EconomyFinancialA year later, Smart & Final still drives Chedraui's...

A year later, Smart & Final still drives Chedraui's revenue

Grupo Chedraui knows that the purchase of Smart & Final was a wise investment. Despite the fact that the acquisition of this price club took place in May of last year, for an amount of 620 million dollars, the financial reports sent to the Mexican Stock Exchange show that the fruits have not stopped for the supermarket chain.

From January to March 2022, Chedraui obtained revenues of 60,728 million pesos (mdp) against the 35,186 mdp that it reached in the first quarter of the previous year, this reveals a variation of 72.6%.

The operating flow or Ebitda went from 2,638 to 4,748 million pesos, with a variation of 80%, while the net profit went from 736 to 1,095 million pesos, that is, an increase of 48.6%, year over year.

On a comparable basis, that is, excluding the operation of Smart & Final, the company’s operating flow reached 3,259 million pesos and revenues only grew 12.5%.

When separating the performance by country, in Mexico, sales corresponding to the first quarter of 2022 show a growth of 14.7%, to 24,063 million pesos and in turn, sales to same stores grew 13.1%.

During the quarter, Chedraui opened two stores and in the last 12 months, net store openings grew to 15. This represents a 0.4% growth in sales floor area.

And, despite the return of consumers to physical stores, omnichannel sales have remained around 4% of the operation’s sales.

In the United States, on the other hand, total sales grew 160.1% year-on-year, accounting for 36,388 million pesos, after the consolidation of the Smart & Final operation. Same store sales grew 9.5% in dollars. Without taking into account the operation of the price club, sales in pesos grew 8.9%.

Regarding the real estate division, revenues grew 34.9%, versus the same period last year, since 277 million pesos were recorded, a clear example of the recovery that this segment has had in recent months, as it is reaching levels income similar to those prior to the health contingency due to the pandemic. During the last 12 months, 38,965 m² of profitable area were incorporated, which represents a growth of 10.1%.

Today, 39.6% is the participation in consolidated sales in self-service in Mexico, while 59.9% corresponds to the participation in the United States, while 0.5% refers to Chedraui’s real estate business.

As of March 31, 2022, the company operated 203 Chedraui stores, 67 Super Chedraui stores, eight Super Che stores, 62 Supercito stores, and 17 Smart & Final stores in Mexico. Additionally, in the United States, it has 64 El Super stores, 59 Fiesta stores and 254 Smart & Final stores. On the other hand, the real estate division, which is responsible for marketing premises with third parties for sale or rent, has a leasable area of 425,852 m².

The goals for 2022

Chedraui has very clear goals for this year. The retailer expects same-store sales growth in Mexico of more than 4.5%. In the United States, an increase of 2.5% is expected for the operations of El Super and Fiesta.

In addition, investment in assets is expected to be around 2.1% of consolidated income, which will allow the sales floor in Mexico to grow by approximately 1.6% and 0.6% in the United States organically.

The opening of one Chedraui store, five Super Chedraui and 25 Supercito stores in Mexico is contemplated, while in the United States the opening of two new branches under the Smart & Final format is planned.

An improvement of between 10 and 15 basis points is also in sight in the margin of the operating cash flow of the self-service operation in Mexico and around 200 basis points in the real estate division, while in the United States an improvement of 40 points is sought based on the Ebitda margin.

“We continue with the trend of the end of last year, this 2022 we will once again achieve extraordinary results in all our business segments. In our operation in Mexico, we maintained growth above the market, driven by our ability to execute, consumer confidence and the recovery in tourist areas where we have a presence. At the same time, we were able to significantly expand our profitability thanks to an efficiency in all lines of the income statement,” said Antonio Chedraui, CEO of Grupo Comercial Chedraui.

“In the United States, we reached unprecedented levels of growth in same stores, while we continue with the integration of the Smart & Final operation, a format that is demonstrating how successful our investment in that business was. Beyond the short-term results, the company maintains its perspective of growth and improved profitability for the future, with a healthy balance sheet that will allow us to face the challenges and opportunities that arise.”

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