- Sales Increase: 2.3% year-over-year, reaching MXN19 billion; 9.6% increase excluding foreign exchange effects.
- Same-Store Sales Growth: 9% year-over-year.
- EBITDA: Grew 7.6% to MXN2.7 billion with a 14.5% margin.
- Digital Orders: 32.9 million orders totaling MXN6.4 billion, contributing 33.9% to total sales.
- Starbucks Same-Store Sales: Increased by 7.2% overall; 8.7% in Mexico.
- Europe Same-Store Sales: Declined 9.9%.
- South America Same-Store Sales: Grew 27.4%; declined 5% excluding Argentina.
- Domino's Pizza Same-Store Sales: Increased by 1.8% overall; 4.7% in Mexico.
- Burger King Same-Store Sales: Increased by 2.5% excluding Argentina; 1.7% in Mexico.
- Full-Service Restaurants Same-Store Sales: Increased by 5.5%; Vips Mexico up 8.4%.
- Store Openings: 48 corporate units and 17 franchisees, totaling 65 new stores.
- Loyalty Sales: Increased by 37.6% to MXN4.4 billion, contributing 33.2% to total sales.
- Net Income: Decreased 66.9% to MXN157 million.
- Earnings Per Share (EPS): MXN3.06; post-IFRS 16 EPS rose to MXN3.63, a 53% increase year-over-year.
- CapEx: MXN2.4 billion, with 25% for maintenance, 56% for store openings and remodelings, and 19% for strategic projects.
- Debt: Pre-IFRS 16 gross debt increased by MXN4.6 billion to MXN29.7 billion.
- Debt Ratios: Total debt to EBITDA ratio at 2.6x; net debt to EBITDA ratio at 2.3x.
- Cash Position: MXN4 billion at the end of the quarter.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales increased by 2.3% year over year, reaching MXN19 billion, or a 9.6% increase when excluding foreign exchange effects.
- Same-store sales grew by a solid 9% year over year, demonstrating strong performance despite a challenging macroeconomic environment.
- EBITDA grew 7.6%, reaching MXN2.7 billion for the quarter, with a 14.5% margin, driven by operating leverage and lower costs of food and raw materials.
- Digital orders contributed significantly, with 32.9 million orders totaling MXN6.4 billion, accounting for 33.9% of total sales.
- The company opened 65 new stores during the quarter, focusing on the most profitable opportunities across all regions.
Negative Points
- Same-store sales in Europe declined by 9.9%, affected by a challenging consumption environment and boycotts of American brands in France and the Netherlands.
- Sales in South America declined by 9% for the quarter, mainly due to the devaluation of the Argentinean peso and reduced consumer demand.
- Net income for the second quarter decreased by 66.9% year-over-year to MXN157 million, primarily due to currency exchange translation effects.
- Adjusted EBITDA in Europe decreased by 14.9% due to macroeconomic pressures and brand boycotts.
- The company faces ongoing challenges in the delivery channel in Spain, affecting same-store sales.
Q & A Highlights
Q: Can you provide insights into the recent dynamics in Europe, especially with the upcoming Olympics, and the outlook for this region? Also, what is driving the lower food costs and raw materials?
A: (Armando Torrado Martinez, CEO) The recent dynamics in Europe, particularly in France, have been challenging due to reduced traffic and street closures in Paris ahead of the Olympics. This has affected our stores, but we are implementing strategies to improve traffic. (Federico Rodriguez, CFO) On the cost side, we are seeing stability or decreases in raw material prices, such as proteins and vegetable oils. Our contract with Starbucks provides stability in coffee prices, and we are using a stockpile strategy for mozzarella cheese to secure better prices.
Q: Could you elaborate on the performance in Mexico, considering the shift in the Holy Week, and the outlook for South America?
A: (Federico Rodriguez, CFO) In Mexico, we saw strong momentum with a continuation of consumption growth, driven by factors like increased minimum wage and remittances. The Holy Week shift affected April, but we rebounded in May and June. In South America, the economic scenario remains tough, particularly in Argentina, but we are seeing improvements in Chile and Colombia.
Q: What is the outlook for Spain, especially in the delivery segment, and how do you plan to stabilize same-store sales there?
A: (Federico Rodriguez, CFO) The delivery segment in Spain has been challenging since 2023 due to changes in consumer behavior favoring casual dining. We expect this trend to continue, but we are optimistic about improving the delivery channel's relevance by the first quarter of 2025. In France, the boycott of American brands has been deeper than expected, but we are adjusting our business plans accordingly.
Q: With the current stock price scenario, are there any plans to reignite the buyback program?
A: (Federico Rodriguez, CFO) We are closely monitoring the market, and if the stock price makes sense, we could consider repurchasing shares to be canceled by the end of the year. We have an approved buyback amount of around MXN500 million, but any decision will depend on market conditions.
Q: Can you clarify the guidance for revenue growth and EBITDA, considering the FX situation?
A: (Federico Rodriguez, CFO) The strong Mexican peso has impacted our revenue growth guidance, but we still expect to meet our EBITDA and CapEx guidance for 2024. Excluding foreign exchange effects, we are in line with our revenue guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
