Walmart Mexico and Central America Third-Quarter Report

By Kylie Madry
MEXICO CITY (Reuters) – Walmart's Mexico and Central America unit reported a 5% drop in its third-quarter net profit on Wednesday, attributed to rising costs amid increased sales and general expenses.

Walmart (NYSE:WMT) de Mexico, the largest retailer in the country, announced a net profit of 12.93 billion pesos ($656.61 million), falling short of the average analyst forecast of 13.62 billion pesos, according to LSEG.

Quarterly sales rose by 8% year-over-year, totaling 228.43 billion pesos, slightly missing the mean estimate of 229.12 billion pesos from LSEG analysts.

In correlation with the sales increase, costs of sales surged over 7% year-over-year. General expenses elevated nearly 15%, and taxes increased by about 23%.

Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 6.5% to reach 24.46 billion pesos compared to the same quarter last year.

CEO Ignacio Caride stated, "Our focus on accelerating the omnichannel experience through simplification, digitalization, and automation is enhancing our business efficiency."

These results mark Caride's first full quarter as the CEO, having previously held a position at e-commerce giant MercadoLibre (NASDAQ:MELI) and taking charge of Walmex in late April.

The board also appointed Guilherme Loureiro, the former CEO, as the new chairman, succeeding Kathryn McLay, who oversees Walmart International.

In Mexico, the gross merchandise value (GMV) from e-commerce channels accounted for 6.8% of the total GMV for the quarter. Same-store sales increased by 4.5% in Mexico and nearly 4% in Central America. The company added 32 stores in Mexico and 7 in Central America.

Walmex, the largest employer in Mexico, is awaiting a decision from the country's antitrust authority, Cofece, regarding an investigation initiated in 2020 about possible monopolistic practices.

The firm stated that during a hearing on September 30, it requested one of the Cofece commissioners to recuse themselves from the case. It anticipates the investigation's administrative stage will conclude in the fourth quarter of this year.

Note: $1 = 19.6921 Mexican pesos at September end.