Wal-Mart de Mexico Net Profit Rises on Higher Sales, Lower Costs

By Anthony Harrup Features Dow Jones Newswires

Mexico's biggest retailer, Wal-Mart de Mexico SAB, said Thursday that its net profit increased 15% in the second quarter as higher sales combined with lower costs and expenses.

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Walmex, as the unit of Arkansas-based Wal-Mart Stores Inc. is known, made net profit on continuing operations of 6.75 billion Mexican pesos ($380 million) in the three months through June, compared with 5.87 billion pesos in the year-earlier period.

The company also registered a 7 billion-peso gain in the quarter from the sale of its Suburbia clothing stores.

Sales rose 9.1% to 135.72 billion pesos, while earnings before interest, taxes, depreciation and amortization -- a measure of operating cash flow -- grew 13% to 12.47 billion pesos. Same-store sales rose 7.2% in Mexico and 6.9% in Central America.

Walmex said both cost of sales and general expenses declined as a percentage of revenue.

The results were in line with the expectations of analysts polled by The Wall Street Journal.

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Growth in Mexican retail, while slower than in 2016, has been resilient to this year's bump in inflation and a slowdown in consumer credit. More than 800,000 formal private sector jobs were created in the past year, and unemployment is at an 11-year low, although wage increases have been below the current 6.3% inflation rate.

Retail association Antad, whose members include Walmex, reported 5.7% same-store sales growth in the second quarter, with total sales up 8.9%.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

July 27, 2017 17:23 ET (21:23 GMT)