Mexican Liverpool Sees 47% Drop in Q2 Profits Amid Rising Expenses

El Puerto de Liverpool, the largest department store group in Mexico and one of the biggest in the world, closed the second quarter with a significant reduction in profit. The company has reduced its profit by 47% in the period due to the increase in operating expenses resulting from minimum wage adjustments.

According to the company, “operating expenses recorded an increase of 12.4% mainly due to the pressures of minimum wage adjustments, which affect both personnel expenses and labor-intensive services, as well as the increase in the provision for uncollectible accounts”.

Gross operating profit (ebitda) stood at 7.108 billion mexican pesos ($385.1 million) at the end of the second quarter, down 7.1% from the same period in 2024. Net income ended the quarter 47% lower than the previous year, at 3,295 million pesos ($176.7 million).

El Puerto de Liverpool reported 8% growth in consolidated revenues

In the second quarter, El Puerto de Liverpool reported an 8% growth in consolidated revenues, which reached 56.42 billion pesos ($3.12 billion). In the commercial segment, the company posted a 7.3% increase in revenues, while in financial services the increase was 15.7% and in real estate, 6.9%.

The Liverpool department store chain closed the second quarter of the current fiscal year with a 4.7% increase in like-for-like sales, while Suburbia’s sales increased by 8.2%.

The group’s commercial margin has been reduced by 210 basis points, to 31%, “mainly due to a promotional calendar focused on sales and inventories, an unfavorable exchange rate, new tariffs on certain imported textiles and logistics expenses due to the migration to the new Softlines center in Arco Norte,“ according to the company.

“Inventories increased 22.6% -the company has highlighted-; in Liverpool, the 20% growth is mainly due to the increase in sales and merchandise in transit for the fall-winter season, in anticipation of possible delays.“ At Suburbia, the increase was 40%, “driven by the slowdown in store openings, an increase in the participation of certain categories, higher import costs and a high base since the beginning of the year.

In the first six months of the year, El Puerto de Liverpool’s total revenues increased 9.1% to 101.95 billion pesos ($5.46 billion). The ebitda, on the other hand, fell by 10.6%, while the net result dropped by 38.2%, to 5,608 million pesos ($300.7 million).