Mexico City, Apr. 18 - Business remained brisk at Mexican supermarkets in the first quarter, which is likely to be reflected in earnings gains for the country's main retail chains.
January sales were unsurprisingly sluggish after the holiday season and December's promotions, but sales had picked up again by March.
Wal-Mart de Mexico, or Walmex, the country's largest retailer, said its sales were up 14.1% in the first quarter, with same-store sales up 5.9% from the year-ago period. The company reports sales monthly.
Sales at other chains - excluding Wal-Mart - are included in numbers released by retail association Antad, which reported sales at self-service stores up 8% in the quarter, and same-store sales up 1.1%.
"We continue to like the fundamentals of the retail stocks in Mexico," Deutsche Bank said in an April 12 report.
Organizacion Soriana is expected to start the ball rolling with its first-quarter earnings report Thursday, followed by Walmex on Tuesday and Comercial Mexicana on April 26.
Much of the sales growth in the quarter will come from expansions in floor space, as same-store sales are showing signs of slowing, according to several sector analysts.
UBS Investment Research said in a report Wednesday that it expects "a modestly successful quarter" for Soriana, helped by wider operating margins thanks to lower expenses. Comercial Mexicana should also see margin expansion on efficiency improvements of recent years, UBS said.
Walmex, on the other hand, could see slower margin expansion in 2007 thanks to tougher competition, the investment bank added, saying: "We believe the negative impact of stiffer competition will come into focus when Walmex reports 1Q-07 results."
Walmex has been taking market share from rivals for several years. That has prompted strong price competition, with privately held Chedraui seen as the most aggressive.
Chedraui bought 28 stores from French retailer Carrefour SA in 2005, and now has 94, including several in Mexico City. Grupo Gigante, which had been falling behind its competitors, has invested in remodeling and logistics, and began making a comeback in the second half of 2006.