Retailer Wal-Mart de Mexico SAB (WALMEX.MX, WMMVY) said Monday its net profit rose by 9.1% on the year in the second quarter on a double-digit sales expansion, despite having underperformed the growth seen in Mexico's broader retail market.
The retailer known as Walmex, a unit of Arkansas-based Wal-Mart Stores Inc. (WMT), showed a quarterly net profit of 4.94 billion pesos ($364 million) on sales of MXN97.40 billion, up 11.9% on the year.
The retailer was expected to post net profit of MXN4.79 billion on sales of MXN97.73 billion for the April-June period, according to the median projection of estimates that Dow Jones Newswires collected from five analysts.
Operating cash flow came at MXN9.06 billion, up 14.7% on the year.
Walmex, Latin America's biggest retailer, averaged monthly same-store sales gains in Mexico during the second quarter of 3% versus 4.9% for Mexican retail association Antad, of which Walmex is a member.
Mexican sales account for more than 85% of Walmex's total sales. The retailer also operates in Central America.
Walmex Chief Executive Scot Rank said in a webcast presentation that the company is investing in low prices for products while reinforcing sluggish merchandise departments in order to generate better same-store sales in Mexico.
The retailer must also improve its inventory management, Mr. Rank said, noting that the company ended June with high levels of stockpiled merchandise due to unfulfilled sales expectations.
Analysts highlight that seasonally fierce competition in Mexico appears to have eaten into some of the retailer's sales growth during the period.
Walmex Chief Financial Officer Rafael Matute noted in the webcast that the company continues to generate a large amount of cash, which it plans to direct toward growth and returning capital to investors via dividends and share buybacks. Walmex had MXN19.65 billion in cash at the end of June.
Walmex opened 56 new outlets during the second quarter, 51 of which were in Mexico...
Source: Argentine Beef Packers S.A.
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