Mexico’s retail sector is expected to enjoy strong earnings in the second quarter of 2025, driven by favorable calendar effects. Easter was moved into the quarter. Promotional calendars were also shifted into this period.
According to Reuters this seasonal increase, along with continued strategic measures to attract conservative shoppers, will translate into robust growth in both top- and bottom line among major players including Walmart de México (Walmex), Chedraui and department store operator Liverpool.
It is believed that the timing of Easter during the second quarter, as opposed to early April 2024, will have a major impact on sales.
Walmex will also benefit this quarter greatly from the performance it achieved during its annual Hot Sale. This 9-day promotional campaign began at the end of May. At the event, The Retailer already had a record in both online and offline sales.
A LSEG survey found that experts expect Walmex to increase its revenue by 9% and profit by 5% over the past year.
This increase was likely due to the annual profit sharing bonuses that were given out in May.
The one-time cash infusion has typically increased discretionary spending on items like clothing, technology and home furnishings.
Other retail groups also benefited from the timing of Easter, Hot Sale and other promotional events. The demand for seasonal and impulse items increased at convenience store operators, snack and beverage distributors like Arca Continental and Femsa.
Store brands and promotional activities are used by retailers to combat inflation.
Mexican retailers are still facing severe inflationary pressures despite the excellent forecast for this quarter. In May, the annual headline inflation rate exceeded the target range set by Mexico’s central bank of 2%-4% and continued to be high throughout June.
The core inflation rate, which excludes volatile items, is often considered to be a more stable metric. It has now reached its highest point since April 2024.
Retailers have responded by prioritising customer loyalty through product changes and pricing tactics, rather than cutting volume.
Private label products, also known as store brands, have become a popular strategy. They are usually less expensive and offer retailers a higher profit margin.
Walmart, Chedraui and Liverpool all have increased their investments in private-label items, across different product categories and price points.
People are also using loyalty programs and packaging promotions, like smaller sizes or lower prices, to help them manage their money while they shop.
By offering affordable alternatives, these techniques aim to dissuade clients from cutting back on their consumption.
Analysts and investors will closely examine retailers’ abilities to switch to more efficient ways of doing business while providing value when they report their Q2 profit.
As macroeconomic conditions worsen, the efficiency of these strategies could affect their ability to perform in the second part of the year.
Second-half risks include a slowing economy and declining remittances
Mexican stores are in turmoil as the year 2025 draws near.
The central bank has forecast a GDP growth rate of 0.1% for the second half. This is a significant slowdown, which will likely affect consumer confidence and retail sales.
In May, the remittances of low-skilled employees, which are a major source of household income, fell by 4.6% on an annual basis (and even more dramatically in April).
In the past, these flows have fueled consumption in areas where employment opportunities are scarce. Retailers who are more dependent on these markets could be more affected if this trend continues.
Analysts warn, however, that the purchasing power of ordinary consumers might not be able to keep up with this increase.
In an unsettling economic and political climate, the fact that sales of non-essential goods haven’t kept pace with increases in income indicates households still are reluctant to buy them.
Updates may alter the post Mexico’s retail sector set to enjoy strong Q2 despite calendar boost and inflation risk
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