Chedraui USA, the U.S. arm of Mexican grocer Grupo Comercial Chedraui, lost shopper traffic at its Hispanic-focused stores in the third quarter of 2026. Stricter immigration policy, cuts to the Supplemental Nutrition Assistance Program (SNAP) and pricier gasoline kept customers away from El Super and Fiesta Mart.
As a result, the division’s same-store sales fell 2.0% in dollar terms, according to the earnings report the company released Oct. 27. Total sales slipped 1.8% in dollars. Still, Chedraui USA lifted its EBITDA margin by 18 basis points to 7.5%, thanks to distribution savings.
That slowdown weighed on the group as a whole. Consolidated sales dropped 2.0% to 70.36 billion pesos, and net income declined 1.2% to 1.63 billion pesos. Meanwhile, a 6.2% appreciation of the peso against the dollar shrank the value of U.S. revenue once converted into Mexican currency.
Three Forces Squeeze Chedraui USA’s Hispanic Banners
El Super, with 72 stores, and Fiesta, with 61, serve mainly Hispanic shoppers, largely Mexican American. Those two banners accounted for the drop in transactions.
“In Chedraui USA, same-store sales continue to show weakness,” CEO Antonio Chedraui said in the report. He tied the decline to immigration policy, smaller SNAP disbursements and fuel-driven pressure on consumer spending.
Carlos Smith, CEO of Chedraui USA, was just as blunt on the Oct. 28 call with analysts. “The US macro environment remains challenging,” he said. Immigration enforcement now draws “less media noise,” Smith added, “but they’re very active in the communities that we serve,” especially in Texas.
Nevertheless, Smith pointed to modest improvement. Traffic at El Super and Fiesta remained negative but beat the first and second quarters. Northern California also outperformed Southern California.
Public data back up that assessment. SNAP enrollment stood at just over 37 million people in April, down more than 5.3 million from a year earlier.
In addition, market research firm Circana estimates SNAP benefit transfers will fall by about $10 billion in 2026. At the same time, regular gasoline averaged $4.36 a gallon in September, up 37.6% from a year earlier, according to the Bureau of Transportation Statistics.
By contrast, Smart & Final held up better. Its 253 stores posted same-store sales growth of 0.1% in dollars: Customer count fell 0.5%, while the average ticket rose 0.7%. According to Smith, business customers delivered bigger baskets and more visits.
Distribution Gains Prop Up Profitability
The margin gain is driven by the Rancho Cucamonga Distribution Center (RCDC) in California. The company is shifting supply for five of its eight U.S. distribution centers to that facility.
Smith said the savings come from two sources. First, the company consolidated warehouses and optimized transportation routes. Second, El Super now self-distributes several categories it used to buy from a wholesaler. Smart & Final, meanwhile, benefits from the scale of consolidated purchasing.
How much more can the company squeeze out? Smith declined to put a number on it. “The environment is very uncertain right now,” he said.
Competition is also heating up. Smith acknowledged more promotional activity and more aggressive pricing across the market. Even so, all three banners grew gross profit in the quarter, he said.
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Thanks to those savings, the division’s EBITDA in dollars dipped only marginally. In pesos, however, it fell 5.7% to 2.59 billion, reflecting the currency effect.
Yet the U.S. business tells two different stories. EBITDA at El Super and Fiesta Mart dropped 12.2% to 1.26 billion pesos, and their margin slid from 8.1% to 7.9% as lower sales eroded operating leverage. Smart & Final, meanwhile, grew EBITDA 1.4% to 1.33 billion pesos, with a 7.1% margin, up 55 basis points.
Across the group, gross margin widened 53 basis points to 25.1%. The RCDC and better supplier terms offset higher fuel-related logistics costs.
Moreover, the U.S. unit cut its bank debt 26.3% to $356.7 million through early repayments of long-term loans.
Mexico Overtakes Chedraui USA In Group Sales
While U.S. operations shrank in peso terms, the Mexican business grew. Chedraui Mexico posted sales of 35.73 billion pesos, up 4.6%, driven by a 4.7% increase in selling space.
As a result, Mexico generated 50.8% of quarterly revenue, compared with 47.6% a year earlier. Chedraui USA contributed 49.2%.
Still, the home market showed signs of fatigue. Same-store sales in Mexico fell 0.7%, in line with the national retail association ANTAD. The Southeast, the group’s most important region, suffered from weaker public and private investment and fewer tourists.
On the call, Antonio Chedraui said the Southeast generates about 42% of group sales. There, ANTAD members’ same-store sales fell a little more than 4%, while Chedraui’s dropped about 2%. Relief is not yet in sight: He said October showed no change in consumer spending.
Cost controls limited the damage, though. Mexican EBITDA rose 4.1% to 3.52 billion pesos, with a 9.8% margin. Consequently, consolidated EBITDA slipped just 0.3% to 6.11 billion pesos, while its margin improved 14 basis points to 8.7%.
The balance sheet, for its part, remains strong. The group ended September with net cash of 3.2 billion pesos. Capital spending reached 7.29 billion pesos in the first nine months, up 24.3% from 2025.
Chedraui USA Falls Short of Its 2026 Targets
The quarter’s numbers contrast with the goals the company set for the year, which appear in its quarterly filing with the Mexican Stock Exchange. For Chedraui USA, the company projected same-store sales growth of 1% to 2% in dollars and a margin gain of 30 to 60 basis points.
The company also expected immigration pressure to weigh on at least the first half, with more stability in the second. Through September, that stability had not reached its Hispanic banners.
During the call, no executive mentioned any change to those targets. Smith, however, said he remains confident that profitability will improve “in the medium and long term” as RCDC operations mature.
Even so, the group is sticking to its investment plans in both countries. It opened an El Super in Las Vegas and a Fiesta in Houston during the quarter, and its 2026 plan calls for five U.S. openings. E-commerce, meanwhile, now accounts for 3.7% of the unit’s sales, up from 3.2% a year earlier.
Smith also left the door open to acquisitions. “In these types of environments, there are winners, and there are losers,” he said, adding that the company is “always looking for opportunities.” He also said he is “super bullish on the Hispanic consumer,” citing 70 million Hispanics in the U.S.
For retailers serving Hispanic consumers in the U.S., Chedraui’s quarter sends a clear signal: Store traffic now hinges on forces outside the store. That makes distribution efficiency and a broader customer mix, such as Smart & Final’s small-business sales, increasingly valuable cushions.