Mexico Retail The 2H26E Outlook – A Minimum Wage Tale

Research evidence excerpt

Mexico Retail The 2H26E Outlook – A Minimum Wage Tale

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the other differentiated setup in 2Q, while we remain cautious on the traditional (55-11) 4950-2901

supermarkets where expectations still leave less room for margin disappointment. Re- giovanni.vescovi@jpmchase.com

rating of the sector requires in our view volume recovery, SG&A normalization, and Banco J.P. Morgan S.A.

investment-led growth in the economy.

• Fading wage tailwind / channel shift: The setup is consistent with a cooling

disposable income impulse: real wage momentum has moderated and formal

job creation has softened, leaving incremental wage‑mass dynamics more

wage rate than employment driven. Household buffers appear thinner –

savings formation has been partially depleted, and our survey shows limited

balance sheet cushion (only 18% of respondents report having no debt, while

~15.8% indicate debt service of half or more of monthly income). The peer set

naturally splits into (i) traditional food retailers (Walmex, Chedraui, La Comer,

Soriana), (ii) TBBB as the hard discount/downtrade growth vehicle, and (iii)

FEMSA Comercio as the convenience exception; valuation dispersion hinges

on SSS resilience, EBITDA margin defense, and cash conversion. Regulatory

changes raise the required productivity offset as the statutory workweek steps

down toward 40 hours (with 46 hours in 2027).

• We see downside to consensus expectations: Earnings risk is concentrated at

EBITDA as muted SSS meets sticky labor costs, keeping our framework below

consensus with the larger gap at EBITDA (vs revenue). In 2Q26E, we are below

consensus on EBITDA for Chedraui (-7.5%), Walmex (-3.0%), La Comer (-

4.2%), Soriana (-3.4%), and FEMSA (-2.8%). For TBBB, consensus estimates