MEXICO CITY (Reuters) -Walmart’s Mexico unit on Wednesday posted a 3.7% rise in first quarter net profit as same-store sales rose in all markets, but it flagged inflation concerns after falling behind competitors in Mexico.
Walmart de Mexico, known as Walmex, recorded 11.5 billion pesos ($639 million) in net profit for the first three months of the year, missing a Refinitiv estimate of 12.3 billion pesos.
The company said changes in how taxes were calculated in a Central American country hit net profit, which otherwise would have grown 15.6%.
Walmex also said it lagged behind stores in Mexican retail association ANTAD, which outperformed it by 30 basis points in terms of first quarter same-store sales growth.
“We are not happy with this result,” Chief Executive Guilherme Loureiro said in a webcast. Walmex had grown above ANTAD for the previous three quarters.
Compared to competitors, Walmex offered more discretional categories that were more likely to be impacted by high inflation, Loureiro said.
“Customers continue to adjust their shopping habits to afford a full basket,” he said.
Mexican brokerage Monex called Walmex’s performance neutral, noting the retailer had stayed defensive against tough competition but would need to examine product selection and its clients’ purchasing power as inflation persists.
Both Mexico and Central America posted same-store sales growth, with revenue up 9.7% from a year earlier to land at 206 billion pesos. Walmex also added 12 stores over the quarter.
Walmex’s earnings before interest, taxes, depreciation and amortization (EBITDA) grew 7.7% to 22.31 billion pesos.
Looking ahead, Walmex said it would soon ramp up services on its digital app, Cashi, after acquiring Mexican fintech company Trafalgar. The app will soon allow money transfers, cash withdrawals and the sending and receiving of remittances, the company said.
($1 = 18.0201 pesos at end-March)
(Reporting by Carolina Pulice and Daina Beth Solomon; Editing by Brendan O’Boyle, Sarah Morland and Chris Reese)
