Walmart Mexico’s market value sheds $3 billion after Q2 profit dip

MEXICO CITY (Reuters) -Shares in Walmart’s Mexico and Central America unit, known as Walmex, slid 6% on Thursday morning, wiping off 60.9 billion pesos ($3.25 billion) from the firm’s market capitalization after posting weaker-than-expected margins.

“The company faces a very important challenge: regaining profitability,” analysts at financial group Banorte said.

Walmex on Wednesday posted a 10% decrease in net profit, despite sales coming up 8%, as the firm spent more than analysts expected.

That pressure came from investments in tech, e-commerce, store openings and labor expenses, Actinver analyst Antonio Hernandez wrote in a note to clients.

The group’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin landed at 9.5%, 81 basis points below the year-ago quarter and the lowest since the same quarter in 2020.

Walmex, Mexico’s largest retailer, has made a push in recent quarters to consolidate its market share, particularly in online sales. CEO Ignacio Caride, who took the job last year, had spent more than a decade at e-commerce powerhouse MercadoLibre .

Caride acknowledged in a pre-recorded webcast on Wednesday that he was unhappy with the results, though he said Walmex’s overall strategy was on track.

Executives are set to discuss the results with analysts in a call later on Thursday.

($1 = 18.7527 Mexican pesos)

(Reporting by Kylie Madry and Aida Pelaez-Fernandez; Additional reporting by Noe Torres; Editing by Brendan O’Boyle and Sarah Morland)

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