The recent purchase of the Fiesta Mart supermarket chain in the United States by Chedraui will allow the Mexican company to double its presence in that country and compete with local retailers that serve the Hispanic consumer.
Chedraui reported that one of its subsidiaries reached an agreement to acquire 63 Fiesta Mart branches in Texas, strengthening its presence in the Mexican-American consumer market.
“Currently, Chedraui operates 59 stores primarily in California and Arizona and, through the acquisition, will not only double its current footprint (in the US), the company will also enter a new state,” Barclays said in a document.
At the end of December 2017, the company had 59 branches of its El Super format in California, Nevada, Arizona and New Mexico, mainly, according to the company’s financial information.
For its part, the broker Citibanamex said that Chedraui would compete with local brands that serve the Hispanic consumer, including Mi Tienda, of HEB, as well as Joe V’s and El Rancho.
“The acquisition of Fiesta Mart balances Chedraui’s business in the US between Texas and California, potentially increasing the operating flow (EBITDA) in that country to 27 percent (against the current 17 percent), although it would dilute the group’s EBITDA margin by 60 points base,” said the financial group.