By Christine Murray
MEXICO CITY Feb 18 Mexico's biggest retailer,
Wal-Mart de Mexico, on Tuesday reported a 12.75
percent fall in fourth-quarter profit after price cuts failed to
offset sinking consumer confidence in Latin America's No. 2
The company, which is controlled by U.S. retailer Wal-Mart
Stores, reported a profit of 7.304 billion pesos ($558
million) for the period from September to December, down from
8.371 billion pesos in the same period a year earlier.
Walmex, as the company is known locally, reported a 60 basis
point fall in its gross profit margin for the quarter to 22.2
percent. It said that operating expenditure rose 4.6 percent.
Walmex Chief Executive Scot Rank said in a statement that
"2013 was a year of great challenges. Given falling incomes and
low consumer confidence, we placed customers at the centre of
our activities and invested heavily in prices."
Revenue for the quarter rose 3.6 percent to 124.5 billion
Walmex has reported weak sales at stores open at least a
year in recent months as Mexican consumer spending has slowed.
The country's consumer confidence index fell to a nearly
four-year low in January, in its fifth monthly decline in a row,
after new taxes took effect and the country's peso currency
tumbled amid a global rout in emerging market assets.
A fiscal reform pushed through Congress last year increased
income tax rates, which reduced disposable incomes, and put new
tariffs on soft drinks and junk food.
"We think that the bad results will continue until the
second half of the year, which will keep punishing the share
price," Invex analyst Ana Hernandez Velazquez said, adding that
Invex would revise down its estimates in light of the results.
Mexico's biggest retail trade body said last month that
sales at stores open at least a year will rise 1.7 percent in
2014 after a nearly flat 2013.
Shares in Walmex closed down 1.16 percent on Tuesday before
the results were announced.