Pricesmart (PSMT) risk factors, FY2024 10-K

Other

1. 01Our financial performance is dependent on international operations, which exposes us to various risks
2. 02Negative economic conditions created or exacerbated by inflation, and higher interest rates could adversely impact our business in various respects
3. 03Our profitability is vulnerable to cost increases
4. 04We face significant competition
5. 05Our sales could be adversely affected if one or more major international online retailers were to enter our markets or if other competitors were to offer a superior online experience
6. 06We are exposed to significant weather events and other natural disaster risks that might not be adequately compensated by insurance, and we are susceptible to the long-term impacts of climate change
7. 07We face difficulties in the shipment of, and risks inherent in the importation of, merchandise to our warehouse clubs
8. 08We are subject to payment related risks, including risks to the security of payment card information
9. 09We face the possibility of operational interruptions related to union work stoppages
10. 10Any failure by us to manage our widely dispersed operations could adversely affect our business
11. 11We depend on maintaining and expanding our membership base, and any harm to our relationship with our Members could have a material adverse effect on our business, net sales and results of operations
12. 12We might not identify in a timely manner or effectively respond to changes in consumer preferences for merchandise, which could adversely affect our relationship with Members, demand for our products and market share
13. 13Future sales growth depends, in part, on our ability to successfully open new warehouse clubs in our existing and new markets
14. 14Failure to grow our e-commerce business through the integration of physical and digital retail channels and the investments we are making to develop a robust e-commerce platform could materially adversely affect our market position, net sales and/or financial performance
15. 15We are subject to risks associated with our dependence on third-party suppliers and service providers, and we have no assurances of continued supply, pricing or access to new merchandise
16. 16Our failure to maintain our brand and reputation could adversely affect our results of operations
17. 17We face the risk of exposure to product liability claims, a product recall and adverse publicity
18. 18We rely extensively on computer systems to process transactions, summarize results and manage our business. Failure to adequately maintain our systems or disruptions of our systems could harm our business and adversely affect our results of operations
19. 19Our use of artificial intelligence in our business or more rapid adoption of artificial intelligence by our competitors could result in harm to our brand and adversely affect our results of operations
20. 20Any failure by us to protect our trademarks, trade secrets and other intellectual property, or our actual or alleged infringement of other companies’ intellectual property, could harm our business
21. 21Business acquisitions or divestitures and new business initiatives could adversely impact the Company’s performance
22. 22Failure to attract and retain qualified employees could materially adversely affect our financial performance

Legal and Compliance Risks

1. 23We face compliance risks related to our international operations
2. 24We could be subject to additional tax liabilities or subject to reserves on the recoverability of tax receivables
3. 25A few of our stockholders own approximately 15.3% of our voting stock as of August 31, 2024, which may make it difficult to complete some corporate transactions without their support and may impede a change in control

Financial and Accounting Risks

1. 26We are subject to volatility in foreign currency exchange rates and limits on our ability to convert foreign currencies into U.S. dollars
2. 27Changes in accounting standards and assumptions, projections, estimates and judgments by management related to complex accounting matters could significantly affect our financial condition and results of operations