Hi, everyone, and welcome to PriceSmart Incorporation's Earnings Release Conference Call for the Q4 of Fiscal Year 2021 has ended on August 31, 2021. After remarks from our company's representatives, Sherry Durham Baty, Executive Quarter and Michael McPhery, Chief Financial Officer. We will be given an opportunity to ask questions as time permits. As a reminder, this Call is limited to 1 hour and is being recorded today, Friday, October 22, 2021. A digital replay will be available following the conclusion of today's call through October 29, 2021, by dialing 1-eight seventy seven-three forty four-seven thousand five 29 are domestic callers for 1412-317 0088 for international callers and by entering the recent access code 101, 59,925.
For opening remarks, I would like to turn the call over to BrightSource's Chief Financial Officer, and Diplomatieri. Please proceed, sir.
Thank you, and welcome to the PriceSmart earnings call for the Q4 of fiscal year 2021. We will be discussing the information that we provided in our earnings press release and our 10 ks, which were both released yesterday afternoon, October 21, 2021. You can find these documents on our Investor Relations website at investors. Cosmart.com, and you can also sign up for e mail 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 I'm not limited to, statements containing the words expect, These will, may, should, or Smith in some other discussions. All forward looking statements are based on current expectations and assumptions as of Today, April 22, 2021. These statements are subject to risks and uncertainties, which 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 via www.sec.gov. These risks may be updated from time to time. The company undertakes no obligation to update non GAAP statements made during this call.
Now, I will turn the call over to Sherry Barrenegaegi, PriceSmart's Chief Executive Officer.
Pardon me. Thank you, Michael. Good day, everyone. Thank you for joining us and for your interest in PriceSmart. Fiscal 2021 is the full year.
Our team of more than 10,000 dedicated employees really fell by working together as one team to innovate and respond to the fluid circumstances that we continue to experience throughout the 13 markets in which we operate. Driven by the commitment and hard work, we're pleased to report strong results for our Q4 fiscal year, and we continue to see growth in sales and membership as we begin the Q1 of the new fiscal year. Despite ongoing COVID related restrictions in some form that has affected most all of our clubs, For the Q4 of fiscal 2021, net merchandise sales grew 12.7% and comparable net merchandise sales grew 10.3% compared to the same quarter last year. Our membership has grown to an all time high and our 12 month trailing renewal rate is the highest it's ever been since we began recording it 14 years ago. These 4th quarter results were achieved through improved operational efficiencies, new digital capabilities, optionality for our inventory flow, our ecommerce platform, pikesmart.com, MENA Analytics, incremental member benefits and services, alternative sourcing of goods in response to global supply chain disruptions, expansion of our private label program and most importantly, the resilience of our dedicated team that has become fully addressed to the test of the rapidly changing dynamic brought on by the pandemic and its varying impact on our markets.
We continue to evolve into a more data driven organization. Our membership model in and of itself differentiates us from other retailers and provides a competitive advantage and provides a lot of data that allows us to better serve our members. Knowledge is power and we are gaining valuable insights through the new analytics will allow us to use membership data effectively to improve member satisfaction and ultimately contribute to higher membership renewal rates. Notably the early and comprehensive measures we've taken to protect and prioritize the well-being and safety of our employees and members has further strengthened our standing in our markets. Additionally, we believe that our adherence to the fundamentals of our business of 6th place merchandise and the guidance of this entire call has also contributed to positive results.
For example, even when comparing our performance to the pre pandemic period in FY 2019, warehouse productivity has increased. And in inventory management, we've reduced markdowns, salvage, throwaway and demurrage. These two metrics have improved relative to the comparable time in 2019 despite the challenges we continue to experience as a result of the pandemic. We believe our value proposition is really resonating with our members. I'm excited to report that our total number of membership accounts reached an all time high of 1,670,000 accounts as of August 31, 2021, even after we experienced a COVID related shift at the end of fiscal 2020.
That's a 7.2% increase when compared to the comparable prior year period. Our trailing 12 month renewal rate was 89.6% for the period ended August 31, 2021, up from 80.5% for the period ending August 31, 2020 and up from 85.7 percent for the period ending August 31, 2019. This 12 month renewal rate of 8 months in the fiscal year is the highest since we've been publicly reporting this data and has increased 200 basis points from the end of the Q3 of fiscal 2021. This shows our business model is the winner in our market. Our membership model is a key differentiator from our competitors and an important asset.
Our investors in technology and new talent, provide valuable data analytics, which by the way, our dollars are helping us unlock greater value from our membership data. This provides us with the opportunity to provide better customer service and more quickly gained better insight into trends and preferences. It also enhances predictability and is a great benefit to any business, especially in a rapidly evolving environment due to the pandemic, global supply chain disruption, cultural shifts and consumer behavior in the age of e commerce. Early indications are showing that so far members have engaged with us online and in club, members who we consider to be true omni channel members tend to spend more with us than those who only engage with us in growth. Additionally, to date, we've seen that pricemart.com transactions generally yield a higher spend per transaction in our average in club transaction.
During Q4, pricemart.com allows our members to purchase online for purchase pickup and delivery through Click and Go. That represents 3.5% of our net merchandise sales. Click and Go is currently available in all 37 of our clubs. Our delivery service is growing as a larger proportion of our price smart.com sales. Our experience with Cushing Girl has demonstrated demand for the service and the data generated by pricemart.com and online channels is another way technology has enabled us to enhance the value of the membership.
We believe typesmart.com is providing us a platform for significant sustainable growth for our business and a valuable incremental benefit to our members. We're also pleased to see members using price smart.com to sign up and renew their Online member sign up and renewals, which we refer to as digital membership, provide several advantages to us, including the opportunity for auto renewal and auto payments, and helps to sustain our renewal rate. Digital memberships also provide a more direct way of communicating with members and learning about their preferences. Our focus on converting our members digital sign ups and renewals have helped us increase digital sign ups from 6% of all new sign ups in fiscal 2020 to 16% in fiscal 2021. Another encouraging time that our membership model resonates members and the growth of our platinum program, which offers annual rebates to members in exchange for a higher annual membership fee of approximately $75 compared to approximately $35 for a Diamond membership.
Analytics and new communication channels with potential members have helped us better demonstrate the value of this program to our members. Platinum accounts in total have grown by 28% since the end of fiscal year 2020 and by 73% since the end of fiscal year 2019. Platinum accounts now represent 7% of our total member account base as of the end of fiscal year 2021. The parent department members, they tend to show more loyalty and credibility as they renew their membership at higher rates and have higher average spend than our diamond numbers. We finished rolling out the platinum program to all of our markets during this past fiscal year 2021.
Our commitment to the development of technology and analytics is reflected throughout the company, including the leadership team. Accordingly, I'm very pleased to announce that effective September 1, 2021, Inclis Panabowski has promoted to a newly created position for the company, Executive Vice President, Member Experience and Strategic Analytics. Prior to his promotion, Mr. Maslowski served as Senior Vice President of Kismarck Member Experience. Since joining SkySmart, he has expanded the capabilities of our leadership team, made great strides in helping us better understand members.
And Steve, along with his team, has devised strategies to grow sales by extracting valuable insights. In addition, Mr. Maslowski and his team have shown how the infusion of user friendly data and reports positively impact inconsistent decision making throughout the company. Now let's turn to sales by segment. During the Q4, we delivered significant sales growth to Central America versus a 16 period last year.
All markets within this segment produced positive sales growth for both the quarter and the full fiscal year. Central America posted 2.9% sales growth in the Q4 compared to the prior year period. In Guatemala, we are looking forward to opening our this club next week and that club is known as Miranda. During the quarter, despite the strong performance of 5 clubs in the Dominican Republic, we saw a decrease in net merchandise sales in our Caribbean region. This is primarily driven by Trinidad where we have 4 clubs and where they've been experiencing a high level of COVID infections and related restrictions.
In the second half of the fiscal year twenty twenty one, the government of Trinidad responded with strict lockdowns and significant restrictions that resulted in complete closures for a few weeks, followed by a reduction of our sub capacity and our sales being limited to only groceries and essential goods. This coupled with our decision earlier in the year to limit U. S. Imports to Trinidad due to the ongoing challenges of converting currency, led to a significant decline in net merchandise sales and Trinidad for the quarter. Colombia delivered an impressive 21.7% sales growth for the quarter despite the negative FX impact.
And next month, we will be hosting Pizza de Manga, our nice club in this market. In terms of merchandise, we saw our non food category comprised of both hardlines and softwares continue its impressive run with 16.3% growth compared to the same quarter in the prior year. Our merchandising team has done a great job of anticipating demand and working with our global suppliers to capture high demand inventory was very difficult for our competitors. As a result, our top line category grew approximately 40%, casual apparel grew 41% and basic apparel grew 48% as we continue to last year. We're seeing a shift in consumer behavior from the stockpiling and surge demand for essentials in the second half of fiscal year twenty twenty and increased demand for discretionary items will continue into this fiscal year.
Our hard line category experienced approximately 7% comparable sales growth compared to the prior year quarter. Virtually all categories in that segment enjoyed growth. The leaders were garden patio, which grew 42%, sporting goods, which grew 29% and small appliance sales grew 19%. Due to the COVID dropouts in the prior period, as expected, we experienced comp declines year over year in our concerts, grain and grocery categories, which were largely offset by a rebound in other categories such as soda beverages, pepper fries and oil contaminants. Overall, our cruise category remained steady and had a nearly 6% gain in the quarter.
Our fresh categories were nearly 11% this quarter versus Q4 of last year with poultry growing 22%, meat were up 23% and gourmet foods were up 12%. We're seeing growth in our high quality fresh products work through our direct farm program. Our direct farm program, to remind you, reduces costs and improves the quality of our fresh produce offerings, while also supporting local farmers and industry in our markets. Our new produce distribution centers allow us to provide farm to table produce more cost effectively, allowing us to pass on a better value than if we were to purchase is from distributors. We currently have 2 produce distribution centers in operation located in Panama and Costa Rica.
We expect our 3rd produce distribution center in the Dominican Republic to be fully operational by the end of the current quarter. We intend to continue to expand this program with additional produce distribution centers in more of our markets going forward. We expect to license programs as a win win win for our business, our members and our local communities. And also furthers our options to be a socially responsible business. A significant component of our to continue on strategy and another way we build brand loyalty and differentiate ourselves from our competitors through our private label products.
Our private label products only earn a private label if we believe the product is the same or better quality as the leading brand Virtu Butterflies. We've increased our selection in all major areas versus the prior year. Our private label sales as a proportion of our total net merchandise sales for the 12 months ended August 31, 2021 was 22%. This is going to be an important part of our merchandising strategy as we move forward. Beyond the obvious benefits quality, value and price, private label gives us greater opportunity to nearshore, to sourcing and manufacturing on select items, with the opportunity to invest in local markets to help potentially reduce the risk of supply chain disruptions and it helps characterize potential opportunities for vertical integration.
Our upper business category yielded 41 percent comparable net sales growth led by our food court, which comprised 46% and bakery, which grew 31% for the quarter versus the prior year. We achieved these growth levels despite the fact that turning back to the court, we closed most of the quarter and were restricted to take out for the rest of the quarter. Additionally, a few of the markets also have some foreclosure days that negatively impacted sales in this category. Turning to supply chain and inventory. Just like many other businesses across the globe, we experienced several calendars during the quarter, including container shortages, port delays, trucks and driver shortages.
These depressions and shortages are impacting the timing of deliveries and leading to higher freight transportation and labor costs. Despite all of these issues, we work hard to hold down and will mitigate the price increases passed on to the members while maintaining sufficient inventory. Our expanded network distribution centers and additional real time data on a number of fronts has facilitated alternative routes to shipments, increased throughput provided flexibility, all of which helped us keep commodity in stock and generating sales for this quarter. We've also made keeping inventory and working with our local vendors to source alternative products to reduce potential future out of stock on high demand items it has been impacted by the construction which has been affected by electronic part shortages. In the last several months, we also experienced inflation because of significant increases in the process of commodities that are input to our vendors' products.
Despite these issues, the team has done a great job of holding, delaying or mitigating cost increases in their continued efforts to provide the best value for our members. However, supply chain disruptions and overall inflationary impact of sourcing and shipping merchandise are causing pressure on our ability to consistently source merchandise and will likely further impact our costs and the price of merchandise. We are closely monitoring our inventory and supply levels to continue to provide robust profitable value in the inflationary environment while mitigating a constant risk of declining demand. Now looking at real estate. We're excited about our plans to open 48th clubs in Aragansa, Guatemala next week, which will be our 1st club in Guatemala.
We also seek to open a new college format warehouse comes into Armando Colombia next month, which will be our nice club in Colombia. Our technology and omni channel capabilities to enhance the value of our smaller format book concept by allowing us to extend our reach and strengthen regional or secondary city locations and represents a significant opportunity for growth for the company. Following Boramanga, the next 20 opening will be in Portmore, Jamaica, which is currently scheduled to open in spring of 2022, this fiscal year. We have expanded our real estate team and have an active pipeline of additional potential club locations that we're working on in many of our markets, which we will announce as the level of certainty around the timing of these projects to weatherize. We will evaluate the locations, guidance and investments required for these additional clubs in the context of the opportunity we now see to capture sales through the combination of our brick and mortar cloud, our price smart.com platform, enhanced delivery capability and potentially less costly TTC located fulfillment and delivery hubs, which we are studying now.
Our member wellness initiatives remain a key focus of our growth strategy. As of August 31, 2021, we had 38 income occupancy centers in 9 of our markets. We plan to expand this service to almost all hubs by the end of fiscal 2022. As of the end of fiscal 2021, we had pharmacies in 3 of our clubs in Costa Rica and we expect to open pharmacies in the remaining 5 Costa Rica clubs during the current quarter, followed by other countries that we are planning for pharmacies as well. We recently opened our first 2 audiology service centers in Guatemala under our Wellness umbrella, and we'll be opening our new club in Aranga with audiology and optical services included.
We plan a full rollout of audiology to all subjects in Guatemala during this quarter. Initial indications from our audiology department are that our members are enjoying dramatic savings relative to the lowest price competitors in addition to improving their quality of life. In recognition of all the hard work, determination, flexibility and commitment to the company during this pandemic. We take all of our non management employees a special appreciation bonus was in some markets that components are incentivizing our employees to get vaccinated. The total impact for the Q4 was approximately $1,900,000 PriceTrack's people first culture is embodied at every level of the organization and its humbling system is a tireless effort made by our employees in support of members, co workers in our communities and ensure business continuation drops all of these significant challenges that came back on by this COVID pandemic.
To bring you to current, following the Q4, we also led to the Aerospace Aerospace Aero Postcross Aero and Marketplace Operations. The talent, technology and processes we gained from the acquired Air Force in 2018 gives us a springboard to launch our e commerce platform, salesforce.com, accelerated online sales for certified production delivery and generated online member sign ups, renewals and payments and enhanced our ability to better connect and serve our members. We've retained the record valuable talent and the technology that is directly applicable to price smart plans for the future growth of our omni channel business is the analytics and information technology capabilities. We meanwhile recoup the portion of our original investment in Aeropost while dispensing a part of the business that we believe are not core to PriceSmart's growth plans. The chances of the talent we've retained include our recently created EVP position of Chief Technology Officer an EV2 position of member experience and strategic analytics.
These key leadership roles have been filled by former Aeropost appears and continue to be supported by a net of their teams. The way the transaction itself will not have a material impact on our results of operations in fiscal year '22 that will consolidate our efforts, sharpen our focus and will help accelerate our innovation going forward by freeing up resources that were previously shared with the Aeropost legacy businesses. We finished the fiscal year with a strong 4th quarter, especially as most of our members reached rebound on an increase in most markets. We're looking to the future, including the longer term. We've embarked on a multiyear growth plan, which includes building the internal infrastructure needs to support faster for growth.
These initiatives will be buoyed by further investing in talent and technology, much of which is spent. We plan to grow by expanding our brick and mortar footprint in our e commerce platform. For both of these sales platforms, we to diversify an expanded logistics and distribution system. We intend to continue our increased focus on our private label product offering and identify additional opportunities for vertical integration. We will evaluate every element of our growth plan through the lens of a member and we will drive this growth by continually increasing the value proposition we represent to our members and by growing our member base.
To wrap it up, We're grateful to trust our members of Christenus in helping compare lives and businesses, especially during these time times. And I'm especially proud of our more than 10,000 employees across 13 countries. It has taken everyone's collective effort from frontline workers to remote and off-site workers, from club and country managers to corporate executives and our supportive Board of Directors. Thanks to each and every one of you. Together, we're turning trials into triumph.
Our team is energized and motivated to grow. And we believe the investments that we are making to lay the foundation quarter where near and medium term growth will help us gain market share. I want to thank you all for your time today. And I'll now turn the call over to Michael.
Thank you, Sherry. Good morning or afternoon to everyone, and thanks for joining us today. Total revenues and net merchandise sales for the quarter were $909,600,000 $871,200,000 respectively, representing increases of 12.2% and 12.7% over the comparable prior year period respectively. Including the club we opened in Bogota, Colombia in December 2020, we ended this quarter with 47 warehouse clubs compared to 46 warehouse clubs that we ended the 4th Our comparable net merchandise sales growth was 10.3% for the 14 weeks ended August 29, 2021. Foreign currency fluctuations had a negative impact on both merchandise sales and comparable net merchandise sales of approximately $10,000,000 or 130 basis points and $9,000,000 or 110 basis points respectively.
5 segment, in fiscal America where we had 26 clubs at year end, Net merchandise sales decreased 18.9 percent with an 18.9% increase in comparable net merchandise sales. Off markets in this segment had double digit comparable net merchandise post growth with only Costa Rica coming in strong and in similar digits. In the Caribbean region, where we had 13 clubs at quarter end, total net merchandise sales declined 1.8% and comparable net merchandise sales declined 2.2%. Dominican Republic continued its stellar sales performance during the COVID-nineteen pandemic and double digit sales growth. However, this gain was more than offset by weakness in Trinidad while we have forecasted.
In Trinidad, comparable net merchandise held declined 21.3% in the 4th quarter We can pull up related restrictions and our continued reductions of U. S. Inventory shipments to that market in response to the U. S. Parale liquidity situation.
Of note, for most of the Q4, we were unable to sell nonessential merchandise in Trinidad, thus we further reduced our shipments of U. S. Inventory during that period. However, in mid August, this prohibition was rescinded, and we were allowed to resume sales of these items. Therefore, we began increasing our merchandise shipments In Colombia, where we had 8 clubs received during the quarter, Net merchandise sales increased 21.7 percent and comparable net merchandise sales increased 3%.
Comparable net merchandise sales increase contributed 30 basis showing positive impact in total comparable merchandise sales for the quarter. Colombia is benefiting from a comparably improved COVID-nineteen situation from a year ago and from the opening of the 8th squad in this market in December 2020. In fact, the currency on total and comparable net merchandise sales in pharma was negative 2 point and 2.3%, respectively, for the quarter. Currency fluctuations are a constant challenge in Colombia, and we Continue to take actions to try to mitigate the impact of any future evaluations, including the sourcing of local produced goods and actively managing our sales prices and foreign currency exposure. Turning to gross margins.
Total gross margin on net merchandise sales came in at 16.9%, an 80 basis point improvement over the Q2 last year. The 80 basis point increase was primarily driven by approximately 60 basis points due to certain pricing actions we took to offset foreign currency exchange costs and COVID related operating costs and the remaining twenty basis points is primarily due to the effect of margin Earnings on our other business categories such as food services and optical compared to the prior year period. Total revenue margins increased to 17.7 percent of total revenues, an increase of 50 basis points versus the same period last year. This is the result of the higher gross margins of 80 basis points that I mentioned previously, partially offset by lower revenue margins from our COSIO and Marketplace business in the quarter at 3 basis and 10 basis points of lower other revenue and income. Selling, general and administrative expenses for the quarter were 14.1% of total revenues, an increase of 40 basis points versus the same period last year.
In total, SG and A expense increased $18,000,000 compared to the prior year. Our House Club and other operations expense contributed 30 basis points of the increase, primarily due to our new cloud in Colombia, which has not normalized sales levels. General and administrative expenses contributed to the other 10 basis points of the increase, primarily due to investments to support our talent and technology development. Operating income was $33,500,000 in the Q4 of fiscal 2021 compared to $29,000,000 in the prior year or 3.6 percent of total revenue in both periods. Net interest expense increased $1,200,000 for the 4th quarter, primarily due to lower short term borrowing compared to the prior year period when we drew down on short term lines of credit as part of our efforts to secure adequate cash to cover contingencies arising from 12 of 'nineteen related risks.
We repaid all these borrowings by the end of the Q3 of fiscal 2021. Other expenses of $1,500,000 were primarily related to the cost of goods, Trinidad dollars into other tradable currencies. Although these costs are partially offset by unrealized currency gains related to our U. S. Dollar denominated Cash position in Jamaica was made from the construction of our East Putnam Club due to a devaluation during the period of Jamaican dollar against the U.
S. Dollar. In the prior year, we recorded an index gain in this line of $1,000,000 primarily due to the devaluation of the Jamaican dollar and the We're developing in a negative year on year pretax FX impact on earnings of $2,500,000 Our cash and cash rate for the Q4 of fiscal 2021 came in higher than last year at 35.5% versus 28% from 2% a year ago, primarily related to recognition timing for the loss of benefit upon tax credits, which are no longer deemed recoverable. It is important to remember that last Cheer's Q4 effective tax rate was lower than normal due to much stronger free cash results than those expected as of the end of our Q1 last year. Our full year effective tax rates were fairly consistent between years, coming in at 33.3% in fiscal 2021 versus 32% or 5% in the prior year.
On a go forward basis, we continue to estimate an annualized effective tax rate of 33% to 34%. Net income for the Q4 of fiscal 2021 was $16,500,000 or $0.63 per diluted share compared to $20,100,000 or $0.65 per diluted share in the comparable prior year period. Now, I would like to cover just a few brief highlights related to the and our strong balance sheet. In Q3 2021, total revenues increased by 8.7%, while merchandise sales increased by 8.2% The comparable net merchandise sales increased by 5.8%. FX fluctuations adversely impacted net merchandise sales and comparable net merchandise sales by 2.4% and 2.3%, respectively.
Net income for fiscal year 2021 grew to $98,000,000 or $3.18 per share compared to $78,100,000 or $2.65 per share in fiscal year 2020. Moving on to the balance sheet. We ended the quarter with cash, cash equivalents and restricted cash totaling $215,500,000 Net cash flow provided by operating activities decreased $132,100,000 versus the prior year period. This decrease was primarily as a result and a vastly different inventory financing strategies throughout the different stages of the pandemic between these two years. In the prior year period, we made a conscious decision to put back on And I follow those in non two areas, whereas in the current period, we increased our position in these items, meet increased demand and participate for supply chain challenges.
Additionally, at the beginning of the pandemic, we negotiated temporary extensions with vendor firms to assist in cash management activities. Extension extensions have now elapsed. However, we have been able to secure permanent extended terms with a substantial portion of our vendors, particularly for long lead time items. Cash used in investing activities increased by $14,500,000 compared to the prior year, primarily due to a decrease in net proceeds from short and long term to the deposit related to management of our cash balances in Trinidad, partially offset by an increase in construction expenses year over year. With respect to Trinidad, as of the end of our fiscal Q4, our Trinidad subsidiary had $1,000,000 denominated cash, cash equivalents And short- and long term investments measured in U.
S. Dollars of approximately $52,900,000 a decrease of $22,800,000 from the end of our for Q3. This decrease is largely due to the fact that our ability to source U. S. Dollars remained relatively constant during the quarter, but our use of U.
S. Dollars will dramatically decrease due to COVID related closures and limitations on sales, which should further decrease our income. Following the full reopening of the funds in the Q4, we began a measured process of increasing our imports. Currently, it's just the operational sources and uses of U. S.
Dollars and Trinidad view our equalized on a go forward basis. The $170,700,000 change from cash provided by cash used in financing activities is primarily a result of a net decrease in proceeds from long term debt and net repayments of short term borrowing. We continue to be vigilant about our cash position and are ready to adapt to certain changes in circumstances. In the prior year period, we executed long term loans primarily to finance purchase of land and construction of our warehouse clubs and increased our short term borrowings as part of our cash management strategy in the early stages of the pandemic. However, as I mentioned previously, in Q3, we finished repaying all of our short term borrowings.
While uncertainty and risks remain in our markets, We feel confident in our operations and our ability to generate and access sufficient cash for our needs while also continuing to invest in the future. In closing, we are very pleased about the results of the current quarter fiscal year. The investments we have made and are making in talent, Data and technology and other capabilities, combined with our commitment to business rights, have been the foundation for our past and recent success. We are looking forward to our growth opportunities for years to come and to your support and engagement in our journey. I will now turn the call over to the operator to take your questions.
Operator, you may now start taking our caller's questions.
We will now begin the question and answer
Good morning, Sherry. Michael.
Good morning. Sherry, Michael, could you walk through The
impact of the Aeropost disposition for me, the legacy business We're sort of, I guess, doing maybe $40,000,000 $45,000,000 in revenues at about a 60% gross margin. And obviously, with this, you lose that, I guess, you lose most of that gross profit. Where's the offset? Because you had mentioned that it was sort of going to have a neutral impact on the business. What costs you are going to go away with the disposition of AP?
Yes. So, hi, John. Yes. So, definitely, we probably had a loss of revenue, but also a decrease in cost. We had some Our operations expenses in our cost of goods sold area to strip out activity and then we also have G and A expenses for that activity.
Overall, I can see that we're not expecting a material impact, but there will be a net probably a net Decrease in overall cost in general. Okay. So Those are not material. Okay.
So and will there be any, With the sale, will there be any gain or loss on the sale?
Yes. We haven't disclosed that. But as Sherry said we recovered a significant part of our initial investments. And if you remember, the base Reasoning rationale behind the original investment was for to acquire the Quantum Technologies to support Our omni channel business is just what we're basically thinking. So, the values of the initial acquisition was largely allocated to that.
So, as we said, we're not expecting material impact either way between the recurring Revenue and expense mix and also the transactions. So, the audience will disclose more about that in our Q1 earnings.
Right. Okay. And then, Sherry, you talked about like everybody else, the supply chain challenges, higher freight costs and all this other stuff That everybody else has seen.
As you look into 2022, it looks like some
of these things are going to continue. Do you think it's going to worsen a little bit? Are you going to see some additional pressure on your margins from the inflationary costs and the supply chain challenges Compared to what we've seen most recently?
Well, as everybody else is noting, the Stationary costs and the disruption to inventory flows through the pricing, commodity, container shortages, We believe the higher costs, but we are planning ahead and we've been very engaged with identified alternative routes for us to be able to sell the merchandise at the lowest possible cost. And this is where our The Boston Consumer Distribution Center is it comes in very handy. A lot of our long lead items can be shipped directly into Costa Rica and bypassed Miami. We also are mitigating some of this by identifying Products continue short, as I mentioned earlier and sourced locally that reduces the risk of the disruption and also some of the higher costs of transportation. So We're in the same boat as everybody else.
As they say, I do feel that we are in a position to be able to mitigate much of this That certainly has cost increased due to transportation freight and other supply chain issues that will be ultimately have to be reflected in the pricing. But again, we're not alone on this. We could feel that we've got and the pressure to be able to mitigate the impact and remain as cost effective and as efficiently as possible.
Sherry, are there any Specific inventory, merchandise items that when you look at it, you're short and obviously, you might Is there anything in particular that you're short in is time?
At this very moment. Yes. At this time, there are some very In demand items that are hard to get a hold of and they're more of the discretionary items, some of the special items that have longer lead times. And we've noticed in some areas, and that's why Michael mentioned, we've taken in positions on certain categories and certain items that we predict are going to be in demand. And there will be a shortage, for example, or scarcity in our markets for some of those items.
And we we've taken some positions on sort of those things to be able to have the in stock available to generate the sales and also get the numbers. So, and from time to time, there are just essentials that do all of a sudden experienced a surge in local markets when COVID rates go up. So, it's a very poor situation. But we're very focused on anticipating those needs and demands and quickly trying to draw to making sure that we have the product My next question comes from Rodrigo Echevarria with Scotiabank.
It's Barry. Just a On margins in Q3, there's been positive impact from the price increases And all that has been happening there. Any sense of what to expect on the margin front as we Yes. At this point, Rodrigo, we're continuing with our pricing. I mean, we did see The business having the situation there in Q4, obviously, we would have kind of close to the open the whole quarter, but if they weren't, and the The caller liquidity kept pulling.
We were able to actually decrease our PT dollar balance, but we're still seeing No, largely, we're not able to source the amount of dollars that we purchase social media source. And there are costs associated with the cost and liabilities. So At this point, we're not intending to call back on that. Of course, we're monitoring our competitive umbrella and doing what we can So the numbers, but at this point, we're not planning on selling back. Obviously, we'll start taking pretty much in every call.
That's not I think that we would expect to hold permanently to the extent that the situation normalizes in the market, but at this point, we don't have a chance to do that.
The trajectory is something that we're monitoring on an ongoing basis and we're not being passive about it. We are If there are other ways that we are just going to be able to source dollars, whether it may be through lines that are made available to an effort to develop manufacturing in the country. And we're very closely engaged to seize on any opportunity we can to be able to convert those GPs to U. S. Dollars.
So as the situation improves, obviously, Now the priority would be to reduce that extra margin because our goal ultimately is to provide the best value to the members. They also make sure that it is captured and the extra expense associated with converting the TTS to U. S. Dollars that we're recapturing that.
Got it. And in your earlier remarks, Sherry, you touched On the growth of the real estate team, I was just wondering if you could share more color on that. Like where are the days? Are you restructuring? How you think you've helped your team in the region?
Any Changes that you can highlight on some of these initiatives?
Well, in order to accelerate Our process with regard to our strategic plan for growth that we have increased discussion in that area and also supports your analysis of real estate investments. And It's a deal discussed of stronger pipeline at this point in time, nothing I can specifically want to in terms of when and which are going to be the ones that prove out to be the right investment structure. So there's definitely more going on right now in terms of our due diligence and activity in evaluating opportunities for additional clubs. And we couple that with also the fact that we now have some history with our petosmart.com, the responsiveness of our members, the growth of delivery, you know, the desire for more delivery as a part of the question of our techsmart.com activity. And there are some important takeaways for us from that that allow us to look at real estate in a manner that is more flexible than it has been in the past because with some additional capabilities, for example, we may have made the same amount of land, we may be able to show color on that, We may be able to support cost in a different way when it comes to dotcom.
It's important to note of price mark.com. These are all things that we're looking at as a result of the recent learnings that we have from the investments that we've made in technology key and talent and just reinforce for us to make sure alternatives and see opportunities that may incur there's more that we're looking at now in the first time Ben and Richard has said.
It's great to hear. Thanks for the support. Thank
you. This concludes the question and answer session. I'd like to turn the call back over to Ms. Jerry Herndacey Thanks for holding your line. I just want to thank everyone for your time and interest in PriceSmart.
We Really appreciate your support and are looking forward to the future. Our team is very excited about everything we have in the works, and we're grateful for your interest. Take care, and have a good Friday. The conference is now concluded. Before attending today's presentation, you may now disconnect.