Chedraui USA’s Q3 sales impacted by changing FX rates

Chedraui USA, the parent company of Smart & Final, El Super and Fiesta Mart, saw same-store sales edge up for its fiscal 2023 third quarter while net sales fell due to changing foreign exchange (FX) rates.

Mexican retailer Grupo Comercial Chedraui S.A.B. de C.V, Chedraui USA’s parent, said this week that U.S. retail sales for the quarter ended Sept. 30 dropped 12.5% to 34.19 billion Mexican pesos (U.S. $1.88 billion) from 39.08 billion MXN ($2.15 billion) a year earlier. The Mexico City-based company attributed the decline mainly to a 15.6% negative impact of the Mexican peso’s appreciation against the U.S. dollar.

Overall U.S. same-store sales rose 3.7% in dollars, fueled mainly by the El Super and Fiesta Mart banners, the retailer said. The company didn’t break out sales data for the Smart & Final and El Super/Fiesta Mart business units

“Our customer base at all three banners continues to grow as customers seek an attractive value proposition during these times of inflationary pressures,” Mexico City-based Grupo Comercial Chedraui stated.

On the earnings side, Chedraui USA’s Q3 EBITDA decreased 6.3% year over year to 2.82 billion MXN ($155.2 million) and reflected the negative impact of FX. In U.S. dollars, EBITDA rose 55 basis points, driven primarily by gains in gross margin and strong operating expense leverage, Grupo Comercial Chedraui reported.

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Smart & Final’s Q3 EBITDA came in at nearly 1.53 billion MXN ($83.8 million), down 11.2% compared to the prior comparative quarter. Excluding the FX impact, the warehouse-style grocer’s EBITDA grew 5.3% in dollars.

At El Super and Fiesta Mart, EBITDA inched up 0.2% to 1.3 billion MXN ($71.4 million) despite the impact of the FX rate change, the company noted. Excluding FX, EBITDA would have climbed 18.7% in dollars.

Total sales for Grupo Comercial Chedraui dipped 0.7% year over year to 64.29 billion MXN ($3.53 billion) for the 2023 third quarter, while EBITDA climbed 6% to 5.71 billion MXN ($313.9 million). Retail sales in Mexico advanced 17.3% overall and 9.5% on a same-store basis for the quarter.

“Our growth strategy in Mexico and the United States continues to achieve good results, as we focus on delivering the variety of products our customers want at the best possible price. In the quarter, we maintained cost discipline and continued our organic growth strategy by opening 23 stores in Mexico and one El Super in Las Vegas, Nevada,” Grupo Comercial Chedraui CEO Antonio Chedraui said in a statement.

“In Mexico, same-store sales continue to grow above ANTAD [Mexican retail sector] levels, with an average spread of 287 basis points in 2023, indicating that we are taking market share away from our competitors,” he added. “In the United States, despite an expected slowdown in economic activity, our customer base continues to grow as we offer excellent value to our customers by providing a wide range of products at attractive prices. Our margins continue to improve, and excess cash from the operations allowed us to reduce debt levels.”

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Chedraui USA finished the third quarter with 377 stores overall in California, Arizona, Nevada, New Mexico, and Texas, including 253 Smart & Final, 65 El Super and 59 Fiesta Mart locations. Smart & Final also has 17 stores in Mexico through a joint venture. On Wednesday, Smart & Final added to its store base with the opening of a 32,000-square-foot Smart & Final Extra! store in Lancaster, California.

Grupo Comercial Chedraui’s total retail network spans 815 stores, including 438 stores in Mexico under the Tiendas Chedraui, Supercito, Super Chedraui, Tiendas Arteli and Super Che banners.