By Amy Guthrie
MEXICO CITY--Wal-Mart Stores Inc.'s Mexican unit said Tuesday
that its net profit expanded 8.9% on the year during the first
quarter, as sales rebounded versus a weak comparison period dogged
by new taxes and cautious consumer spending.
The company, which accounts for around 6% of Wal-Mart's annual
sales and is one of the Bentonville, Ark.-based retailer's biggest
overseas operations, reported quarterly net profit of 5.18 billion
Mexican pesos ($334 million), as total revenue increased 9.3% to
111.72 billion pesos.
The company known as Walmex had been expected to report net
profit of 5.4 billion pesos on sales of 111.7 billion pesos,
according to the median estimate of seven equities analysts polled
by The Wall Street Journal. Higher general expenses chipped away at
quarterly profit, while the company said it invested $129 million
into the business during the period.
The unit failed to grow same-store sales last year in Mexico,
its main market, amid a weak economy and struggles to turn around
its Sam's Club business in the country.
On a pre-recorded conference call, Walmex Chief Executive
Enrique Ostale said sales at Sam's Club stores open more than 12
months grew by 6.8% during the quarter, for a marked improvement
versus a double-digit decline in the unit's same-store sales for
the same period of 2014. Even so, the Sam's turnaround remains a
"work-in-progress," Mr. Ostale said, with opportunities to improve
the stores' general merchandise offerings.
Same-store sales for Wal-Mart's Mexican self-service outlets
grew by 4.4% during the period, which Mr. Ostale said implies
market share gains because retail association Antad reported a 3.6%
increase for the period in that segment, excluding Wal-Mart
stores.
Meanwhile, same-store sales in Central America increased 7.7% in
the quarter. Mexico supplies about 85% of Walmex's total
revenue.
Mr. Ostale said he was "particularly encouraged" by the
company's same-store sales momentum, noting sales gains in items
such as cheese and cold cuts but marking the stores' bakery
department as having "room for improvement."
Write to Amy Guthrie at amy.guthrie@wsj.com
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