Organización Soriana (SORIANA) Q2 2024 earnings summary

Executive summary

• Total revenues increased 1.5% year-over-year to MXN 45,050 million, driven by same-store sales growth of 0.8% and net store openings.

• Four new stores opened in the quarter, with a net addition of seven units year-over-year, bringing the store count to 809.

• Aggressive promotional campaigns, including a new four-by-two offer, were launched to counter heightened market competition.

• Digital sales via the Soriana app grew 21% in sales and 34% in order volume, reflecting ongoing investment in digital channels.

• Social responsibility initiatives included support for 144 institutions and environmental progress in energy transition.

Financial highlights

• Gross profit reached MXN 10,477 million, with gross margin expanding to 23.3%, up 7.9% year-over-year, aided by improved supplier negotiations.

• Operating expenses rose 9.7% to MXN 7,341 million, mainly due to higher personnel costs, new store openings, and increased advertising spend.

• EBITDA was MXN 3,132 million, a 7.0% margin and up 1.5% year-over-year.

• Net financial cost increased 12% to MXN 785 million, primarily to finance CapEx and growth.

• Net income for Q2 2024 was MXN 725 million, representing 1.6% of sales and down 10.3% year-over-year.

Outlook and guidance

• Management expects continued aggressive competition and plans to maintain strong promotional activity, especially for upcoming key retail seasons.

• Anticipates a more complex demand environment in the second half due to reduced government stimulus, but no structural decline in consumer purchasing power is expected.

• Gross margin is expected to remain healthy, though not likely to repeat the same level of expansion seen this quarter.

• CAPEX for Q2 2024 totaled MXN 1,874 million, focused on store openings and investment projects.

• Debt increase was directed to finance 2024 investment projects.