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Walmart’s net profit rises 10% in Mexico, even as spending rises

By on October 20, 2022 0

MEXICO CITY, Oct 20 (Reuters) – Walmart’s Mexican unit posted a 10% increase in third-quarter net profit on Thursday, according to analysts’ estimates, while spending rose faster than revenue due to from rising e-commerce and labor costs, the company said.

Mexican Walmart (WALMEX.MX)Mexico’s largest retailer, posted a net profit of 12.15 billion pesos ($603.8 million), or 0.70 pesos per share, against Refinitiv’s estimate of 0.69 pesos.

The chain’s quarterly revenue, which is under increasing pressure from the Mexican government to contain inflation in its stores, rose 12% from the previous July-September period, also in line with forecasts.

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Even though same-store sales increased, particularly at Mexico’s low-cost Bodega stores, the company’s gross margin remained flat at 23.7%, reflecting higher spending compared to a year ago.

“We continued to invest in our strategic priorities,” Chief Financial Officer Paulo Garcia said in a webcast after the earnings announcement, referring to labor and e-commerce costs in Mexico’s main market. from the retailer.

The company known as Walmex said e-commerce accounted for 4.8% of total sales in Mexico, down from 4.5% a year ago. It also expanded its physical footprint with 26 new stores.

Looking ahead, Walmex said its immediate priority was to keep prices low amid rising inflation, adding that the company’s buyers were working closely with suppliers to review prices on an item-by-item basis.

Mexican President Andres Manuel Lopez Obrador said on Tuesday he spoke with Judith McKenna, head of Walmart Inc. (WMT.N) international division, “doing everything possible” to bring down inflation on food products.

“The current environment requires much more focus and attention than day-to-day activities usually do,” chief executive Guilherme Loureiro said in the webcast of the results.

“We have a strong team with extensive experience in inflationary environments.”

Annual inflation reached 8.76% in the first half of September.

($1 = 20.1271 pesos at the end of September)

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Reporting by Daina Beth Solomon and Noe Torres; Editing by Cassandra Garrison, Will Dunham and Richard Pullin

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