MEXICO CITY — Walmex’s net profits fell 13.3 percent to 26.4 billion pesos, or $1.4 billion at current exchange, in 2015 as Wal-Mart Stores’ Mexican and Central American division scrambled to boost discounts in a tough retail market and restructuring costs squeezed margins.
Sales rose 11 percent to 489.37 billion pesos, or $26.68 billion, from 440.9 billion pesos, or $24.04 billion.
“In 2015, our [earnings before interest, taxes, depreciation and amortization] margin fell 50 basis points to 9.2 percent from 9.7 percent,” chief financial officer Pedro Farah said in an earnings call late Tuesday. “We invested to reduce prices, increased ad spending and did some organizational adjustments.”
The retailer also posted two non-recurring fourth-quarter charges linked to transport costs and undisclosed acquisitions to grow its Central American franchise, Farah added. Walmex closed some nonperforming Bodega Aurrera convenience stores, including one in Guadalajara, a spokesman confirmed.
EBITDA still managed to rise 5 percent to 50 billion pesos, or $2.7 billion, while consolidated earnings increased 11 percent to 489.3 billion pesos, or $26.6 billion.
Same-store and newly opened store sales gained 6 and 2 percent, respectively, while e-commerce revenues increased 0.2 percent.
“We exceeded our 7 percent total sales objective,” said Walmex’s outgoing chairman and chief executive officer Enrique Ostale, reiterating the 2015 performance was “solid” despite weaker net profits and margins.
“We grew with quality, profitably and sustainably in all our country portfolios, formats and categories,” said Ostale, who will be succeeded by Guilherme Loureiro in coming weeks.
Same-store sales grew 6.4 percent in Mexico and 4.7 percent in Central America, down from a 5.5 percent hike in the same 2014 quarter. Guatemala’s political turmoil hurt the Central American franchise earlier in the year, but it later recovered, also helped by a stronger performance in El Salvador, Ostale said.
Fourth-quarter net earnings were down 18.4 percent, while EBITDA fell 6.1 percent. Revenues rose 12.7 percent. Same-store sales increased 8.6 percent in Mexico and 4.6 percent in Central America, according to Ostale.
Apparel sales increased 9.7 percent, led by the men’s segment, Ostale said, adding that newly restructured Sam’s Club also saw gains.
Walmex finished the year with 24.8 billion pesos in cash after investing 31.5 billion pesos to pay dividends and 1.8 billion pesos in stock buybacks.
Walmex’s shares closed down 5.2 percent to 42.4 pesos on the Mexican bolsa Wednesday, though they are up 33 percent in the past 12 months.