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Correspondence Letter

Robert E. Burwell

12636 High Bluff Drive, Suite 400

Direct Dial: (858) 523-5408

San Diego, California 92130-2071

Rob.Burwell@lw.com

Tel: (858) 523-5400 Fax: (858) 523-5450

www.lw.com

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Washington, D.C.

File No. 026004-0000

 October 11, 2005

 VIA EDGAR & FEDERAL EXPRESS

 Mr. Andrew Blume

 Division of Corporation Finance

 Securities and Exchange Commission

 Mail Stop 3561

 450 Fifth Street, N.W.

 Washington, DC 20549

Re:
PriceSmart, Inc.

 Amendment No. 1 to Registration
Statement on Form S-1

 File No. 333-123076

 Filed August 1, 2005

 Dear Mr. Blume:

 We are
in receipt of the Staff’s letter dated August 30, 2005 with respect to the above-referenced Registration Statement on Form S-1. We are responding to the Staff’s comments on behalf of PriceSmart, Inc.
(“PriceSmart” or the “Company”). In accordance with our telephone conference with the Staff on October 7, 2005, we are submitting this letter responding to the Staff’s comments for the
Staff’s consideration prior to the filing of Amendment No. 2 to the Registration Statement. Courtesy copies of this letter are being submitted to the Staff by facsimile.

 PriceSmart’s responses set forth in this letter are numbered to correspond to the numbered comments in the Staff’s
letter. For ease of reference, we have set forth the Staff’s comments and PriceSmart’s response for each item below.

 Notes to Consolidated Annual Financial Statements

 Note 2 – Summary of Significant Accounting Policies, page F-8

1.
We have reviewed your response to comment 12 in our letter dated March 30, 2005. Please revise your disclosure to clarify the line item on the statements of operations where
the operating costs of your distribution facilities, such as related payroll, utilities, rent expense, and building and equipment depreciation are included. Please also provide us with an analysis which supports your assertion that the distribution
network costs excluded from cost of goods sold are so insignificant as not to warrant the requested cautionary disclosures in Management’s Discussion and Analysis.

 Mr. Andrew Blume

 October 11, 2005

  Page
 2

 Confidential Response? No

 When applicable, all references, including on the statement of operations, to “warehouse” or “warehouse
operations,” have been revised to “warehouse club” or “warehouse club operations” to clarify that such references refer to the Company’s warehouse club (or retail) activities, as opposed to distribution activities. The
Company understands how the Staff could have inferred otherwise from its previous response, but no distribution costs are excluded from cost of goods sold.

 Additionally, the Company has revised “Note 2—Summary of Significant Accounting Policies” in the notes to its financial statements in
response to the Staff’s comment as follows:

 Cost of
Goods Sold – The Company includes the cost of merchandise, food service and bakery raw materials, and one hour photo supplies in cost of goods sold. The Company also includes the external and internal distribution and handling costs for
supplying such merchandise, raw materials and supplies to the warehouse clubs. External costs include inbound freight, duties, drayage, fees and insurance. Internal costs include payroll and related costs, utilities, consumable supplies, repair and
maintenance, rent expense, and building and equipment depreciation at our distribution facilities.

2.
We have reviewed your response to comment 13 in our letter dated March 30, 2005. Please provide footnote disclosure similar to the information you provided us in your letter
regarding your accounting policy for volume rebates, prompt payment discounts, and fees for in-store demonstrations.

 Confidential Response? No

 The Company has revised its disclosure in response to the Staff’s comment. The Company has added the following to the “Cost of Goods Sold”
paragraph in “Note 2—Summary of Significant Accounting Policies” in the notes to its financial statements:

 Vendor consideration consists primarily of volume rebates and prompt payment discounts. Volume rebates are generally linked to pre-established purchase
levels and are recorded as a reduction of cost of goods sold when the achievement of these levels is confirmed by the vendor in writing or upon receipt of funds. On a quarterly basis, the Company calculates the amount of rebates recorded in cost of
goods sold that relates to inventory on hand and this amount is recorded as a reduction to inventory, if significant. Prompt payment discounts are taken in substantially all cases and, therefore, are applied directly to reduce the acquisition cost
of the related inventory, with the resulting impact to cost of goods sold when the inventory is sold.

 Mr. Andrew Blume

 October 11, 2005

  Page
 3

 Note 6 – Stock Option Plan and Equity Participation Plan, page F-14

3.
We have reviewed your response to comment 17 in our letter dated March 30, 2005. Since immateriality does not justify known non-compliance with GAAP, please confirm that you
will record the fair value of donated services as an expense going forward irrespective of materiality.

 Confidential Response? No

 The Company will include the fair value of services donated by its interim CEO as an expense beginning with the financial statements to be included in its
Form 10-K for the year ended August 31, 2005.

 Note 12 – Debt, page F-24

4.
We have reviewed your response to comment 22 in our letter dated March 30, 2005 and still do not understand your basis in GAAP for classifying the subject debt obligations
as long-term as of August 31, 2004 and November 30, 2004. In particular, we note that under SFAS 78, current classification of debt is required when the debtor is in violation of a debt covenant at the balance sheet date and the violation
makes the debt callable within one year from the balance sheet unless (a) the creditor has waived the right to demand repayment for more than one year from the balance sheet date or (b) it is probable that the covenant violation will be
cured within a specified grace period, preventing the obligation from being callable. Item (a) does not appear to apply since, in most cases, you had not obtained waivers by the initial filing date. Item (b) does not seem to apply since it
does not appear you have actually cured the violation at a future date by complying with the covenant within a specified grace period. Please either revise your balance sheet classification, or otherwise tell us in detail why you continue to believe
your current treatment is consistent with GAAP.

 Confidential Response? No

 As of the August 31,
2004 and November 30, 2004 balance sheet dates, the Company was in violation of debt covenants and did not have waivers for a period extending beyond one year on four loans with a total amount outstanding of $14.1 million and $10.9 million at
August 31, 2004 and November 30, 2004, respectively. Of these amounts, $10.1 million and $6.7 million were classified as long-term debt at August 31, 2004 and November 30, 2004, respectively. As indicated above, SFAS 78
ordinarily would require this debt be classified as a current liability under these conditions. However, the Company applied SFAS 6 (paragraphs 11 and 12) which allows for the classification of short-term obligations as long-term if there is an
“intent” and an “ability” to refinance that debt on a long-term basis and if “the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation” before the
balance sheet is issued (paragraph 11.b.). On October 29, 2004 (prior to the issuance of the August 31, 2004 financial statements), the Company received stockholder approval of a financing program that met the SFAS 6 requirements.

 Mr. Andrew Blume

 October 11, 2005

  Page
 4

 Among other elements of the financing program, the Company entered into a Common Stock Purchase
Agreement dated October 4, 2004 pursuant to which The Price Group, LLC1 agreed to convert a $25 million bridge
loan made in August 2004 into common stock at $8 per share. The financial program also called for the Company to launch a rights offering to its existing stockholders, allowing such stockholders to purchase: (i) for a period of one-month, 1.5
shares of common stock for each share of common stock they owned as of the rights offering record date at a price of $7 per share; and (ii) for a period of eleven months beginning after the one month period referred to in part (i) above
expired, 1.5 shares of common stock for each share of common stock they owned as of the record date at a price of $8 per share. In the Common Stock Purchase Agreement, The Price Group agreed that if upon termination of the $7 rights exercise period
referred to above the Company had not received at least $25.0 million in proceeds from the rights offering, The Price Group would purchase from the Company the number of shares of common stock equal to such shortfall, if any, divided by $8 (the
“Rights Offering Purchase”) at a price of $8 per share.

 At the time the Company filed its Annual Report on Form 10-K for the year ended August 31, 2004 and its Form 10-Q for the quarter ended November 30, 2004, the Company intended to use proceeds from the financing transaction to
repay any or all of the four loans referenced in the Staff’s comment if for any reason the Company was not able to obtain a waiver for any future default(s). In fact, the Company actually used proceeds from the bridge loan to repay one of the
four loans, having a balance of $4.1 million, between year-end and filing of the Company’s Form 10-K. Further, the Company viewed the expected proceeds of the financing program as sufficient to terminate an arrangement the Company had
previously put in place specifically to address the possibility that one of the Company’s loans might be accelerated. The Company described the terms of the “put option” arrangement that the Company had established with the Sol and
Helen Price Trust in December 2003 and the reasons for entering into that arrangement in the Company’s Form 10-K for the year ended August 31, 2003 and in the Forms 10-Q for the first three quarters of fiscal 2004:

 If the Company is unsuccessful in obtaining the necessary waivers or fails
to comply with these financial covenants in future periods, the lenders may elect to accelerate the indebtedness described above and foreclose on the collateral pledged to secure the indebtedness. In such a case, the Company would need additional
financing in order to service or extinguish the indebtedness. Accordingly, to address these potential needs for additional capital, the Company has entered into an agreement with the Sol and Helen Price Trust, a trust affiliated with Sol Price, a
significant stockholder of the Company, giving the Company the right to sell all or a portion of specified real property to the Trust at any time on or prior to August 31, 2004 at a price equal to the Company’s net book value for the
respective properties and other commercially reasonable terms.

1
Directors Robert E. Price, James F. Cahill, Murray L. Galinson and Jack McGrory, and Sol Price, a significant stockholder in the Company, were co-managers of The
Price Group and collectively owned a significant interest in that entity at the time of the financing program.

 Mr. Andrew Blume

 October 11, 2005

  Page
 5

 On August 31, 2004, the Company extended the put option to November 30, 2004 with the expectation that
beyond that date the Company would have the financial program in place, which would provide a source of funds to address any possible future acceleration of such indebtedness. Moreover, the Company’s intent at the time of filing the
Company’s Form 10-Q for the quarter ended November 30, 2004 is specifically addressed in the Company’s Form 10-Q under the heading “Management’s Discussion and Analysis of Results of Operations and Financial
Condition—Liquidity and Capital Resources—Short-Term Borrowings and Long-Term Debt”: “The Company believes that, primarily as a result of the Financial Program, it has sufficient financial resources to pay-down any of the above
obligations which have maintenance covenant noncompliance as of November 30, 2004. Accordingly, the aforementioned obligations are reflected in the accompanying balance sheet under the original contractual maturities.”

 Further, the $25 million of minimum proceeds from the rights offering and/or
the Rights Offering Purchase, as applicable, plus the proceeds of the $25 million bridge loan (and subsequent conversion of the bridge loan into shares of common stock pursuant to the Common Stock Purchase Agreement), were more than adequate to give
the Company the ability to repay the four loans in question, none of which is currently outstanding. Accordingly, the Company believes that the classification of four loans in question as long-term debt is consistent with GAAP under SFAS 6.

 Note 14 – Convertible Preferred Stock
page F-30

5.
We have reviewed your response to comment 9 in our letter dated March 30, 2005. Please address the following items:

•

Tell us in detail how you determined that January 15, 2002, as opposed to the January 22, 2002 issuance date, was the commitment date for the convertible preferred
stock issuance, as discussed in Issues 4 and 5 in EITF 00-27. In this connection, we note that the market price of your common stock increased $1.57 per share between January 15, 2002 and January 22, 2002. Thus, as a result of using the
earlier date, a smaller discount was computed for the preferred stock issuance. In particular, less value was allocated to the detachable warrants in the relative fair value allocation and also the computation of the intrinsic value of the
conversion feature was likewise impacted.

•

It does not appear that you allocated the proceeds of the issuance to the warrants and the convertible preferred stock on a relative fair value basis. Instead, it appears you
calculated the fair value of the warrants and allocated the remainder of the proceeds to the preferred stock. Please provide us with a revised calculation that allocates the proceeds using the relative fair value method as described in footnote 4 of
EITF 98-5 and paragraph 16 of APB 14. Tell us whether the revised calculation would have resulted in a beneficial conversion feature at the commitment date.

•

Tell us how the $984,000 of proceeds attributable to the warrants was recorded in your financial statements. To facilitate our understanding, you may wish to provide us with the
journal entry you recorded upon issuance of the preferred stock.

 Mr. Andrew Blume

 October 11, 2005

  Page
 6

 Confidential Response? No

 On January 15, 2002, the Company and Grupo Gigante, S.A. de C.V. entered into a binding Series A Preferred Stock and
Warrant Purchase Agreement. At the time the parties entered into the agreement, Gigante was an unrelated party. The agreement satisfied both elements of the definition of a commitment date under EITF 98-5 (as recited in EITF 00-27):

 1. The agreement specified all significant terms for the
transaction, including the number of shares of Series A Preferred Stock to be sold, the terms of the warrant to be sold, the aggregate purchase price in U.S. dollars for the shares and warrant, and the timing of the anticipated closing; and

 2. The agreement included a disincentive for
nonperformance that was sufficiently large to make performance probable. First, the agreement contains a specific performance clause. Second, the agreement calls for the application of New York law and includes the parties’ consent to
jurisd