Walmart Mexico's Q4 net profit increased significantly, but gross profit margin decreased instead of increasing!

Walmart Mexico said on February 15 that net profit in the fourth quarter increased by nearly 12% from the same period last year due to strong same-store sales. However, gross profit margin declined due to the low-price strategy to clear inventory.

Walmart Mexico's net profit in the fourth quarter was 14.82 billion pesos (US$759.65 million), while revenue reached 237.82 billion pesos, up 11% from the same period in 2021 and slightly higher than market expectations (237.6 billion pesos).

Compared with the same period last year, the company's EBITDA increased 7.5%, with same-store sales in Central America increasing by nearly 13% and same-store sales in Mexico increasing by more than 10%.

In the fourth quarter, Walmart Mexico's earnings per share were 0.85 pesos, in line with market expectations, but its net profit exceeded market expectations, reaching 14.82 billion pesos.

Paulo Garcia, Walmart Mexico's chief financial officer, said the company's gross margin fell 20 basis points in the quarter as the company made significant price adjustments in apparel, seasonal products and home goods.

"Bodega Aurrera (Walmart's Mexican supermarket) saw tremendous growth in the fourth quarter due to lower prices on its products," Walmart said in a statement.

Mexican brokerage Monex called Walmart's fourth-quarter report positive, while warning that high inflation and competition to offer low prices will continue until 2023.

Walmart expanded its global footprint during the quarter, opening 69 new stores in total, but investment this year was 23% less than expected due to supply chain disruptions.

"We plan to start some projects in 2023," Paul Garcia said in conclusion.

Editor ✎ Nicole/

Disclaimer: This article is copyrighted and may not be reproduced without permission.