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UPDATE 2-Wal-Mart Mexico expands profit despite recession
July 8, 2009 / 8:46 PM / 8 years ago

UPDATE 2-Wal-Mart Mexico expands profit despite recession

* Walmex posts 16 percent rise in net profit

* Calendar effect helps offset recession

* Sales rise 11 percent, year-on-year (Adds detail on results, analyst quote, stock price)

By Noel Randewich

MEXICO CITY, July 8 (Reuters) - Walmex, Mexico’s biggest retailer, posted a 16 percent rise in second-quarter net profit on Wednesday as aggressive promotions, improved efficiency and a helpful calendar offset a deep recession.

Wal-Mart de Mexico, or Walmex WALMEXV.MX, said it earned 3.753 billion pesos ($285 million) in the April-June period, better than the 3.641 billion pesos forecast on average by analysts consulted by Reuters.

Last year, the busy Holy Week vacation week fell in March, the end of the first quarter, while this year it was in April, the beginning of the second quarter. That helped push Walmex’s revenues for the quarter up 11 percent to 63.894 billion pesos, the company said. Improved efficiency limited growth in general expenses to 7 percent.

EBITDA, or earnings before interest, tax, depreciation and amortization, rose 16 percent to 6.14 billion pesos.

Before the results were released, shares in Walmex edged up 0.55 percent to close at 38.15 pesos.

Mexico has been slammed by its worst recession in years due to slumping U.S. demand for its manufactured exports. That has driven up unemployment and made many families wary of spending on big-ticket items. Walmex’s same-store sales in June were down 0.1 percent over the year-ago period.

Still, strong store expansion and promotions helped Walmex post strong results for the April-June period.

“If you have good results in today’s environment, once things improve again, Wal-Mart’s numbers are going to be extraordinary,” said Raquel Moscoso, an analyst at Ixe brokerage in Mexico City.

The company said traffic to stores open for at least a year rose 3.3 percent in the quarter and the average amount spent per visit edged up 0.6 percent. ($1 = 13.1695 pesos at end of June) (Reporting by Noel Randewich; editing by Andre Grenon)

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