Walmart's Mexico unit boosts logistics spending in $1 billion capex plan

FILE PHOTO: Men walk past the logo of Walmart outside a store in Monterrey, Mexico February 12, 2018. REUTERS/Daniel Becerril/File Photo

MEXICO CITY (Reuters) - Walmart’s Mexico unit will ramp up logistics spending this year as a part of a 22.2 billion peso ($1.09 billion) plan aimed at further boosting online sales, which soared in 2020, the retailer said on Thursday.

Walmart de Mexico said it will put a quarter of its capex into logistics, compared to just 14% devoted to the segment in 2020, and invest even more heavily in the area over the next five years while pulling back on spending for brick-and-mortar supermarkets. The move mirrors its parent company’s investments in online sales.

“A few years ago, a big part of our investment went to store openings,” Chief Executive Guilherme Loureiro said in an online presentation after Mexico’s largest retailer reported a 12% rise in fourth-quarter net profit to 12.6 billion pesos.

“Going forward, we will considerably increase investments in logistics and technology.”

Still, the bulk of spending this year - or 40% - will go to maintain and remodel existing stores. Walmart de Mexico last year opened 63 stores in Mexico and another 19 in Central America, bringing its total footprint to 3,489 locations.

Online sales grew 171% in 2020, Walmart de Mexico also said. Despite that surge, online sales represented just 3.8% of total sales in Mexico by year-end.

In the fourth quarter, the retailer reported a 5.5% jump in revenue to 196 billion pesos.

Shares in the company fell 4.34% by the close of markets, the same day that shares of parent company Walmart Inc. dropped 6.48% on the company’s announcement that it expected sales and profit growth to slow.

($1 = 20.2960 Mexican pesos)

Reporting by Daina Beth Solomon; Additional reporting by Noe Torres and Abraham Gonzalez; Editing by Cynthia Osterman