Chedraui (CHDRAUI) Q3 2024 earnings summary

Executive summary

• Consolidated sales grew 11.8% year-over-year in Q3 2024 to MXN 71,886 million, with strong performance across Mexico, the U.S., and real estate segments.

• Same-store sales in Mexico rose 4.9%, outperforming ANTAD for the seventeenth consecutive quarter; U.S. SSS increased 0.5% in USD.

• EBITDA increased 3.5% to MXN 5,914 million; adjusted for duplicate/RCDC transition costs, EBITDA grew 11.1% and margin reached 8.8%.

• Net income declined 24.8% to MXN 1,456 million due to duplicate/RCDC transition costs; adjusted net income rose 6.6%.

• Launched Rancho Cucamonga Distribution Center (RCDC) in California, consolidating five legacy DCs; nearly $80 million of $120 million CAPEX deployed.

Financial highlights

• Gross profit increased 9.0% to MXN 16,844 million; adjusted gross margin was 24.0%, flat year-over-year.

• Operating income fell 7.0% to MXN 3,607 million; adjusted operating income grew 8.1%.

• EPS was MXN 1.51, down from MXN 1.95 in 3Q'23.

• CapEx for the first nine months totaled MXN 7,293 million, 3.6% of sales and 37.7% higher year-over-year.

• Net debt to EBITDA improved to 0.02x, down from 0.09x a year ago.

Outlook and guidance

• Profitability expected to normalize in H2 2025 as the new U.S. distribution center reaches full operation.

• Targeting a 50 basis point margin improvement in U.S. banners post-transition, ramping up through 2025.

• Same-store sales growth in Mexico expected to meet full-year guidance despite a softer consumption environment.

• Supercitos store openings revised to low 70s for 2024 due to permit delays, down from 100 planned.

• Continued focus on organic growth, store openings, and supply chain efficiency in both Mexico and the U.S.