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Walmex reports 6.5% rise in profit

Income at $484M for Walmart unit by Serenah McKay | October 25, 2019 at 1:48 a.m.
A customer loads his vehicle outside a Wal-Mart store in Mexico City in this file photo.

Walmart Inc.'s unit in Mexico and Central America reported this week that third-quarter profit rose 6.5% despite economic uncertainties that have made consumers more cautious about spending.

Walmart de Mexico y Centroamerica, or Walmex, posted net income of $484 million, or 2.8 cents per share, for the quarter that ended Sept. 30, up from $454.5 million, or 2.6 cents per share, in the same period a year ago. Total revenue grew 4.9% over the same quarter last year, to $8.12 billion.

Walmex is one of Walmart International's strongest markets and led the division in sales last year.

Guilherme Loureiro, the unit's president and chief executive officer, said in a conference call Wednesday that strong back-to-school sales boosted performance in the quarter. He specifically cited "a sustainable price advantage across categories, a broader assortment and great execution at the stores" as key to improved customer experience and double-digit growth during the season.

However, Loureiro noted the unit is "dealing with adverse and uncertain socioeconomic circumstances in Mexico. Our business is resilient, but our customers are concerned about a less favorable outlook and becoming more cautious."

Sales at stores open at least a year, or same-store sales, continued to drive overall sales performance, Loureiro said. Same-store sales are considered a key indicator of a retailer's health.

Olga Gonzalez, chief financial officer for Walmex, said in the call that the unit's Mexican operations saw same-store sales increase 3.8% over last year's third quarter, and revenue grew 5.2%. Revenue in Walmex's Central American division rose 2.6%, she said, although same-store sales fell 0.2%.

Like its Bentonville-based parent, Walmex is aggressively competing in e-commerce. The unit's online sales jumped 65% over last year's third quarter, representing 1.4% of total sales in Mexico. Loureiro said Walmex now has more than 1,000 third-party sellers on its e-commerce marketplace, allowing it to offer "a differentiated assortment to expand our reach to new customers in an asset-light way."

Walmex, based in Mexico City, opened 29 stores in Mexico during the quarter and seven in Central America. As of Sept. 30, it operated 3,327 stores. Its shares are traded on the Mexican Stock Exchange.

Walmart Inc. will report its third-quarter earnings Nov. 14. Wall Street analysts are expecting average per-share earnings of $1.09, compared with earnings per share of $1.08 in the same period last year.

Walmart's shares closed Wednesday at $119.11, down 24 cents, or 0.2%, on the New York Stock Exchange. Its shares have traded between $85.78 and $120.71 in the last year.

Business on 10/25/2019

Print Headline: Walmex reports 6.5% rise in profit


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