Grupo Comercial Chedraui SAB de CV
BMV:CHDRAUIB
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Grupo Comercial Chedraui SAB de CV
Earnings Call Analysis
Q4-2023 Analysis
Grupo Comercial Chedraui SAB de CV
Grupo Chedraui began the year with specific financial targets and has successfully met or surpassed these goals. Throughout 2023, results aligned with or exceeded the guidance set earlier, underscoring the company's adept planning and execution capabilities.
The company faced a minor setback with a 0.4% decline in consolidated sales, largely due to foreign exchange effects, specifically an 11% impact from Chedraui USA when converted to Mexican pesos. If not for the currency volatility, sales would have seen a positive uptick of 5.9%. In the U.S., sales were half of the consolidated total, signifying the market's substantial contribution to the business.
Despite the currency headwinds, Grupo Chedraui's commitment to operational efficiency and cost control fostered a 7.3% growth in EBITDA compared to the preceding year, leading to an increase in EBITDA margin to 9.1% of sales. Excluding the currency impact, EBITDA would have spiked by 14.2%.
The company's net income demonstrated a significant 60.5% compound annual growth rate over four years, culminating in MXN 2,494 million. The return on equity stood at 18.6%, marking a 130 basis point upgrade from the same quarter in 2022, signaling robust profitability.
Grupo Chedraui navigated challenges such as the lack of government assistance that boosted previous year's sales and deflation in particular categories affecting average ticket sizes. Consequently, there was a 0.2% reduction in total sales and a 1% decline in same-store sales, accentuated by an 11.3% drop in Chedraui USA sales due to the peso's appreciation against the dollar.
Each banner within Chedraui USA enhanced their EBITDA margin dollars relative to the previous year through continued operating efficiencies. The strategic focus on high-margin categories, particularly perishables, positions El Super and Fiesta well, and is in the initial stages of implementation at Smart & Final. Looking ahead, six new store openings across the banners are planned for 2024 as the company pursues organic growth.
Grupo Chedraui displayed solid fiscal discipline with a gross profit increase, lower operating expenses, and reduced financial expenses. The company's 0.4% decline in consolidated sales to MXN 69,760 million is attributed to the strong peso. Yet, EBITDA thrived with a growth of 7.3%. Financial leverage improved significantly to minus 0.24x owing to adept free cash flow generation and U.S. debt prepayment.
Grupo Chedraui ended the year with a robust cash position of MXN 5.5 billion, projected to nearly double by year's end. The company has taken decisive steps by amplifying CapEx for expansion and maintenance to 3.8% of sales (MXN 11 billion), doubling total dividends to represent 28% of the income results, and expressing readiness to explore valuable consolidation opportunities.
The company is set to adopt a more aggressive pricing strategy going into the next year, with the anticipation of additional opportunities via expense leverage and inventory management. The guidance suggests only a modest 10 basis point increase in the EBITDA margin, reflecting a strategic choice to be more competitive in pricing to maintain and expand market share.
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Good morning to all participants, and welcome to the Grupo Comercial Chedraui Fourth Quarter 2023 Conference Call.
Participating in the conference call today will be Mr. Jose Antonio Chedraui, CEO of Grupo Comercial Chedraui; Mr. Carlos Smith, CEO of Chedraui USA; Humberto Tafolla; Grupo Chedraui's CFO; and Arturo Velazquez, IRO for the company.
We will begin the call with initial comments on Grupo Comercial Chedraui's fourth quarter financial results by the company's CEO, Mr. Jose Antonio Chedraui. Please go ahead.
Good morning to all, and welcome to our presentation of Grupo Chedraui's Fourth Quarter 2023 Results.
We're pleased to announce that Grupo Chedraui's Fourth Quarter and 2023 results met and, in some cases, exceeded the guidance we provided at the beginning of the year. Our organic growth strategy continued with the opening of 57 stores in Mexico and 3 stores in the United States, closing the year with a total of 460 and 379 stores, respectively.
Finally, I want to recognize and express gratitude to the commitment and dedication of our employees in Acapulco, who in the face of the impact of Hurricane Otis, effectively applied our business continuity plan, which allowed us to overcome this event in record time, while reinforcing our commitment to customers, being the first self-service chain to reopen its stores. We also provided immediate relief to our coworkers and community members through Fundacion Chedraui.
We will now review the financial results for the fourth quarter of 2023. Starting with the highlights of our consolidated results, continuing with the performance of each region, and ending with a summary of the financial results. Please, let's review Slide 4.
Consolidated sales declined 0.4%, primarily driven by an 11% foreign exchange impact on Chedraui USA sales when converted to Mexican pesos. Without the currency impact, consolidated sales would have grown by 5.9%.
Sales in the U.S. represented 50% of consolidated sales in the quarter and 53% for the full year. Our operating efficiency and cost control strategy offset the currency translation impact on EBITDA, which grew 7.3% compared to the same quarter of last year.
Excluding the currency impact, consolidated EBITDA increased 14.2%. We achieved a higher EBITDA margin of 9.1% of sales, and a 66 basis point increase compared to the fourth quarter of 2022.
On Slide 5, higher EBITDA, efficient working capital management and the decline in bank debt led to favorable net income and profitability levels. The 4-year compound annual growth rate for net income in the fourth quarter was 60.5%, with total net income amounting to MXN 2,494 million. Profitability measured by return on equity stood at 18.6%, and represented a 130 basis point increase compared to the fourth quarter of 2022.
In the following slides, we will review operations in Mexico and the U.S. On Slide 6, our ongoing commitment to an effective price strategy for our customers drove same-store sales above ANTAD levels. On average, in 2023, we had a positive spread of 283 basis points. Customers continue to prefer the value proposition offered by Chedraui through its various store formats. As we aim to provide them with the best product mix at the best possible price while maintaining excellent customer service.
We opened 57 stores in 2023 for a total of 460 stores in Mexico. In the last 4 years, we increased store count by 154, and this includes 36 stores acquired from Arteli in 2022.
On Slide 7, as a result of strong same-store sales and a 2.5% increase in our sales floor area, consolidated sales were higher by 13.7% compared to the fourth quarter. In addition, EBITDA grew 16.2%, which is explained by operating leverage and strict cost control. EBITDA ended at 8.4% of sales, which is an 18 basis points improvement versus prior.
In the next slide, Slide 8, we will review the highlights of our Real Estate division. The division's sales continued to show positive trends with a 17.5% increase compared to the same quarter of 2022, amounting to MXN 343 million. Over the last 12 months, 11,017 square meters of leasable area were incorporated, representing a 2.6% annual growth. Our occupancy rate increased to 97.3% from 94.4% in 2022.
Finally, EBITDA declined by 4.4% due to onetime costs in the quarter.
Now I will turn the meeting over to Carlos Smith, CEO of Chedraui USA, so he can comment on our U.S. operation. Carlos, please go ahead.
Thank you, Antonio. Customer count continued to grow in the fourth quarter at all banners, driven by our strong value proposition and store remodeling investments.
Beginning in November, all banners began cycling against last year's sales that were positively impacted by supplemental government assistance to our customers, which ran from November 2022 through March of 2023. In addition, we experienced deflationary trends in certain categories that impacted our average ticket size.
During Q4, total sales decreased by 0.2%, with same-store sales declining by 1% in dollar terms. And as previously mentioned, Chedraui USA sales were impacted by the exchange fluctuation that caused an 11.3% decline in Q4 sales compared to the previous year when converted to Mexican pesos.
Given their strong focus on price leadership in perishables, El Super and Fiesta delivered strong same-store sales results. However, sales slowed at Smart & Final in Q4 due to deflationary pressures and reduced government stimulus. We are currently executing several initiatives to drive Smart & Final sales, with a particular focus on delivering the best value and product offerings. Please turn to Slide 10.
Despite this currency impact, EBITDA performance in the quarter remained strong. EBITDA grew 1.3% to MXN 3,295 million, representing a 117 basis point margin expansion, and 9.4% of sales. In U.S. dollar terms, EBITDA increased by 13.8%. It is important to note that each banner increased total EBITDA margin dollars compared to the previous year. This is a result of continued operating efficiencies and operating expense control.
We continued our organic growth in the quarter with the opening of 2 Smart & Final stores in California, for a total of 3 store openings in 2023, and an El Super store in Las Vegas, Nevada in the third quarter, bringing our total store count to 379.
Our U.S. operation remains committed to driving profitable growth through our 3 successful banners with the expected 2024 openings of 6 new stores, 4 El Supers, 1 Smart & Final, and 1 Fiesta. Our debt reduction plan is on track with $173 million paid in 2023 and an ending 2023 debt balance of $482 million.
That concludes our report on the U.S. operation.
Thank you, Carlos. Now we turn to the consolidated financial results on Slide 11. In the fourth quarter of the year, consolidated sales amounted to MXN 69,760 million, a 0.4% decline year-over-year as Chedraui's U.S.A. sales were impacted by an 11% appreciation of the Mexican peso.
Gross profit increased with a 10 basis point expansion in gross margin, while operating expenses without depreciation and amortization decreased 4.1%. As a result, consolidated EBITDA grew 7.3% to MXN 6,380 million, and represented 9.1% of sales, a 66 basis point increase compared to the fourth quarter of 2022.
Financial expenses decreased 6.8% to MXN 1,226 million, driven by lower debt levels in the quarter, the foreign exchange impact and higher interest earned from a favorable cash position in Mexico.
Moving on to the consolidated net income for the quarter. It increased 18.6% to MXN 2,494 million and represented 3.6% of sales.
Finally, please move to Slide 12. As a result of a net cash balance, our financial leverage closed the year stronger than expected at minus 0.24x compared to the same period of 2022 when it closed at 0.05x. This is the result of the company's ability to generate free cash flow and Chedraui's USA debt prepayment over the year. The year-to-date CapEx invested reached MXN 7,491 million, which is equivalent to 2.8% of sales.
Now if you allow me, we will move on to the question-and-answer section.
[Operator Instructions] Our first question come from the line of Benjamin Theurer with Barclays.
Congrats on those very strong results. Actually, one for Carlos in the U.S. business. Could you help us with maybe a few examples of explaining a little bit what you've been doing throughout the year in order to really drive that significant margin expansion in the U.S. business because it was broad-based. So it was in Smart & Final, within El Super and Fiesta mart, seen a very good performance here throughout the year. Just to understand like what's the magnitude of -- how you feel about the level that you've achieved right now? And where do you see still maybe some room to continue to improve that as '24 progresses? That would be my very first question.
Yes. Look, we -- as we've mentioned a few times before, really, the key for us is to drive sales mix to higher-margin categories, which is perishables, right? So if you think about our strategy at El Super then implemented at Fiesta and now beginning and still in the early stages of implementation at Smart & Final, it's all -- for us, it's all about leading with price, being price leaders and really delivering on a very strong perishable offering, where you've got great pricing and great quality. And we continue to do that.
So what's been interesting is that we continue to see gains on the El Super side, which is much more mature in terms of its perishable sales mix. But we're happy with what we're seeing, and we're happy with the progress, I guess, in terms of what we're seeing at Fiesta. We still think it's got tremendous room for growth in this arena. And like I mentioned just a little bit earlier, we're still in the early stages of developing this at the Smart & Final banner.
Okay. Perfect.
And then, one more thing. Go ahead, sorry.
No, no, no, no. You finish it. That's fine. Sorry for that. I thought you were done.
No. And obviously, the second important point here is the leverage that we now bring as a nearly $8 billion retailer in the U.S. with common suppliers, and that's certainly bringing in some efficiencies.
Perfect. And then as we look into the balance sheet, which obviously is very strong, and you closed the year with the net cash, would you assume the guidance implies an even greater net cash position by the end of the year? You just announced the dividend payment. So maybe that one is more for Antonio. But how do you think about maybe incremental cash returns aside from the dividend and the extraordinary dividend you announced? Or do you think you need the capital for accelerated CapEx and/or potential further M&A as you've done it in the past?
For the Grupo team, you might want to see if you're self muted at all from any of your connections, please.
Can you hear me?
We can hear you now, yes.
Okay. I'm sorry. Okay. I was saying that we have a strong balance sheet. We ended up with a cash position of MXN 5.5 billion this 2023. And we pretend to end the close to MXN 10 billion on December this year, expanding our CapEx and also adding an extraordinary dividend by the end of the year.
So in the end, we have a very good cash position that we believe we can increment, not only with the results, but with our ability to keep adding value through our working capital that we always produce benefits coming from managing inventory better because we -- every year, we do some adjustments that allow us to become better in this matter.
Does this answers your question?
Yes. To a degree, yes, I mean the question is like, obviously, with such a strong cash balance, do you think you can further engage in M&A or potentially even more share buybacks or share repurchase? Some things like that or just more dividend because it kind of almost feels like an inefficient capital structure, having so much cash on the balance sheet when you maybe have the opportunity to invest it into more growth or more M&A opportunities, whatever arises over the course of the year.
Well, we're increasing -- we've taken 3 measures already. One, it's increasing our CapEx for expansion and maintenance. We increased our CapEx to 3.8% of sales, we would be spending close to MXN 11 billion in CapEx this year.
On the other hand, we are increasing our dividend. Our dividend will be the double of the total dividend that we have in this year, close to 28% of the income of the -- yes, of the income results. And then we are open to consolidation opportunities.
We always are looking at opportunities. They do not necessarily become a reality because we are very careful on the target, but also very careful on the price of the target. We have proven that every consolidation that we have taken, all of them, we value, we are conscious about that.
So yes, we're open to that. We're looking at opportunity but they do not necessarily realize unless they add value to Chedraui [indiscernible].
Our next questions come from the line of Luis Willard with GBM.
Congrats, Antonio for this [indiscernible] results.
So firstly, I think it's quite simple. So as we enter 2024, [indiscernible] we see quite a solid consumption environment, at least resilient consumption environment. How are you thinking in terms of the competition on the price gaps versus self-service companies and especially other formats are also playing into the low-income segment of Mexico? How do you think about price gap there?
Luis, I'm sorry, the line, it's not coming clear. So can you help me and repeat it, please? I'm sorry, but the line is not allowing us to hear you clearly.
Yes, just a second and I'll change this. Is this better?
Yes, completely better.
All right. Perfect. So the question was, as we enter into 2024, and even though that consumers -- is still resilient, how do you think about price gaps versus your competitors? And especially, do you see them turning a bit more aggressive in terms of pricing or in terms of promotion, especially when you look at all the staples companies having some sort of flags between the price -- the prices that they put in the market and the margins that they will probably see for 2024, meaning that there would be some room for them or other competitors being promotional? I don't know if I was clear, but happy to elaborate a bit more.
Grupo team, could you check if you're self muted again, please?
I'm sorry, can you hear me?
We can hear you now, yes.
Okay. Well, we have a plan for this year, Luis. We expect to become more aggressive in terms of pricing. We are reducing the speed of growth of our EBITDA margin, even though we believe that there will be more opportunities on the expense leverage. And on the better management of inventory, we're only recognizing in our guidance a 10 basis points increase on the EBITDA margin because we believe that we would need to become more aggressive this year. That's what we think. That's what we expect. And with the cost structure that we have and with our ability of managing our inventories, we believe that we're well prepared to sustain the price gaps that we have been able to sustain in the past. We feel that we are very well positioned for that.
And maybe if I can pick your brain on M&A in Mexico. I mean, your public company and your results are public. So all the private players already know that you're the ones with the firepower in the market, perhaps. So I mean, as opposed to the previous, let's say, 5 years, when you were kind of leveraged, not precisely in terms of operations where you are right now. So do you see this as an opportunity or maybe something that explain your -- not in your favor when negotiating with these private parties? Does it make sense for them to perhaps getting into a more robust operation with yourselves? Maybe just think you're being on there?
I think that we're very well positioned to take over M&A opportunities in Mexico. First of all, we believe that there are regions where we still don't have any presence at all or limited presence. So that opens a real possibility that will also be aligned with the COFECE, which is the antitrust agency in Mexico. So we have real opportunities on that, as well as you already mentioned, with our strong balance sheet. So that will allow us to be probably the only one or the only ones capable to take over these M&A opportunities, even though that the targets -- targets may know these well, in the end, they will probably -- if they want to sell their assets, they will know that they will have to go through us. So that will open a door that will allow us probably to negotiate this better.
But as I have already said, we're very conscious that these targets would lead to add value to the company, allowing us to sustain the Chedraui capabilities. We don't want to get into business that we don't know, and that we'll have to develop capabilities that at the moment we don't have. So we're very conscious on that side.
And on the other hand, the price. The price is very important for us, and it would have to add value to Chedraui. So it's -- we're looking at possibilities, but before they materialize, we really want to make sure on this -- that we comply with these 2 strategic objectives, Luis.
Our next questions come from the line of Melissa Byun with Bank of America.
My question is for Carlos. Can you discuss the differences in consumer behavior or other dynamics between Smart & Final and the El Super and Fiesta banners and why you're seeing such differences in trends among the concepts?
And then how should we think about the sustainability of Smart & Final margins over the short term, given the sluggishness that you're seeing in terms of sales? And if you could also expand on some of the initiatives you alluded to in terms of recovering sales at Smart & Final.
Sure. I think the key differentiator right now would be that both El Super and Fiesta are really well positioned as price leaders. And in the -- where there -- where customers think of both of those formats as top of mind in terms of the word, shop, right? And when you have a cautious consumer that's looking for value with less expensive, good quality products, we hit that sweet spot, right? So that's always been a strength of El Super. It's becoming a strength at Fiesta and it's a strength that we need to develop at Smart & Final.
Smart & Final has always been a very light format, but not all consumers consider it as their first choice to go buy milk, eggs and produce, let's say. So our initiatives are really driven towards that so that some of the categories that drive traffic, like produce, need to be really, really in excellent shape, both from a pricing standpoint and from an execution standpoint at store level so that we can slowly move Smart & Final to become a first choice for consumers rather than a format that's very strong during special holidays and special events and slowly converted to a primary shop.
So that's really what we're working on. And I think it's through a combination of pricing initiatives, through strengthening our perishable, not necessarily assortment but just a perishable execution. And I think we're going to get there. We're seeing a little bit of sluggishness, like you mentioned, but that's going to taper off shortly, and we think we're going to be able to execute our 2024 plans accordingly.
Great. And do you think that you will need to reinvest some of the gains that you've made in terms of margins back into the value proposition? And how should we think about maybe the balance of the favorable mix impact on margins from perishables versus the efforts on the value side?
Yes. Yes. I think we -- and we baked that in our 2024 plan. So we know what the economic backdrop looks like right now, we're in an environment of slowing food inflation. We've had some deflation in a few categories, EBT dollars are back to pre-pandemic levels.
So we're in a market share gain right now. Fortunately, our customer counts are still growing. They've been consistent, even in the fourth quarter, consistent to where they've been year-to-date. And I think we're positioned properly to achieve this, and in all 3 banners, as a matter of fact. And -- but one of the things that we saw at Smart & Final is that there was a lot of room to grow that margin. So we're on that trajectory.
Our next questions come from the line of Hector Maya with Scotiabank.
First, if you could please share your thoughts on how sustainable do you believe that margin levels in the U.S. could be? Like if we could expect 9% to be further sustainable throughout 2024, particularly regarding your comments on the improvements in spend that you could see in Fiesta and also in Smart & Final.
And also in terms of your strategy for private label in Mexico by format, did you have an update on that, particularly for -- from Supercito? Is there any changes to your strategy in private label? Or how do you believe that the dynamics should evolve in this year?
[indiscernible].
Sure, Antonio, my pleasure. Yes. So one of the things that is helping us with our margin expansion is that we're continuing to grow our sales. So we're getting leverage from our sales growth. And we're doing a very nice job with operating costs, I would say. And once again, even -- we bought Fiesta in 2018, we're still not where we think we can take that format, right? Sales have been moving nicely, but I think that there's more to be done on the top line. There's more to be done on the expense line. There's more to be done on the gross profit line. So I'm bullish on continuing to be able to grow margin in that format.
And like I said earlier, Smart & Final, same concept. I think we've got potential for more top line growth. I think we've got more potential on our gross margin line. Expense control is very, very good and disciplined at Smart & Final. But the other 2, we can increase volume per outlet. And so I'm bullish on being able to maintain for sure and continue to expand those margins.
About the private label in Supercito. Well, private label is very important for us in Mexico. And we're also bringing the private label that we use in Smart & Final, basically in First Street with great, great results. But particularly in Supercito. Supercito has a private label presence of a little over 20% of their sales. It is important, considering that Supercito is not a hard discount concept. Supercito is a proximity supermarket that competes with a very aggressive pricing strategy for a typical supermarket, but has a bigger assortment that allows the customer to buy a complete -- complete reposition supermarket basket.
So I think it's a very interesting format with better margins than a hard discount and with better sales per store and per square meter than a typical hard discount with a big presence -- with a big private label presence. But not only just private label, we sell national brands that are very important for Supercito as well, Hector.
I mean, the conversation around hard discount in Mexico is obviously very hard right now. So I just wanted to understand if your private label strategy in Supercito, if it's open to change? Or do you feel comfortable with the penetration of 20% of sales as a feeling or the ideal level? Or would you be open to increasing that level of penetration in Supercito?
No, we're happy at the moment. We are following the customer. We're very focused on that, and we follow their demand. That's basically what we do in all of our formats. So Supercito is not different.
Supercito has a bigger private label presence than a typical supermarket of us but that comes out more than the strategy that we define. It's following the customer needs. So if there's more need for private label, and that depends on the customer demand, we would easily adjust it. But at the moment, that's -- that's what we see. And we don't expect in the near future any big change.
And the last one, I promise. In terms of M&A, if you could also update us on your ambitions? I know you've been discussing the possibility for the U.S. and Mexico, but do you believe that there could be an opportunity this year in 2024? And if so, would it be more likely to happen in the U.S. or Mexico?
We're open to both M&A opportunities in both countries. We have the balance sheet in both countries and consolidated to do that. In Mexico, it depends more on the price of the potential target, which has become difficult in the past. And in the U.S., maybe Carlos can comment and add on the potential opportunities that we see there.
Yes. I guess, our comments here are very consistent with how Grupo Chedraui in general sees this. So there's a lot of small chains in the U.S. There's a lot of specialty operators in the U.S. But look, ultimately, I think the message here needs to be very clear, which is we've got a good balance sheet, we are open to looking at every opportunity, but we are going to buy at a very, very good price and address formats where we think we can add value.
So as things happen, people will get informed. But in the meantime, I think the takeaway is that we're very, very open to it. We're going to do it wisely, and we've got the power to do it.
Our next question comes from the line of Alvaro Garcia with BTG Pactual.
Congrats on results. Two questions on my side, both on Mexico, both related to Supercito as well. The first one is sort of on human capital and finding people on labor. I was wondering if you can comment, would you say that Supercito, obviously, you're set to open 100 this year? Would you say it's the hardest format to find people for? That's my first question.
And then my second question has to do with the distribution to Supercitos. I know that a lot of the distribution, I mean, this was sort of modeled on something Walmart has done in the past comes from your larger Tiendas Chedraui. And I'm just curious if you think there's a limit to the capacity of this distribution strategy in the future once Supercito reaches significant scale?
Thank you for your questions, Alvaro. Well, yes, not only for Supercito, but in every supermarket that we operate in Mexico and the U.S., it is a business which is very labor-intensive and to be able to -- you have to really prepare the human capabilities to be able to meet our strategies. And we are prepared for that. We are really meeting the expansion goals with the strategies, including on the human resource side.
About distribution, yes, it is very clear that to sustain the growth that we project in the future, not only the 100 stores this year, but we believe that there will be opportunities to double that potential growth in the coming years. We are preparing with a centralized distribution that do not only depend on the -- on the bigger stores that support the Supercito. So we have that already put in plan. And we are already distributing centrally by -- not only by case, but by item to these Supercitos, and that's already happening within our distribution capabilities at the moment.
Our next questions come from the line of Rodrigo Alcantara with UBS.
Very straightforward questions here on my side. First one, if you can break down the same-store sales in Mexico, perhaps by region and format curious presently to understand the performance of Supercito about your proximity format.
And the second one, very quickly, if you have any update regarding the discussions about Smart & Final in Mexico. I'm reminded that there are some bottlenecks there in the negotiations, right? So just curious if you can give us an update on that, that would be very helpful.
Thank you for your questions, Rodrigo. Well, let me share with you the same-store sales by region in the quarter. Basically, most of the growth is still coming from the South and Southeast. But we're seeing a positive trend in the metropolitan area of Mexico City that we didn't see in the past. So we were able to expand same-store sales, close to double digit as well in the metropolitan area that we have not seen in the past.
On the other hand, the Smart & Final potential in Mexico, we were -- we think there are possibilities. We hope that we can probably test that format, maybe 1 or 2. But still, we have not closed the negotiations with our business partners. So once we have that put in place, we would probably be able to test that format in other regions, but still open. That negotiations have not been closed yet.
Very helpful. Just on the same-store sales per format, maybe you can share on Supercito specifically how it was?
Yes. The Super Chedraui is the format that has been able to expand more than the rest of the formats with a reasonable difference. That means that we have been able to expand stronger on the food side than on the general merchandise site.
Our next questions come from the line of Fernando Herrera with Compass Group.
Can you hear me?
Yes, we hear you well, Fernando.
Perfect. Okay. So first of all congratulations. My first question is you can go a bit deeper on consumer dynamics in the U.S., where are you expecting for 2024?
And the second question is related to EBITDA margin potential expansion in Mexico. I mean, I have instinct that the Supercito format has proven to be more profitable. So we don't [indiscernible] you're focusing on that format. Do you think there is still some space to keep including that trend?
Fernando, I think your question -- sorry, Antonio.
No, no, no. Please, Carlos, please, please. I think it's the consumer dynamics in the U.S. That's what -- yes.
Perfect. Yes, I think, as I mentioned a little bit earlier, it's -- we see it as pretty straightforward in terms of the economic backdrop that we have and the consumer dynamics, right? So we've got slowing food inflation. As I mentioned, EBT dollars are at pre-pandemic levels.
So what does that mean? Well, you've got a cautious consumer. The consumer is looking for value. They are looking for less expensive options. And I think -- like I said, I think our 3 formats are really well positioned to address these consumer needs.
So certainly, the tailwinds that we've had are no longer with us. High inflation is a thing in the past. Stimulus, dollars are a thing in the past. So you're really in a market share gain. But like I said, I think we're well positioned to succeed.
And then about your question on the expansion side in Mexico. Well, this year, we plan to open 7 Tiendas Chedraui in Mexico. That's the big format. 3 out of those are Selecto. Then we plan to open 3 Super Chedrauis and 100 Supercitos. That's the organic expansion plan for this year in Mexico.
Okay. And my question back from was -- you have mentioned that the Supercito format has proven to be more profitable. So do you see some space to keep improving profitability in Mexico, given the focus you're giving to Supercito further?
Well, we -- the expansion plan, basically, is driven by market opportunities. That's the main focus. And we believe that Supercito has huge opportunities in certain metropolitan areas where we already operate. One is Mexico City, then Veracruz, then Xalapa, which is a city of Veracruz. And we also plan to expand this in Cuernavaca, and other cities close to the metropolitan area of Mexico City.
So the strategy is basically focused on market opportunities where we expand our formats, and we believe there are huge opportunities for Supercito.
Thank you. There are no further questions at this time. I would like to hand the call back over to management for any closing remarks.
I just want to thank everyone for joining, and I hope to be talking to all of you soon when the first quarter closes. We're looking forward to that. Thank you very much.
Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.