Wal-Mart de México, S.A.B. de C.V. (WMMVF) or Walmex, retail giant Walmart’s (NYSE:WMT) unit in Mexico and Central America, plans to ramp up its investment in the region to 27.1 billion pesos (nearly $1.5 billion) in 2023, reflecting a 27% rise. The company is investing in consumer-centric projects to drive long-term growth.
Investment to Boost Business
It is worth noting that about 45% of the 2023 investment is allocated to remodels and maintenance, omnichannel capabilities, and efficiency measures. Further, the company assigned 29% of the planned capital expenditure to new stores and clubs. It expects new stores to contribute between 1.2% and 1.4% to Walmex’s overall sales growth this year. Walmex continues to consider its Bodega discount stores as the “main growth vehicle” in the region.
Walmex intends to spend 12% of its estimated investment on expanding and modernizing its supply chain and 14% on technology projects.
Meanwhile, Walmex has received the approval of Mexican financial authorities to acquire a Mexican fintech company, Institución Financiera de Pagos. The acquisition, which is expected to be completed within the next couple of weeks, will expand the company’s financial services offerings.
Also, Reuters reported that at the Walmex Day 2023 held on Tuesday, the company disclosed that it would launch a new health membership product that will leverage the nearly 1,500 pharmacies and 500 doctor’s offices across stores in the region. Walmex is focused on developing its health business as a strong vertical.
Mexico is a key growth area for Walmart. During the Q4 earnings call, Judith McKenna, president and CEO of Walmart International, stated that Mexico gained market share for the ninth consecutive year. “And I think one of those things is testament to the strength of the formats in Mexico and the way that they appeal across all sectors of the Mexican and Central American population as well,” said McKenna.
What is the Prediction for Walmart Stock?
Last month, Walmart posted better-than-anticipated fiscal fourth quarter results. However, the company issued a soft outlook due to the ongoing macro pressures.
Wall Street’s Strong Buy consensus rating for Walmart is based on 21 Buys and four Holds. The average WMT stock price target of $162.75 implies nearly 17% upside potential.