Carlos Slim's Mexican Retailer Gets a Boost From Apple Fanaticsby
IShop sales forecast to rise 36% this year: Itau estimates
Mexican consumers stocking up on new iPhones, iWatches
Carlos Slim has Tim Cook to thank for helping his latest retail success.
Slim’s retailer Grupo Sanborns SAB saw a 44 percent uptick in same-store-sales for its electronics and music stores last quarter as customers stocked up on iPhones and Apple Watches. The boom will probably extend to the rest of the year, Itau BBA SA said in a note after the company reported results on Oct. 26, revising its annual same-store sales growth forecast for the stores that sell all things Apple Inc. -- called iShop -- to 36 percent from 9 percent.
While Sanborns doesn’t break out sales for iShop within its electronics and music retail unit, the Apple-brand stores are making up “for a larger part of the pie” each year, Luis Willard, a Corporativo GBM SAB analyst in Mexico City, said in an interview. Sanborns has benefited from the introduction of new Apple products, its growing presence in highly visited shopping malls, as well as a rebound in consumer spending, he said. Some MixUp stores, another of Slim’s brands that sells items such as CDs, DVDs and video games, are being closed or remodeled into iShop locations, said the analyst, who rates the stock market perform.
“We have been surprised by the recent performance” of iShop, Sanborns Investor Relations Director Angelica Pina said on an earnings call with analysts last month. “We know part of the reason was very loyal customers of the Apple brand,” she said of the company run by Chief Executive Officer Tim Cook.
Sales from Mixup and iShop stores accounted for at about 15 percent of the almost 10 billion pesos ($600 million) in third-quarter revenue at Sanborns, which operates Sears in Mexico and namesake convenience stores that include a restaurant and sell an assortment of items, from beauty products to TVs.
Sanborns, which has seen shares jump 23 percent this year, will open 16 new locations next year, including six Sears and four iShop stores, Pina said on the call. She didn’t reply to requests seeking comment.
The lowest inflation rate in almost five decades is boosting purchasing power by the most since 2001 in Mexico, where retail sales surged by the most in three years in August as a rebound in consumer spending accelerated. That’s helping to prop up the economy even as falling oil output and sluggish manufacturing exports are leading economists to ratchet back their 2015 growth forecasts.