March 25, 2018 / 4:59 PM / 2 years ago

Mexico's Chedraui buys Fiesta Mart to grow U.S. Latino sales

MEXICO CITY (Reuters) - Mexican grocer Chedraui, a powerhouse in the fast-growing Latino market in the United States, said on Sunday it had bought smaller U.S. grocery store chain Fiesta Marts for an undisclosed amount.

The logo of the Mexican retailer Grupo Comercial Chedraui is pictured in Mexico City, Mexico March 25, 2018. REUTERS/Carlos Jasso

Grupo Comercial Chedraui (CHDRAUIB.MX), as the company is formally know, announced the acquisition of Texas-based Fiesta Marts’ 63 stores in a brief statement on Sunday, emphasizing how the deal will strengthen its reach with Mexican-American shoppers.

A Chedraui official did not immediately respond to calls seeking additional details on the acquisition.

Chedraui, based in Veracruz state, already runs 59 El Super grocery stores, mostly in California but also in other southwestern U.S. states, where shoppers are courted with Spanish-language ads promising the lowest price.

Burt Flickinger, a grocery sector consultant with Strategic Resource Group, said the acquisition will likely make the company the top retailer for Spanish-speaking shoppers in the United States, besting even retail giants like Walmart for the coveted demographic.

“El Super is (already) a fierce winner in the wars in the stores, he said, referring to the chain’s dominance with Latino consumers.

The group is the fastest growing consumer constituency in the United States, he added.

Chedraui made the purchase of Fiesta Marts through its U.S. unit, Bodega Latina, and while the company’s statement did not provide a final price tag, it did say the acquisition reflects 0.2 percent of the firm’s projected 2018 sales and 6.6 percent of its earnings before interest, taxes, depreciation and amortization (EDITDA) for the year.

In Mexico, Chedraui operated 170 stores as of the end of last year.

The company said earlier this year it expects to invest around 3.8 percent of its consolidated revenue in assets, which it said should see sales growth reach as high as 6 percent in 2018.

Chedraui’s sales growth totaled 3.3 percent last year.

Reporting by David Alire Garcia and Adriana Barrera; Editing by Lisa Shumaker and Paul Simao

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