Retailer Wal-Mart de Mexico, or Walmex, posted 28% growth in net profit for the second quarter, beating expectations as expansion and cost savings fueled growth, the Reuters news agency reported.
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Walmex, a unit of Wal-Mart Stores Inc reported a net profit of 1.95bn pesos ($181m) for the period, compared with 1.52bn pesos a year earlier. Net profit for the first half of the year reached 3.801bn pesos.
Walmex has used aggressive expansion and low prices to become the dominant retailer in Mexico’s fragmented market. Analysts in a Reuters poll had forecast net profit would rise 24% in the quarter.
Revenues increased 13% in the second quarter to 37.4bn pesos. Same-store sales, which measure performance at stores open at least a year, rose 4.7%. Same store sales for June rose a healthy 6.6%.
Core earnings before interest, taxes, depreciation and amortization, or EBITDA, jumped 18%, while operating income, or EBIT was also up about 18% in the quarter.
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By GlobalDataEduardo Solorzano, Walmex’s new CEO, called it an excellent performance that “reflects efforts by our workers to better serve clients and improve productivity.”
Earnings were boosted by strong sales and cost efficiencies from a new, state-of-the-art refrigerated distribution centr, a trend that is expected to continue this year, analysts said.
“The bulk (of the cost savings) will start to be seen in the second half of the year,” said Joaquin Ley, a retail analyst with Santander brokerage.
