v3.26.1
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 9 Months Ended
May 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to interest rate risk relating to its ongoing business operations. To manage interest rate exposure, the Company enters into hedge transactions (interest rate swaps) using derivative financial instruments. The objective of entering into interest rate swaps is to eliminate the variability of cash flows in the Secured Overnight Financing Rate ("SOFR") interest payments associated with variable-rate loans over the life of the loans. As changes in interest rates impact the future cash flow of interest payments, the hedges provide a synthetic offset to interest rate movements.
The Company is also exposed to foreign currency and interest rate cash flow risk related to non-functional currency long-term debt of some of its wholly owned subsidiaries. To manage this foreign currency and interest rate cash flow risk, some of the Company’s subsidiaries have entered into cross-currency interest rate swaps that convert their U.S. dollar-denominated floating interest payments to functional currency fixed interest payments during the life of the hedging instrument. As changes in foreign exchange and interest rates impact the future cash flow of interest payments, the hedges are intended to offset changes in cash flows attributable to interest rate and foreign exchange movements.
In addition, the Company is exposed to foreign currency risk related to the forecasted merchandise inventory purchases by its international subsidiaries whose functional currency is other than the U.S. dollar. To mitigate this risk, some of the Company’s subsidiaries have entered into non-deliverable forward foreign-exchange contracts. These contracts are intended to reduce the variability in cash flows associated with forecasted purchases by effectively fixing the foreign currency exchange rates for such transactions.
These derivative instruments (cash flow hedging instruments) are designated and qualify as cash flow hedges. The gain or loss of the derivative, measured at fair value, is initially reported on the consolidated balance sheets in accumulated other comprehensive loss. Amounts recorded in accumulated other comprehensive loss are subsequently reclassified into earnings in the same period that the hedged item impacts consolidated earnings.
The Company is exposed to foreign currency exchange rate fluctuations in the normal course of business, including foreign currency exchange rate fluctuations on U.S. dollar-denominated liabilities within its international subsidiaries whose functional currency is other than the U.S. dollar. The Company manages these fluctuations, in part, through the use of non-deliverable forward foreign-exchange contracts that are intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended to economically address currency exposure to U.S. dollar-denominated liabilities arising from merchandise inventory expenditures, as well as currency exposure related to forecasted construction costs in Chile. Currently, these contracts do not qualify for derivative hedge accounting, and changes in their fair value are recognized immediately in earnings. The Company seeks to mitigate foreign currency exchange-rate risk with the use of these contracts and does not intend to engage in speculative transactions for other purposes. These contracts do not contain any credit-risk-related contingent features.
Cash Flow Hedges
As of May 31, 2026, all of the Company’s interest rate swaps, cross-currency interest rate swaps and a portion of the NDF derivative financial instruments were designated and qualified as cash flow hedges. The Company formally documents the hedging relationships for all derivative instruments that qualify for hedge accounting.
The amounts recorded in accumulated other comprehensive loss for qualifying NDF foreign-exchange contracts are reclassified into earnings in the same period that the hedged merchandise expenditures impact the consolidated statements of income.
The following table summarizes the Company’s interest rate swaps and cross-currency interest rate swaps agreements for which the Company has recorded cash flow hedge accounting for the nine months ended May 31, 2026:
EntityDate
Entered
into		Derivative
Financial
Counter-
party		Derivative
Financial
Instruments		Initial
US$
Notional
Amount		US$
Loan
Held With		Floating Leg
(swap
counter-party)		Fixed Rate
for PSMT
Subsidiary		Settlement
Dates		Effective
Period of swap
Colombia subsidiary25-Nov-24Citibank, N.A. ("Citi")Cross currency interest rate swap$18,700,000PriceSmart, Inc.6.00%10.91 %27th day of each November, February, May and August beginning on February 27, 2025November 27, 2024 - November 27, 2027
Colombia subsidiary15-Nov-24Citibank, N.A. ("Citi")Cross currency interest rate swap$10,000,000PriceSmart, Inc.3.00%7.61 %17th day of each February, May, August and November beginning on February 18, 2025November 18, 2024 - November 17, 2026
Colombia subsidiary19-Sep-24Citibank, N.A. ("Citi")Cross currency interest rate swap$12,500,000PriceSmart, Inc.4.00%9.15 %24th day of each September, December, March and June beginning on December 24, 2024September 24, 2024 - September 24, 2029
Colombia subsidiary30-Nov-23Citibank, N.A. ("Citi")Cross currency interest rate swap$10,000,000PriceSmart, Inc.5.00%11.27 %30th day of each November, May, August and 28th day of each February (except in case of a leap year, 29th day of each February) beginning on February 29, 2024November 30, 2023 - November 30, 2026
Colombia subsidiary12-Apr-23Citibank, N.A. ("Citi")Cross currency interest rate swap$10,000,000PriceSmart, Inc.4.00%11.40 %11th day of each July, October, January and April, beginning on July 11, 2023April 12, 2023 - April 11, 2028
Colombia subsidiary3-May-22Citibank, N.A. ("Citi")Cross currency interest rate swap$10,000,000PriceSmart, Inc.3.00%9.04 %3rd day of each May, August, November and February, beginning on August 3, 2022May 3, 2022 - May 3, 2027
SD Property Managers, LLC16-Jun-25Fifth Third Bank, National AssociationInterest rate swap$12,500,000Fifth Third Bank, National AssociationVariable rate 1-month SOFR4.02 %1st day of each month beginning on July 1, 2025June 16, 2025 - June 16, 2035
Panama subsidiary11-Jul-24Banco Davivienda (Panamá), S.A. successor to Bank of Nova Scotia ("Scotiabank")Interest rate swap$16,500,000Banco Davivienda (Panamá), S.A.
3-month SOFR with a 2.95% floor
4.43 %1st day of each March, June, September and December beginning June 3, 2024February 29, 2024 - March 1, 2029
PriceSmart, Inc.7-Nov-16U.S. Bank, N.A. ("U.S. Bank") successor to Union Bank, N.A.Interest rate swap$35,700,000U.S. Bank
Variable rate 3-month SOFR plus 1.70%
3.65 %1st day of each month beginning on April 1, 2017March 1, 2017 - March 1, 2027
The following table presents the Company's non-deliverable forward foreign-exchange contracts for which the Company has recorded cash flow hedge accounting for the nine months ended May 31, 2026:
EntityDates Entered into (Range)Derivative Financial Counter- partyNotional Amount (USD)Settlement Dates (Range)Weighted Average Strike Rate
Colombia subsidiaryMarch 24, 2026-May 6, 2026Citibank Colombia S.A.$42,000,000 June 2, 2026 - October 21, 2026
3,802 (COP to USD)
Colombia subsidiaryMay 14, 2026-May 27, 2026DAVIbank S.A.$6,000,000 October 28, 2026 - November 10, 2026
3,850 (COP to USD)
For the three and nine months ended May 31, 2026 and May 31, 2025, the Company included the gain or loss on the non-deliverable forward foreign-exchange contracts for which the Company has recorded cash flow hedge accounting in the same line item—Cost of goods sold - net merchandise sales—as the hedged merchandise expenditures as follows (in thousands):
Income Statement Classification
Net Loss Reclassified from OCI into Earnings
Cost of goods sold - net merchandise sales for the three months ended May 31, 2026$(271)
Cost of goods sold - net merchandise sales for the three months ended May 31, 2025$— 
Cost of goods sold - net merchandise sales for the nine months ended May 31, 2026$(271)
Cost of goods sold - net merchandise sales for the nine months ended May 31, 2025$— 
The Company entered into non-deliverable forward foreign-exchange contracts to mitigate the foreign currency exchange rate risk associated with forecasted merchandise inventory expenditures within the Company’s international subsidiaries whose functional currency is other than the U.S. dollar. These non-deliverable forward foreign-exchange contracts are designated and qualify as cash flow hedges under ASC 815. The amounts recorded in accumulated other comprehensive loss are reclassified into earnings in the same period that the hedged item impacts the consolidated statements of income.
For the three and nine months ended May 31, 2026 and May 31, 2025, the Company included the gain or loss on the interest rate swaps and cross-currency interest rate swap agreements in the same line item—interest expense—as the offsetting gain or loss on the related hedged debt instruments as follows (in thousands):
Income Statement Classification
Interest expense on borrowings (1)
Cost of swaps (2)
Total
Interest expense for the three months ended May 31, 2026$779 $1,260 $2,039 
Interest expense for the three months ended May 31, 2025$696 $890 $1,586 
Interest expense for the nine months ended May 31, 2026$2,373 $3,520 $5,893 
Interest expense for the nine months ended May 31, 2025$2,620 $2,115 $4,735 
(1)This amount is representative of the interest expense recognized on the underlying hedged transactions.
(2)This amount is representative of the interest expense recognized on the derivative instruments designated as cash flow hedging instruments.
The total notional balance of the Company’s interest rate swaps and cross-currency interest rate swaps was as follows (in thousands):
 Notional Amount as of
Floating Rate Payer (Swap Counterparty)
May 31,
2026		August 31,
2025
U.S. Bank$26,563 $27,519 
Fifth Third Bank, National Association12,500 12,500 
Citibank N.A.71,200 71,200 
Banco Davivienda (Panamá), S.A.15,792 16,337 
Total$126,055 $127,556 
Derivatives listed in the table below were designated as cash flow hedging instruments. The table summarizes the effect of the fair value of interest rate swaps, cross-currency interest rate swaps and non-deliverable forward foreign-exchange contracts that qualify for derivative hedge accounting and their associated tax effect on Accumulated Other Comprehensive Loss (in thousands):
May 31, 2026August 31, 2025
Derivatives designated as cash flow hedging instrumentsBalance Sheet
Classification		Fair
Value		Net Tax
Effect		Net
OCI		Fair
Value		Net Tax
Effect		Net
OCI
Cross-currency interest rate swaps
Other non-current assets
$298 $(105)$193 $— $— $— 
Cross-currency interest rate swapsOther current liabilities(6,203)2,172 (4,031)— — — 
Cross-currency interest rate swapsOther long-term liabilities(2,430)851 (1,579)(5,381)1,884 (3,497)
Interest rate swaps
Other current assets
403 (91)312 — — — 
Interest rate swaps
Other non-current assets
— — — 701 (157)544 
Interest rate swapsOther current liabilities(144)39 (105)— — — 
Interest rate swapsOther long-term liabilities(183)48 (135)(815)207 (608)
Non-deliverable forward foreign-exchange contracts
Other current assets
134 (47)87 — — — 
Non-deliverable forward foreign-exchange contractsOther current liabilities(698)244 (454)— — — 
Net fair value of derivatives designated as hedging instruments$(8,823)$3,111 $(5,712)$(5,495)$1,934 $(3,561)
Fair Value Instruments and Economic Hedges
From time to time the Company enters into non-deliverable forward foreign-exchange contracts, which are treated for accounting purposes as fair value instruments or economic hedges and do not qualify for derivative hedge accounting. The use of non-deliverable forward foreign-exchange contracts is intended to offset changes in cash flow attributable to currency exchange movements. These contracts are intended to economically address currency exposure to U.S. dollar-denominated liabilities arising from merchandise inventory expenditures incurred by the Company’s international subsidiaries whose functional currency is other than the U.S. dollar and to reduce the variability in cash flows associated with forecasted construction costs in Chile.
The following table summarizes the non-deliverable forward foreign exchange contracts that do not qualify for hedge accounting and are open as of May 31, 2026:
Financial Derivative
(Counterparty)		SubsidiaryDates
Entered into (Range)		Derivative Financial
Instrument		Total Notional
Amounts
(in thousands)		Settlement
 Dates (Range)
Citigroup Global Markets LimitedPriceSmart, Inc.24-Mar-2026Forward foreign exchange contracts (Chilean pesos)$28,600 10-Sep-2026 - 8-Oct-2027
Citibank, N.A. ("Citi")Colombia21-Jan-2026 - 16-Apr-2026Forward foreign exchange contracts (USD)$14,000 25-Jun-2026 - 24-Sep-2026
Forward derivative gains and losses on non-deliverable forward foreign-exchange contracts that do not qualify for hedge accounting are included in Other expense, net, in the consolidated statements of income in the period of change. The gains (losses) associated with these contracts for the three- and nine-month periods ended May 31, 2026 and May 31, 2025 are as follows:
Income Statement Classification
Net Gain (Loss)
Other expense, net for the three months ended May 31, 2026$148 
Other expense, net for the three months ended May 31, 2025$(231)
Other expense, net for the nine months ended May 31, 2026$(753)
Other expense, net for the nine months ended May 31, 2025$(1,361)