Mexican retail chains posted weaker sales in September, with same-store sales falling 0.9 percent on a nominal basis, according to data from the Asociación Nacional de Tiendas de Autoservicio y Departamentales (ANTAD). Over the first nine months of the year, nominal same-store sales were still up 1.4 percent.
Once inflation is taken into account, the picture is harder. Real sales fell 2.46 percent in September after deflating by inflation in each sector. US annual inflation, by our own measurement, stood at 3.7 percent in September.
Rain and prices squeeze store traffic
Ariel Méndez Velazquez, an equity analyst at Grupo Financiero Ve por Más, said consumer weakness continues to affect the whole industry. Low unemployment and minimum wage increases have helped, he said, but other factors are working against retailers.
The rainy season is limiting store visits. Cumulative price increases and broader macroeconomic uncertainty have also weakened consumer sentiment, he said.
Households cut back on discretionary spending
Households are putting basic goods first and sharply restricting discretionary purchases, according to the analysis. The companies under pressure include La Comer, Soriana, Chedraui, Walmart, Palacio de Hierro, Liverpool, FEMSA Comercio and Arca Continental.
The pressure is broad rather than confined to one chain. Discretionary categories are where the cutbacks are concentrated.
Source: Asociación Nacional de Tiendas de Autoservicio y Departamentales (ANTAD) | Data: FRED — St. Louis Fed
