Wal-Mart de Mexico SA, the country's largest retailer, reported a seven-percent increase in second-quarter net profit after inflation, even as sales at its established stores grew less than 1 percent due in part to a slowdown in consumption.
The company reported net profit of almost 3 billion pesos (US $280 million) during the period, compared with nearly 2.8 billion pesos ($260 million) in the same quarter last year.
Walmex—as the Mexican unit of Arkansas-based Wal-Mart Stores Inc. is known—reported a nine-percent increase in total sales after inflation, to nearly 51 billion pesos ($4.7 billion). Same-store sales, or sales from units that have been in operation for over a year, increased by 0.9 percent, the company said.
Second-quarter sales were affected by a slowdown in the Mexican and US economies, as well as an absence of positive factors the company took advantage of in 2006, including the presidential elections and the World Cup, Walmex president and CEO Eduardo Solorzano said. He also cited a slowdown in money sent home by Mexicans living abroad, mostly in the US.
The program held the increase in second-quarter operating expenses to 6 percent over the same period last year, despite new expenses related to Banco Wal-Mart, a bank the company plans to open later this year, he added.
In November, Mexico's treasury secretary approved the opening of five new banks including Banco Wal-Mart, which is expected to offer basic consumer services such as loans and accounts linked to debit cards and checkbooks. Solorzano said the company expects to receive certification for the bank by September.
Walmex is Mexico's largest retailer and private-sector employer, with more than 140,000 workers at 929 supermarkets, restaurants, clothing stores and retail chains. The company plans to open 125 new stores this year. (Reuters)