Walmart’s Earnings Fall Short of Expectations
Walmart de México y Centroamérica (Walmex) reported a slight decline in its operating income (EBITDA) during the second quarter of this year, a situation not seen in five years, which surprised analysts. Despite the company’s revenue growth aligning with expectations, the 0.2% drop in EBITDA fell short of analysts’ forecast for a 5.8% increase.
Revenue Growth and Increased Expenses
Walmart’s profits fell by 10.3% in the second quarter, while analysts had anticipated a 1.8% increase. This period also saw a 12.2% rise in general expenses, or 9.7% in constant currency, due to investments in growth areas such as technology, e-commerce, and new store openings.
“Slow Consumer Recovery”
Experts deemed the report weak, as consumer spending lost momentum in recent months amid global trade uncertainty impacting Mexico’s economy. This led consumers to moderate their spending.
- In June, Mexican consumer confidence declined due to concerns about the current and future state of the national economy amid signs of economic slowdown.
- Walmart’s strategy in Mexico involved price investments to expand its price advantage over competitors, aiming to gain market share.
- Despite reducing the perceived price gap by 50 basis points, Walmart faced increased competition from discount players offering lower-priced private label products.
Regional Performance
In Mexico, revenues grew 6% in the domestic market, while same-store sales increased 4.4%, with a 6% ticket growth offset by a 1.4% decrease in traffic. The Hot Sale offers campaign was a significant sales driver, running from May 26 to June 3.
In Central America, revenues rose 6%, and same-store sales increased 4% due to a 2.6% ticket growth and a 1.4% increase in traffic. Walmex’s e-commerce business grew by 20% in the second quarter of 2025.
Maintaining Annual Projections
Despite the slower-than-expected consumer recovery, Walmex does not foresee fundamental changes in its annual projections. The company reaffirmed its guidance of 6-7% consolidated revenue growth for the year.
Expansion and Current Stock Performance
During April-June of this year, Walmex opened 20 units in Mexico, including 17 Bodegas Aurrera, Bodega 3, Mi Bodega 4, Bodega Aurrera Express 10, Walmar Supercenter 1, and Walmart Express 2. This brings Walmex’s total units in Mexico to 3,191, with 2,587 Bodega Aurrera, 103 Walmart Express, 173 Sam’s Club, and others. In Central America, the company operates 933 units.
As of July 16, Walmart’s stock has risen by 4.83% on the Mexican Stock Exchange, trading at 57.54 pesos per unit.
Key Questions and Answers
- Q: What led to Walmart’s profit decline? A: The profit drop was primarily due to increased general expenses, such as investments in technology, e-commerce, and new store openings.
- Q: How did consumer spending impact Walmart’s performance? A: Consumer spending lost momentum in recent months due to global trade uncertainty, causing consumers to moderate their spending.
- Q: What strategies did Walmart employ to maintain its market position? A: Walmart implemented price investments to expand its price advantage over competitors and gain market share.
- Q: How did Walmex perform regionally? A: In Mexico, revenues grew 6% domestically, while same-store sales increased 4.4%. In Central America, revenues rose 6%, and same-store sales increased 4%.
- Q: What is Walmex’s outlook for the rest of the year? A: Despite the slower-than-expected consumer recovery, Walmex maintains its annual projections and reaffirmed its guidance of 6-7% consolidated revenue growth for the year.
