weeks later would impact March, but is there any way for you to quantify what you think the impact was on a basis point for the month of March?

I think the best way to think about that, Ron, is to wait until we've announced April and then we'll be able to see what the impact is because we can take a look at March and April put together.

That's what we usually do. Internally, we look at both months together to kind of see if we're following that trend. This happens pretty much every year.

But this year in particular, the separation of Easter was longer and obviously, it sent the whole business to the month of April, which we're actually about to start Semana Santa in all these countries, it starts this Saturday. We're looking forward to good business, obviously with higher transactions in the clubs and the clubs are ready for that incremental business now coming.

Okay. Are you seeing any benefit from the platinum plan in Costa Rica and could that be moving system-wide?

We're happy with what we have seen, Ronald, but it's still a little early to extend it to other countries. So far, we're still learning. It's been a little bit over a year that we hit the anniversary of platinum. We started November 2012, so we hit the anniversary November 2013. We have a lot of good members happy with the program, but we still have to study a little bit more what's going on in the results before we can extend it.

The other thing I'd add there, Ron, is also we're learning how to best implement a program like this. We recently changed, for example, that move from the annual period not being on the annual membership renewal rate, but on a once a year basis for getting the rebate checks, similar to how Costco does it here. We started down one path and we moved to another one. We're continuing to refine our implementation of that program as well.

Yes.

Okay. Great. Thank you and good luck going forward.

ROTH Capital Partners, Dave King.

This is Joe for Dave. Can you talk a little bit more about how TVs and electronics trended during the quarter, as well as in March? And kind of some of your promotions behind and if you guys are seeing any sort of traction leading up to the World Cup at this point?

We're starting to see a little bit of traction. Definitely, we have good expectations on World Cup. I think I mentioned this on my last call, for the Latin America countries, different from the US, because I know World -- I guess soccer is not as important as it is in the US -- in our countries, it's much more important than in the US and fortunately, we have actually a few countries that qualify for World Cup and there is a lot of attention on TVs and a lot of attention on World Cup events.

Hopefully, it will be good for our electronics and even other categories within the selection. The sales on electronics will probably start more strong within the last weeks of April and for sure May, as people get ready for June 12 first game.

Okay. Great. In your opening remarks, did you say that electronics in the quarter were down just in low single-digits?

Yes, I did say that and also, they were down in Q1. It's been an effect -- as we follow other retailers, we know that a lot of them had experienced something similar, even the big TV companies have had some difficulties in the last few quarters. There hasn't been anything new coming out in the electronics world, except for some technology that is still pretty expensive like the 4K and other things.

It's been quite a challenging time for electronics. Everybody has a lot of [data] probably in World Cup to change a little bit of that trend and get a lot of bars and homes to replace old technology or go after bigger screens and help a little bit the sales of electronics. That's pretty much what we're looking at trying to accomplish.

Okay. Your warehouse club gross margins held up pretty well year-over-year and actually improved sequentially. Can you talk a little bit about what might be driving that and how should we be thinking about your ability to lower prices on a go-forward basis to help drive volumes and comps?

I think our warehouse margins actually went down, might be looking at total gross margin, which would also include membership income. Again, we have the effect of still working through some of the increase in the membership fee we did back in June of 2012. But consistent with what we've been doing for the last number of quarters and probably years, we have a reduction of our net warehouse margins, I think it was 19 basis points in this last quarter.

That's the model for the Company as we continue to grow sales and leverage our operating expenses and can push that back into lower margins. We also, obviously, can lower prices by efforts to continue to buy better and to see efficiencies in our distribution operation, which we can pass those savings on to our members in lower prices as well.

Okay. Great. It seems like new membership growth has slowed in recent months. Can you just talk a little about what's been driving that?

We're going at about 11%, I think we said.

Yes. I highlighted an 11% growth compared to the last quarter and 13% on income, so it's been actually consistent growth. We have been holding at double-digit growth for the last couple of years, actually. It's following a good trend. We don't really see that slowing down. It's been pretty consistent.

Okay. Thank you.

Jon Braatz, Kansas City Capital.

It was a very noisy quarter, a very noisy six months in terms of currency movement. Any way you can quantify what type of impact the currency movement had on maybe gross sales? There's weakness in Colombia and Costa Rica and they're pretty big markets. Any way you can quantify that?

Our currency generally devalued against the US dollar as we have noted, we note in our 10-Q. In fact, if you're a real 10-Q person, if you look on page 62, we've actually highlighted and show what the devaluation's been during the six-month period in our major markets. In that regard, the sales growth we report in US dollars will generally be lower than the sales growth in local currency.

Right.

However, a number of factors makes sizing this difference, I think, a pretty tricky matter, Jon. Among them, we do reprice our imported merchandise, purchased in US dollars, to maintain our target margins, although with an eye to maintaining our competitive price umbrella.

In addition, while the translation of the sales of our local merchandise, when we translate that back, it translates back as fewer US dollars, there may be offsetting price increases associated with higher underlying inflation in these markets that could mitigate that. It doesn't necessarily lend itself to an easy calculation.

That's a long way of saying that yes, devaluation of currencies in our markets probably negatively impacts our sales growth, but that's always been the case. Attempting to fully account for the various factors associated with it is pretty tricky business. It's simply one of the risks we attempt to manage as an international warehouse club business.

Net-net, yes, it probably impacts the growth and we did see, particularly, I think in February, Costa Rica devalued pretty quickly as opposed to sort of a normal devaluation. We did not reprice up merchandise because most of the merchandise we brought in at the lower cost, so there was no need for us to reprice it. That probably had an impact on sales for Costa Rica when we translated back to US. But over time, that will correct itself as we reprice for new merchandise that lands at higher cost.

Okay. In the month of March, the Colombian currency appreciated nicely, so that may be a little bit of a tailwind for the month of March?

Until it goes down again or up again.

Until it goes down again, up again. All right. Okay. John, you talked a little bit about pre-opening levels in Bogota, you're going to include rental expense in pre-opening expenses. You've got two other stores opening. When do some of those expenses begin to hit beyond just what you've mentioned in Bogota?

Generally, pre-opening expenses tend to hit two or three months before.

Three months before opening. We're planning opening in November. We'll probably start seeing a lot of that -- starting August, we will see higher level of expenses coming for pre-opening, Jon.

Okay. With those three new stores they'll be rather elevated compared to what we've seen previously, correct? In aggregate.

Sure, right.

Okay.

I don't recall last time we opened three warehouse clubs within a couple of weeks of each other.

It's been a while, or probably many, many years since we have opened three in probably in a month or whatever period specifically we will open. Yes, it's going to hit us a little bit on the expense side, but obviously, we're looking forward.

Okay. Jose, given the fact that you're opening three new stores within a couple months, does that place any limitations on what else you may do in a near-term basis? Would you want to get those things completed before you move on other stores? Is there any limitation on your expansion plan because of those three quick new openings here in the latter part of this year or late part of this year?

I will say, Jon, not necessarily. Actually, we're still active looking for alternatives wherever we find them and we have a team that is, obviously, a real estate team. In terms of expansion, the real estate team is keeping an eye on opportunities that can come in other major cities or other places and particularly, the construction team, the one that is really busy.

But I think we set up the Company to a point that we can open these three without causing a distraction in growing and obviously, keeping, also, the business on the current 32, almost 33, warehouse clubs that we have now. It's a little challenging, but the good thing is we knew it was coming and we have been working on planning a good, quality season, a good successful opening of the three warehouse clubs in Colombia, and obviously, keep an eye on opportunities for growth. I would say not necessarily we will be affecting our future growth.

Okay. Thank you very much.

(Operator Instructions)

Edwin Johnston, Sandhill Investment Management.

Staying with Colombia, John, we've had a few discussions. Is the general idea there still that you have the three openings, which will get you to 6, that 15 eventually? No time frames, because I know you won't give them, but is a 12 to 15 type of number in Colombia in a long-term sense still the type of number that you would like to work to in that country?

I'm not sure where -- I guess if the we ever mentioned the 12 or 15, but obviously, the way we have made our math is that given the size of the country, Edwin, with almost 45 million people, it gives us the opportunity -- that's the population of Central America, if you make the math, it gives the opportunity to have as many as we have in Central America.

There is an opportunity there and obviously, the big cities like Medellin and Bogota, just Bogota with 8 million people, we know that one warehouse club is not been sufficient to serve a city of that size, so there is obviously a good opportunity. That's our intention, to keep looking for opportunities, especially the major cities and other secondary cities where we still don't have a presence. The opportunity is still there.

As you mentioned, we don't have a time frame when we can complete more warehouses. We feel pretty good about closing the year with six warehouses, which will be a pretty good accomplishment after three years of starting our business in Colombia. We will try to add, obviously, as we can. As you make the math here, we can probably suggest that there will be more than what we have, but not sure if the 12 or 15 number is something we have.

I didn't mean to throw anything out there that's not there. That's fair enough. You're going to try and do additional stores. Speaking to the priority, I know you're opportunistic with regard to acquiring land and acquiring sites and how difficult it is; you've spoken acquiring the land, the permitting process, so on and so forth.

Which would you say is a priority, the clustering in bigger cities like Bogota and Medellin or new smaller cities, secondary cities, which you still find attractive where there might be less competition? Going forward, is there a preference between those two?

No, not really. We actually have our eyes on both. The process is long. We just try to do a little bit of both at the same time.

We have ideas on things that we can make happen in the major cities and at the same time, opportunities for the secondary cities, which usually are pretty good cities; not necessarily with a lot less competition, but obviously good opportunities still. What we have found with our warehouse club concept is that a lot of people would like to have one in their cities.

As we do social media and other things, we hear from people really asking for us to be in secondary cities, which are also definitely a good opportunity. But there's not a priority on getting those. We want to try to get as much as we can and knowing that the process is long, that's the right thing to do to start working on all fronts and try and get as much as we can.

With regard to your real estate team out there looking, is it fair to say, and if you have some wonderful new geography I'm sure you won't tell us anyway, but is it fair to say that they continue the majority of their efforts or all of their efforts are in Colombia? Or are other newer geographies a possibility at this point in time or is it still really all about Colombia?

No, it's not all about Colombia. We still have opportunities, as you can see. In the last 12 months, actually, we opened one in Costa Rica, we're about to open one in Honduras. We are still trying to add, where possible, some existing units in current markets. We try to have a good balance between Colombia and existing markets so we don't slow down the opportunities that we may have in existing countries, which we know are pretty good.

We're pretty pleased with what we have done in the existing countries and we don't want to lose that attention either. It's just a matter of keeping a good balance, Edwin, on that.

Okay. Your efforts remain in the current countries and not in terms of looking in new countries, is that fair?

Yes, that's a very fair statement.

Thank you very much, Jose.

David Strasser, Janney Capital Markets.

Just to talk a little bit about cannibalization, currently, I know you talked a lot about Costa Rica and one store in Colombia being cannibalization. I'm just trying to think if this is kind of the peak period of this cannibalization, whether Honduras will add to the cannibalization because it sounds like the other stores going up in Colombia shouldn't be or they're in different markets, so as we kind of cycle through this, you'll start to hopefully see those negative comp stores start to rise again. I'm just trying to understand a sense of timing around some of these different moves.

Okay. David, the first answer is Honduras will definitely hit us again when we open in May. It will definitely have an impact because we have the existing warehouse club in Honduras needs some of that cannibalization to keep growing. It's going to be painful for a few months or in the short-term, but it's going to be good for that warehouse club and obviously, the growth for the entire city of Tegucigalpa.

In the meantime, we're almost about, probably three months from the anniversary of the opening of the second one in Cali. We're going to still have a few months of impact in Cali. The new clubs in the new cities will have a relatively small impact because even though we have some members shopping from Bogota or Medellin, it's not going to be as significant.

They should have no impact on comps, the ones we're opening in Bogota and Medellin, those are really incremental.

Those are incremental new sales and very little impact. The one that we definitely know is going to affect us and we're prepared to live with, is the one in Tegucigalpa. It's the right thing to do, but it's going to affect us. It's just a matter of timing.

In the last year, the three openings that we have had have affected existing warehouse clubs, starting with Cali, then Costa Rica, now obviously, Honduras. The need of growth that we have in some of those countries that is going to affect those, David, for a short-term period.

Has the cannibalization done the positive of taking some of the pressure off these stores? Can you hear that from the people in the stores that have been cannibalized, that maybe the shopping experience is better? Because when I've been down there, it's ridiculous to try and -- you go in any sort of peak period, it's just been ridiculous. Has the positive aspects of that shown up in the shopping experience?

No question. The members in Zapote, probably they wish that we have moved more sales to the other one, but definitely, it's making the shopping experience there better, which is the intention. In the past we heard comments from people saying nobody goes there because it's so crowded. So it is happening and we keep hearing that in some of those markets, so it's a positive.

Obviously, the way we see things is they will even grow again. Zapote is one of the clubs that got hit with the cannibalization of sales, but there is opportunity for members that stopped going or stopped going as frequent because as you mentioned, if you have been there on a weekend or even a weekday, it was hard to find a parking spot in some of our locations. We want to make that shopping experience better and that's the intention of this cannibalization.

In some ways thinking about it, as the Colombia one rolls off from a cannibalization standpoint on some level, the Honduras one comes in, so probably overall, what we've been seeing may roughly be the same type of cannibalization numbers, give or take, at least by club, over the next year or so?

If I look at the month coming up here, I think the second club in Cali comes back into our comp base in July. Given that we opened Tegucigalpa number two in May, I think May and June, probably those months will be when we have three clubs being cannibalized. It will fall into two being cannibalized come July and then how that all plays out. It's going to be with us for a while.

On a little bit of a shorter term note, talking about the March numbers, there's no question, obviously, the later Easter's going to help April. Last year, just to make sure, Easter Sunday you're closed and then a bunch of stores get closed on Good Friday. That's an offset in April where you'll have Easter Sunday closed and a handful of stores or something on Good Friday?

We actually close only on Good Friday and (multiple speakers). Other than that, there's one country that I believe we close on Easter Sunday.

A few on Easter.

It's not a big impact on April.

So, the bigger impact is definitely the lead-up to it? I remember reading about last year moving it up, you said it added 70 basis points when you moved it up from the first week of April when it was two years ago to the March 30 or March 31 last year, it added a little bit to your overall business.

Yes, I think last year I think it sort of bridged the month a little bit. This is clearly in one versus the other, which is why we wanted to call it out. This is a pretty big separation and I think no run-up to this amount of Santa activity happened in March this year, whereas I think in prior periods, there's always been some bleed one way or the other across the boundary.

At the risk of prying too hard on this, can you give any sense of magnitude? I know you don't want to give a definitive number or anything. Is it several hundred basis points you think that will shift in comp? Is it 500, 200?

I'll give the response that I gave to Ron, David, is we're a couple weeks away from announcing our April sales. We could speculate what it would be, but I'd rather tell you what the actuals are when we get them.

No problem. I appreciate it. Thank you very much.

At this time, there are no further questions. I'll hand the conference back over to our speakers for any additional or closing remarks.

Thank you, Lisa. This ends our call so thank you all for participating with us today. Bye-bye.

Thank you.

Ladies and gentlemen, that does conclude today's program. Thank you all for your participation.