Walmart (NYSE:WMT) is doing better in Mexico and Central America

Wal-Mart de México, SAB de CV (WMMVF) or Walmex, retail giant Walmart’s (NYSE:WMT) unit in Mexico and Central America, plans to increase its investment in the region to 27.1 billion pesos (almost $1.5 billion) by 2023, an increase of 27%. The company invests in consumer-focused projects to drive long-term growth.

Investments to boost business

It is worth noting that approximately 45% of the investment in 2023 will be allocated to refurbishments and maintenance, omnichannel capabilities and efficiency measures. Furthermore, the company allocated 29% of planned capital expenditures to new stores and clubs. It expects new stores to contribute between 1.2% and 1.4% to Walmex’s overall sales growth this year. Walmex continues to view its Bodega discount stores as the region’s “key growth asset”.

Walmex plans to spend 12% of its estimated investment on expanding and modernizing its supply chain and 14% on technology projects.

Meanwhile, Walmex has received approval from Mexican financial authorities to acquire a Mexican fintech company, Institución Financiera de Pagos. The acquisition, which is expected to close in the coming weeks, will expand the company’s financial services offerings.

Also, Reuters reported that on Tuesday, Walmex Day 2023, the company announced that it would be launching a new health membership product that will leverage the region’s nearly 1,500 pharmacies and 500 in-store doctor’s offices. Walmex is focused on developing its health business as a strong vertical line.

Mexico is an important growth area for Walmart. During the Q4 earnings call, Judith McKenna, president and CEO of Walmart International, stated that Mexico has gained market share for the ninth consecutive year. “And I think one of those things is a testament to the strength of the formulas in Mexico and the way they appeal to all sectors of the Mexican and Central American population as well,” said McKenna.

What’s the Forecast for Walmart Stocks?

Last month, Walmart posted better-than-expected fourth-quarter results. However, the company issued a soft outlook due to ongoing macroeconomic pressures.

Wall Street’s Strong Buy consensus score for Walmart is based on 21 Buys and four Holds. The average WMT stock price target of $162.75 implies nearly 17% upside potential.


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