Walmex Third-Quarter Profit Slides 6.1% as Expenses Outpace Sales

what happened

Mexican retailer Walmart de Mexico, known as Walmex, reported a 6.1% drop in third-quarter net profit, to 11.03 billion pesos ($590.2 million). Earnings per share came to 0.642 pesos, compared with 0.678 pesos a year earlier. Revenue rose 3% to 248.83 billion pesos, but expenses grew faster: general expenses climbed 5.7%, and their share of sales reached 17.4%, up from 17% a year earlier. The company said the increase was driven mainly by investments in growth, partly offset by productivity and efficiency measures.

Same-store sales rose 1.7% in Mexico and 4.8% in Central America, while e-commerce sales in Mexico grew 16%. EBITDA rose 0.4% to 25.37 billion pesos, and operating profit fell 1.8% to 18.68 billion pesos. The company opened 42 stores during the quarter, according to Dow Jones Newswires.

why it matters

The key point for the market is the gap between revenue growth and falling profit. Investors will watch whether Walmex can restore profitability while keeping its store network and online sales growing across Mexico and Central America.

market impact

Walmex shares: profit fell on higher costs, which weighs on the stock

• ▼Walmex shares (WALMEX) pressure down — net profit fell 6.1% despite higher revenue

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