October 18, 2018 / 8:30 PM / a month ago

Mexico's Walmex third-quarter profit driven by solid sales

MEXICO CITY (Reuters) - Mexico’s biggest retailer, Wal-Mart de Mexico (WALMEX.MX), reported on Thursday a 7.9 percent rise in third-quarter revenue, capitalizing on sales traffic in Mexico that compensated for slow growth in Central America and a tough comparison base.

Two people walk outside a Wal-Mart store in Mexico City January 11, 2013. REUTERS/Edgard Garrido

The company, known as Walmex, said its net profit of 8.7 billion pesos ($464 million) posted little growth compared with the year-earlier period, when Walmex still registered profits from its sale of clothing chain Suburbia.

Its net profit was a bit higher than in the July-September period last year, while revenue climbed to 147.8 billion pesos, both tracking analyst estimates.

Walmex Chief Executive Guilherme Loureiro said in a conference call that same-store sales remained the company’s “main growth driver,” especially in Mexico. He said the company expected weaker results in Central America.

Political turmoil in Nicaragua has been a particular obstacle, Chief Financial Officer Olga Gonzalez told the call.

“We are not satisfied. There is still a lot of work to be done,” she said of the region.

Gonzalez also said Walmex was in a “heavy investment” phase focused on prices, salaries, new stores, logistics, technology and e-commerce.

Parent company Walmart (WMT.N) expects to complete its $225 million acquisition of Latin American food delivery service Cornershop by year’s end, a move that would help Walmex ramp up its online grocery business.

Walmex’s digital payments system, Cashi, which was rolled out in August, is expected to drive online shopping, Loureiro said.

Online sales grew 41 percent in the quarter, to make up just over 1 percent of total sales.

Its low-price strategy has helped Walmex consistently claim bigger market share, said Banorte analyst Valentin Mendoza.

“This aggressive commercial strategy to leverage its huge volume has been the clear differentiator,” he said.

Mexico is a priority market for Walmart along with the United States, China and India, the company told investors on Tuesday.

Reporting by Daina Beth Solomon; Editing by Julia Love and Peter Cooney

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