On Wednesday, Walmart’s Mexican division reported a drop in its gross margin in Q4 due as it strived to offer lower prices. This happened even though same-store high sales helped boost the net profits by nearly 12% compared to the previous year.
Profit for the quarter totaled 14.82 billion pesos ($759.65 mln), while revenues hit 237.82 billion pesos, being up 11% as compared to the period from October to December 2021 and slightly above the banking analysts’ average forecast, i.e. 237.6 billion.
The company known as Walmex reported earnings per share of 0.85 pesos which matches Refinitiv's estimate, as net income went up nearly 12% to 14.82 billion pesos ($759.65 million).
As compared to last year, Walmex's quarterly EBITDA was up 7.5%, while same-store sales were up almost 13% in Central America and more than 10% in Mexico.
That being said, the company's gross margin dropped 20 basis points in the quarter as Walmex made "price investments" in clothing, seasonal, and household goods, Walmart’s CFO Paulo Garcia said.
“We innovated to offer even lower prices,” Walmex said in its statement. It was also noted that Bodega, which is its most budget-friendly brand, led the way in Mexico, as prices of certain goods fell by as much as 5%.
Monex, the Mexican brokerage company, referred to Walmart’s report as positive yet warned that high inflation and competition for low prices would remain in 2023.
Walmex opened 69 new stores in the quarter; however, total investment for the year turned out to be 23% less than expected as a result of supply chain disruptions.
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