Costco's Mexico Partner Seeks Reorganization

ELLIOT ZWIEBACH

ISSAQUAH, Wash. — Costco Wholesale Corp.’s joint-venture partner in Mexico is seeking a financial reorganization, but that should not impact the Mexican operations of Costco, industry analysts said Friday. "The pending reorganization of Controladora Comercial Mexicana (CCM), the holding company of Costco's joint venture partner in Mexico, is unlikely to materially affect the ongoing business of Costco Mexico," Deborah Weinswig, an analyst with Citicorp, New York, said. So far the holding company has only requested the reorganization proceeding, "which would not include Costco Mexico itself," she pointed out. "We believe Costco Mexico will continue to operate as usual and do not expect Costco to be impacted by [the] restructuring." CCM filed a motion with a Mexico City judge last week to initiate a reorganization proceeding. Citicorp's Mexico-based retail analyst, Eduardo Estrada Lopez, said it should be "business as usual" for Comercial Mexicana's retail businesses. He also said Comercial Mexicana, or Comerci, was unaware whether the filing would impact its relationship with Costco. Comerci, a subsidiary of CCM, operates seven retail formats in Mexico, including a 50% stake in Costco Mexico, which operated 31 warehouses through the end of August.

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