Walmex sees a Mexican retail recovery

Mexico’s biggest retailer says local consumers are trickling back into stores to buy everything from washing machines to high-end televisions. But so far the trickle has yet to become a flood.

Wal-Mart de Mexico, better known as Walmex (WMMVY), is seeing signs of discretionary spending coming back after the global recession.

Same-store sales climbed 5.4% in May and CEO Scot Rank says June is “off to a good start.”

Going forward, the company — the Mexican affiliate of Walmart (WMT) — plans to expand aggressively throughout Central America, but the big push probably will not come before early 2012. It will take at least that long to integrate existing stores into the Walmart network, Rank says.

Clothing and appliances have been good sellers for the company as the domestic economic mood brightens. The World Cup is also helping with television sales.

WMMVY is thinly traded in ADR form, making it a somewhat speculative play for individual investors with limited portfolios and patience. Rival Grupo Gigante (GPGJY) is the only other Mexican retail ADR, but turnover there is even worse.

One interesting way to play the television side of the story: Grupo Televisa (TV). If Mexicans are buying more TVs, then it follows that they are watching more TV, and if they are watching the World Cup, they are definitely watching it on Televisa channels.