Wal Mart de Mexico B de C : Walmex reports 1Q22 results

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Quarterly Financial Information

[105000] Management commentary..................................................................................................................................2

[110000] General information about financial statements ........................................................................................... 13

[210000] Statement of financial position, current/non-current ..................................................................................... 15

[310000] Statement of comprehensive income, profit or loss, by function of expense ........................................... 17

[410000] Statement of comprehensive income, OCI components presented net of tax ......................................... 18

[520000] Statement of cash flows, indirect method ...................................................................................................... 20

[610000] Statement of changes in equity - Accumulated Current .............................................................................. 22

[610000] Statement of changes in equity - Accumulated Previous ............................................................................ 25

[700000] Informative data about the Statement of financial position ......................................................................... 28

[700002] Informative data about the Income statement ............................................................................................... 29

[700003] Informative data - Income statement for 12 months ..................................................................................... 30

[800001] Breakdown of credits ......................................................................................................................................... 31

[800003] Annex - Monetary foreign currency position .................................................................................................. 33

[800005] Annex - Distribution of income by product ..................................................................................................... 34

[800007] Annex - Financial derivate instruments .......................................................................................................... 35

[800100] Notes - Subclassifications of assets, liabilities and equities ....................................................................... 39

[800200] Notes - Analysis of income and expense ....................................................................................................... 43

[800500] Notes - List of notes .......................................................................................................................................... 44

[800600] Notes - List of accounting policies .................................................................................................................. 68

[813000] Notes - Interim financial reporting ................................................................................................................... 80

[105000] Management commentary

Management commentary [text block]

We are encouraged by the progress we made across the business on the implementation of our long-term strategy.

Customer experience scores continue to improve as we help families save time and money by lowering prices amid the high inflation environment we are experiencing, and as we deliver a seamless and enjoyable omnichannel shopping experience.

We are serving customers regardless of how they want to shop. Sometimes at our stores and sometimes through our eCommerce platforms. We keep innovating and executing to get better at both.

We are focused on three strategic priorities: to win in discount, to lead in omnichannel and to become the ecosystem of choice; and throughout the quarter we made progress on these three fronts.

Our strategy translates into shared value creation for all stakeholders and we are on our path to become a regenerative company. I would like to share with you the main highlights in this aspect.

For the fifth consecutive year, we are part of the Bloomberg Gender Equality Index 2022. Currently, 53% of our associates are women.

Thanks to our commitment to the economic, environmental, and social development of the country, we ranked #1 in the self-service and department stores sector in Merco's "Responsabilidad ESG" ranking.

We were also considered the best retailer and the best omnichannel retailer in Mexico by America Retail's "Retail Hall Fame Mexico 2021".

Disclosure of nature of business [text block]

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

As of March 31, 2022, it operates 3,631 units, throughout 6 countries (Costa Rica, Guatemala, Honduras, El Salvador, México, and Nicaragua), including self-service stores, membership clubs and omnichannel sales.

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.

II. 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.

III. 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 prosper 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.

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 quarter, we delivered double-digit total revenue growth.

Consolidated revenue grew 10.0%: 10.2% in Mexico and 10.8% in Central America.

Our long-term strategy is a growth strategy. Revenue growth has accelerated sequentially quarter after quarter in the last 4 quarters.

On 1Q22, we reached a 23.8% three-year stacked consolidated revenues growth, demonstrating the consistency of our results.

MÉXICO

Same-store sales grew 9.0% during the quarter.

PERFORMANCE BY REGION:

The South and North regions posted the highest same-store sales growth, while the Metro area delivered lower, yet solid growth.

PERFORMANCE BY FORMAT:

Bodega is our main vehicle to serve the most price sensitive customers and to win in discount.

Throughout the quarter, we worked on simplifying the execution and communication of our merchandising guidelines. Additionally, we continued to provide great value for customers through lower prices and by reinforcing our private brand offerings, which experienced a sales penetration increase of 60 bps vs. 1Q21.

Seasonal events, such as Valentine's Day and Super Bowl, were well received by our customers and we drove double-digit sales growth. It is amazing to see Bodega's reach during these type of events. As an example, on the Super Bowl weekend we sold 4 million beers and almost 700 thousand snacks.

Sam's Club delivered the second highest comp growth among our formats. We're driving strong volumes by focusing on great, high-quality items at disruptive prices, including Member's Mark, which experienced a sales penetration increase of 230 bps vs. 1Q21.

We are offering Plus members an even more convenient omnichannel shopping experience since we started offering free delivery on orders $1,499 pesos and up. Members are really appreciating the value we are offering through the membership. During the quarter, Plus members represented almost 40% of membership sign ups and renewals. This is very good for Sam's, given that Plus members' ticket is 2x higher than advantage members' ticket and their shopping frequency is 1.4x higher.

Walmart Supercenter also delivered strong growth. During March, we launched a new program called Omnichannel Merchants to support our on-demand operation. They are approaching customers at stores to convince them to try our service and inviting them to join Walmart Pass.

The omnichannel NPS of the format increased by almost 900 bps vs. 1Q21. We are serving customers how, when and where they want to be served, and they are appreciating our efforts.

We are making progress with Walmart Express. So far, we have converted 86 stores, and in the coming months we will convert the remaining 13 Superama stores. We see that stores that were converted into Walmart Express during the first half of last year are showing a positive trend, and even surpassing the level of sales they had before the conversion, which is encouraging.

We finalized a catalogue reengineering analysis and adjusted our offering, so customers can find the merchandise they are looking for, at great prices. Top categories that went through the reengineering are growing over 1,300 bps more when compared to their growth rate before the process.

One of the features customers appreciate most about the new format, is the seamless and fast shopping experience. Pickup share of total online orders increased by 850 bps vs. last year, and over 35% of store transactions are going through the self- checkout stations.

PERFORMANCE BY DIVISION:

During March, we launched an initiative called "Los básicos de tu canasta" to continue to support our most price sensitive customers by providing access to quality items at exceptional prices, amid the high inflation period we are going through. We are offering a basket of more than 50 food and personal care products, leveraging opening price points and private brands, with disruptive prices.

General Merchandise performance was driven by growth in categories such as Home and Small Appliances, while performance in Electronics was softer, impacted mainly by TVs and computers. We are seeing a lower demand given last year and in 2020, computer demand was unusually high due to remote school and work, and we are also experiencing delays and inventory shortages due to global supply chain disruptions. We are working to improve our customers' shopping experience and to deliver what they ask for.

Apparel sales were impacted by the Easter Week flip, primarily on our self-service formats. At Sam's Club, where we focus on basic apparel, all subdivisions: men, women and kids apparel, delivered solid growth.

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