Wal-Mart de México (WALMEX) Q1 2025 (Q&A) earnings summary

Executive summary

• Consolidated revenues grew 6.5% year-over-year to MXN 240.98 billion, with new stores contributing 1.6% to total sales growth and growth in both Mexico (+2.9%) and Central America (+3.5% constant currency), despite a softer macro environment and negative calendar effect.

• E-commerce, especially on-demand groceries, grew at high double digits, with Mexico GMV up 17% and Central America eCommerce sales up 54%; ecosystem initiatives and advertising contributed positively to gross margin.

• Sam's Club outperformed other formats, driven by individual member growth, premium assortment, and improved service levels, while Walmart Express saw improvements from expanded premium assortment and enhanced fresh offerings.

• Net income decreased 6.6% year-over-year to MXN 12.32 billion, with a net margin of 5.1%, and EPS was MXN 0.707, down from MXN 0.756 in 1Q24.

• Continued expansion of omni-channel, new business initiatives, and digital transformation, with active omni-channel user base reaching 19.8M.

Financial highlights

• Total revenues reached MXN 240,975M, up 6.5% from 1Q24, with gross margin expanding 20 bps to 24.1% of revenue and EBITDA increasing 1.9% to MXN 25,091M.

• Working capital worsened due to higher inventory and slower rotation, but normalization is expected as inventory management improves.

• SG&A expenses rose to 16.5% of revenues, reflecting growth investments and sales deleverage.

• Expense growth was high single digit, in line with guidance, driven by investments in expansion, remodeling, e-commerce, and associate value proposition.

• Ecosystem initiatives, especially advertising (Connect business), contributed 20 bps to gross margin; Bait and financial solutions also accretive.

Outlook and guidance

• Full-year sales growth guidance of 6-7% confirmed, with expectations of gradual consumption recovery and improved traffic.

• Management expects a gradual ramp-up in performance for the following quarters, with continued capital investments and focus on working capital.

• Q2 expected to benefit from Hot Sale, seasonal events, and profit sharing payments, supporting general merchandise sales.

• Continued investment in long-term growth, productivity, and digital transformation, despite short-term economic headwinds.

• Guidance reflects current data and good faith estimates, but results remain subject to macroeconomic risks and uncertainties.