UPDATE 2-Walmex profit rises, but sluggish Mexican economy weighs

Wed Oct 23, 2013 5:19pm EDT

MEXICO CITY Oct 23 (Reuters) - Mexico's biggest retailer, Wal-Mart de Mexico, said on Wednesday that third-quarter profit, hindered by a soft economy, rose slightly from a year earlier.

The company said it earned 5.295 billion pesos ($403 million) in the July-September period, up from 5.256 billion pesos in the same period in 2012.

Walmex, as it is known locally, said revenue increased almost 2 percent to 101 billion pesos.

Mexico's economy contracted for the first time in four years in the second quarter, hurt by sluggish consumption as well as lower government spending and weak demand for exports.

The government slashed its growth outlook to 1.8 percent from a prior outlook for 3.1 percent growth, and later forecast that storm damage last month could shave off an additional 0.1 percentage point.

"The economic environment in Mexico continues to be soft," said Chief Executive Scot Rank on a pre-recorded call discussing the results.

The company is trying to draw customers with more advertising focusing on low prices in its stores, as well as by remodeling older stores, Rank said.

Walmex, as part of an effort to sell non-core assets, said last month it would sell its restaurant business to local restaurant operator Alsea for just over $600 million. That deal has not yet closed.

Shares of Walmex closed down 0.65 percent at 33.67 pesos before the company reported its results.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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