Walmart Inc.'s Mexican operations saw its first-quarter consolidated revenue rise 10%, or $9.2 billion, over last year's dip of 0.3%, the company said Tuesday.
Walmart de Mexico y Centroamerica, also known as Walmex, said net income grew 10.3% during the quarter, to $542.5 million at current exchange rates. Walmex is Walmart's largest international market.
Besides Mexico, Walmex consists of Central American nations Costa Rica, El Salvador, Nicaragua, Honduras and Guatemala. In all those nations, Walmex operates stores in formats ranging from hypermarkets to bodegas. Mexico also has 166 Sam's Club locations.
Revenue in the Mexican operations grew 10.2% in the quarter, and 10.8% in Central America.
Sales at stores open at least a year, or same-store sales, rose 9% in Mexico. Same-store sales are considered a key indicator of a retailer's health.
Mexico's e-commerce business continued to see strong growth, with net sales in the quarter up 19%. That represented 4.6% of Mexico's sales and 0.8% of its total sales growth.
In Central America, same-store sales increased 9.7% over last year's first quarter, with El Salvador delivering the highest growth. Private-brand sales grew twice as fast as the rest of Walmex's Central American business.
Guilherme Loureiro, Walmex's chief executive officer, said the company focuses on three strategic priorities: "to win in discount; to lead in omnichannel; and to become the ecosystem of choice."
"Throughout the quarter, we made progress on these three fronts," he said.
Sales in Mexico were led by food and consumables, Loureiro said. And the company's popular bodega discount format got a boost from seasonal events in the quarter such as Valentine's Day and the Super Bowl. These drove double-digit sales growth at the bodegas, Loureiro said.
As an example, he said, the bodegas sold 4 million beers and almost 700,000 snacks on Super Bowl weekend.
Sam's Club delivered the second-highest same-store sales growth among Mexico's various formats, Loureiro said. "We're driving strong volumes by focusing on great, high-quality items at disruptive prices, including Member's Mark," Sam's Club's private-label brand.
Paulo Garcia, Walmex's chief financial officer, said the company's Mexican unit is going through an investment phase to further its growth strategy. And during the first quarter, he said, the main area of investment was talent.
"We are making relevant investments to offer competitive compensation plans for our associates," Garcia said. "This has translated into higher engagement and a 30 percentage-point reduction in turnover rates from 2019 to date."
In Central America, Garcia said, "we are focusing on cost efficiency in areas such as energy and water consumption; on digitization by introducing new tools and redesigning reports; on merchandise flow, with focus on backrooms; and on labor productivity, by simplifying processes and training and by improving our staffing forecasts."
Walmex said in January that its board of directors "is considering strategic alternatives regarding its operations in Honduras, El Salvador and Nicaragua as it focuses efforts and capital on its core businesses and geographies."
"These alternatives could include joint ventures, strategic partnerships or alliances; a sale; or other possible transactions," the company said in a news release.
"All of our operations in Central America are strong businesses with a differentiated customer value proposition; world class and well-invested infrastructure; a significant growth runway; and strong fundamentals," Loureiro said.
"As we seek to prioritize our resources and accelerate our ecosystem in Mexico, Costa Rica and Guatemala, we believe there may be attractive opportunities for further growth in Honduras, El Salvador and Nicaragua that could be better captured under a different structure," Loureiro said.
The company has made no further public statement about its plans regarding its operations in the latter three countries.