Bloomberg News

Wal-Mart de Mexico Falls to Two-Year Low as Taxes Crimp Sales

February 07, 2014

Wal-Mart de Mexico SAB, Latin America’s biggest retailer, fell to the lowest since September 2011 after a report showed sales slipped at its stores.

Walmex, as the company is also known, retreated 2 percent to 30.58 pesos at 9:44 a.m. in Mexico City. It was one of the worst performers on the country’s IPC index of 35 stocks, which retreated 0.4 percent. The retailer accounts for 6.6 percent of the benchmark’s weighting, the seventh highest.

Sales at Mexican stores open at least a year fell 3.8 percent in January from a year earlier, the biggest drop since September and the sixth contraction in the past seven months, according to a stock exchange filing yesterday. The Latin American country raised a sales tax in regions bordering the U.S. to 16 percent from 11 percent last month and instituted a new 8 percent levy on junk food.

The report “marks a slower than expected start of the year,” Luis Willard, a Mexico City-based analyst at Corporativo GBM SAB, wrote in an e-mailed research report today. “The company -- and the industry as a whole -- should continue to experience an uneven first part of the year, as consumers adjust their budgets to incorporate the effect of higher taxes.”

Customer traffic at Walmex cash registers fell 0.8 percent, while a measure of how much consumers spent on each visit declined 3.1 percent. The drop in average ticket, as the gauge is known, was the sharpest since April 2010, UBS AG wrote in an e-mailed report today, based on Walmex data.

An index of consumer confidence fell to 84.5 in January, the weakest reading since April 2010, according to a Feb. 5 report from the national statistics agency.

To contact the reporter on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net


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