BBB Foods Inc. (TBBB) Q2 2026 Earnings Report, Transcript and Summary

Good morning, everyone. My name is Daniela, and I will be your conference operator. Welcome to Tiendas 3B's second quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speaker's remarks, and instructions will be given at that time. Please ensure that your full name is displayed correctly on Zoom. If not, please take a moment to edit your display name. Also note that this call is for investors and analysts only. Questions from the media will not be taken, nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available to us. Today, we are joined by Tiendas 3B's Chairman and Chief Executive Officer, Anthony Hatoum, and Chief Financial Officer, Eduardo Pizzuto. I will now turn the call over to Anthony. Please go ahead.

Good morning, and thank you for joining us today. I will begin with a review of our operating results for the quarter, and will be followed by our CFO, Eduardo Pizzuto, who will provide an overview of our financial performance. We will conclude with our Q&A session. We delivered another strong quarter, sustaining and even building on the momentum we achieved in the first quarter. Here are the key highlights from our second quarter results. We opened 155 net new stores during the quarter, bringing our total store count to 3,624 as of June 30, 2026. Over the last 12 months, we have opened 593 net new stores. We also opened one new distribution center, expanding our network to 21 regions as of the end of June. Same-store sales grew 20% compared to the second quarter of 2025. Total revenue increased 39% year-over-year to MXN 26 billion. Reported EBITDA reached MXN 960 million. Excluding non-cash share-based compensation, EBITDA increased 44% to MXN 1.6 billion. For the first half of the year, cash flow generated from operating activities reached MXN 4.3 billion, representing 119% growth compared to the first half of 2025. Let's now turn to our operational performance. As I mentioned, we opened 155 net new stores during the second quarter. Over the last 12 months, we have opened 593 net new stores, representing 20% growth in our store base compared to June 2025. Our expansion strategy remains unchanged. We continue to balance densifying our presence in existing regions while selectively expanding our footprint in others. Our revenue growth remained exceptionally strong, and we believe 3B continues to be amongst the fastest-growing retailers globally. Total revenue reached MXN 26 billion in the second quarter, up 39% year-over-year. Same-store sales increased 20%, reflecting another quarter of outstanding performance. This strong growth continues to be driven by ongoing improvements to our value proposition, increasing brand awareness, and growing customer loyalty. Our same-store sales performance continued to significantly outperform the market. During the quarter, we maintained a gap of more than 20 percentage points versus ANTAD, while our internal inflation remained very low. I will now pass the microphone to Eduardo.

Thank you, Anthony. Good morning, everyone. Sales expenses as a percentage of revenue decreased by 56 basis points to 10% year-over-year in the second quarter of 2026. Most of the expense lines showed operating leverage, including labor. Admin expenses, excluding share-based payment, increased by 57 basis points year-over-year. As seen in previous quarters, admin expenses reflect our continuing investment in talent and expansion into new regions to support our accelerated growth. In the second quarter of 2026, admin expenses reflects a one-time cash expense of MXN 37 million related to the equity follow-on offering in May 2026. With respect to the share-based payment expense, these are non-cash and already reflected in our fully diluted share count. Additional details are available in the appendix of this earnings release, where we also provide projections for this non-cash expense. EBITDA for the second quarter of 2026, excluding non-cash share-based payment expense, increased 44% to MXN 1.6 billion, driven by strong sales growth, improved gross margin, and operational efficiencies. The adjusted EBITDA margin increased by 21 basis points year-over-year. EBITDA in the second quarter of 2026 includes a one-time cash expense of MXN 37 million related to the equity follow-on offering in May 2026. Excluding this impact, the adjusted EBITDA margin in the second quarter of 2026 was 6.2%. As you know, we don't drive to an EBITDA. It will naturally continue to increase over time, driven by our disciplined execution. Our business model generates strong operating cash flow through our structurally negative working capital model. As of June 2026, adjusted negative working capital reached MXN 10.2 billion compared to MXN 7.1 billion in 2025, excluding IPO and follow-on proceeds. This represents approximately 11.2% of total LTM revenue, also excluding IPO and follow-on proceeds. Our operating cash flow fully funds our organic expansion. I will now turn the call back over to Anthony for final remarks.

Thank you all for joining us today and for your continued interest in Tiendas 3B. We delivered a strong first half of 2026 with consistent and solid execution across our key operating and financial metrics. Our high-growth business model has continued to demonstrate its resilience across different economic environments. It delivers attractive unit economics, generates strong cash flow, and becomes even more competitive as we scale. We remain confident in the significant long-term growth opportunity for Tiendas 3B. Thank you, and we will now open the call for your questions.

Thank you. We will now conduct a Q&A session with Anthony Hatoum and Eduardo Pizzuto. If you would like to ask a question, please press the Raise Your Hand button that is located at the bottom of the screen. We remind you that all lines have been placed on mute. So when it is your turn to ask a question, you will be given permission to speak, and you will then be able to unmute yourself and ask your question. Our first question comes from Andrew Ruben at Morgan Stanley.

Hi. Thanks very much for the question. I am interested to understand a bit more about the gross margin performance. Just thinking about some of the drivers, you mentioned stronger commercial margins, so trying to understand what might have changed, if anything, quarter-on-quarter there. Then second, the lower transportation costs. I think this is the first time you have mentioned that in a while, despite the DC build-out. So trying to understand these drivers, how much they contributed, and how that pertains to any forward outlook on gross margin would be very helpful. Thank you.

I will take the gross margin question, Andrew. As you know, it is a dynamic process in a sense that this is a sum, what you are seeing here is a sum of the gross margins of all the SKUs we currently carry. In large part, let us say the main driver is we scale, we are much more efficient in terms of buying or in terms of manufacturing a good. We get better input conditions. We improve the logistics of moving that good over, and that fundamentally basically gives you a bigger pie that if it is a private label product you have divided in a very equitable way with your producer. Then you turn around and you say, "Okay, now I have a bigger pie. Let us decide at what price do we put it?" It is mostly a very ongoing adjustment of prices where we try to optimize volumes and dollar margin. And then we sum it all up and you see that, yes, it's improved, but it's the result of all these little improvements that we see across the whole portfolio. Will the trend continue? Very likely, you'd see this improving as we scale and as we are just getting better at what we do. There comes a point where in terms of percent margin, you're basically passing more into price than necessarily retaining it. But end result, the most important thing is to look at is the MXN dollar margin generated, and as long as this continues to grow healthily as we see it here, we're all very happy.

I'll take the second portion, Andrew. Good morning. In terms of transportation expenses, I guess overall, there's no doubt that as we continue to grow and gain scale, we become more efficient in all our operating line items. Specifically on logistics for Q2, two things played in our favor. One is we have ongoing efforts to optimize our transportation costs, not only for new regions, but all of our regions. The second one is specifically for the distribution center that we opened in Q2, we did a better job in managing the pre-operating expenses of this region. Of course, that is something that we will apply in future regions. I'll take advantage of your question just to give you an update on distribution centers. We have, in addition to the one we opened in Q2, in the past few weeks, we opened an additional two distribution centers, and we expect to open a third one within Q3. So for a total of three DCs in Q3. The reason I mention this, it's because we might see some pressure probably in logistics expense just because we're adding three additional new distribution centers.

Right. That's very helpful color. Thank you both, and congrats on the quarter.

Thank you.

Thanks.

Thank you. Our next question comes from Bob Ford at Bank of America.

Hey, thank you very much. Good morning, Anthony, Eduardo, Joaquin, and again, congratulations as well. With respect to same-store sales, how much of the growth is ticket versus traffic? How should we think about the year-on-year improvements that you are seeing in terms of item counts per transaction? I was also curious, you have some phenomenal innovation. How much of that growth is coming from new SKUs? Additionally, could you give us a little update on the progress with the ERP rewrite? There has been a revolution in programming over the last 12 months. How is that speeding up development or maybe allowing you to run a little leaner than you expected? How should we think about deployment? Both in terms of functionality in the system, as well as any complementary changes you may need in logistics or the point of sale.

Yeah. Hi, Bob. Good to hear from you and many questions. Let me start with the first one regarding where is same-store sales growth coming from. We have about two-thirds of the growth is explained by volume. One-third is explained by price, and within price, the large impact is coming from better mix. We remain with a very low amount of inflation in our price number. There was a second part to your question that was talking about categories and category growth. When we look at all our current categories, they are all growing at various rates, but they are all growing. When we look at maybe one or two commodity categories where we are relatively well penetrated, they are still growing, but possibly at a slightly slower pace than, let us say, in newer categories that just entered, which you very rightly saw. We have a couple of new categories which, starting from a low base, are growing quite rapidly and successfully. We have been extremely careful about introduction of new products or categories. As you know, we like to keep our SKU count on the low side. It brings a lot of benefits to us. So every time we put in an SKU, we have to make sure that it does rotate, that it is highly accepted and many times we just drop an SKU that is less attractive. This will continue. I do not see a stop to that. As you know, our stores can handle a significantly higher number of SKUs, but we are extremely conservative in introducing new ones. One last part to your question is, 3B is a platform, and we have said that many times. We touch a client very frequently. This client not only needs groceries. You can basically say that whatever this client needs is something that you can potentially offer as long as you do not violate your core principles. On the second part of your question, which had to do with our ERP, I am very pleased with the progress on our new ERP system. We are testing phase 1, and I think it is going quite well. AI tools have definitely accelerated our ability to program. What I have noticed, though, is that we have just brought forward a lot of stuff that we had planned to do a little bit later, and we have even added more features that we thought we would put in a bit later. So net-net, we are on track, and it is going quite well. There was a last part to your question, but maybe I missed it.

It was actually kind of plugging into, maybe you are signaling this when you talk about the broader platform opportunity. But I was asking you a little bit, too, about how you are thinking about complementary changes to the supply chain or the point-of-sale systems and just trying to get a better sense for the calendar of deployment and maybe the functionality that we will expect over time.

Yeah. There's no doubt that in this new generation of ERP that you're seeing, our point of sale is a much more potent point of sale that has the ability to deliver more than just ringing up a product. That's the whole idea of giving us optionality to offer more services to the client down the road. In terms of logistics, again, as you get bigger, suddenly you have many more doors opening for optimizing your logistics. As you know very well, we don't do much on the backside of logistics, and that's quite an interesting opportunity for us to explore.

Very helpful. Thank you. Again, congratulations.

Thanks, Bob. Thanks, Bob.

Thank you. Our next question comes from Joseph Giordano at J.P. Morgan.

Hi, good morning, everyone. Good morning, Anthony. Thanks for taking my question. I want to explore a little bit, and Eduardo, sorry, to explore a little bit the upgraded store format you guys have been talking about. It's a little bit larger, more doors for refrigerated goods. I'd like to understand, what's the percentage of new stores that are coming under the new format? If it's 100%. And second, what's the typical sales uplift we are seeing from those locations? And last, if I may, how should we think about the ramp-up? Looks like the ramp-up of the new stores are much faster than in previous vintages. Thank you very much.

Hi, Joe. Good to hear from you. Yeah, 100% of our new stores open under the new format. We'd like to try and keep as much format discipline as we can going forward. There's no doubt that we chose this upgraded format because it has much better performance than our older stores. Having said that, our older stores are still performing extremely well. Eduardo, do you want to touch on the others?

Yeah. I would just add, you ask also on the ramp-ups, Joe, and what I can say is that we're very happy to see how these stores are performing. If you remember, we updated our unit economics analysis in Q4, so it's pretty much trending against what we had projected. The same thing with pretty much all our stores are tracking in the direction that we had expected. There's no news there other than the ramp-ups continue to be very consistent and we're very happy with the evolution of our 2026 vintage.

Thank you.

All right. Our next question comes from Ulises Argote at Santander.

Hi, Anthony, Eduardo. Thanks for the space for questions. I had a follow-up to a point you made earlier, Eduardo. You guys opened close to 280 stores in the first 6 months of the year, and this came with only one additional distribution center. I just wanted to get some color if this is more related to some temporality effects there on the opening of distribution centers. You already said, Eduardo, there will be 3 new ones on the quarter, but I wanted to get a sense there if you're finding any efficiencies, being able to serve a broader store base from each distribution center, given what we saw in the first half of the year. I appreciate any thoughts there. Thank you.

Hi, Ulises. Thank you. We are on track in terms of our openings as what we had planned in the beginning of the year. As we've discussed in previous calls, every time we open a new distribution center, we, of course, benefit from two things. One is we continue to increase our footprint in the country, and the second one is we do become more efficient because our transportation expenses get benefited from that. We've seen that in pretty much all our DCs that we have opened. For the back half of the year, yes, we're opening 3 additional ones in Q3. If we see opportunities to open more in the back half of the year, we might do so. Again, it's because, at the end, we become more efficient. There was a second portion of your question.

No, I think it was just to understand if there was any temporality into what we saw in the expansion on the first half, with just one DC being added now.

Well, as I mentioned earlier, we were benefited this quarter by those two factors that I mentioned, and transportation expense and the fact that we were, I guess, smarter in the pre-opening expenses for the region that will be applied for the next regions that we open. But just a heads-up, as I said, might be some pressure on logistics expense in Q3 just because we're opening three additional DCs. But, in the longer run, eventually these will become even more efficient, so nothing very different from what you've seen in the past.

No, that's very clear. Thanks a lot. Gracias.

Gracias. Thank you, Ulises.

Thank you. Our next question comes from Héctor Maya at Scotiabank. Héctor Maya: Hi, Anthony, Eduardo. Congrats on the strong results. Just wondering if you saw any tailwind from the World Cup, and if so, how much do you think it contributed to same store sales? Also, wanted to know how you are thinking about the increase in the pace of G&A investments in the second half, or if the level we saw in Q2 could be a good run rate. Thank you very much.

Hi. No, World Cup did not have a relevant impact on our sales. It was even hard to tease out anything, if at all. In terms of G&A expenses, Eduardo, you have a better handle on that.

Sure. Hector, as you know, we don't guide on these metrics, but I think it's fair to assume that we will continue to invest in talent just because we are convinced that it drives value, strong value, actually. So we will continue to do so for the back half of the year. So I think it's fair to assume and expect something very similar to what happened in Q2. So let's say 3%ish of revenue. I think in the short term, that would be a fair assumption. Héctor Maya: Perfect. Very clear. Thank you. Thank you very much.

Our next question comes from Irma Sgarz at Goldman Sachs.

Yeah. Thank you for the opportunity to ask my question. Just picking up on that G&A point, as you've made clear on your previous answer, you're looking to continue to invest into talent. Can you just be a little bit more explicit in terms of which areas of the organization you're looking to add talent? Obviously, you've brought some important people onto the team that are sort of market facing over the last 12 months. But, I'd be curious to just hear a little bit more on the back end, the part that we don't maybe directly see, which areas of the organization you're looking to add. Or is this more sort of retention of talent and sort of incentives, and employee value proposition that you're investing in there on the G&A side? Just curious, I know it's a bit in the nitty-gritty, but I know you're testing in some stores to sort of go cardless and I know you have a lot of cash expenses actually, or cash transactions in your stores, but just curious if you could tease out for us what you've learned there, and if there's any meaningful margin gain from that, or even incremental margin gain that you envision. Thank you.

Let me start with the last question. What you're referring to as the cardless exercise is a test where we've basically taken out credit cards and debit cards to see what happens, and I can just give you a very high-level answer.

Yeah

Saying that non-material impact. It's a test, and it doesn't mean we're going to expand it. At BBB Foods, at any point in time, you're going to find several tests running on different topics. They all have the same kind of objective with either trying to generate more revenue or reduce costs or reduce risk, and it's always something where we're trying to create more value for the customer. That's on that. On the matter of G&A investment, it has much, much less to do with improving salaries and benefits to employees and much, much more to do, and that's where the core value is, in adding talent and densifying talent in across the board critical areas. You'll see it in purchasing, you'll see it in logistics, you'll see it in systems, you'll see it in specialty areas where one person can have a dramatic impact on creating value for the company. We're very aware that adds to the G&A number, but we're also much more than convinced that it's a very valuable investment with very high return.

And perhaps as we think about 2027, should we think of that as an ongoing process?

You said fresh, right?

No, in terms of talent.

Oh, yeah. Talent is an ongoing process, and it-

Yeah

at this point in time, there is no limit to adding talent. But again, for us, if we do add, for example, one new person, whatever they cost, what are they going to contribute? And the answer always has to be significantly more than what they're going to cost us, and it's been the case so far.

So the dilution that we should think about or the operating leverage should come more still through the selling expense line?

Exactly. Mm-hmm.

Thank you. Our next question comes from Jorge Izquierdo at BTG Pactual.

Hi, good morning, Anthony, Eduardo. Thanks for the space for questions, and congrats on the results. I have a quick one regarding store size going forward. As basket size increases, how are you thinking about store sizes and the need to have parking availability in the future?

Interesting question. I think at this stage, we're extremely comfortable with the current store size that you're seeing in the new generation of stores. The addition of parking or not boils down very simply to how suburban or urban are you. In urban areas, very difficult to have parking, so that sort of limits your ability to do so. But as soon as there is a need for parking and you've opened a store where there is parking, then absolutely, we're putting parking.

Okay. Thank you very much, Anthony.

Thank you. Our next question comes from Antonio Hernandez at Actinver. Antonio Hernández: Hi. Good morning. Congrats on your results. Just a quick one regarding working capital. As new categories are being introduced or even piloted, how should we see working capital going forward? There's of course, an improvement, but how much should we weigh in these new categories? Thanks.

Hi, Antonio. Thanks for your question. Let me take a step back and our overall philosophy, as you know, is we only carry items that have very high rotation. So by definition, what we look for in a new item, new category, whatever that is that it complies with that principle, not only high rotation but an amazing value. If we consider that into your question, then there should be no impact on working capital because we always look for items with very fast rotation. There should be no material impact on working capital. In fact, if you look at our trends over the past, let's say a few years, you'll see that we've been slightly improving our inventory days. So it's below 20 days. That's what we should expect going forward. So no changes really on that front. Antonio Hernández: Okay, perfect. Thanks a lot.

Thank you. Our next question comes from Joel Thomas at HSBC.

Good morning, Anthony and Eduardo. Thanks for the space, and congratulations on the strong results. Couple of things, please. Firstly, same-store sales. As you pointed out, it was +20% on a comp of +17% from last year. If you look at this on a two-year basis, there is a real meaningful acceleration. Given that the improvement sounds like it is coming from volume more than anything else, is that sort of two-year momentum the best way to think about how to model this out into the future and the sort of performance that can be maintained? Secondly, I had a question on competition because we are hearing a lot of noise in the market including from FEMSA about their rollouts. I just wondered what you are seeing in terms of the competitive intensity in the hard discounting space, and what it is that you are doing to stay ahead of that competition specifically.

Let me take that last one. Regarding FEMSA, we do not see anything more than what we have already seen. It is good to keep in mind that we already operate in a very competitive market, and that has been the case now for many years. I continue to believe that the market potential in Mexico is significant, and that there is room for several players to thrive in the sector that we call discount. From our side, nothing new, nothing that will change what we are doing at all. We continue to do what we are doing, and I think that is going to continue to work extremely well. With regards to same store sales growth, if you go back to some of the discussions we have had with the market earlier, it does not take much in our case to see an increase in same store sales. All we need to do is sell one more item per customer, and you can see that number significantly increasing. We see that increase in number of products we sell to a given existing customer as something that will happen naturally over time because our products are just getting better, and the value that we are offering to the client is continuing to improve. The day that stops is probably the day you do not see any more expansion in same store sales. I would be conservative, but I would still remain positive that that is going to happen.

Thanks.

Thank you.

Thank you. Our next question comes from Isabel Alamas at UBS.

Hi, Anthony, Eduardo. Thank you for the opportunity for taking questions here. I have two questions. First one, I would like to tap also on your growth, but specifically on how could you think in terms of how much growth has been coming from new customers compared to the increased share of wallet from your existing ones? Also, if you could elaborate on the main initiatives that you have in place to expand this number of items per transaction that you have just mentioned. Also, if you see the company gaining increasing relevance within customer share of wallet, is this a trend that we should continue seeing from now on? My second one is regarding your expansion, specifically on the real estate front. If you continue to see solid availability for real estate for your pipeline, if you see better negotiation conditions with landlords or any change in that. And also, given that you have a very solid performance, cash generation remains healthy. If you could be considering accelerating the expansion pace.

Okay. Let me start with the real estate question, and it's a fairly straightforward answer. There is no constraints on real estate. The runway's tremendous in Mexico for us, so we haven't seen any constraints on that front. On the matter of where's the growth going to come from, more penetration of wallet or more customers, it's always been a balance. Historically, if we look back and we look at our numbers, we see that it's been a mix of both. It also depends on how old the store is. So you can imagine that older vintages will capture new clients at a slower rate, whereas, of course, our newer vintages are just capturing clients much more rapidly. I think Eduardo Pizzuto mentioned earlier on, it's also that we're seeing a faster ramp-up. So it's like we get new customers, not only more customers, but we get them faster at the initial part of a store opening, and that has a very beneficial impact. But across the board, what you will see is an increase in penetration of wallet. An increase of penetration of wallet comes from two things. One, you can add new SKUs and automatically you'll get something more there. But even without adding any new SKUs, as I mentioned, we're super conservative on adding new SKUs, the existing portfolio is still not by any metric, fully penetrated. There's still tremendous potential for existing customers with the existing portfolio to still see an increase in same store sales. That we have pretty good data on, and we continuously monitor that. So we're pretty confident that there is a lot more to do with what we have right now without adding anything new.

That is clear. Thank you.

Thank you. Our next question comes from Froylan Mendez at J.P. Morgan.

Hola, Eduardo, Anthony. Thank you very much for taking my question. I just wanted to dig a little bit more on the gross margin. In the past, you have said not to really extrapolate a single quarter margin into the full year or the next quarters. It sounds like the extra openings in the third quarter could lead to a giveback on the gross margin that we saw this quarter. Is there anything also seasonal on the gross margin during this quarter, maybe more, I do not know, World Cup campaigns or more people using your DC versus the past? Some more granularity on the gross margin into this quarter and what to expect into the next would be appreciated. Secondly, on the stock option plan, we know that the employee stock option plan had this restriction period during the earning season. I understand that it is liberated tomorrow after 48 hours of the earnings release. Any comments on any mechanism that avoids any disorderly sale from management that wants to obviously gain liquidity after many years of having received stock options? That would be highly appreciated. Thank you.

Yeah. Thank you. Let me answer the question of options. You would think that people will rush to the doors to sell their options, and I don't have a feeling that that's going to be the case. In any event, we do already have in place mechanisms to ensure that when naturally people want to sell some of their options, it's done in a very orderly and timely way. That's already in place. Your first question was around

Gross margins, Anthony, if there was something one-off.

Yeah, no, again, we don't see seasonality in our gross margins, really. We do see volatility quarter to quarter in the gross margins for the fundamental mechanism in which gross margins change SKU per SKU. As I've always said that, if you look at it longer term, the trend is always positive. Now, I did answer Andrew's question on that, saying that there is a natural moment in time where you basically say the percent gross margin maybe stabilizes, but your MXN gross margin basically continues to increase dramatically. It's all due to the fact that how much of this are you passing on to the customer in terms of price. That then detonates more sales, that then generates more MXN margin versus how much you're keeping and showing a better percentage gross margin. At the end of the day, what's most important is your MXN gross margin increasing healthily over time, which is a reflection of all the good things you're doing.

Thank you. Appreciate it.

Thank you. That is all the time we have for questions today, so that concludes our Q&A session. I would like to hand the call back over to Anthony Hatoum for his closing remarks.

As always, we appreciate very much, and thank you very much for your interest and participation in our company. Thank you to the analysts covering us, and thank you to all the shareholders who are participating here today. And of course, thank you to all the 3B employees and, again, our customers who make all of this possible. Till next time, thank you very much.

Thank you, all. You may now disconnect.