Retail News Update

Wal-Mart de Mexico SA said Wednesday that second-quarter net income rose by 9 percent over the year-ago period as new stores opened and customer traffic increased.

Walmex, as the local unit of Arkansas-based Wal-Mart Stores Inc. is known, said profits rose to 3.23 billion pesos (US$313 million) in the quarter from 2.97 billion pesos (US$288 million) in the same period last year, in line with analysts’ expectations.

Net sales rose 12 percent to 57.2 billion pesos (US$5.6 billion), as same store-sales increased by 5.9 percent. Mexico’s largest retail chain also opened 36 new outlets in the second quarter, bringing its total store count to 709.

Retail sales have continued to climb in Mexico despite rising inflation, which reached 5.26 percent in June, contributing to what Walmex Chief Executive Officer Eduardo Solorzano described as a “tough” economic environment.

“We expected, as a matter of fact, that the economic environment would be tough,” Solorzano told a conference call. “We assumed that customers and consumers would be facing an uncertain environment, and would be cautious in their expenses.”

But as world food price soared, Walmex maintained sales gains by hiking prices less than the market average. It also anticipated growth, opening 43 new stores in the first six months of 2008 — twice the number opened in the same period last year, Solorzano said.

The company also expects to unveil special advertising campaigns, he said.

The moves helped to boost second-quarter customer traffic by 4.8 percent, though average purchases per customer are up by just 1.1 percent as compared to same period of 2007.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 9 percent 5.28 billion pesos (US$513 million), equivalent to 9.2 percent of total revenue.

Walmex currently operates 709 retail stores and 360 restaurants in Mexico. Its stores include Wal-Mart Supercenters, Sam’s Clubs, Superama supermarkets, and the Suburbia clothing store.