Walmart (WMT) stock was in high spirits today, lifted by the prospect of strong retail sales in Mexico in the second-quarter.
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According to a Reuters report, retailers in Mexico are expected to post solid results helped by favorable calendar effects, such as the inclusion of Easter in the quarter, and promotions.
Hot in Mexico
Walmex has already announced record in-store and online sales during Mexico’s Hot Sale, a nine-day promotional period that began in late May. An LSEG poll of analysts forecasts Walmex will post a 9% revenue and 5% profit jump from a year earlier.
That’s important given Walmart’s international reach and importance in terms of overall group revenues.
That’s been helped, according to analysts, by many workers receiving their annual profit-sharing bonus payments in May, which put more cash in their pockets.
“The Hot Sale’s timing was able to benefit from the boost of PTU payment… especially for retailers more exposed to discretionary consumption like clothing or electronics,” said Antonio Hernandez, consultant at Actinver.
Ariel Mendez, consultant at Ve Por Mas financial group, said the Easter effect could also boost soft drinks and snacks
Analysts said retailers, such as Walmart, have rolled out strategies inviting consumers to shift habits rather than cut back on purchases. For instance, they have been promoting cheaper store-brand products, offering loyalty programs and using smaller packaging.
Mexican Shadows
“Retailers are increasing private label participation, as these brands are cheaper, more accessible for customers, and often yield better margins for the stores,” said Hernandez.
However, there are shadows over the Mexican horizon with analysts pointing to the country’s headline inflation rate, which is outside the central bank’s target range of 2% to 4%.
Core inflation, considered a better indicator of price trends, reached its highest level in June since April 2024.
Other headwinds come in the shape of Trump’s threatened 30% tariffs on imports into the U.S. from Mexico. The new tax hits on August 1 and could push up prices, disrupt supply chains, and pressure margins across industries from autos to retail.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 28 Buy ratings. Its highest price target is $120. WMT stock’s consensus price target is $111.33 implying a 16.76% upside.
