Mexican retailer Walmex to focus on profits, not expansion

Wal-Mart de Mexico, the country's biggest retailer, on Thursday said it plans to invest 17 percent more this year compared to last year but will use most of the funds to improve productivity, rather than expand, in order to boost profits.

The firm, known locally as Walmex, plans to invest $14.7 billion Mexican pesos ($829 million) in 2016, with some 61 percent of the funds going towards maintenance, remodeling, logistics and technology, including e-commerce.

The remaining money will go towards new stores, though the company did not provide specific figures or the foreseen expansion of its sales floors.

Last year, the retailer invested 12.5 billion pesos and opened 97 stores, expanding its total sales floor area by 1.8 percent, below the 2.4 percent originally expected.

Walmex, which is controlled by Wal-Mart Stores Inc, has suffered in the past two years from an economic slump in the Mexican economy, forcing the company to sell assets and focus on its supermarket business.

The firm's revenue grew 11 percent in 2015, but net profits fell 13.3 percent.

The retailer a year ago said it plans to expand more slowly and focus instead on making sure existing stores generate more money.

At the time, the company still set itself an ambitious plan of doubling its size within ten years and growing profits faster than sales.

"To reach those goals we are changing our way of working," its new chief executive Guilherme Loureiro said at an analysts' meeting.

He said the company aims to grow sales at an average clip of 7 percent a year and boost e-commerce, where revenues are expected to grow 10 percent on average over the next four years.

$1 = 17.7285 Mexican pesos