By Sarah Morland
MEXICO CITY (Reuters) -Walmart’s Mexico and Central America unit reported a 10% decrease in its second-quarter net profit on Wednesday, below analysts’ forecasts, citing a slower-than-anticipated recovery in consumer spending even as its sales rose 8%.
Net profit was 11.23 billion pesos ($598 million) in the three months through June, below the nearly 13-billion-peso forecast of analysts polled by LSEG, while revenues rose 8% year-on-year to reach 246.25 billion pesos – slightly above analysts’ estimate of 246.07 billion pesos.
“We are starting to see a gradual pickup in sales. However, the recovery has been slower than expected with consumer confidence having mixed results in the quarter and with uncertainty still present,” Walmex Chief Executive Officer Ignacio Caride said in a presentation of the results.
“I am happy about the progress of our strategy even though I’m not happy with our current results,” Caride said.
Analysts had predicted a strong quarter for retailers, boosted by the annual Hot Sale promotional period, which began later in May this year and came after many workers received annual profit-sharing bonus payments, boosting spending power.
Walmex is Mexico’s largest retailer and operates Walmart and Sam’s Club stores in the country as well as the low-cost supermarket chain Bodega Aurrera. During the quarter, it opened 25 new stores, mostly in Mexico.
Walmex said sales growth was led by Bodega Aurrera and Sam’s Club, whose “value proposition remains very relevant to our customers during these complicated times.”
It added that the company’s own brands improved customer perception of its prices, and shoppers also embraced a campaign featuring Lilo & Stitch products, ahead of a live-action movie that released in Mexico toward the end of May.
The company reiterated its forecast of 6% to 7% growth in consolidated revenue for 2025, and said it expected a gradual increase in growth in the second half of this year.
“We are seeing a slower-than-expected consumption recovery, but we don’t see any fundamental change in what we forecasted for the full year,” Walmex’s management said in a statement.
($1 = 18.7654 Mexican pesos at end-June)
(Reporting by Sarah Morland; Editing by Natalia Siniawski, Brendan O’Boyle and Lisa Shumaker)
