Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wal - Mart de Mexico SAB de CV (WMMVF) reported consistent market share gains in key formats like Bodega and Sam's Club, indicating strong competitive positioning.
• The company has successfully invested in pricing strategies to help customers navigate economic softness, which has resulted in increased traffic and market share.
• New business ventures, such as Walmart Connect, are contributing positively to gross margins and are expected to grow significantly in the coming years.
• The company's ecosystem strategy is enhancing customer engagement and providing valuable data insights, which are expected to drive future growth.
• Wal - Mart de Mexico SAB de CV (WMMVF) is committed to long-term growth with plans to double the business faster than in the past decade, supported by investments in new stores and automation.

Negative Points

• The company faced headwinds in the latter part of the year due to a softer consumption environment, impacting overall performance.
• There was a noted decrease in the contribution of new businesses to gross margins in the fourth quarter, attributed to a strong prior year comparison.
• Operating expenses are expected to grow, driven by wage increases and ongoing digital investments, which may pressure margins.
• Higher inventory levels at year-end could lead to potential pressures on gross margins in the first quarter of 2025.
• The apparel segment remains a small portion of sales and represents an area of opportunity that has yet to be fully capitalized on, particularly online.

Q & A Highlights

Q: Can you provide insights into the competitive landscape in Mexico, particularly regarding promotional activities and pricing strategies across different formats like Sam's and Bodega? A: Ignacio Carride, President and CEO, explained that the company focused on investing in pricing to help customers navigate the softness in consumption. Raul Quintana, Chief Omni-Channel Operating Officer, added that Bodega and Sam's consistently gained market share, with improvements seen in Walmart Supercenters and Walmart Express. The strategy is to leverage the portfolio's strength to maintain market share gains.

Q: What are the benefits of the WOMEX ecosystem, and how do you plan to leverage it for growth? A: Ignacio Carride highlighted the ecosystem's role in understanding customer behavior, especially those who pay in cash. This data helps tailor offerings and improve supplier relationships through Scintilla. Paulo Garcia, CFO, noted that the ecosystem aims to capture a higher share of the wallet, translating into market share gains.

Q: Could you elaborate on the operating expense outlook for 2025, considering wages, digital investments, and efficiency gains? A: Paulo Garcia stated that labor costs have been rising, with a 12% increase expected in 2025. The company plans to prioritize strategic investments in distribution centers, automation, and store expansions while maintaining a focus on efficiency to manage operating expenses.

Q: How do you view the contribution of new businesses to profitability, and which has the most potential? A: Paulo Garcia mentioned that Walmart Connect, the advertising business, has the highest standalone contribution due to its growth and high margins. However, Ignacio Carride emphasized that the ecosystem's goal is to drive overall market share gains rather than focusing on standalone profitability.

Q: What are your strategies for apparel and general merchandise, and what are your plans for new store openings? A: Paulo Garcia noted that apparel is a significant opportunity, particularly online, and the company plans to diversify its general merchandise portfolio. Regarding new store openings, the focus is on expanding in regions with white spaces and balancing new openings with remodeling existing stores to optimize returns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.