MEXICO CITY (Reuters) - Walmart de Mexico, Mexico’s largest retailer, on Thursday reported a nearly 10% jump in second-quarter net profit, beating expectations as higher traffic partly attributed to Mother’s Day and the summer season boosted sales.
Sales at Mexican stores that have been open at least a year rose over 5%, signaling healthy performance for parent company Walmart Inc’s (WMT.N) largest overseas market by store count.
Walmart brand stores in Mexico saw “robust” growth thanks to discounts tied to the summer vacation season, Mother’s Day and Father’s Day, the retailer said.
Central America’s same-store sales, however, only rose 1.7%, hampered by a weak regional economy that has put pressure on discretionary spending.
Walmart de Mexico’s net profit during the quarter was 8.75 billion pesos ($455.8 million), up from 7.9 billion pesos a year earlier and considerably above market expectations.
A Reuters poll of six analysts had forecast the company would report a 0.8% increase in net profit.
The analysts had said net profit was likely to be impacted by higher financial costs under new accounting standards imposed in Mexico this year. Walmart de Mexico said that if the standards had been applied last year, net profit would have risen 13.2%.
The company raked in 154.35 billion pesos in revenue during the second quarter.
Online sales rose 50%, in keeping with growth last quarter, and now make up 1.5% of sales in Mexico.
Building on its e-commerce push, Walmart de Mexico said it is in final talks with financial service providers to partner on Cashi, a digital payments app launched by the retailer last year that aims to help shoppers who lack bank accounts do online transactions.
The partnership would allow Walmart de Mexico to add new functions to the app, such as money transfers, the company said.
Walmart de Mexico also said it invested $370 million to open two new distribution centers in Mexico dedicated to e-commerce.
Meanwhile, it has continued to expand its brick and mortar operation, adding 32 new stores from April to June that brought its total to 3,291 locations.
Reporting by Daina Beth Solomon; editing by Julia Love, Tom Brown and Cynthia Osterman