Mexico's Walmart, Alsea shares battered by tax concerns

MEXICO CITY, Feb 19 (Reuters) - Shares of Walmart Inc’s Mexico unit fell 3.6% on Wednesday after the country’s largest retailer disclosed a bigger-than-expected tax liability from the sale of a restaurant chain to Mexican company Alsea.

Walmart de Mexico, also known as Walmex, first announced the tax claim in early 2018, saying authorities had set the charge at 3.67 billion pesos. But when it reported quarterly earnings on Thursday, it said the liability had grown to 10.56 billion pesos ($568.83 million).

That would be the equivalent of 14.9% of its earnings before interest, tax, depreciation and amortization (EBITDA) for 2019.

Restaurant company Alsea, which bought Walmex’s Vips chain in 2014, surprised investors by saying late Friday afternoon it had been ordered to pay more than $200 million in taxes.

Alsea shares fell 6% on Monday, the biggest daily drop since late 2016 for the operator of Mexican eatery chains under brands that include Starbucks, Burger King and Domino’s. The shares rose 0.9% on Wednesday, but still traded below last week’s levels.

Walmex shares tumbled as low as 4.1% following media reports on its own potential tax charge, after climbing to a post-November high on Tuesday.

Mexican President Andres Manuel Lopez Obrador has made it one of his priorities to boost tax collection in the nation whose overall tax take is the lowest out of 36 nations in the Organization for Economic Co-operation and Development (OECD).

The companies have said they would appeal the claims of 10.56 billion pesos for Walmex and 3.88 billion pesos for Alsea.

“An appeal for revocation was filed with the tax authorities, in order to make an adequate assessment of all the arguments,” Walmex said last week in its quarterly earnings report, adding that it believed it would win the appeal.

A spokeswoman said the company had no further comment.

Despite the companies’ confidence about winning their appeals, their plummeting stocks reflect investor concerns about a potential loss, Banorte equity analyst Valentin Mendoza said.

$1 = 18.5645 Mexican pesos Reporting by Daina Beth Solomon; Editing by Christian Plumb and Richard Chang