Mexican Department Stores Report Double-Digit Q2 Earnings

Grupo Palacio de Hierro and El Puerto de Liverpool both reported financial results for the second quarter of 2024, with Palacio de Hierro experiencing a 10.5% increase in consolidated revenue, reaching MX$24.3 billion (US$1.29 billion) for the quarter, and Liverpool reporting MX$41 billion. Both department stores attributed part of this growth to their digital presence.

Palacio de Hierro’s growth was driven by a robust omnichannel strategy and increased consumer activity. EBITDA grew by 18.3%, totaling MX$2.03 billion, while net income rose by 13.3% to MX$755 million.

Key highlights from Palacio de Hierro's 2Q24 report include the expansion of the “Extended Catalog” sales channel and the integration of more products into physical stores. The company also introduced AI for optimizing merchandise planning and distribution and launched an exclusive e-commerce section for Casa Palacio, featuring brands like Versace and Ralph Lauren Home Collection.

Additionally, they opened “Mencare” within “Belleza Palacio,” focusing on male grooming products and personalized care experiences. New international brands such as Le Coq Sportif, Chantelle X, Hackett, and Columbia were added to their fashion lineup.

For the first half of the year, Palacio de Hierro's consolidated revenue increased by 9.2% to MX$24.3 billion, with a compound annual growth rate of 12.7% from 2022 to 2024. Digital sales saw a notable 36% year-over-year growth, boosting its revenue. EBITDA for this period rose by 17.2% to MX$3.5 billion, and net income increased by 22.6% to MX$1.2 billion. The company ended the quarter with MX$2.7 billion in cash and investments.

Rating agencies Fitch Ratings and HR Ratings reaffirmed Palacio de Hierro's AAA ratings, reflecting its strong market position, brand recognition, and conservative financial profile.

Liverpool reported a 9.8% growth in consolidated revenue for the second quarter, supported by strong merchandise availability and a solid commercial strategy. Excluding the impact of the Galerías Villahermosa insurance recovery, revenue growth was 10.3%, and EBITDA increased by 9.0%.

Liverpool's total revenue for the commercial segment grew by 9.5% to MX$41.08 billion, while Suburbia's revenue increased by 9.2% to MX$5.22 billion. EBITDA reached MX$9.2 billion, with a 6.7% increase, and a margin of 17.8%. Net income rose by 32.2% to MX$6.2 billion, primarily due to favorable exchange rates. Liverpool also reported growth in its digital segment, with Liverpool's digital participation at 28.9% for the quarter and Suburbia's at 6.6%, a 2.1 times increase from the previous year.

Additionally, 61 new kiosks were installed in Suburbia stores, enhancing their digital presence. The number of credit cards issued also grew, with Liverpool cards increasing by 6.4% to 5.7 million and Suburbia cards rising by 16.0% to 1.7 million.