MEXICO CITY — “We are doing very well and our 10 percent sales target will be reached,” boasted Ana Maria Baca, online manager at Sears.com.mx, the e-tailing arm of Sears Operadora México S.A. de C.V., the fortunes of which are rising after last year’s earthquakes destroyed one of its flagships and dented sales.
Indeed, the nearly 100-strong department-store network belonging to Mexican billionaire Carlos Slim is about to reopen its key shop in Galerías Coapa, a Mexico City mall owned by rival Liverpool that was heavily damaged in last fall’s earthquake.
“We are about to open Coapa and we have remodeled many stores,” Baca said, adding that sales at Sears.com.mx will surge 65 percent to roughly 300 million pesos, or $15.6 million, compared to last year when they gained 40 percent.
The chain, “which has nothing to do” with the U.S.’ bankrupt Sears Holdings Corp. but pays 1 percent annual royalties to use its name in Mexico, recently revamped several stores, including those located in the Mexican capital’s Satélite and Perisur shopping districts. Baca said the Perisur shop underwent the most significant facelift and expansion, becoming the top-grossing outlet with sales rising 35 percent to 54 million pesos, or $2.8 million, in September.
Sears.com.mx sells roughly 15,000 items a day and stocks 80,000 products. The site also supplies Claro Shop, the online marketplace belonging to Slim’s retail holding Grupo Sanborns, which holds its eponymous restaurant and retail chain, as well as Saks Fifth Avenue Mexico, perfumery chain Dax and electronics banner iShop/Mixup.
The Sears banner accounts for the lion’s share of Grupo Sanborns’ sales, with 47 percent. Its 95 stores operate in 837,000 square meters, or a total of 9 million square feet. Sanborns does not provide a precise figure breakdown for Sears’ sales. Baca would not provide any figures other than the 10 percent sales objective for 2018.
Sears.com.mx markets the chain’s Jeanious and Fukka apparel private labels and its own footwear trademark Elle. The site also markets Levi’s, Chaps and Dockers as well as shoes by Nine West, Steve Madden. Levi’s products are top sellers, said Baca.
Sears de Mexico recently opened a store in Puebla State and plans to install locations in Tlaxcala near Mexico City and in Leon, Guanajuato State, in 2019.
Asked if Mexican consumers make a connection between the imploding American Sears banner and its Mexican incarnation, Baca said: “Most people know Sears in Mexico belongs to [Grupo] Carso and so there has not been much noise about what is happening in the U.S.”
Despite Baca’s optimism, Sears Mexico seems like it needs a boost after Grupo Sanborns’ operating profits plunged 22 percent to 5.1 billion pesos, or $264 million, as business costs soared in a volatile year, dragging net down 6 percent. Sales inched up 4.6 percent to 47.5 billion pesos ($2.5 billion).
According to its 2017 annual report, Sanborns inaugurated two Sears last year, one Sanborns (which also carries apparel) and six iShop stores selling Apple products. The openings, however, were much slower than in 2016 when Sanborns opened 17 stores, six under the Sears banner.
Still, things are looking up for fashion retailers in Mexico.
The newly struck United States-Mexico-Canada (USMCA) or NAFTA 2.0 free-trade accord and growing signs that President-elect Andres Manuel Lopez Obrador’s policies won’t spoil economic growth are boosting consumer sentiment.
The rising optimism could also fuel M&A activity. Liverpool is said to be eyeing fresh acquisitions after failing to buy a Chilean rival a couple of years ago while fashion franchisor Grupo Axo could also make additional buys after recently snapping up athletic footwear brand Tennix, said Daniel Guiot, a retail partner at M&A advisory firm Rion in Mexico City.
Coppel and Axo, however, recently shelved plans to float on the Mexican bolsa.
The former is said to have canceled the transaction after growing signals that populist Obrador, set to take power on Dec. 1, won’t be too harsh on business, said Guiot. Axo, meanwhile, postponed the share sale after one of its top investment fund owners, General Atlantic, decided against it.