WMMVY Wal Mart de Mexico SAB de CV (QX)

By Anthony Harrup 

MEXICO CITY -- Mexico's biggest retailer, Wal-Mart de Mexico SAB, saw first-quarter sales expand at their slowest pace in over two years, held back by an incipient slowdown in consumption, protests, and several negative calendar effects.

Walmex, a unit of Bentonville, Arkansas-based Wal-Mart Stores Inc., said Thursday that sales in the January-March period totaled 131.7 billion Mexican pesos ($7 billion), up 7.3% from the first quarter of 2016. It was the slowest growth since the fourth quarter of 2014, and below the 12% growth for all of 2016.

Same-store sales in the first quarter, which exclude stores opened in the past year, rose 4.1% in Mexico and 2.1% in Central America.

In January, widespread protests in Mexico over higher gasoline prices led to violence and looting that temporarily shut down several dozen Walmex stores and shaved 1.5 to 2 percentage points off sales growth that month. February had an extra leap-year day in 2016, and the Easter holiday, which tends to lift sales, is in April this year instead of March.

Mexico's employment and wage growth in the past two years, coupled with low inflation, has contributed to robust retail sales, although consumption shows signs of slowing in 2017 and annual inflation has picked up to 5.3% in mid-March.

"We believe same-store sales growth is being increasingly driven by ticket rather than traffic, which we read as lower-quality growth," Credit Suisse said in a recent report in which it added that macroeconomic tailwinds such as wage and credit growth are losing strength.

Walmex said that 1.4% fewer customers spent on average 6.1% more per visit in March at its stores in Mexico.

Still, the company last month reiterated its target of doubling sales in the period from 2014 to 2024. Walmex said it would invest 17 billion pesos this year, 19% more than in 2016, in new stores, remodeling, logistics and development of e-commerce.

Walmex plans to report its first-quarter financial results on April 27.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

April 06, 2017 18:04 ET (22:04 GMT)

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