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Wal-Mart de Mexico to Invest $1.3 Billion in Logistics

Karla Salinas | 19.12.2016

Mexico’s private consumption and retail sales have remained robust, driving economic growth. Retail sales rose 8.3% in the first nine months of the year.

Wal-Mart de Mexico, Mexico’s biggest retailer and private-sector employer, said Wednesday it plans to invest $1.3 billion in the country to expand and improve its logistics operations.

Much of the investment, which is in addition to the company’s annual capital expenditures on store openings and remodelings, will be made over the next three years, Chief Executive Guilherme Loureiro said in an event at the presidential residence.

The plan involves the construction of new distribution centers and the upgrading of existing centers.

Wal-Mart de Mexico, a unit of Arkansas-based Wal-Mart Stores Inc., has set itself the goal of doubling its annual sales between 2014 and 2024. Its sales were around $28 billion in 2015.

“To meet our growth goals and reach more corners of the country, we need to strengthen our logistics infrastructure,” Mr. Loureiro said. The retailer has close to 2,300 stores in Mexico, where it employs 200,000 people.

The announcement comes at a time when Mexico is concerned that some investments could be put on hold until companies have more clarity on the future of U.S.-Mexico trade and investment relations under the administration of U.S. President-elect Donald Trump. Mr. Trump has said he wants to make changes to the North American Free Trade Agreement and has been lobbying U.S. companies not to move jobs to Mexico.

“We’re seeing how Mexico is continuing to attract investment in different sectors,” Mexican President Enrique Peña Nieto said at the event.

He noted Monday’s auction in which the government awarded eight out of 10 oil exploration blocks in deep waters of the Gulf of Mexico, and which are expected to generate investment over time of $40 billion.

The successful oil auction was seen as supportive for foreign direct investment, which in the first nine months of this year totaled $19.8 billion, compared with $25.8 billion in the first nine months of 2015.

“The [auction] result is better for Mexico’s government than we had expected, eliminating a key layer of uncertainty over foreign direct investment inflows and uncertainty about the successful implementation of the new energy-investment program,” Moody’s Investors Service said in a report.

While Mexico’s oil output has been falling and construction held back by government budget cuts, private consumption and retail sales have remained robust, driving economic growth. Retail sales rose 8.3% in the first nine months of the year.

Wal-Mart de Mexico reported this week that its sales in Mexico were up 9.2% through November.

Source: The Wall Street Journal

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