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Wal-Mart de Mexico Profit Rises 10% in Third Quarter
 Jonathan J. Levin & Jonathan Roeder - Bloomberg
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October 12, 2010
Wal-Mart de Mexico SAB, Latin America’s largest retailer, said third-quarter profit rose 10 percent, missing analyst forecasts as higher service costs and flooding curbed its gains.
Net income increased to 4.25 billion pesos ($340 million), from 3.86 billion pesos a year earlier, the company said today in a statement to Mexico’s stock exchange. Sales rose 27 percent to 82.3 billion pesos.
Floods in parts of the country hurt sales in September, Chief Financial Officer Rafael Matute said on a conference call after the report. The Mexico City-based company also paid more for electricity in the period, he said.
“The third quarter was a challenging quarter for Mexico,” Matute said.
Analysts projected adjusted profit of 4.6 billion pesos, the average of seven estimates compiled by Bloomberg.
In September, same-store sales rose 2.3 percent from a year earlier. Total sales last month were 25.9 billion pesos, the company said on Oct. 6.
In February, the retailer acquired stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica from U.S. parent company Wal-Mart Stores Inc.
‘Growth Avenue’
“Central America is the new growth avenue for Walmex,” said Francisco Chevez, an HSBC analyst in New York, speaking in a telephone interview before the report. He rates the company’s shares “overweight.”
Wal-Mart de Mexico plans to open stores in 300 more cities in the region as Mexico’s economy recovers and domestic demand returns, Chief Executive Officer Scot Rank said in August.
The company aims to grow in Latin America because of the market’s young population and untapped customers, Rank said in an interview.
To contact the reporters on this story: Jonathan J. Levin in Mexico City at jlevin20(at)bloomberg.net; Jonathan Roeder in Mexico City at jroeder(at)bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello(at)bloomberg.net
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