Walmart revenue up in Mexico
Walmart Inc.’s Mexican operations saw first-quarter consolidated revenue rise 10% to $9.2 billion, compared with a 0.3% decline a year earlier, it said on Tuesday. the society.
Walmart de Mexico y Centroamerica, also known as Walmex, said its net income rose 10.3% in the quarter to $542.5 million at current exchange rates. Walmex is Walmart’s largest international marketplace.
Besides Mexico, Walmex includes the Central American nations of Costa Rica, El Salvador, Nicaragua, Honduras, and Guatemala. In all of these countries, Walmex operates stores in formats ranging from hypermarkets to bodegas. Mexico also has 166 Sam’s Club locations.
Revenue from the Mexican operations increased by 10.2% in the quarter and by 10.8% in Central America.
Sales at stores open for at least a year, or same-store sales, increased 9% in Mexico. Comparable store sales are considered a key indicator of a retailer’s health.
E-commerce activity in Mexico continued to experience strong growth, with net sales in the quarter up 19%. This accounted for 4.6% of Mexico’s sales and 0.8% of its total sales growth.
In Central America, same-store sales increased 9.7% compared to the first quarter of last year, with El Salvador recording the strongest growth. Private label sales grew twice as fast as the rest of Walmex’s business in Central America.
Guilherme Loureiro, Managing Director of Walmex, said the company is focused on three strategic priorities: “winning in discount; being an omnichannel leader; and becoming the ecosystem of choice”.
“Throughout the quarter, we made progress on all three fronts,” he said.
Sales in Mexico were dominated by food and consumables, Loureiro said. And the company’s popular bodega discount format was boosted by seasonal events in the quarter such as Valentine’s Day and the Super Bowl. These have resulted in double-digit sales growth for bodegas, Loureiro said.
As an example, he said, bodegas sold 4 million beers and nearly 700,000 snacks on Super Bowl weekend.
Sam’s Club had the second-highest same-store sales growth among various Mexican formats, Loureiro said. “We generate high volumes by focusing on high quality items at disruptive prices, including Member’s Mark”, Sam’s Club’s private label.
Paulo Garcia, Walmex’s chief financial officer, said the company’s Mexican unit was going through an investment phase to pursue its growth strategy. And in the first quarter, he said, the main area of investment was talent.
“We make smart investments to offer competitive compensation plans to our associates,” Garcia said. “This translated into higher engagement and a 30 percentage point reduction in turnover rates from 2019 to date.”
In Central America, said Garcia, “we are focusing on profitability in areas such as energy and water consumption; on digitization by introducing new tools and rethinking reports; on the flow of goods, with an emphasis on the back shops; and on work productivity, by simplifying processes. and training and improving our workforce forecasts.
Walmex said in January that its board 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 press release.
“All of our operations in Central America are strong businesses with a differentiated customer value proposition; world-class, well-invested infrastructure; a significant growth path; 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 additional growth in Honduras, El Salvador and Nicaragua which could be better seized in a different structure,” Loureiro said. .
The company has made no further public statements about its plans for its operations in the latter three countries.