Wal-Mart de Mexico's Net Profit Doubles on Sale of Restaurants

By Dow Jones Business News, 
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By Anthony Harrup

MEXICO CITY-Mexico's biggest retailer Wal-Mart de Mexico (WMMVY, WALMEX.MX) said Wednesday that its net profit doubled in the second quarter on a one-time gain from the sale of its restaurant business, while sales and operating profits rose.

Walmex, as the unit of Wal-Mart Stores Inc. is known, reported net profit of 10.4 billion pesos ($804 million) in the April-June period, compared with five billion pesos in the second quarter of 2013. Excluding the Vips restaurant chain, which Walmex sold in May to casual dining restaurant operator Alsea, net profit was up 2.5% to 5.1 billion pesos.

Walmex sales in the quarter rose 5.6% to 104.6 billion pesos, with improving growth at supermarkets compensating for continued weakness at Sam's Club membership stores, which account for around a quarter of the company's sales in Mexico. Operating cash flow measured by earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 5.6% in the second quarter to 9.7 billion pesos.

Chief Executive Scot Rank said in a webcast that the second quarter included a favorable calendar effect with the Easter holiday falling in April this year instead of March. The effect of the soccer World Cup in Brazil was about neutral, as higher sales of electronic goods ahead of the event were offset by lower store traffic while the matches were on in June, he added.

Mr. Rank said the recent management shake-up at Sam's Club is expected to improve results at the division.

He stressed the retailer's plans to expand its year-old ecommerce business to include home deliveries of groceries from its Super Center stores starting in the third quarter, gradually expanding that to reach nationwide coverage.

Walmex had 2,203 stores in Mexico and 676 in Central America at the end of June. The company's shares closed down 0.3% at 34.05 pesos ahead of the report.

Write to Anthony Harrup at anthony.harrup@wsj.com

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