Walmart de Mexico reports 10% jump in quarterly sales, but EBITDA dips

MEXICO CITY (Reuters) – Walmart’s Mexico unit reported a 10% jump in second quarter revenue compared with the year-earlier period on Thursday, helped by more grocery sales and online shopping amid stay-at-home measures meant to contain the coronavirus.

Still, Walmart de Mexico <WALMEX.MX>, the biggest retailer in Mexico, saw earnings before interest, tax, depreciation and amortization (EBITDA) fall 3.3% from last year to 15.73 billion pesos, despite analyst forecasts EBITDA would increase.

The retailer also posted 1.66 billion pesos ($72.4 million) in quarterly net profit, a huge year-on-year drop due to a 8.1 billion peso payment to Mexico’s tax authority (SAT) in May.

Chief Financial Officer Milton Brandt said the retailer had managed to contain other costs in its core Mexico market.

“Excluding the payment to the SAT, we were able to keep expense growth below total revenue growth, despite incurring higher operating costs given the measures taken to handle the pandemic,” he said in a webcast discussing results.

If not for the Mexico tax and royalty payments in Central America, EBITDA would have risen 10% and net profit would have climbed 15%, the company said.

Sales swelled to 169 billion pesos, boosted by grocery shopping. Walmart de Mexico also noted that demand for puzzles, board games and kitchen gear rose, but fell for beauty and personal care products.

Mexico, Walmart Inc.’s top foreign market by store count, detected its first cases of coronavirus in February and subsequently urged residents to stay at home as much as possible.

In line with that guidance, Walmart de Mexico’s online sales grew 217% in the quarter and now make up 4.5% of total sales in Mexico. The company added 12 stores from April to June, yet said it was shifting investment to prioritize other areas including tech systems and automation processes.

(Reporting by Daina Beth Solomon and Noe Torres; Editing by Dave Graham and Diane Craft)

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