Walmart’s (WMT) Mexico unit, Walmex, is exploring strategic alternatives for its operations in Central America. The unit is considering possible joint ventures, strategic partnerships, and alliances for its operations in Honduras, El Salvador, and Nicaragua.
Walmart is a U.S. retail giant that offers an assortment of merchandise and services through its stores. It operates through the Walmart U.S., Walmart International, and Sam’s Club segments. Walmart’s upcoming earnings report for Q4 2021 is scheduled for February 17, 2022.
Central America Restructuring
As Walmex explores its strategic options to better focus its efforts on core businesses and strategic geographies, it affirms the strength of its businesses in the region, which it says boasts a strong, differentiated customer value proposition. According to Investing.com, the Walmart unit opened 31 new stores in the third quarter of last year, with 28 in Mexico and three in Central America.
Focus now shifts to prioritizing resources and accelerating growth in key markets of Mexico, Costa Rica, and Guatemala. While the Walmart unit embarks on its restructuring drive, operations will continue as normal in the affected areas, with the company complying with all obligations.
Meanwhile, KeyBanc analyst Edward Yruma downgraded Walmart to a Hold from a Buy. The downgrade comes amid concerns that the retail giant could be negatively affected as its middle-class customers feel the effects of wage pressures. The lack of stimulus tailwinds and continued inflationary pressures could impact customers’ spending power.
Consensus among analysts is a Moderate Buy based on 13 Buys and 5 Holds. The average Walmart price target of $170.94 implies 21.93% upside potential to current levels.
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