Walmart in Mexico targets low prices despite high inflation, profits surge

MEXICO CITY, Oct.21 (Reuters) – The Mexican unit of Walmart (WMT.N) said Thursday it was focusing on its low price strategy as inflation rose in the third quarter, helping the retailer’s bottom line to increase by more than 20%.

Walmart de Mexico (WALMEX.MX), Mexico’s largest retailer, posted net profit of 11 billion pesos ($ 535 million) while revenue rose 6.4% to 176 billion pesos.

“In times of high inflation, our low-cost value proposition becomes even more relevant to our customers,” Managing Director Guilherme Loureiro said in a webcast to discuss third quarter results.

He added that the company, known locally as Walmex, was ready for the holiday season despite global supply chain issues, in part because about 93% of its products are sourced locally.

“We have worked with national suppliers and logistics providers to secure capacity… we will continue to monitor delays in ports and other supply chain factors,” said Loureiro.

Walmex’s third-quarter costs rose 5.5% but remained below revenue growth, while the retailer’s profit margin rose to 8.8%, the company said.

From July to September, it opened 31 stores, primarily in Mexico, and a “Walmart Fulfillment Services” warehouse in Mexico City for outside merchants who sell through the Walmex website.

E-commerce sales in Mexico grew 27% in the quarter, reaching 4.5% of total sales and Walmex said it would soon allow shoppers to pay for their orders online using Cashi, its electronic wallet.

Compared to earlier in the pandemic, when shoppers sourced food rather than other items, sales increase again in general merchandise and clothing, the company said.

($ 1 = 20.6420 at the end of September)

Reporting by Daina Beth Solomon and Noe Torres Editing by Chris Reese and David Gregorio

Our standards: Thomson Reuters Trust Principles.