Covid-19 Restrictions and Forex Shortages Hit PriceSmart Sales
Currency shortages induced by Covid-19 restrictions saw PriceSmart deciding on reducing the imports. One that led to a significant slowdown in the sales of net merchandise across Trinidad and Tobago. This is for the period ending 31st of May 2021 and constitutes the third quarter for 2021. Sherry Bahrambeygui, the CEO, stated in a conference call last month how the continual rise in Covid-19 infections and the imposed restrictions led to the declining sales figures. Trinidad and Tobago boast of four membership clubs operated by PriceSmart. The club’s capacity and sales saw a 50 percent decline due to the imposed restrictions and lockdown, limiting the sales to essential goods and groceries.
Limiting the US imports to Trinidad in a significant decision earlier this year owing to the challenges involved with currency conversion has been the primary cause for the declining net merchandise sales for the quarter. A 21.8 percent decline was recorded for the third quarter in the net merchandise sales for Trinidad owing to the rising cases of Covid-19. The decline also stemmed from the continual reduction for inventory shipments of the US to the Trinidad market owing to the illiquidity situation for US dollars. PriceSmart sourced other tradable currencies to meet the growing demands for foreign exchange shortages, as quoted by Bahrambeygui. At the same time, work was ongoing for increasing the sourcing for US dollars across multiple projects.
One of the means included exporting goods to various outlets across other markets produced in Trinidad and Tobago. US inventory shipments saw a reduction for the short term by PriceSmart due to the limitations surrounding the non-essential merchandise sale in Trinidad and Tobago. The end of the third quarter, as pointed out by BahramBeygui, stated the decrease to be a whopping $20 million to $76.7 million. This included the Trinidad cash equivalents, dollar-denominated cash, to the short and long-term investments all put together amounting to $521.1 million in Trinidad and Tobago currency. This is in comparison to the $96.7 million registered at the end of the second fiscal quarter.
The quarter-over-quarter decrease stemmed from a merger of various improvements with regards to sourcing of US dollars. This was further fuelled by the additional reduction in importing merchandise for the third quarter. One that led to more sources than finding uses for the US dollars for the same period. Bahrambeygui is hopeful of multiple sectors of the economy reopening in the fourth quarter, increasing imports.
