Background on Grupo Sanborns and its Relevance
Grupo Sanborns, a prominent operator of retail stores and restaurants such as Sanborns, Sears, and iShop, is currently grappling with the challenges posed by weak consumer spending in Mexico and rising wages that outpace the country’s economic growth. The company’s extensive workforce, comprising numerous employees needed to run its stores and restaurants, has been significantly impacted by these factors.
Financial Pressures and Strategies
Arturo Spínola García, the Financial Director of Grupo Carso, highlighted the primary concerns facing Grupo Sanborns. He explained that the combination of stagnant sales and rising operational costs, driven by inflation in wages and salaries, has created a challenging situation for the company.
“We have inflation, particularly in wages and salaries, which leads to operational disequilibrium. With stagnant sales and rising inflationary costs, this is the main issue affecting us, and we are actively working to address it,” Spínola García stated during a recent analyst conference.
To counteract these pressures, Grupo Sanborns is implementing strategies aimed at boosting sales and optimizing costs. These measures include enhancing the utilization of their retail space and adopting more efficient operational practices.
“The operational disequilibrium does have an impact because Grupo Sanborns is a labor-intensive group. Wages have grown significantly more than the economic growth, which is evident in the efforts we are making to reverse this situation,” Spínola García emphasized.
Wages and Salaries as a Major Expense
According to HR Rating, wages and salaries constitute the most substantial expense for Grupo Sanborns. In the third quarter of 2024, salary-related expenses accounted for 33.9% of the company’s total costs.
- General expenses increased by 17.7% during this period.
- Salaries rose by 12.7%, and employee benefits increased by 13.1%.
The company employed 42,031 individuals at the time, as reported by HR Rating.
Impact of Minimum Wage Increases
In 2025, Mexico’s general minimum wage increased by 12%. It rose from 248.93 pesos per day to 278.80 pesos. In the Free Trade Zone of the North Border, the daily minimum wage increased from 374.89 pesos to 419.88 pesos, according to data from Mexico’s National Commission of Minimum Wages (CONASAMI).
Declining Financial Performance
From January to March, Grupo Sanborns experienced a 40.7% decrease in operating profit and a 2.4% drop in consolidated sales, which totaled 16,184 million pesos compared to 16,585 million pesos in the previous year. This outcome can be attributed to weakened consumer spending and reduced foot traffic in their stores.
The minorist group, owned by entrepreneur Carlos Slim, operates a total retail space of 1.16 million square meters across 448 stores.
Key Questions and Answers
- What are the primary challenges facing Grupo Sanborns? The company is dealing with weak consumer spending in Mexico and rising wages that outpace economic growth, leading to operational disequilibrium.
- What strategies is Grupo Sanborns implementing to address these challenges? They are focusing on boosting sales and optimizing costs through improved space utilization and more efficient operations.
- What is the significance of wages and salaries for Grupo Sanborns? Wages and salaries represent the most substantial expense for the company, accounting for 33.9% of total costs in Q3 2024.
- How have minimum wage increases affected Grupo Sanborns? The 12% increase in Mexico’s general minimum wage and the higher rise in the Free Trade Zone of the North Border have contributed to the company’s financial pressures.
- What factors led to Grupo Sanborns’ declining financial performance? The decrease in operating profit and consolidated sales can be attributed to weakened consumer spending and reduced foot traffic in their stores.
