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Walmart’s Mexican unit considers “strategic alternatives” in Central America

Men walk past the Walmart logo outside a store in Monterrey, Mexico February 12, 2018. REUTERS/Daniel Becerril/File Photo

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MEXICO CITY, Jan 24 (Reuters) – Walmart’s Mexican unit said on Monday it was considering “strategic alternatives” to its operations in Central America, including a sale or joint venture, a move that analysts said would help him focus on the most profitable Mexican market. .

Walmart de Mexico, known locally as Walmex, operates about 860 stores in Central America, accounting for nearly a quarter of its footprint.

“We believe there may be exciting opportunities for greater growth in El Salvador, Honduras and Nicaragua,” the company said in a statement.

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“These alternatives could include, but are not limited to, potential joint ventures, strategic partnerships or alliances, sale or other transactions.”

Walmex opened 31 new stores – 28 in Mexico and three in Central America – during the third quarter of 2021.

Sales fell at the retailer’s supermarkets in Central America during the pandemic, but in the third quarter of last year, every country saw increases in same-store sales, led by Honduras.

Walmex in Central America operates discount stores, supermarkets, hypermarkets, warehouse stores and wholesale membership stores.

“The company chooses to focus on its strongest markets and leave operations in certain countries with complex political and health situations in other hands,” said Alejandra Marcos, senior analyst at Intercam.

The changes won’t reach the entire region, as the announcement doesn’t include operations in Costa Rica and Guatemala, but Intercam analysts said Mexico is the company’s ‘crown jewel’ .

Barclay analysts Benjamin M. Theurer and Antonio Hernandez said Walmex had “work to do” in the Mexican market after underperforming peers like Chedraui and La Comer.

Walmex’s revenue in Central America totaled 30 billion pesos ($1.5 billion) in the third quarter of 2021, up 13.9% from the same period a year earlier, according to a company filing. .

Walmex operating profit in Central America increased by 22.4%, and earnings before interest, taxes, depreciation and amortization increased by 14.6%, reaching a margin of 9.1% during the same period.

($1 = 20.5800 Mexican pesos)

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Report by Valentine Hilaire; Editing by Mark Porter and Stephen Coates

Our standards: The Thomson Reuters Trust Principles.

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