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BBB Foods Surges 12%, Plans 420 New Stores After Strong Report

BBB Foods' stock soars 12% post-IPO, driven by record 396 store openings and a strong private label strategy, aiming for 420 new stores next year.

By Bill Bullington

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4/26, 16:50 EDT
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Key Takeaway

  • BBB Foods Inc. stock surged 12% to $23.11 after reporting a nearly 15% growth in same-store sales and opening a record 396 stores in 2023.
  • The company plans to open up to 420 new stores next year, aiming for a long-term goal of 12,000 stores, leveraging its private-label strategy.
  • Since its IPO in February, BBB Foods' shares have risen over 32%, highlighting strong investor confidence and market potential.

Record Store Openings Drive Growth

BBB Foods Inc., a Mexican discount retailer known for its Tiendas 3B stores, has seen a significant uptick in its stock value, marking the most substantial increase since its initial public offering (IPO) in February. The company's shares surged by 12% to $23.11 following the announcement of its fourth-quarter results, which showcased a nearly 15% growth in same-store sales. Since its market debut, the stock has risen over 32%. In a strategic expansion effort, BBB Foods opened a record 396 stores throughout 2023, with nearly 40% of these openings occurring in the fourth quarter alone. This expansion brings the company's total to nearly 2,300 locations. CEO and founder Anthony Hatoum shared plans to continue this growth trajectory with the opening of up to 420 new stores in the coming year, aiming to reach a milestone of 12,000 stores eventually.

Private Label Strategy Enhances Value

During a call with analysts, Hatoum emphasized the company's focus on enhancing its private-label goods offerings, which he believes offers customers better quality and more value for their money. This strategy has been pivotal in driving the projected mid-teens growth in same-store sales for the upcoming year. BBB Foods' approach mirrors that of the successful German discount chain Aldi, by stocking a limited variety of competitively priced products ranging from snacks to cleaning supplies. This model has not only streamlined operations but has also allowed BBB Foods to carve out a niche in the competitive retail market by offering unique value propositions through its private labels.

IPO Success and Market Potential

BBB Foods' successful IPO, which raised $677 million, marked the first consumer-oriented Mexican company to go public since tequila maker Becle in 2016. This milestone has provided investors with a fresh avenue to engage with Mexico's domestic market, which has been experiencing stronger-than-expected growth. Analyst Hector Maya from Scotiabank highlighted the company's promising outlook, noting its "high growth profile and margin expansion potential." Maya's buy rating on the company underscores the optimism surrounding BBB Foods' financial health and its strategic positioning within the retail sector.

Street Views

  • Hector Maya, Scotiabank (Bullish on BBB Foods):

    "The stock looks inexpensive considering its high growth profile and margin expansion potential."

Management Quotes

  • Anthony Hatoum, CEO of BBB Foods:

    "We have more private labels, we have better quality private labels, and we’re giving our customers more value for money." "We are planning to open as many as 420 more stores this year while same-store sales are projected to grow in the mid-teens as word spreads about its growing private-label goods offerings." "I expect the company to expand to 12,000 stores."