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Mexico: Walmart to have difficult 2015

According to an analysis by Banamex, Walmart's sales will only have a sustained recovery after 2016, when they might grow faster than the rate of inflation.

For stores in operation for more than a year in 2015, the bank cut its estimated sales growth, from 2.4% to 1.6%, while their adjustment for 2016 went from 5% to 3%.

"While we believe Walmex's valuation is attractive compared to their counterparts, and we expect there will be a recovery when consumption improves, we do not foresee Walmex's performance being outstanding," stated the report.

"Despite talk of a recovery in consumption, it has been much slower than expected. It is currently stagnating, growth has not been seen, "said Veronica Uribe, specialist at Monex.

On Wednesday, the retailer reported that sales in November had increased by only 0.4% annual rate, even though they had held a discount program in that month.

The figure was lower than what analysts expected and lower than the 0.7% increase of the previous month. Walmart, like other retailers, has been hit by the entry into force of the tax reform, which affected the mood of consumers.

The National Association of Supermarkets and Department Stores (ANTAD) recognized on November 18 that it wouldn't reach its goal of expanding sales by 1.7% in 2014, as its accumulated growth by the end of October was 0.6%.

Walmart's results in November were due to a 3.3% increase in average ticket, which contrasted with a decline of 2.9% in the number of transactions. "Weak demand continues to be a problem," Banamex analysts said in a report.

Moody's said on Wednesday that retail sales in Mexico would improve once the country's economy rebounds. The agency expects retail sales will grow between 4.5% and 4.8% in the 2015-2017 period.

Walmart's plans remain the same
Walmart said on Thursday that they hadn't changed their plans to grow 4.1% in floor sales in 2014, Mexico.

"We have not changed our perspective (...). Our investments are long-term investments. We make plans for five years, where we see shops and locate options, it has nothing to do with the results of one month, "said Antonio Ocaranza, director of corporate communications for the retailer, in an interview.

"We will present our investment plan for 2015 in February and we usually base it on the profits we generated the previous year," he added.

In September, the chain cut its investment plan for this year from the $1,062 million dollars it announced in February to $949 million dollars. The company stated that the reduction was due to the delays of some building permits, so they had decided to delay the opening of 15 stores until January.


Source: CNNExpansión.

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