By Alan Hatfield
Betterware de Mexico, S.A.B. de C.V.’s (BWMX) first quarter results signaled a return to profitability following a historically difficult previous quarter beset by global supply chain disruptions, inflationary input costs and underwhelming economic environment for Mexican consumers.
EBITDA margin came in at 29.3% in Q1 2022, representing a 2.52% YoY increase from Q1 2021, but a 10% increase from Q4 2021 as the extraordinary expenses made by the company in Q4 2021 to adapt to global economic conditions accomplished their stabilizing intent.
Betterware, an e-commerce vendor focusing primarily on home goods, depends on its network of distributors and associates to sell to consumers absent any substantial brick-and-mortar presence. Shoppers were impacted by the highest annualized consumer inflation rate since 2001 at 7.45%, and against the backdrop of the company’s stated goal to achieve 40% penetration among Mexican households by 2025.
“The strength and resiliency of our asset-light business model combined with the successful execution and agility with which we operate our strategy served us well in the first quarter, driving significant recovery in gross profit margin and EBITDA margin compared to the fourth quarter of 2021,” Luis G. Campos, Executive Chairman of the Board, said in the statement. “Furthermore, we were able to navigate the environment well, offsetting cost pressure, commodity price inflation and supply chain disruptions while implementing and developing innovative product, pricing, and growth initiatives.”
The YoY downturn in activity was partially offset by an average 12% growth in product prices, pushing gross margin to 63.6% in Q1 2022, an increase of 6.1% over Q1 2021. However, EBITDA saw a 41% YoY decrease to Ps. 547.8M, although the prior year’s EBITDA represented a 287% increase on Q1 of 2020 and was the highest the company had ever registered.
Net revenue decreased 36% in the quarter to Ps. 1,869.1M YoY, albeit with Q1 2021 figures representing a record 205% net revenue growth relative to Q1 of 2020.