MEXICO CITY (Reuters) -Walmart’s Mexico unit on Thursday posted a 10% jump in third-quarter net profit, tracking analyst estimates, while expenses grew faster than revenue due to higher e-commerce and labor costs, the company said.
Walmart de Mexico, the biggest retailer in Mexico, posted a net profit of 12.15 billion pesos ($603.8 million), or 0.70 pesos a share, compared with the Refinitiv estimate of 0.69 pesos.
Quarterly revenue at the chain, which has come under increasing pressure from Mexico’s government to rein in inflation at its stores, rose 12% from the prior July-to-September period, also in line with forecasts.
Even as same-store sales increased, especially at Mexico’s low-cost Bodega stores, the company’s gross margin was flat at 23.7%, reflecting higher expenses compared with last year.
“We continued to invest behind our strategic priorities,” Chief Financial Officer Paulo Garcia said in a webcast following the results announcement, referring to labor and e-commerce costs in the retailer’s main Mexico market.
The company known as Walmex said e-commerce makes up 4.8% of total Mexico sales, up from 4.5% a year ago. It also expanded its physical footprint with 26 new stores.
Looking ahead, Walmex said its immediate priority was to keep prices low amid swelling inflation, adding that company buyers were working closely with providers to review prices item by item.
Mexican President Andres Manuel Lopez Obrador said on Tuesday that he discussed with Judith McKenna, the head of Walmart Inc’s international division, “doing everything possible” to lower inflation on food products.
“The current environment requires a lot more focus and attention than the day-to-day business typically does,” said Chief Executive Guilherme Loureiro in the results webcast.
“We have a solid team with vast experience in inflationary environments.”
Annual inflation hit 8.76% in the first half of September.
($1 = 20.1271 pesos at end-September)
(Reporting by Daina Beth Solomon and Noe Torres; Editing by Cassandra Garrison, Will Dunham and Richard Pullin)
