TBBB
🇲🇽 Tiendas 3B (BBB Foods Inc.) is a rapidly expanding Mexican hard-discounter, similar to Aldi/Lidl, operating in a market ripe for this model due to favorable socioeconomics and limited direct competition.
📈 The company has significant runway for growth, aiming to expand from ~2,700 stores to potentially 15,000 stores, fueled by strong same-store sales growth and new openings.
⚙️ Its highly efficient business model features negative working capital, allowing store expansion to be financed internally without significant external capital needs, though valuation and potential stock dilution are risks to consider.
@adriarivero:
“This Mexican company, Tienda es bueno bonito y barato (Tiendas 3B or BBB Foods Inc.), is a hard discounter, similar to Aldi or Lidl. It entered Mexico almost 20 years ago but had its IPO in February 2024. What makes a hard discounter potentially successful? Key factors include lack of existing hard discounters, the profitability of existing supermarkets, the country’s socioeconomic level, and whether competitors are public companies (often focused on the short term). Mexico met these criteria. The CEO, Anthony, an American who previously worked at a private equity firm invested in BIM (a Turkish hard discounter), identified Mexico’s potential after studying many countries. He moved his family there without speaking Spanish and started the chain, later securing private equity funding. They’ve opened stores for 15 years and now have about 2,700. They estimate potential for up to 15,000 stores conservatively, representing a 5x growth potential. Hard discount penetration in Mexico is low. While there’s a competitor, it’s not growing significantly. The main competitor is Walmart de Mexico, but it doesn’t operate a true hard discount model. Conditions are ideal. Same-store sales have grown consistently over time, even in older stores, leading to overall 30% annual growth for 15 years. The return on investment for new stores is high, and they recover the initial investment quickly. Crucially, hard discounters turn inventory very fast. They sell goods (e.g., in 15 days) and receive cash immediately but pay suppliers later (e.g., 60 days). This negative working capital finances the expansion of new stores without needing upfront capital, an impressive model. Risks include a demanding valuation, uncertainty about terminal margins (hard discounters have low margins by design), and potential dilution from past stock options.”
Watch the exact part of the video where @adriarivero talks about BBB Foods Inc. here:
Watch the video on YouTube
Read more articles analyzing BBB Foods Inc. (TBBB) at the provided link. TBBB stock.
