Walmart Mexico's market value sheds $3.7 billion after Q2 profit dip
The stock tumbled 7.4% on Thursday, its steepest daily decline since 2020, decreasing Walmex's market capitalization by 68.6 billion Mexican pesos ($3.7 billion).
Mexico's largest retailer, which operates Walmart, Sam's Club and Bodega Aurrera stores across six countries, on Wednesday posted a 10% drop in net profit, although sales were up 8%, as Walmex spent more than analysts expected.
Net profit was 11.2 billion pesos ($598 million) in the quarter, below analysts' expectation of close to 13 billion pesos, while the core earnings margin hit 9.5%, the lowest level for that quarter since 2020.
"The company faces a very important challenge: regaining profitability," analysts at financial group Banorte said.
Actinver analyst Antonio Hernandez said in a note to clients that the margin pressure came from investments in tech, e-commerce, store openings and labor expenses.
"The benefits of these investments will continue to translate into stronger growth and accelerated market share gains," Chief Financial Officer Paulo Garcia said in a call with analysts on Thursday.
"We're prioritizing investments with the highest returns and dropping those with lower returns," he added.
Walmex has made a push in recent years to consolidate its market share, particularly in online sales.
CEO Ignacio Caride, who in a pre-recorded webcast on Wednesday said he was unhappy with the results, said he believed the group's overall strategy was on track and reiterated the company's guidance and share buyback plans.
Caride took the job last year after more than a decade at e-commerce powerhouse MercadoLibre (MELI.O), opens new tab.
Executives noted that Walmex would continue to expand its store footprint, with 4,124 stores currently and 25 new openings over the quarter, and push on with a remodeling campaign for a wave of stores that opened more than a decade ago.
Executives said on the call that unusually torrential rains in June in Mexico City - its wettest June in over 20 years - had "a big impact" on food and drinks sales. Built on a lake, Mexico City is prone to floods in and around its metropolitan area.
($1 = 18.7500 Mexican pesos)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
an hour ago
- Reuters
Loblaw beats quarterly estimates as Canadian shoppers turn to local and discount brands
July 24 (Reuters) - Canadian retailer Loblaw Companies Ltd ( opens new tab beat second-quarter revenue and profit estimates on Thursday, driven by strong demand for essential products such as groceries and medicines at its Real Canadian Superstore locations and discount banners, including Maxi. Consumers seeking lower-priced alternatives across categories ranging from food to healthcare have boosted demand for discount retailers such as Loblaw. Same-store sales at its food retail segment rose 3.5% in the second quarter, while drug retail unit sales increased 4.1% from a year earlier. The "Buy Canadian" movement, sparked by trade disputes between the U.S. and Canada, has also led to consumers switching to locally made goods. This shift has led to a dramatic reshuffling of shelves at Canadian retail stores, which are now benefiting from a surge in sales of Canadian products. Loblaw's retail sales, its biggest revenue contributor, climbed 5.4% in the quarter ended June 14, compared with a 1.4% increase a year ago. E-commerce sales also jumped 17.5%. Earlier this month, U.S. President Trump threatened to impose a 35% tariff for goods imported from Canada, starting August 1, raising concerns about an escalating trade war. Loblaw's quarterly revenue rose 5.2% to C$14.67 billion ($10.78 billion) from a year ago. Analysts estimated a rise of 5% to C$14.64 billion, according to data compiled by LSEG. On an adjusted basis, the company posted earnings per share of C$2.40, topping expectations of C$2.33 per share. Loblaw maintained its annual adjusted profit forecast of high single-digit growth. Separately, Loblaw announced a 4-for-1 stock split on Thursday to keep shares affordable for retail and employee investors. ($1 = 1.3614 Canadian dollars)
Reuters
an hour ago
- Reuters
Valero Energy beats Q2 profit estimates as refining margins improve
July 24 (Reuters) - Refiner Valero Energy (VLO.N), opens new tab beat Wall Street estimates for second-quarter profit on Thursday as a rebound in refining margins helped cushion the loss in its renewable diesel unit. Investors were expecting top U.S. refiners to report higher second-quarter profits, bouncing back from losses during the first three months of the year as unseasonably strong diesel margins boosted earnings. Valero, the first major refiner to post results this earnings season, said its refining margin per barrel of throughput was up at $12.35 in the reported quarter, compared with $11.14 from a year earlier. "We set a record for refining throughput rate in our U.S. Gulf Coast region in the second quarter," said CEO Lane Riggs. The company's total throughput volumes stood at 2.9 million barrels per day (bpd) in the quarter, compared with 3.0 million bpd a year earlier. The refining segment reported quarterly operating income of $1.3 billion, higher than last year's $1.2 billion. However, its renewable diesel segment, consisting of the Diamond Green Diesel joint venture, reported an operating loss of $79 million for the quarter, compared with a profit of $112 million a year ago. The company also said it was progressing with a fluid catalytic cracking unit optimization project that will enable the St. Charles Refinery to increase its high-value product yield. The project is estimated to cost $230 million and is expected to be completed in 2026. Valero reported a profit of $2.28 per share for the quarter ended June 30, compared with analysts' average estimate of $1.74 per share, according to data compiled by LSEG.
Reuters
an hour ago
- Reuters
Wall St futures mixed as investors weigh Alphabet, Tesla earnings
July 24 (Reuters) - U.S. stock index futures were mixed on Thursday as investors assessed earnings from Alphabet and Tesla while focusing on progress in trade deals between the U.S. and its top partners. Google-parent Alphabet (GOOGL.O), opens new tab raised its capital spending plans for the year to about $85 billion and predicted a further increase next year, shrugging off uncertainties from U.S. trade policy. Its shares rose 3.5% premarket. Electric carmaker Tesla (TSLA.O), opens new tab, however, painted a gloomy picture, with CEO Elon Musk warning that reduced government support for EV makers could lead to a "few rough quarters" for the company. Its stock dropped 5%. By 5:57 a.m. ET, S&P 500 E-minis were up 7.75 points, or 0.12%, and Nasdaq 100 E-minis were up 85.25 points, or 0.37%. Dow E-minis were down 136 points, or 0.3%. The blue-chip (.DJI), opens new tab on Wednesday came just shy of surpassing its all-highs touched in December. The benchmark S&P 500 (.SPX), opens new tab and the tech-heavy Nasdaq (.IXIC), opens new tab surged to fresh records as reports of an imminent trade deal between the European Union and the U.S. boosted risk sentiment. Diplomats said the deal would result in 15% import tariffs on the bloc. Additionally, President Donald Trump's announcement of a deal with Japan has also aided investor sentiment this week. The pact includes slashing tariffs on goods from the Asian country to 15%. With the August 1 deadline just a week away, investors expect a flurry of more trade negotiations, given that China and South Korea are also seeking deals to avoid Trump's hefty duties. Amid escalating tensions between the Trump administration and the Federal Reserve, the president will visit the central bank later in the day. Trump has been persistently attacking Fed Chair Jerome Powell for not cutting rates and mused publicly about firing him. The central bank holds its monetary policy meeting next week, with markets widely expecting policymakers to leave interest rates unchanged. Traders see a 62.2% likelihood of a cut in September, according to the CME Group's FedWatch tool. Later in the day, investors will parse weekly jobless claims and S&P Global's flash PMI data to examine the health of the economy amid tariff uncertainties. Among other earnings-related moves, IBM (IBM.N), opens new tab slid 5.25% as its second-quarter earnings failed to impress investors, especially due to its lower-than-expected sales in its mainstay software segment. Shares of ServiceNow (NOW.N), opens new tab jumped 7.1% after the software firm raised its annual subscription revenue forecast.
