Mexico City, July 28 - Mexican retailer Comercial Mexicana posted a 71 percent fall in net profit to 83.6 million pesos ($6 million) in the second quarter as it funneled money into meeting its debt payments, the company said on Tuesday.
The company, known as Comerci, defaulted on its obligations in October after taking massive losses on derivative bets and has been struggling ever since.
Total sales at Comerci increased 5 percent to 13.4 billion pesos in the second quarter, while same-store sales also climbed despite Mexico's worst recession in decades as the company's low prices won over shoppers with its low prices.
But interest payments related to a part of its more than $2 billion in debt cut deep into Comerci's profits in the April to June period. Comerci said it paid 621 million pesos in interest in the quarter, triple what it paid in the year-ago period.
Local creditors holding Comerci debt rejected last week the retailer's latest proposal to restructure its debt.
The local creditors, including retirees, pension funds and unions which lack the muscle of bigger banks negotiating with Comerci, have hired a lawyer to represent them as they try to recover their investment and have started legal action.
Comerci recently agreed in principle with its major banks on general terms to repay its debt, although the group of local debt holders was not among them.