Wal Mart de Mexico B de C : Walmex 2Q22 Results

Wal-Mart de México, S.A.B. de C.V.	Consolidated
Ticker:	WALMEX	Quarter: 2 Year: 2022

Quarterly Financial Information

[105000]	Management commentary..................................................................................................................................	2
[110000]	General information about financial statements ...........................................................................................	14
[210000]	Statement of financial position, current/non-current.....................................................................................	16
[310000]	Statement of comprehensive income, profit or loss, by function of expense ...........................................	18
[410000]	Statement of comprehensive income, OCI components presented net of tax.........................................	19
[520000]	Statement of cash flows, indirect method ......................................................................................................	21
[610000]	Statement of changes in equity - Accumulated Current ..............................................................................	23
[610000]	Statement of changes in equity - Accumulated Previous ............................................................................	26
[700000]	Informative data about the Statement of financial position .........................................................................	29
[700002]	Informative data about the Income statement...............................................................................................	30
[700003]	Informative data - Income statement for 12 months.....................................................................................	31
[800001]	Breakdown of credits.........................................................................................................................................	32
[800003]	Annex - Monetary foreign currency position..................................................................................................	34
[800005]	Annex - Distribution of income by product .....................................................................................................	35
[800007]	Annex - Financial derivate instruments ..........................................................................................................	36
[800100]	Notes - Subclassifications of assets, liabilities and equities .......................................................................	40
[800200]	Notes - Analysis of income and expense.......................................................................................................	44
[800500]	Notes - List of notes ..........................................................................................................................................	45
[800600]	Notes - List of accounting policies ..................................................................................................................	69
[813000]	Notes - Interim financial reporting ...................................................................................................................	81

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Wal-Mart de México, S.A.B. de C.V.	Consolidated
Ticker:	WALMEX	Quarter: 2 Year: 2022

[105000] Management commentary

Management commentary [text block]

We are progressing against our long-term strategy, delivering strong growth and profit, and making significant investments, while we strengthen our value proposition and low-price commitment. We are using our financial strength to balance the long-term and the short-term; to balance growth and returns.

It is during these times that our low-price value proposition becomes even more relevant. Customers are coming to us for value, and we are very pleased about how our teams are dealing with the pressure from cost of goods inflation with a customer-centric approach. During the quarter, we were able to increase our price gap by 120 bps vs. 2Q21, reaching an all-time high.

Our strategy translates into shared value creation for all stakeholders, and we are on our path to become a regenerative company

We were included in Expansion's Super Empresas ranking and we ranked among the top 5 in the top companies for women ranking.

We received the "Empresa Socialmente Responsable" distinction, marking the 22nd consecutive year we receive such distinction. It recognizes Walmex's long-term commitment with Environmental, Social and Governance matters.

In May, we hosted our first Sustainability Summit, where our leaders and key suppliers shared the different initiatives we are implementing as a company to help mitigate climate change, drive a circular economy, and protect and restore natural capital.

On June 29, we rang the Mexican Stock Exchange's opening bell to celebrate the 45th anniversary of the listing of our prior company - Cifra - and the 25th anniversary of trading as Walmex.

Disclosure of nature of business [text block]

Walmart de México y Centroamérica is one of the leader retail chains in the region.

As of June 30, 2022, it operates 3,651 units, throughout 6 countries (Costa Rica, Guatemala, Honduras, El Salvador, México, and Nicaragua), including self-service stores, membership clubs and omnichannel sales.

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Wal-Mart de México, S.A.B. de C.V.	Consolidated
Ticker:	WALMEX	Quarter: 2 Year: 2022

Walmart shares trade in the Mexican Stock Exchange since 1977; the ticker symbol is WALMEX.

Disclosure of management's objectives and its strategies for meeting those

objectives [text block]

The objective of the Company is to double total sales in 10 years and to leverage operating expenses to reinvest in the business.

Sales growth will come from:

• Same store sales
• Sales from new stores
• eCommerce

Disclosure of entity's most significant resources, risks and relationships [text block]

The Company is exposed to the effects of future events that could affect the purchasing power and/or buying habits of the population. These events may be economic, political or social in nature and some of the most important are described below:

I. Changes in exchange rates. Exchange rate fluctuations tend to put upward pressure on inflation and reduce the population's purchasing power, which could ultimately adversely affect the Company's sales, in particular due to the purchase of imported goods.

1. Competition. The retail sector has become very competitive in recent years, which has led to the need for all the players in the market to constantly look for ways to set themselves apart from the competition. This puts the Company's market share at risk. Other factors affecting the Company's market share could be the business expansion of its competitors and the possible entrance of new competitors into the market.

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Wal-Mart de México, S.A.B. de C.V.	Consolidated
Ticker:	WALMEX	Quarter: 2 Year: 2022

1. Inflation. A significant increase in inflation rates could have a direct effect on the purchasing power of the Company's customers and the demand for its products and services, as well as employment and salaries.

IV. Changes in government regulations. The Company is exposed to the changes in different laws and regulations, which, after becoming effective, could affect the Company's operating results, such as an impact on sales, expenses for payroll indirect taxes and changes in applicable rates. Currently, the level of scrutiny and discretion by the tax authorities has greatly increased. Mexican legal courts have changed their position favoring the authorities and ignoring violations of form and procedure.

V. Recent developments. The COVID-19 pandemic has resulted in widespread and ongoing impacts on the local and international economy, on our associates, suppliers, customers, and other individuals and entities with whom we do business. Although it seems that most severe effects of the pandemic have already ended and vaccination campaigns have significantly reduced the risk of having to implement measures that impact economic activity, the secondary effects will continue in many aspects and will continue to be a risk.

In addition to the above, the recent international events involving Ukraine, along with the effects of the pandemic, have caused disruptions in the markets, prices of many products and in the international supply logistics chain. These risks and their impacts are difficult to predict and could adversely affect our operations and our financial performance.

As of the date of this report, the financial effect of the combination of these events has not had a significant adverse impact on the financial statements taken as a whole.

Disclosure of results of operations and prospects [text block]

Please consider that Central America is referring to figures on a constant currency basis.

During the second quarter of 2022, consolidated revenue grew 12.0%: 12.2% in Mexico and 15.3% in Central America.

Each quarter has presented unique challenges over the last two years, and currently inflation is playing a role on the top line. Nevertheless, revenue growth has accelerated sequentially quarter after quarter, reaching a 26.7% three-year stacked growth on 2Q22.

We are managing pricing prudently and strategically, taking a long term approach to drive sustainable growth. During the quarter, Walmex's consolidated ticket grew 5.7% while traffic grew 5.4%.

MÉXICO

During the quarter, same-store sales grew 10.8%, driven by Bodega and Sam's Club.

PERFORMANCE BY REGION:

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Wal-Mart de México, S.A.B. de C.V.	Consolidated
Ticker:	WALMEX	Quarter: 2 Year: 2022

Growth was broad-based across all of them. The South delivered the highest growth as economic activity in the region continues to recover. The Central and Northern regions also delivered above-average growth; while the Metro area, where macro conditions have been more challenging, delivered lower, yet solid growth.

PERFORMANCE BY FORMAT:

Our multiformat operation allows us to serve customers across different demographics and shopping occasions, which further increases our resilience and allows us to favor our customers with low prices.

Bodega was the fastest growing format. We've consistently expanded our price gap for the last 4 quarters and 2Q22 was not the exception; we managed to increase our price gap to competitors by 140 bps.

To drive price perception, in addition to the investments we are doing in prices, we launched the "Hay para más" campaign, which focused on reinforcing and unifying our communication with customers.

Fresh departments are very relevant among our Bodega customers and an important traffic-driver for the stores. We tested a new layout to provide a fresher and simpler shopping experience on such departments. This change resulted in a 160 bps traffic increase, so we started a nationwide rollout of this new layout in June to drive traffic and sales.

Sam's also delivered strong growth across all categories. Members are appreciating the value we offer through our Member's Mark brand. We are launching new and compelling items to enhance our catalog. A great example is our multi-vitamin, which offers better quality than branded options, with a 20% value. During the quarter, Member's Mark sales penetration increased 230 bps compared to 2Q21.

Membership performance has been healthy as well. During the Hot Sale event, Plus member penetration reached an all-time high at 40%. Plus members shopping frequency and average ticket is 2x higher vs. advantage members, and it is encouraging to see they are appreciating the value of the membership.

Regarding Walmart, it is great to see how seasonal events are being implemented again at the stores at its full potential, after two years of softer traffic due to the pandemic. As we enter the second half of the year, we are excited about the great merchandise we will offer our customers during emblematic events such as Back to School, World Cup and Christmas, with an omnichannel scope.

So far this year, we've opened 5 new Supercenters to bring our assortment and prices to more customers, and we are very excited to see all of them outperforming our sales and returns goals.

We are encouraged by the positive trend we are seeing at Walmart Express. After several quarters of disruption due to store conversion, we are resuming growth. During the quarter, we converted two more stores into Walmart Express and on the second half of the year we will finish the 11 remaining conversions.

We are focused on offering the right prices and assortment for our customers. During April, we hosted an event focused on organic products, where customers could find around 100 products in categories such as fruits, vegetables, groceries, and consumables. Organic products sales increased double-digits during the event.

"Maestros de la Parrilla" and the cheese, wine, and bread event were also well received by customers, as we drove triple and double-digits sales growth, respectively, during the events.

PERFORMANCE BY DIVISION:

Food and Consumables continue growing strong. Consumer habits are constantly evolving, and their spending is somewhat shifting away from discretionary items given high inflation levels. This is affecting General Merchandise and Apparel's sales performance.

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