Good afternoon, everyone, and welcome to PriceSmart Incorporated's Earnings Release Conference Call for the first quarter of fiscal year 2022, which ended on November 30, 2021. After remarks from our company's representatives, Ms. Sherry Bahrambeygui, Chief Executive Officer, and Michael McCleary, Chief Financial Officer, you will be given an opportunity to ask questions as time permits. As a reminder, this conference call is limited to one hour and is being recorded today, Friday, January 7, 2022. A digital replay will be available following the conclusion of today's conference call through January 14, 2022.Dial 1,877-344-7590 for domestic callers.Call 1,412-317-0088 for international callers.About entering the recall access code,601-4456.
For opening remarks, I would like to turn the call over to PriceSmart's Chief Financial Officer, Michael McCleary. Please proceed, sir.
Thank you, and welcome to the PriceSmart earnings call for the first quarter of fiscal year 2022. We will be discussing the information that we provided in our earnings press release and our 10-Q, which were both released yesterday afternoon, January 6, 2022. You can find these documents on our investor relations website at investors.pricesmart.com, where you can also sign up for email alerts. As a reminder, all statements made on this conference call, other than statements of historical fact, are forward-looking statements concerning the company's anticipated plans, revenues and related matters. Forward-looking statements include, but are not limited to, statements containing the words expect, believe, plan, will, may, could, estimate, and similar expressions. All forward-looking statements are based on current expectations and assumptions as of today, January 7, 2022.
These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks detailed in the company's most recent annual report on Form 10-K and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update forward-looking statements made during this call. Now I will turn the call over to Sherry Bahrambeygui, PriceSmart's Chief Executive Officer.
Good day, everyone. Welcome to our earnings call. I hope you're all starting 2022 with the same optimism that our folks here have for the new year. We have some great topics to cover today, and as you can see from the results, we had a very strong first quarter of the fiscal year. COVID or no COVID, supply chain disruptions or not, the results from this entire team are very, very solid. Now looking at the numbers. During the first quarter, our total membership base has grown to a new record level with 7% growth year-over-year. Our 12-month membership renewal rate is very strong at 89%.
Our headline numbers all grew over the prior comparable period, and it's worth noting that results for this quarter have been compared to a quarter last year in which significant growth was achieved relative to the same quarter in fiscal year 2020. The net merchandise sales increased 12.6% versus the same period last year. With regard to comparable sales in Q1, we increased 9.4% versus the same period last year. Currency continued to be a headwind and impacted total and comparable net merchandise sales by 1%. Our operating income was 3.3% in the first quarter of this fiscal year when compared to the same period last year.
Earnings for the Q1 grew 10.1% to $30.5 million from $27.7 million in the prior year period, yielding diluted and basic earnings per share of $0.98 in the current quarter versus $0.90 in the prior year period. Now looking forward into Q2, we can report strong holiday sales with our comparable net merchandise sales for four weeks ended December 26, 2021, they were up 10.1%. This was despite a negative currency impact of 2.8%. We're seeing good momentum, and our team is well prepared to build on that momentum. Now, I'd like to talk a little bit about how we're pursuing growth for our company. We're focused on three major drivers to grow our company. The first is real estate.
We're opening new clubs and making investments in our distribution network to ensure that we're strategically located in the right places to maximize efficiency in the supply chain. Second is enhancing the value of the membership. Third is driving incremental sales for the company through our new platform, pricesmart.com, and other digital capabilities. Now let's briefly touch on some of our activities in each of those areas. With regard to real estate, we continue to actively seek opportunities to expand our geographic footprint for brick-and-mortar warehouse clubs. It is our intent to continue and even accelerate our current pace of club growth over the next 3-5 years as we continue to explore and evaluate opportunities in new markets. Since the beginning of the COVID pandemic, we've opened 4 clubs. Two of those clubs were just opened in the Q1 of 2022.
The first of those two is Guatemala Club in southwest Guatemala City, Guatemala, and it's our sixth club in Guatemala. Our COO attended the opening and was extremely pleased with the club, our employees, and the overall offering we provide in that market. In only about three months, we've seen strong performance and good growth in membership, and we see potential for even more clubs in Guatemala. In November, during the first quarter of the fiscal year, I, along with several members of our regional team, traveled to Colombia to visit our clubs there and evaluate the market. We attended the opening of Club Montelíbano, our ninth club in Colombia, located near Montería. We felt great passion for that market, and it was greatly assuring that our local management team is doing an exceptional job.
Our employees are positive and extremely grateful for how they've been cared for and protected during this very difficult time. We are working to increase our presence in the Colombian market. Although not yet announced, we can share with you today that we're under contract, permits have been issued, and site preparation is underway on a new club in Medellín, Colombia. The site is in the center of a densely populated and growing area of Medellín with very good demographics for our business. I got to see it myself when I was there in November, and we're extremely excited about the prospect for this location. Assuming all goes as planned, this club, which we refer to as Medellín, should open in the fall of 2023. Also, as we previously shared, the Portmore Jamaica club is progressing nicely.
We believe Jamaica has a strong market growth, and the sales generated out of our Kingston club have been historically record-setting for that location. We're looking forward to breaking ground on Portmore approximately a year from here, and that will mark the fiftieth club for our company. We've invested in our real estate team and have more potential locations identified for potential new clubs in the coming years. Approach to site finding includes intensive site surveys to conduct evaluation or due diligence. There's no doubt the positive results that we're seeing from newer clubs, the increase in demand for our membership, and the opportunities that we see to serve the needs of these markets responsibly and competitively is a strong motivator to increase our brick-and-mortar presence and expand our geographic footprint with new clubs.
Hand in hand with our plans for club growth is smart planning for our distribution network and additional distribution centers of various types so that we can most efficiently support the flow of merchandise from the supplier to the member, be it sales generated through clubs or through pricesmart.com. Also, the need for optionality in today's world has proven essential. Therefore, we plan the most appropriate investments in our distribution network to maximize efficiency, to minimize supply chain disruptions, and to provide optimal support for a growing e-com business. We also intend to expand our network of produce distribution centers from three that we currently operate to six. Sites are at various stages of analysis and selection. We expect that these additional 6 produce distribution centers will allow us to serve local and regional programs to all of our current markets.
These distribution facilities sometimes also provide the opportunity to centralize certain production activities, such as bakery, meat processing, and packaging, and labeling, all of which we think can lead to greater efficiency. As we scale up the number of our clubs and sales in our markets, we continually evaluate how to land our merchandise at the lowest cost. Strategically located distribution centers can help us to realize greater efficiencies, which result in better pricing, harder to get lost sales, and provide optionality to mitigate the shortcomings associated with supply chain disruptions. That's a reality that we're all having to contend with nowadays. Now moving to our second driver for growth, enhancing membership value. At its core, the club business model is about making our value proposition so compelling, so great that people choose to pay a membership to access what we provide.
We are continually developing new ways to reduce costs and provide greater value. This has been through our direct farm program, where we invest to partner with local farmers to source better quality produce at a lower cost, which we can then pass the savings on to the member. Another example is our private label program. We have strong brand recognition in our markets and a great reputation. Private label gives us the opportunity to give even greater value to our members. We plan to continue expanding our offering, especially in the area of hard and soft lines. Private label also provides us the opportunity to source quality items locally when appropriate. Select local sourcing has a number of benefits. For example, it supports local communities in which we operate and develops an industry and creates jobs and impacts jobs.
It can help mitigate access to our access risk. It reduces exposure to supply chain disruption and escalation of transportation costs. There are a number of reasons for us to continue investing in and expanding our private label, including the fact that it's a differentiator for us, given that it's our own brand. Private label represented approximately 26.6% of our merchandise sales in the Q1 of 2022, which is up from 22% for the full year of 2021. We also enhance membership value by offering services that can enhance the quality of life for our members. Our wellbeing initiatives, which continues to expand, currently offers optical services in 45 clubs, which include eye exams for the members and additional members of their families, along with deeply discounted quality eyeglass frames.
We expect that we're gonna be opening at least two more before the end of this fiscal year. Our optical has proven to be a great success for us. We provide audiology services. This is one of our newest initiatives under the wellbeing umbrella. We provide those services in all five of our Guatemala clubs, free hearing exams for members and members of their family, as well as deeply discounted hearing aids. We expect to roll out audiology to somewhere between a third and half of our clubs before the end of the fiscal year. We've opened pharmacies in all eight of our Costa Rica clubs and also intend to roll out pharmacy to more of our markets.
Members also benefit from the convenience services we provide, such as curbside pick-up and delivery options for purchases using our Click & Go platform. We continue to invest in and enhance these services. We also believe that a benefit of being a member is that we can be trusted. As a company, we are trusted, and we are working on really cultivating that goodwill and trust that comes from the fact that we put such emphasis on keeping our members safe and treating them responsibly. During COVID and to this day, we've maintained competitive pricing and great value for our members.
Even in times of scarcity and supply chain interruptions, our team did a great job of ensuring we had the right amount of the right merchandise at the right place, at the right price, and at the right time, so that we could maximize sales and make available those goods when our members needed them most. In fact, driving membership value leads to a higher membership base, an opportunity, you know, provides an opportunity to increase the membership fee when appropriate, and it allows us to reinvest the membership fees to drive prices down, which in turn then makes the membership even more valuable. By adding more valuable benefits that members can only get from us, we expect membership incomes to grow, and for that to be a driver for both for our company. Now turning to our third main driver.
We are focused on generating incremental sales from pricesmart.com and other online capabilities. This doesn't mean that it's necessarily limited to the sales that are transacted online, but by virtue of our presence online, we see opportunities to generate incremental sales both online and in our clubs. As mentioned earlier, we continue to invest in our development and evolution of pricesmart.com and other technology tools that allow us to engage in better analytics with the valuable resources we have with our membership data. We're seeing positive signs and opportunities to grow sales through our online platform. In fact, we found that members who shop both online and in clubs generally spend more than comparable members who shop exclusively in clubs. In Q1, on pricesmart.com, we saw an increase in sales, transactions, and penetration of total sales from the immediately preceding quarter.
We recently surpassed 1.5 million transactions on pricesmart.com. Sales via pricesmart.com represented 4% of our first quarter sales, up from 2.5% in the preceding quarter, which is fiscal FY 2021. However, once again, it's important to emphasize that our online format and our clubs do not operate in silos. Pricesmart.com provides a great opportunity to connect and demonstrate our value proposition to our members. The two formats should reinforce each other to drive greater sales overall for the company. The online platform provides convenience. In fact, 15% of all new members in Q1 signed up online. It's also an effective vehicle to provide information and offerings that can help drive in-club sales as well. In addition, through pricesmart.com, we have better connectivity with our members and a two-way communication channel that allows us to provide better customer service.
Although our current online platform and technology tools have already become a significant part of how we do business to connect with our members, we believe we have untapped opportunity to utilize this platform and the data it generates to effectively grow incremental sales. Wrapping up, underlying all of these drivers of growth and what makes any of this a reality is our people. We've always been a company that puts our employees first. I must admit, COVID, you know, it not only gave us an opportunity to prove it to our employees, it compelled us to do even better. One of the most tangible accomplishments in this last year, which you don't see reflected necessarily in the numbers. To make sure that all of our employees at all levels of our company have access to good healthcare.
No doubt, this was a cost we had not previously incurred, but I believe it is one of the wisest long-term investments we've made. Appreciation, loyalty, and commitment expressed by our employees is palpable. I firmly believe how we have steered the company through these uncertain times is a major contributor to the results that we're talking about here today. I wanna thank our team for a great job on a stellar quarter, and I'll hand it back to Michael now. Thank you.
Thank you, Sherry. Good morning or afternoon to everyone, and thanks for joining us today. Before I begin, I would like to take this opportunity to thank our team members for their tremendous efforts and dedication during this past quarter and holiday season. Our results are a reflection of that hard work and determination. Total revenues and net merchandise sales for the quarter were $975.4 million and $944 million, respectively, representing increases of 11.2% and 12.6% over the comparable prior year period, respectively. Including the clubs we opened in El Frutal, Guatemala in October and Montelíbano , Colombia in November, we ended this quarter with 49 warehouse clubs compared to 36 warehouse clubs at the end of the Q1 of fiscal 2021.
We are excited about our plans to reach the milestone of 50 clubs when we open our second club in Jamaica in April 2022. We experienced a very strong opening out of the gate with Aranda, and membership sign-ups for our Puerto Blanca club have been well ahead of our target. We believe that this is further evidence that consumers in these markets appreciate and embrace our unique business model. The comparable net merchandise sales growth for our fiscal Q1 was 9.4% for the 13 weeks ended November 28, 2021. Foreign currency fluctuations had a negative impact on both net merchandise sales and comparable net merchandise sales of 100 basis points or approximately $8.4 million and $8.5 million, respectively.
By segment, in Central America, where we had 27 clubs at quarter end, net merchandise sales increased 18.6%, with a 13.1% increase in comparable net merchandise sales. All of our markets in Central America had positive comparable net merchandise sales growth, with exceptional performance in the Northern Triangle countries of El Salvador, Guatemala, and Honduras. In the Caribbean region, where we had 13 clubs at quarter end, total net merchandise sales increased 5.4% and comparable net merchandise sales increased 5%. The Dominican Republic, Jamaica, and Aruba all contributed double-digit sales growth. However, this strong performance was partially offset by weakness in Trinidad, where we have four clubs, which had a sales decline of 6.2% in the Q1 .
This decline was primarily driven by our measured approach to rebalance our merchandise mix following the reopening of the economy at the end of our fiscal 2021. In December, we began to see strong positive comps again in Trinidad due to a combination of rebalancing our in-stock inventory levels, strong year-end demand, and having lapped the impact of our pullback on inventory imports, which began impacting sales in December 2020. We are monitoring the evolution of this market closely, but generally continuing to manage our imports to be in line with the amount of US dollars we expect to source in Trinidad. In Colombia, where we had nine clubs open as of the end of November, net merchandise sales increased 16.6% and comparable net merchandise sales declined 2.8%.
The comparable net merchandise sales decrease contributed approximately 30 basis points of negative impact to total comparable net merchandise sales for the quarter. The decrease in Colombia during the first quarter was primarily due to foreign currency devaluation, with a relatively small impact on sales transfers from existing clubs due to our new Américas club we opened in the Q2 of last year. In terms of merchandise, we saw our foods category grow 9% compared to the same quarter in the prior year. Our cleaning, beverages, and liquor departments led the way with 9%, 36%, and 13% growth, respectively. Our fresh category grew 12% compared to the same quarter in the prior year, with our poultry, meat, and seafood departments with 21%, 18%, and 15% growth, respectively.
Our total non-foods category grew 3% compared to the same quarter in the prior year. Hardline declined 3%. However, excluding Trinidad sales from both periods, where the reduction of our imports negatively impacts year-on-year comparison, Hardline's grew at 2.9%. Our Hardline seasonal Christmas department enjoyed a strong rebound versus the prior year period, with 96% growth, offsetting some of the declines in our other departments. The home category grew approximately 20%, with sales of casual apparel growing 26% and home furnishings growing 24% versus the same quarter last year. Lastly, our other business category rebounded with 17% growth, primarily from our food service and bakery departments, buoyed by increased on-site traffic.
Turning to margins, total gross margins on net merchandise sales came out at 16% for the quarter, which is substantially in line with the 16.1% margins for the same period last year. Total gross margins decreased 60 basis points from 17.4% of total revenues when compared to the same period last year. This decrease is primarily the result of 50 basis points of lower gross margins following our sale of Aeropost during the quarter. SG&A expenses increased $11.2 million compared to the prior year, primarily due to the addition of three new clubs and our continued investment in technology and talent to support continued growth. This decreased by 20 basis points as a percentage of total revenue. This decrease is primarily due to lower operating expenses after our sale of Aeropost.
The impact of eliminating Aeropost's operating expenses was a 40 basis points contribution to lower warehouse clubs and other expenses and a 10 basis points contribution to lower general and administrative expenses. These combined cost savings of 50 basis points were offset by the 50 basis points lower margin contribution I mentioned previously. Therefore, the sale of Aeropost had a basically neutral year-on-year impact on operating income. Operating income for the quarter increased 3% from the same period last year to $46 million. Net interest expense decreased $0.4 million for the first quarter, primarily due to the short-term borrowings compared to the prior year period when we drew down on short-term lines of credit as part of our efforts to strategically cash to cover contingency arising from COVID-19 related risks.
We repaid all these borrowings by the end of the third quarter of fiscal 2021. Other income was $1.4 million, was primarily driven by a pretax gain of $2.7 million from the sale of Aeropost. On an after-tax basis, the Aeropost disposal resulted in a net contribution of $0.05 EPS during the quarter. The pretax gain on disposal was partially offset by a $1.9 million loss associated with the cost to convert Trinidad dollars into other tradable currencies and the revaluation of monetary assets and liabilities in several of our markets. Our effective tax rate for the Q1 of fiscal 2022 came in higher than last year at 34.1% versus 32.9% a year ago.
This increase of 1.2% is attributable to a comparably unfavorable net tax impact from non-recurring items of 1.7%, which primarily related to changes in uncertain tax positions, offset by a comparable favorable benefit from recurring items of 0.5%, primarily resulting from changes in valuation allowances on our contract on a go-forward basis. We continue to estimate an annualized effective tax rate of 33%-34%. Net income for the Q1 of fiscal year 2022 was $30.5 million or $0.98 per diluted share, compared to $27.7 million or $0.90 per diluted share in the comparable prior year period. Moving on to the balance sheet. We ended the quarter with cash equivalents, and restricted cash totaling $192.6 million.
Net cash used in operating activities decreased by $4.4 million compared to the prior year. The decrease in net cash used is primarily a result of the increase in profits during the quarter when compared to the prior year, with changes in operating assets and liabilities largely offsetting each other. Our inventory position has increased to $501 million as of November 30, 2021, from $373 million as of November 30, 2020. This increase reflects our efforts to bring our inventory levels in line with our sales trend and the addition of two clubs versus the prior year period.
In addition, we have made strategic investments in inventory to maintain adequate in-stock levels on items that either have been or we expect may be impacted from increased container transit time, especially for merchandise coming from Europe and Asia and commodity and electronic chip shortages. Net cash used in investing activities decreased by $38.3 million compared to the prior year, primarily due to the increase in purchases of certificates of deposit compared to the same 3-month period a year ago from the significant improvement or decrease in our balance of Trinidad dollars on hand versus the prior year. Cash used in investing activities is also net of approximately $5 million of net cash proceeds from our disposal of Aeropost during the quarter.
With respect to Trinidad, our balance of Trinidad dollar-denominated cash equivalents, and investment long-term investments measured in US dollars improved slightly during the quarter, decreasing $3 million from our fiscal 2021 ending balance to approximately $49.9 million. As part of our continued efforts to convert Trinidad dollars to US dollars, in December 2021, we executed a loan whereby we received $25 million. The associated principal and interest on this loan will be paid in Trinidad dollars, converted at rates in effect in December 2021 over a four-year period, thereby locking in the conversion of a significant amount of Trinidad dollars at current conversion rates and freeing up some cash in US dollars for deployment for general corporate purposes.
The $23.4 million change from cash used in to cash provided by operating activities is primarily the result of higher net repayments of short-term debt compared to the same three-month period a year ago when we were repaying short-term facilities accessed at the early stages of the COVID-19 pandemic. We continue to be vigilant about our cash position and are ready to adapt to sudden changes in circumstances. In closing, we are very pleased with the results achieved during the first quarter of fiscal 2022 and believe that we are off to a good start for our fiscal second quarter, driven by the 6.1% comparable net merchandise sales growth in December. Our balance sheet continues to be very strong and we believe we are well-positioned to drive future growth through real estate, membership value, and further digital expansion through pricesmart.com.
This achievement is a team effort involving this entire organization and their diligence to make PriceSmart a key component of our members' lives. I will now turn the call over to the operator to take your questions. Operator, you may now start taking our callers' questions.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please mute your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to attend to our roster. The first question will come from Jon Braatz of Kansas City Capital Associates. Please go ahead.
Morning, Michael. Morning, Sherry.
Good morning.
Good morning. I'm curious with COVID cases rising again, are you seeing any indications in your markets that there might be a return to some operational restrictions at your stores?
At this point, we're not seeing anything of significance. However, cases are definitely rising. I believe the view is that this round may be different from prior rounds, but we don't know. We basically have to wait to see if the government officials may decide to impose restrictions or not. To date, we're not seeing much of a difference. We're prepared, though, regardless, to be able to make sure that we can get the goods that our members need to them in the most safe and effective way, no matter what the circumstances are.
Thank you. I hope, you know, it sounds like Trinidad is getting a little bit better. It sounds like you're seeing a little bit of sales improvement. Have you adjusted prices accordingly? I know you raised prices to counter the currency restrictions, but have you adjusted pricing in Trinidad?
I guess, John, you can say we're priced to get up in this. You know, we did have a little bit of a buffer there in the Q4. Not for the reasons we wanted, but because we had pulled back on certain shipments before the closures, and we continued through $6. That was a big help to get, you know, in our fiscal Q4 to get the balance sheet back down to sort of more historical levels. We, you know, we continue to see challenges there. We haven't adjusted pricing at this point. We're actively monitoring. We're leaving that, you know. You could see as I reported, we had $1.9 million hit in sourcing of FX during the quarter.
We continue to experience the costs associated with that. We've also now added this new loan, which will add some financing costs. But we're, you know, pretty excited about this new loan as being a new vehicle to generate new growth. We have not pulled back on any pricing at this point.
All right. Thank you.
The next question will come from Charlie Carter at Ceredex Value Advisers. Please go ahead. Hi. I was just trying to better understand the general administrative costs that I think you all have alluded to, some of the talent investments, either in, like, real estate or IT or just other IT related spending. There's, I guess, maybe the health insurance comment too might be part of that. Just trying to make sure I understood that increase and then also would like to kind of have a, you know, near to medium term view on kind of what where you see that cost line item going. I have a follow-up, if that's okay.
Yeah, thanks. As I mentioned, we've got a couple of moving pieces in there this quarter, right? We've got the reductions from Aeropost, right? That kind of changes the year-on-year aspect of that. As we've mentioned, I think last quarter, you know, I think once you pull out the FX for Aeropost, we're kind of expecting that we're gonna continue to invest, as Sherry mentioned, in things like healthcare. We've mentioned we're sort of really on investments in talent, and healthcare is just one example of that.
We're continuing to invest in the talent and technology, and we're hoping to, you know, as sales are growing again, that we can at least stabilize that G&A percentage as a part of sales as opposed to some of the deleveraging we've had. Now, if you include filling in, there are obviously some distortions as we open these new clubs. You advance up some costs for new clubs, so they all are factoring that into this G&A until we advance to kind of more stabilized selling levels.
Forgive me. Is there a target where you want to grow that? I mean, I understand there might need to be some, you know, one-time investment in the business there. Just given your intended acceleration in real estate growth, store growth, do you hope to kind of keep it constant as a percentage of sales? You think you can actually leverage it as you know, leverage these real estate, you know, the real estate talent you've added on and you know, IT spending that will support dotcom, et cetera.
I guess the best way to say it at this point is in the near term, you know, we're continuing to make the investments we feel are appropriate to fund that growth. Sherry laid out a pretty expensive growth plan we have over the next few years. As that growth comes to play, then that certainly should help us leverage. In the near term, you know, we're gonna continue to make those investments so we can support that growth.
Hi. On that, just looking at, you know, in recent years, we have invested in, and I'm focused on the talent portion right now. You know, we've invested in expertise in areas that the company really didn't have or need, you know, years ago. We now, for the first time in the last year or so, have a Chief Technology Officer. We have an EVP-level professional who is, I guess, like data analytics and helping us use the data to mine some of the investments in technology so that we can apply that in a way that allows us to make better decisions, respond more quickly, shape in other areas of the business and help us grow in a very just a clean way with executive support and decisions.
Retail, as you know, has evolved in the last few years, and those were not necessarily positions that were essential for a successful retail company. Because of the interplay with technology and the way consumers behave now and how we expect them to behave going forward, these are areas that are extremely important and do have the opportunity to leverage, to be leveraged. The one thing about technology is that it's not like another club that every time you build a new brick and mortar, there's a process there. Technology often has the opportunity to apply the same tools across a larger scale without the cost going up. There are opportunities to leverage this, but in the meantime, we are making those investments that we feel are gonna strengthen the foundation of the company for the long term.
These are things that we believe are essential and appropriate for us to be able to grow faster and stay ahead of the curve and be able to reach more members and conduct our business smartly. In the short term, yes, we will continue investing, but we have faith that with the right investments bear fruit in the long run, and that's our approach for the company.
Yeah. You certainly are realizing at least the early benefits of that. I'm not disagreeing with whether they're warranted. I guess maybe just a follow and then I do have one other question, if that's okay. How many years do you think, though, will you be kind of at an elevated level of investments with distribution centers and, you know, adding into the stores? You talked to the board. What are the expectations you're, you know, setting for them in terms of spending at a, you know, historically elevated level?
Well, I mean, the more you grow, the more you want to grow, the more you're going to spend, right? If you're gonna open one club a year, the spend is gonna be much lower than hypothetically 10 clubs a year. If you want to expand into new markets, you will likely be spending more. We are definitely poised for growth. It's difficult for me to tell you how long there's gonna be additional investments made, but we're only gonna make these investments if we think we're getting a good return.
That elevated expense really suggests that we believe that what we're investing in is going to help us grow and help us, you know, increase our membership base, increase our geographic footprint, and generate more sales so that the company can grow to its potential. In the meantime, you know, we do take a measured approach, but we're seeing enough signs that we have a level of confidence that our business model has a very specific purpose and role, especially in emerging markets. Not only do we have opportunity in some ways coming out of this COVID, but there's a sense of responsibility because we experience how our business model and the values that we hold and the tenets that we maintain really do help keep our members supported and businesses supported.
There's a level of trust that has been highlighted by this experience, that members have and we can continue to generate profits and expand our reach to people who can benefit from our business model, and we can improve their lives, and we intend to do so.
I know. Just quickly then on the real follow-up question. On historical, you know, foreign exchange headwinds for the P&L, do you all at least attempt to kind of price for that in U.S. dollar, you know, so that, so that you don't have margin deleverage on that? Because I'm assuming at least some portion of your cost of goods, you know, originally was denominated in U.S. dollars. How do you all manage through that? Do you have any analytics to do that well? Just yeah whatever you can say on pricing and, you know, the transactional headwind from a stronger U.S. dollar.
Yeah, thanks for starting. Yeah, good follow-up. Yeah, we're very actively monitoring FX. We basically, you know, our whole business model is kind of a cost plus model where, you know, we bring things in based on the average cost of the increase in transportation or such costs from our vendors, whatever's coming in. We're constantly monitoring that on a weekly or a monthly basis, depending on, you know, especially countries like Colombia that have so much volatility. We're very actively monitoring that and repricing dynamically. You can see we've had pretty stable margins over the last few years especially. We're very much. I mean, we're very much on top of that and repricing as much as we can as the foreign currency fluctuates.
Thank you for that.
This concludes our question and answer session. I would like to turn the conference back over to Ms. Sherry Bahrambeygui for any closing remarks. Please go ahead. I'd like to thank you all for joining us today. We are looking forward to 2022, and we hope that you'll join us again for the next quarter earnings. Take care. Bye.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.