BBB Foods Inc. (TBBB) Earnings

Management highlights

- **Store and Distribution Network Expansion** • Opened 155 net new stores in Q2 2026, bringing total store count to 3,624 as of June 30, 2026; 593 net new stores opened over the last 12 months, representing 20% growth in the total store base • Opened 1 new distribution center in Q2, expanding the network to 21 regions; 2 additional distribution centers have opened since quarter-end, with a third planned for opening in October 2026 • 100% of all new stores are now opened under the company's upgraded larger format, which includes expanded refrigerated goods space, and the new format delivers better performance than older store models - **Sales Performance** • Same-store sales grew 20% year-over-year in Q2 2026, outperforming the industry benchmark Antad by more than 20 percentage points, while company internal inflation remained very low • Strong growth is driven by ongoing improvements to the company's value proposition, increasing brand awareness, and growing customer loyalty; Tiendas 3B remains among the fastest growing retailers globally • Approximately two-thirds of same-store sales growth comes from volume, one-third from price, with better product mix driving most of the price impact - **Operating Expense and Efficiency** • Sales expenses as a percentage of revenue decreased 56 basis points year-over-year to 10%, driven by operating leverage across most expense lines including labor • Admin expenses (excluding share-based compensation) increased 57 basis points year-over-year, primarily due to ongoing investments in talent, expansion support for new regions, and a one-time 37 million peso cash expense for the May 2026 equity follow-on offering • Gross margin improvements are driven by buying scale efficiencies, better logistics cost management, better input pricing, and incremental improvements across the entire SKU portfolio; the company prioritizes growing total dollar gross margin over steady percentage margin expansion - **Business Model Strength** • The high-growth business model demonstrates resilience across varying economic environments, delivers attractive unit economics, generates strong operating cash flow, and becomes more competitive as the company scales • The company operates with a structurally negative working capital model, and organic expansion is fully funded by internally generated operating cash flow

Guidance

- Management did not provide explicit full-year numerical guidance, but reaffirmed confidence in the significant long-term growth opportunity for Tiendas 3B in Mexico - Gross margin is expected to continue improving gradually as the company scales and improves operational efficiency; over time, percentage margin may stabilize as the company passes efficiency gains to customers via lower prices to drive higher sales volume, but total dollar gross margin will continue to grow healthily - G&A investment run rate in the second half of 2026 is expected to remain similar to the level seen in Q2 2026, as the company continues to add talent across high-impact critical business areas, which is expected to generate high returns - Temporary logistics expense pressure is expected in Q3 2026 due to the opening of three new distribution centers, though these new facilities will improve long-term operational efficiency

Segment performance

Tiendas 3B is a single-segment discount retailer, so separate product segment financial data is not provided in the call. Total company performance for Q2 2026: total revenue of 26 billion pesos, representing 39% year-over-year growth; reported EBITDA of 960 million pesos; adjusted EBITDA (excluding non-cash share-based compensation and one-time follow-on offering expenses) of 1.6 billion pesos, growing 44% year-over-year, with an adjusted EBITDA margin of 6.2% (up 21 basis points year-over-year). For H1 2026, operating cash flow reached 4.3 billion pesos, growing 119% year-over-year compared to H1 2025. As of June 30 2026, adjusted negative working capital reached 10.2 billion pesos, up from 7.1 billion pesos in 2025 (excluding IPO and follow-on offering proceeds).

Risks & headwinds

No material new risks or operational failures were discussed on the call. Management noted that the Mexican discount retail market is already highly competitive, but stated that the large size of the market leaves room for multiple players to thrive, and existing competitive intensity does not change the company's strategy. No other risks were highlighted.

Analyst Q&A

• Q: What are the drivers of recent gross margin improvement, and what is the outlook for gross margin going forward, including updates on distribution center expansion? /

  A: The main driver of gross margin gains is improved scale, which delivers greater efficiency in purchasing, manufacturing, and logistics. These improvements allow the company to optimize pricing to balance volume and total dollar margin, resulting in incremental improvements across the entire SKU portfolio. Management expects gross margin to continue improving as the company scales, with a focus on growing total dollar margin rather than just percentage margin. In addition to the DC opened in Q2, two more DCs have opened recently, with a third planned for October 2026, and improved pre-opening expense management for new DCs will be applied to future facilities.

• Q: What is the breakdown of same-store sales growth between traffic and ticket, what is the contribution of new SKUs to growth, and what is the progress and timeline for the company's ERP rewrite, including the impact of AI on development? /

  A: Two-thirds of same-store sales growth comes from volume, one-third from price, with most of the price impact driven by better product mix, and overall company inflation remains very low. All categories are growing, and the company is highly conservative about adding new SKUs, only adding high-rotation products and dropping low-performing SKUs to keep total SKU count low. The ERP rewrite is progressing well, with AI accelerating development and allowing the company to pull forward planned features that were originally scheduled for later phases. The new ERP supports a more capable point-of-sale that will enable new customer services and unlock additional logistics optimization opportunities.

• Q: What share of new stores uses the upgraded format, what sales uplift does it deliver, and how has new store ramp-up changed compared to older vintages? /

  A: 100% of all new stores now open under the upgraded larger format, which was selected specifically because it delivers better performance than older store models. Older stores still perform very well, and management reports strong satisfaction with the faster ramp-up of new upgraded format stores compared to previous store generations.

• Q: How is competitive intensity in the Mexican discount retail space evolving, particularly with new rollouts from competitors like FEMSA, and how should investors model future same-store sales momentum? /

  A: Management does not see any meaningful change in competitive intensity, noting that Tiendas 3B has always operated in a highly competitive market, and the large untapped market potential in Mexico leaves room for multiple players to thrive. Same-store sales growth is driven by incremental increases in the number of items purchased per customer, which is expected to continue naturally as the company's value proposition improves. Management advises to be conservatively modeled while remaining positive about ongoing growth potential.