This quarterly report on Form 10-Q contains forward-looking statements concerning the Company's anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "anticipated," "scheduled," and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including the following risks: the Company's financial performance is dependent on international operations which exposes the Company to various risks; any failure by the Company to manage its widely dispersed operations could adversely affect its business; the Company faces significant competition; future sales growth could be dependent upon the Company acquiring suitable sites for additional warehouse clubs; the Company faces difficulties in the shipment of, and risks inherent in the acquisition and importation of, merchandise to its warehouse clubs; the Company is exposed to weather and other natural disaster risks; general economic conditions could adversely impact the Company's business in various respects; the Company is subject to changes in relationships and agreements with third parties with which the Company does business; a few of the Company's stockholders own nearly 30.4% of the Company's voting stock, which may make it difficult to complete some corporate transactions without their support and may impede a change in control; the loss of key personnel could harm the Company's business; the Company is subject to volatility in foreign currency exchange rates; the Company faces the risk of exposure to product liability claims, a product recall and adverse publicity; a determination that the Company's long-lived or intangible assets have been impaired could adversely affect the Company's future results of operations and financial position; although the Company takes steps to continuously review, enhance, and implement improvements to its internal controls, there may be material weaknesses or significant deficiencies that the Company has not yet identified; as well as the other risks detailed in the Company's U.S. Securities and Exchange Commission ("SEC") reports, including the Company's Annual Report on Form 10-K filed for the fiscal year ended August 31, 2012 filed on October 30, 2012 pursuant to the Securities Exchange Act of 1934. See "Part II - Item 1A - Risk Factors."

The following discussion and analysis compares the results of operations for the three month period ended November 30, 2012 and 2011 and should be read in conjunction with the consolidated financial statements and the accompanying notes included herein.

PriceSmart's mission is to efficiently operate U.S.-style membership warehouse clubs in selected Latin American and Caribbean markets, selling high quality merchandise at low prices to PriceSmart members, and to provide fair wages and benefits to PriceSmart employees, as well as a fair return to PriceSmart stockholders. The Company sells U.S. brand-name, private label, locally sourced and imported products to its small business and consumer members in a warehouse club format, providing high value to its members. By focusing on providing high value on quality merchandise in a low-cost operating environment, the Company seeks to grow sales volume and membership, which in turn will allow for further efficiencies and price reductions and ultimately improved value to its members.

PriceSmart's business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. The Company's ownership in all subsidiaries as of November 30, 2012 is 100%, and they are presented on a consolidated basis as wholly owned subsidiaries. The number of warehouse clubs in operation as of November 30, 2012 and 2011, for each country or territory are as follows:

                           Number of             Number of        Anticipated warehouse
                        Warehouse Clubs       Warehouse Clubs         club openings
                      in Operation as of    in Operation as of              in
Country/Territory      November 30, 2012     November 30, 2011       Fiscal year 2013
Colombia                               2                     1                        1
Panama                                 4                     4                        -
Costa Rica                             5                     5                        -
Dominican Republic                     3                     3                        -
Guatemala                              3                     3                        -
El Salvador                            2                     2                        -
Honduras                               2                     2                        -
Trinidad                               4                     4                        -
Aruba                                  1                     1                        -
Barbados                               1                     1                        -
U.S. Virgin Islands                    1                     1                        -
Jamaica                                1                     1                        -
Nicaragua                              1                     1                        -
Totals                                30                    29                        1

The Company acquired land in south Cali, Colombia on December 14, 2011, upon which it opened a new warehouse club on October 19, 2012. Additionally, on January 9, 2012 the Company entered into an agreement to acquire property located in La Union, Cartago, Costa Rica, upon which the Company anticipates constructing its sixth membership warehouse club in Costa Rica. The Company currently anticipates opening this club in the fall of calendar year 2013. Finally, on March 15, 2012 the Company acquired land in north Cali, Colombia upon which it anticipates opening a new warehouse club in the spring of calendar year 2013.

In general, the Company's earnings improve, and cash flows from operations increase, as sales increase. Although the Company's cost of goods sold is largely variable with sales, a portion of the Company's selling, general and administrative expenses rise relatively slowly in relation to sales increases. Therefore, the Company prioritizes initiatives that it expects will have the greatest impact on increasing sales. Looking forward to the next several quarters, the following items are likely to have an impact on the Company's business and the results of operations.

The Company's warehouse clubs are located in Latin America and the Caribbean, and its corporate, U.S. buying operations and distribution centers are primarily located in the United States. The Company's reportable segments are based on management's organization of these locations into operating segments by general geographic location. The Company's operating segments are the United States, Latin America and the Caribbean.

General Economic Factors

The economies in the major PriceSmart markets continue to experience moderate year over year growth. Specific events in some of the smaller countries in which the Company has warehouse clubs, such as increases in value-added taxes, reduced economic activity and other factors are contributing to a more challenging retail environment in those markets, adversely impacting sales growth.

In the countries in which the Company operates, the Company does not currently face direct competition from U.S. membership warehouse club operators. However, it does face competition from various retail formats such as hypermarkets, supermarkets, cash and carry, home improvement centers, electronic retailers and specialty stores, including those within Latin America that are owned and operated by a large U.S. based retailer. The Company has competed effectively in these markets in the past and expects to continue to do so in the future due to the unique nature of the membership warehouse club format. The

Company has noted that certain retailers are making investments in upgrading their stores and adding new locations within the Company's markets resulting in increased competition. Further, it is possible that U.S. warehouse club operators may decide to enter the Company's markets and compete more directly with PriceSmart in a similar warehouse club format.

Many PriceSmart markets are susceptible to foreign currency exchange rate volatility. Currency exchange rate changes either increase or decrease the cost of imported products that the Company purchases in U.S. dollars and prices in local currency. Price changes can impact the demand for those products in the market. Currency exchange rates also affect the reported sales of the consolidated company when local currency-denominated sales are translated to U.S. dollars. In addition, the Company revalues all U.S. dollar denominated monetary assets and liabilities within those markets that do not use the U.S. dollar as their functional currency. These monetary assets and liabilities include, but are not limited to, excess cash permanently reinvested offshore, U.S. dollar denominated long-term debt used to finance land acquisition and the construction of warehouse clubs, and the value of items shipped from the U.S. to the Company's foreign markets that are U.S. dollar denominated. Approximately 51% of the Company's net warehouse sales are comprised of products imported into the markets where PriceSmart warehouse clubs are located. Products imported for sale in PriceSmart markets are generally purchased in U.S. dollars, but approximately 80% of the Company's net warehouse sales are in foreign currencies. The Company seeks to manage its foreign exchange risk by (1) adjusting prices on U.S. dollar goods on a periodic basis to maintain its target margins after taking into account changes in exchange rates; (2) by obtaining local currency loans from banks within certain markets where it is economical to do so and where management believes the risk of devaluation and the level of U.S. dollar denominated liabilities warrants this action; (3) reducing the time between the acquisition of product in U.S. dollars and the settlement of that purchase in local currency; and (4) by entering into interest rate swaps, cross currency interest rate swaps and forward currency derivatives. The Company has local currency-denominated long-term loans in Honduras and Guatemala; has interest rate swaps in Trinidad and Barbados; and has cross-currency interest rate swaps and forward currency derivatives in Colombia. Turbulence in the currency markets in the first quarter of fiscal year 2012 related to concerns over European sovereign debt had a negative impact on some of the foreign currencies of the countries in which the Company operates. For example, the Colombian peso devalued 9.3% against the U.S. dollar during the first quarter of fiscal year 2012, resulting in the Company's Colombian subsidiary recording approximately $1.5 million in currency losses upon the translation of U.S. dollar denominated liabilities. Future volatility and uncertainties regarding the currencies in the Company's countries could have a material impact on the Company's operations in future periods. However, there is no way to accurately forecast how currencies may trade in the future and, as a result, the Company cannot accurately project the impact of the change in rates on the Company's future demand for imported products, reported sales, or financial results.

Business Strategy

PriceSmart is a membership warehouse club business. The Company's business strategy is to offer for sale to businesses and families a limited number of stock keeping units (SKU) covering a wide range of products at the lowest possible prices. The Company charges an annual membership fee to its customers. These fees combined with warehouse operating efficiencies and volume purchasing enable PriceSmart to operate its business on lower margins than conventional retail stores.

Generally, the Company's earnings and cash flow from operations improve as sales increase. Higher sales provide greater purchasing power and often result in lower product prices from the Company's suppliers. As the Company's and individual PriceSmart locations' sales volumes increase, operating efficiencies are often realized through the leveraging of fixed costs and by the introduction of more efficient operating processes. Further, increased sales permit the Company to leverage its selling, general and administrative expenses. Sales growth in our existing locations (comparable warehouse club sales) creates the highest degree of cost leverage due to the operating efficiencies within our warehouse club format. The combination of annual membership fees, operating efficiencies and low margins enable PriceSmart to offer its members high quality merchandise at very competitive prices which, in turn, enhances the value of the PriceSmart membership.

Current and Future Management Actions

The Company seeks to increase sales by attracting new members and growing sales in existing warehouse clubs and by adding new PriceSmart warehouse clubs in new and existing markets where management believes new locations will provide long-term value to the Company. The Company opened a new warehouse club in south Cali, Colombia ("Canas Gordas") on October 19, 2012. The Company also entered into an agreement to acquire land in January 2012 located in La Union, Cartago, Costa Rica, upon which the Company anticipates constructing its sixth membership warehouse club in Costa Rica. The Company currently anticipates opening this club in the fall of calendar year 2013. Finally, on March 15, 2012 the Company acquired land in north Cali, Colombia upon which it is currently constructing a new warehouse club with an anticipated opening in the spring of calendar year 2013. The Company continues to explore other potential sites for future warehouse clubs in other major cities in Colombia as well as in its other markets.

Effective June 1, 2012, the Company raised the annual membership fee by approximately $5.00 in most markets. The annual fee for a Diamond membership in these markets is now approximately $35.00 (entitling members to two cards). A membership fee helps PriceSmart offer high quality merchandise at low prices providing value to its members.

The Company believes that its logistics and distribution operations are an important part of what allows PriceSmart to deliver high quality merchandise at low prices to our members. The Company continues to explore areas to improve efficiency, lower costs, and ensure a good flow of merchandise to our warehouse clubs. The Company is adding regional distribution centers in some of its larger markets (currently Costa Rica and Panama) to improve merchandise flow and lower costs, the benefit of which can be passed on to our members in the form of lower merchandise prices.

The Company seeks to enhance its long-term business performance by buying rather than leasing real estate. However, the Company has leased sites in the past and will likely do so again in the future. Real estate ownership provides a number of advantages as compared to leasing, including lower operating expenses, flexibility to expand or otherwise enhance PriceSmart buildings, long-term control over the use of the property and the residual value that the real estate may have in future years. In the course of acquiring sites, the Company sometimes has to purchase more land than is actually needed for the warehouse club operation. As an example, when the Company acquired the Alajuela site in Costa Rica, it purchased land for the PriceSmart warehouse club and entered into a joint venture with the seller on the balance of the property. PriceSmart entered into a similar real estate transaction with respect to its Brisas site in Panama City. To the extent that the Company acquires property in excess of what is needed for a particular warehouse club, the Company generally plans to either sell or develop the excess property. The excess land at Alajuela and Brisas is being held for development by the joint ventures, which commenced in fiscal year 2011. A similar development strategy is being employed for the Company's excess land at the new San Fernando, Trinidad and Arroyo Hondo, Dominican Republic locations where the properties are fully owned by PriceSmart. In this respect, the Company recently began developing and has obtained tenants on part of the excess land in San Fernando, Trinidad. The profitable sale or development of real estate is highly dependent on real estate market conditions.

Financial highlights for the first quarter of fiscal year 2013 included:

• Net warehouse club sales increased 11.8% over the comparable prior year period. The Company had one additional warehouse club for a portion of the quarter (Cali, Colombia which opened on October 19, 2012) compared to the first quarter of fiscal 2012. Comparable warehouse club sales (that is, sales in the warehouse clubs that have been open for greater than 13 1/2 calendar months) for the 13 weeks ended December 2, 2012 grew 8.3%.

• Membership income for the first quarter of fiscal year 2013 increased 21.2% to $7.7 million on a 14.4% increase in membership accounts from December 1, 2011 to November 30, 2012 and the effect of the $5.00 membership fee increase in most markets.

• Warehouse sales gross profits (net warehouse club sales less associated cost of goods sold) increased 15.1% over the prior year period and warehouse sales gross profits as a percent of net warehouse sales increased 43 basis points (0.43%) to 15.0% compared to the same period last year despite ongoing price reductions.

• Selling, general and administrative expenses (not including pre-opening expenses) were 10.9% as a percentage of sales or approximately the same as the first quarter of last year.

• Operating income for the first quarter of fiscal year 2013 was $29.8 million, an increase of $5.5 million over the first quarter of fiscal year 2012.

• The Company had a negligible net loss from currency exchange transactions in the current quarter, compared to a $1.2 million net loss from currency exchange transactions in the same period last year.

• Net income for the first quarter of fiscal year 2013 was $20.0 million, or $0.66 per diluted share, compared to $14.0 million, or $0.47 per diluted share, in the comparable prior year period.

Reclassifications to consolidated statement of income recorded during fiscal year 2013 for fiscal year 2012 - The Company receives cash consideration from its vendors for product demonstration. Prior to fiscal year 2013, the Company recorded this consideration as other income. However, cash or equity consideration received from a vendor is presumed to be a reduction of cost of sales when it is recognized in the income statement. Additionally, reimbursements of costs incurred by the customer to sell the vendor's products are treated as a reduction of the related cost when recognized in the income statement. Therefore, the Company has accordingly recorded such consideration as a reduction to cost of sales and a reduction to related costs incurred to sell the vendor's products starting in fiscal year 2013. The Company has made reclassifications to the consolidated statement income for fiscal year 2012 to conform to the presentation in fiscal year 2013. These reclassifications did not impact consolidated operating income or net income. The following table summarizes the impact of these reclassifications (in thousands):

                                                       Three Months Ended
                                                                                                            Total Fiscal
                          November 30, 2011     February 29, 2012     May 31, 2012      August 31, 2012       Year 2012
Revenues:
Net warehouse club
sales-as previously
reported                 $         468,329     $         537,816     $     494,898     $       499,003     $  2,000,046
Reclassifications                     (137 )                (197 )            (151 )              (197 )           (682 )
Net warehouse club
sales-as currently
reported                 $         468,192     $         537,619     $     494,747     $       498,806     $  1,999,364

Other income-as
previously reported      $           1,776     $           2,165     $       2,163     $         2,318     $      8,422
Reclassifications                   (1,097 )              (1,230 )          (1,294 )            (1,279 )         (4,900 )
Other income-as
currently reported       $             679     $             935     $         869     $         1,039     $      3,522

Cost of goods sold:
Net warehouse club-as
previously reported      $         400,481     $         459,313     $     421,512     $       422,825     $  1,704,131
Reclassifications                     (616 )                (805 )            (788 )              (590 )         (2,799 )
Net warehouse club-as
currently reported       $         399,865     $         458,508     $     420,724     $       422,235     $  1,701,332

Selling, general and
administrative:
Warehouse club
operations-as previously
reported                 $          42,509     $          46,384     $      46,197     $        47,311     $    182,401
Reclassifications                     (618 )                (622 )            (657 )              (886 )         (2,783 )
Warehouse club
operations-as currently
reported                 $          41,891     $          45,762     $      45,540     $        46,425     $    179,618

Net effect on Operating
income                   $               -     $               -     $           -     $             -     $          -

COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 2012 AND 2011

Certain percentages presented are calculated using actual results prior to
rounding. The Company's fiscal first quarter ended on November 30, 2012.  Unless
otherwise noted, all tables present U.S. dollar amounts in thousands.

Net Warehouse Club Sales

                                 Three Months Ended November 30,
                                        2012                     2011
                                 Amount           % Change      Amount
Net Warehouse club sales $     523,599               11.8 %   $ 468,192

Comparison of Three Months Ended November 30, 2012 and 2011

The Company opened its second warehouse club in Colombia and thirtieth overall in mid-October 2012 which contributed to the 11.8% growth in the first quarter of fiscal 2013 compared the same quarter last year. Transactions grew 8.3% in the quarter from the same period last year and average tickets grew 3.3%. While all merchandise categories recorded sales increases, the food merchandise category had the highest growth, driven by sales in grocery, fresh and bakery. The overall mix of imported products was 52%, compared to 51% last year.

Comparable Sales

The Company reports comparable warehouse club sales on a "same week" basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month that is used for financial reporting purposes. This approach equalizes the number of weekend days and weekdays in each period for improved sales comparison, as the Company experiences higher warehouse club sales on the weekends. Further, each of the warehouse clubs used in the calculations was open for at least 13 1/2 calendar months before its results for the current period were compared with its results for the prior period. For example, the sales related to the new warehouse club opened in Cali, Colombia on October 19, 2012 will not be used in the calculation of comparable warehouse club sales until January of calendar year 2014.

Comparable warehouse club sales, which are for warehouse clubs open at least 13 1/2 full months, increased 8.3% for the 13-week period ended December 2, 2012, compared to the same 13-week period last year.

Net Warehouse Club Sales by Segments

The following tables indicate the net warehouse club sales and the percentage
growth in net warehouse club sales during the three months ended November 30,
2012 and 2011 in the segments in which the Company operates.

                                                   Three Months Ended November 30,
                                                2012                                             2011
                                                      Increase from
                      Amount       % of net sales      prior year        Change        Amount       % of net sales
Latin America      $  350,606             67.0 %     $      45,868         15.1 %   $  304,738             65.1 %
Caribbean             172,993             33.0 %             9,539          5.8 %      163,454             34.9 %
Net warehouse club
sales              $  523,599            100.0 %     $      55,407         11.8 %   $  468,192            100.0 %

Comparison of Three Months Ended November 30, 2012 and 2011

For the three months ended November 30, 2012 , the higher net warehouse club
sales growth in Latin America compared to the Caribbean reflects improved
economic conditions in those more diversified and larger markets, plus the
addition of the warehouse club sales in Cali, Colombia in the current periods
compared to prior periods.


Export Sales
                                                    Three Months Ended November 30,
                                                   2012                                           2011
                                                      Increase from prior                               % of net
                        Amount      % of net sales            year           Change       Amount         sales
Export sales          $  3,073             0.6 %      $              824      36.6 %   $     2,249       0.5 %

The increase in export sales was due to direct sales to a single institutional customer (retailer) in the Philippines for which the Company achieves a gross profit margin that is below the Company's warehouse club gross profit margin.

Membership Income
                                                     Three Months Ended November 30,
                                                          2012                             2011
                                                        Increase from
                                          Amount         prior year       % Change        Amount
Membership income                     $     7,673      $       1,342         21.2 %   $      6,331
Membership income % to net warehouse
club sales                                    1.5 %                                            1.4 %
Number of total accounts                  999,278            125,621         14.4 %        873,657

Comparison of Three Months Ended November 30, 2012 and 2011

For the three months ended November 30, 2012, the increase in membership income primarily reflects a 14.4% increase in the number of membership accounts. The . . .