Walmart de México Q3 Profit Misses Estimates as Costs Erode Margins

Walmart de México (Walmex) reported third-quarter earnings that missed analyst forecasts, as rising operating costs led to significant margin pressure despite continued growth in e-commerce. The results highlight a challenging environment for Mexico's largest retailer, where investments and expenses are growing faster than sales.

Earnings Miss and Margin Pressure

The company announced a net profit of 11.03 billion pesos ($610 million), a 6% decrease from the same period last year. According to a poll of analysts by LSEG cited by Reuters, this figure fell below the consensus estimate of 12.26 billion pesos.

Total revenue for the July-September period rose 3% year-over-year to 248.83 billion pesos, also shy of the 250.44 billion pesos analysts had projected. The pressure on profitability was evident in the company's EBITDA (earnings before interest, taxes, depreciation, and amortization), which grew by just 0.4%. Consequently, Walmex's EBITDA margin contracted by 30 basis points to 10.2%, as general and sales expenses both increased by approximately 6% due to growth-related investments.

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Sales Breakdown and E-Commerce Strength

Digging into the sales performance, same-store sales in Mexico increased by nearly 2%. This growth was primarily driven by a 1.6% rise in the average ticket size, while customer traffic remained broadly flat, suggesting that higher prices or larger baskets, rather than more shoppers, fueled the modest sales gain.

A key positive for the quarter was the sustained momentum in the digital channel. E-commerce gross merchandise value (GMV) posted double-digit growth, rising 15% in Mexico and 23% in Central America. While a significant bright spot, this online growth was not enough to offset the margin erosion experienced across the broader business.