What: Real estate and store-card credit are now more profitable than merchandise sales at El Palacio de Hierro, with real estate margins seven times higher than the commercial segment's in 2025.

Why it is important: It confirms a pattern already visible across El Palacio de Hierro's recent results and echoed by Liverpool, where real estate and financial services are becoming structural profit centres rather than side businesses.

El Palacio de Hierro, the Baillères family's Mexican department store group, generated 60,748 million pesos in revenue during 2025, an 8.3% annual increase. While its commercial division — department stores, restaurants, travel and boutiques — remains the dominant revenue source at 98.7% of the total, the company's real estate arm, which leases retail space in malls including Santa Fe, Angelópolis in Puebla and Paseo San Pedro in Monterrey, delivered by far the highest returns.

Real estate and other services generated 780.2 million pesos in 2025, up from 712.4 million the year before, and posted an operating margin of 58.4%, compared with just 8.4% for the commercial segment despite contributing only 1.3% of total revenue.

The company's Credit Division is also gaining weight: sales paid via its store card accounted for more than 47.5% of commercial-segment revenue in 2025, the active customer portfolio grew 23.8%, and net interest income on credit sales reached 2,638.2 million pesos, up from 2,200.3 million pesos in 2024.

IADS Notes: El Palacio de Hierro's real estate and credit divisions have consistently outpaced its core commercial business over the past year, a pattern already visible in its 2025 full-year results, where revenue reached 60,748 million pesos on 8% annual growth (Modaes, March 2026), and confirmed at the half-year mark, when sales rose 4.65% but net income fell 9.46%, with the credit division up 12.7% and real estate income up 5.9%, both growing faster than the commercial segment (Modaes, August 2026). The same diversification logic is playing out across the Mexican market: Liverpool, El Palacio de Hierro's principal domestic competitor, is expanding financial products, real estate and in-store services to offset softer consumer spending, with financial services now accounting for roughly 10% of its revenue (Fashion Network, September 2026). Regionally, this resilience-building has coincided with a strong 2025 for Latin America's top five department store groups, whose combined profits rose nearly 48%, though El Palacio de Hierro posted more modest gains than Chilean peers Falabella and Ripley (Modaes, March 2026).

El Palacio de Hierro increases its real estate activities' profitability