OFFERING CIRCULAR

Grupo Comercial Chedraui, S.A.B. de C.V. 133,793,545 Shares

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Offering Price: Ps. 34.00 per Share

We are offering 119,385,898 shares of our Series B, Class I shares of common stock (the “Shares”) and the selling shareholder is offering 14,407,647 of our Shares in a combined offering consisting of (a) an initial public offering of 60,207,095 Shares in Mexico to the general public and (b) an international offering of 73,586,450 Shares in the United States to qualified institutional buyers as defined under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) in transactions exempt from registration thereunder and in other countries outside of Mexico to certain non-U.S. persons in reliance on Regulation S under the Securities Act. Shares being offered in the combined offering may be reallocated among the Mexican offering and the international offering. See “Plan of Distribution.”

The initial purchasers and the Mexican underwriters have options, exercisable for 30 days from the date of this offering circular, to purchase, up to 20,069,032 Shares from us to cover over-allotments, if any. See “Plan of Distribution.”

No public market currently exists for the Shares. We have applied to register the Shares in Mexico with the Registro Nacional de Valores (the “RNV”) maintained by the Comisión Nacional Bancaria y de Valores (the “CNBV”) and to list the Shares for trading on the Bolsa Mexicana de Valores, S.A.B de C.V. (the “BMV”) under the symbol “CHDRAUI”. The registration of the Shares in the RNV is expected to be obtained on or before the closing of the Global Offering as required under the Ley del Mercado de Valores (the “Mexican Securities Market Law”). Registration of the Shares in the RNV does not imply any certification as to the investment quality of the Shares, our solvency or the accuracy or completeness of the information contained in this offering circular and such registration does not ratify or validate acts or omissions, if any, undertaken in contravention of applicable law.

Investing in the Shares involves risks. See “Risk Factors” beginning on page 16.

The Shares have not been and will not be registered under the Securities Act. The Shares may not be offered and sold within the United States or to U.S. persons, except to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. You are hereby notified that sellers of the Shares may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See “Transfer Restrictions” for a description of the restrictions regarding the purchase and transfer of the Shares.

Delivery of the Shares in book-entry form will be made on or about May 5, 2010, through the book-entry system of S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V. (“Indeval”) in Mexico City, Mexico.

Sole Global Coordinator

Citi

Joint Bookrunners

Citi Credit Suisse

The date of this offering circular is April 29, 2010.

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TABLE OF CONTENTS NOTICE TO INVESTORS................................... ii SELECTED CONSOLIDATED FINANCIAL NOTICE TO NEW HAMPSHIRE RESIDENTS ....... iii INFORMATION........................................... 39 SERVICE OF PROCESS AND ENFORCEMENT OF MANAGEMENT’S DISCUSSION AND CIVIL LIABILITIES ....................................... iv ANALYSIS OF FINANCIAL CONDITION AND AVAILABLE INFORMATION............................. iv RESULTS OF OPERATIONS ......................... 42 FORWARD-LOOKING STATEMENTS ................ v BUSINESS .................................................... 62 PRESENTATION OF CERTAIN FINANCIAL MANAGEMENT ............................................ 94 INFORMATION............................................. vii PRINCIPAL AND SELLING SHAREHOLDERS... 99 GLOSSARY OF TERMS AND DEFINITIONS ........ ix RELATED PARTY TRANSACTIONS................ 100 SUMMARY ...................................................... 1 DESCRIPTION OF OUR CAPITAL STOCK AND THE GLOBAL OFFERING ................................. 9 BYLAWS ................................................... 101 SUMMARY FINANCIAL DATA.......................... 12 TAXATION................................................... 107 RISK FACTORS................................................ 16 PLAN OF DISTRIBUTION............................... 112 USE OF PROCEEDS .......................................... 27 TRANSFER RESTRICTIONS ........................... 117 CAPITALIZATION ............................................ 28 VALIDITY OF THE SHARES........................... 118 DILUTION ....................................................... 29 INDEPENDENT AUDITORS ............................ 119 DIVIDENDS AND DIVIDEND POLICY................ 30 INDEX TO CONSOLIDATED FINANCIAL EXCHANGE RATES.......................................... 31 STATEMENTS ............................................ F-1 THE MEXICAN SECURITIES MARKET.............. 32 ANNEX A— UNAUDITED INTERIM FINANCIAL INFORMATION........................................... A-1 ANNEX B—SIGNIFICANT DIFFERENCES BETWEEN MEXICAN FRS AND IFRS......... B-1

You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with information that is different. This offering circular may only be used where it is legal to sell these Shares. The information in this document may only be accurate as of the date on the front cover of this offering circular. We are not making an offer of these Shares in any jurisdiction where such an offer is not permitted.

THIS OFFERING CIRCULAR IS SOLELY THE RESPONSIBILITY OF GRUPO COMERCIAL CHEDRAUI, S.A.B. DE C.V. AND HAS NOT BEEN REVIEWED OR AUTHORIZED BY THE CNBV. APPLICATION HAS BEEN MADE TO REGISTER THE SHARES IN MEXICO WITH THE RNV MAINTAINED BY THE CNBV, WHICH IS A REQUIREMENT UNDER THE MEXICAN SECURITIES MARKET LAW. SUCH REGISTRATION IS EXPECTED TO BE OBTAINED ON OR BEFORE THE CLOSING OF THE GLOBAL OFFERING, AND DOES NOT IMPLY ANY CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE SHARES, OUR SOLVENCY OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR AND SUCH REGISTRATION DOES NOT RATIFY OR VALIDATE ACTS OR OMISSIONS, IF ANY, UNDERTAKEN IN CONTRAVENTION OF APPLICABLE LAW. IN MAKING AN INVESTMENT DECISION, ALL INVESTORS, INCLUDING ANY MEXICAN CITIZEN WHO MAY ACQUIRE SHARES FROM TIME TO TIME, MUST RELY ON THEIR OWN EXAMINATION OF GRUPO COMERCIAL CHEDRAUI, S.A.B. DE C.V.

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NOTICE TO INVESTORS

The Mexican offering is being made in the United Mexican States (“Mexico”) pursuant to a prospectus in Spanish with the same date as this offering circular. The Mexican prospectus, which has been filed with and will be reviewed and approved by the CNBV, and this offering circular contain substantially the same information, in all material respects, except that the Mexican prospectus includes other information required by regulation in Mexico. The international offering is being made in the United States and elsewhere outside Mexico solely on the basis of information contained herein.

We are relying upon an exemption from registration under the Securities Act for an offer and sale of securities that do not involve a public offering. By purchasing the Shares, you will be deemed to have made the acknowledgments, representations and agreements described under “Transfer Restrictions” in this offering circular. We are not, and the initial purchasers and selling shareholder are not, making an offer to sell the Shares in any jurisdiction except where such an offer or sale is permitted. You should understand that you will be required to bear the financial risks of your investment for an indefinite period of time.

We have submitted this offering circular solely to a limited number of institutional investors in the United States and to certain investors outside the United States and Mexico so that they can consider a purchase of the Shares. We have not authorized the use of this offering circular for any other purpose. This offering circular may not be copied or reproduced in whole or in part. This offering circular may be distributed and its contents disclosed only to prospective investors to whom it is provided. By accepting delivery of this offering circular, you agree to these restrictions. See “Transfer Restrictions.”

This offering circular is based on information provided by us and other sources that we believe to be reliable. We, the initial purchasers and the selling shareholder cannot assure you that this information is accurate or complete. This offering circular summarizes certain documents and other information and we refer you to them for a more complete understanding of what we discuss in this offering circular.

We are not making any representation to any purchaser regarding the legality of an investment in the Shares by such purchaser under any legal investment or similar laws or regulations. You should not consider any information in this offering circular to be legal, financial, business or tax advice. You should consult your own counsel, accountant, business advisor and tax advisor for legal, financial, business and tax advice regarding any investment in the Shares.

We reserve the right to withdraw this offering of the Shares at any time and we and the initial purchasers reserve the right to reject any commitment to subscribe for the Shares in whole or in part and to allot to any prospective investor less than the full amount of Shares sought by that investor. The initial purchasers and certain related entities may acquire for their own account a portion of the Shares.

You must comply with all applicable laws and regulations in force in the jurisdiction to which you are subject and you must obtain any consent, approval or permission required by you for the purchase, offer or sale of the Shares under the laws and regulations in force in the jurisdiction to which you are subject or in which you make such purchase, offer or sale, and none of we, the initial purchasers or the selling shareholder will have any responsibility therefor.

In making an investment decision, you must rely on your own examination of us and the terms of this offering, including the merits and risks involved. Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any other securities commission or other regulatory authority has approved or disapproved the Shares or determined if this offering circular is truthful, accurate, adequate or complete. Any representation to the contrary is a criminal offense. No public market currently exists for the Shares.

Notwithstanding anything in this offering circular to the contrary, except as reasonably necessary to comply with applicable securities laws, you (and each of your employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the offering and all materials of any kind (including opinions or other tax analyses) that are provided to you relating to such tax treatment and tax structure. For this purpose, “tax structure” is limited to facts relevant to the U.S. federal income tax treatment of the offering.

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NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

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INFORMATION FOR INVESTORS IN CERTAIN COUNTRIES

For information for investors in certain countries, see “Transfer Restrictions” and “Plan of Distribution.”

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SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

Upon consummation of the Global Offering, we will be deemed a sociedad anónima bursátil de capital variable (variable capital public stock corporation) organized under the laws of Mexico. As of the date of this offering, we are a sociedad anónima de capital variable (variable stock corporation) organized under the laws of Mexico. Most of our directors, executive officers, controlling persons, and experts named herein are non-residents of the United States and substantially all of the assets of such non-resident persons and substantially all of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States or in any other jurisdiction outside Mexico upon such persons or us or to enforce against them or us in courts of any jurisdiction outside Mexico judgments predicated upon the laws of any such jurisdiction, including any judgment predicated substantially upon the civil liability provisions of United States federal and state securities laws. We have appointed CT Corporation System, as an agent to receive service of process with respect to any action brought against us in any federal or state court in the State of New York arising from this offering. There is doubt as to the enforceability in Mexican courts, in original actions or in actions for enforcement of judgments obtained in courts of jurisdictions outside Mexico, of civil liabilities arising under the laws of any jurisdiction outside Mexico, including any judgment predicated solely upon United States federal or state securities laws. We have been advised by our special Mexican counsel that no treaty is currently in effect between the United States and Mexico that covers the reciprocal enforcement of foreign judgments. In the past, Mexican courts have enforced judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, consisting of the review in Mexico of the United States judgment in order to ascertain whether Mexican legal principles of due process and public policy (orden público) have been complied with, without reviewing the merits of the subject matter of the case. See “Risk Factors―Risks Related to the Shares.”

AVAILABLE INFORMATION

We are not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended the “Exchange Act”). For so long as any of the Shares remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, we agree to furnish upon the request of any shareholder of the Shares, to the holder or beneficial owner or to each prospective purchaser designated by any such holder of the Shares or interests therein who is a “qualified institutional buyer” within the meaning of Rule 144A(a)(1), information required by Rule 144A(d)(4) under the Securities Act, unless we either maintain the exemption from reporting under Rule 12g3-2(b) of the Securities Act or furnish the information to the SEC in accordance with Section 13 or 15 of the Exchange Act. Any such request may be made to us in writing at our main offices located at Privada de Antonio Chedraui Caram #248, Colonia Encinal, 91180, Xalapa, Veracruz, Mexico, Attention: Chief Financial Officer. We are also required periodically to furnish certain information, including quarterly and annual reports, to the CNBV and to the BMV, which will be available in Spanish for inspection through the BMV’s website at www.bmv.com.mx.

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FORWARD-LOOKING STATEMENTS

This offering circular contains forward-looking statements. Examples of such forward-looking statements include, but are not limited to: (i) statements regarding our results of operations and financial position; (ii) statements of plans, objectives or goals, including those related to our operations; and (iii) statements of assumptions underlying such statements. Words such as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution investors that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements, including the following factors:

• competition in our industry and markets;

• limitations on our ability to open new stores and operate them profitably;

• increases in supplier prices;

• product liability claims;

• limitations on our access to sources of financing on competitive terms;

• our ability to service our debt;

• performance of financial markets and our ability to refinance our financial obligations as needed;

• restrictions on foreign currency convertibility and remittance outside Mexico;

• changes in consumer spending habits;

• changes in overall economic conditions in Mexico and the United States;

• our ability to execute our corporate strategies;

• our ability to enhance or expand our store network;

• failure of our information technology (“IT”) systems, including data and communications systems;

• changes in exchange rates, market interest rates or the rate of inflation;

• the effect of changes in accounting principles, new legislation, intervention by regulatory authorities, government directives and monetary or fiscal policy in Mexico; and

• the risk factors discussed under “Risk Factors” beginning on page 16.

Should one or more of these factors or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, forecast or intended.

Prospective investors should read the sections of this offering circular entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” for a more complete discussion of the factors that could affect our future performance and the markets in which we operate.

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In light of these risks, uncertainties and assumptions, the forward-looking events described in this offering circular may not occur. These forward-looking statements speak only as to the date of this offering circular and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or developments. Additional factors affecting our business emerge from time to time and it is not possible for us to predict all of these factors, nor can we assess the impact of all such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Although we believe the plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that those plans, intentions or expectations will be achieved. In addition, you should not interpret statements regarding past trends or activities as assurances that those trends or activities will continue in the future. All written, oral and electronic forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

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PRESENTATION OF CERTAIN FINANCIAL INFORMATION

Unless otherwise specified or the context otherwise requires, references in this offering circular to “the Company,” “Grupo Chedraui,” “the issuer,” “we,” “us” and “our” are references to Grupo Comercial Chedraui, S.A.B. de C.V. and its subsidiaries.

Financial Statements

This offering circular includes our annual audited consolidated financial statements as of December 31, 2007, 2008 and 2009 and for the years then ended, together with the notes thereto (the “Audited Financial Statements”) beginning on page F-1.

See Annex A for a discussion of our results for the three-month periods ended March 31, 2010 and 2009 and our unaudited interim financial information as of and for the three-month periods ended March 31, 2010 and 2009.

The financial information in this offering circular has been prepared in accordance with Mexican Financial Reporting Standards (“Mexican FRS” or “MFRS”, individual standards referred to herein as Normas de Información Financiera, or “NIFs” or “Bulletins”), which differ in certain significant respects from International Financial Reporting Standards (“IFRS”). See “Significant Differences Between Mexican FRS and IFRS” for a description of certain principal differences between Mexican FRS and IFRS as they relate to us.

EBITDA

References to “EBITDA” are to earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a financial measure computed under Mexican FRS or IFRS. We calculate EBITDA as operating income (loss) plus depreciation and amortization expense. EBITDA should not be construed as an alternative to (i) net income as an indicator of our operating performance, or (ii) cash flow from operations as a measure of our liquidity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—EBITDA.”

Accounting Principles

Prior to January 1, 2008, Mexican FRS Bulletin B-10, “Recognition of the Effects of Inflation on Financial Information,” outlined the inflation accounting methodology mandatory for all Mexican companies reporting under Mexican FRS. The presentation of financial information in period-end, or constant, currency units was intended to eliminate the distorting effect of inflation on the financial information and to permit comparisons across periods in comparable monetary units. Our Audited Financial Statements for periods ending on dates on or prior to December 31, 2007 were prepared giving effect to Bulletin B-10 and thus are reported in constant period-end pesos as of December 31, 2007 to adjust for the inter-period effects of inflation by applying factors derived from the Mexican National Consumer Price Index (Índice Nacional de Precios al Consumidor, or “NCPI”), an inflation index determined by the Mexican Central Bank, Banco de México. Effective January 1, 2008, NIF B-10, “Effects of Inflation” replaced the prior Bulletin B-10 and we are no longer required to use inflation accounting for periods beginning in 2008, unless the economic environment in which we operate qualifies as “inflationary,” as defined by Mexican FRS. There was no significant volatility in the rate of inflation in Mexico in 2009 and 2008. The value of the UDI was Ps. 3.93 at December 31, 2007, Ps. 4.18 at December 31, 2008 and Ps. 4.34 at December 31, 2009. Accordingly, the economic environment in Mexico for the three-year periods preceding December 31, 2009 and 2008 did not qualify as inflationary, for which reason we did not account for the effects of inflation as of and for the periods ended December 31, 2009 and 2008. As a result, amounts in this offering circular for financial information for dates or periods beginning on or after January 1, 2008 is presented in nominal terms; however, such amounts reflect inflationary effects recognized up to December 31, 2007. See Note 3(c) to our Audited Financial Statements included herein for a summary of the effects of adoption of NIF B-10.

Currency and Other Information

Unless otherwise stated, the financial information appearing in this offering circular is presented in Mexican pesos. In this offering circular references to “pesos” or “Ps.” are to Mexican pesos and references to “U.S. dollars,” “dollars” or “U.S.$” are to United States dollars.

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This offering circular contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, U.S. dollar amounts that have been translated from pesos have been so translated at an exchange rate of Ps.12.25 per U.S. dollar, the rate published on Thursday, April 29, 2010 in the Mexican Official Gazette of the Federation (Diario Oficial de la Federación, or the “Official Gazette”) by Banco de México. See “Exchange Rates” for information regarding rates of exchange between the peso and the U.S. dollar for the periods specified therein.

Totals in some tables in this offering circular may differ from the sum of individual amounts in those tables due to rounding.

References to spreads refer to percentage amounts representing the difference between two interest rates or transaction values, as the context requires.

In this offering circular, where information is presented in thousands, millions or billions of pesos or thousands, millions or billions of dollars, amounts of less than one thousand, one million, or one billion, as the case may be, have been truncated unless otherwise specified. All percentages have been rounded to the nearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be. In some cases, amounts and percentages presented in tables in this offering circular may not add up due to such rounding adjustments or truncating.

Unless otherwise specified, all units of area shown in this offering circular are expressed in terms of square meters.

Industry and Market Data

Market data and other statistical information (other than with respect to our financial results and performance) used throughout this offering circular are based on independent industry publications, government publications, reports by market research firms or other published independent sources, including: Asociación Nacional de Tiendas de Autoservicio y Departamentales, A. C. (“ANTAD”), a private association that, among other things, measures the commercial activity, growth and quality of services provided by their member stores (which include department stores, convenience stores, discount stores and drug stores); The Nielsen Company (“Nielsen”); Asociación Mexicana de Agencias de Investigación de Mercado y Opinión Pública, A.C. (“AMAI”); Planet Retail Ltd. (“Planet Retail”), a provider of on-line business information services including retail rankings, retail profiles and grocery retailing; Consejo Nacional de Población (“CONAPO”) a government entity dedicated to publishing information on Mexico’s population; and Instituto Nacional de Estadística, Geografía e Informática (“INEGI”), Mexico’s National Institute of Statistics, Geography and Computer Sciences.

Some data are also based on our estimates, which are derived from our review of internal surveys and analyses, as well as independent sources. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy or completeness. In addition, these sources may use different definitions of the relevant markets than those we present. Data regarding our industry are intended to provide general guidance but are inherently imprecise. Though we believe these estimates were reasonably derived, you should not place undue reliance on estimates, as they are inherently uncertain.

Other Information Presented

The standard measure of area in Mexico is the square meter, while in the United States the standard measure is the square foot. Unless otherwise specified, all units of area shown in this offering circular are expressed in terms of square meters. One square meter is equal to approximately 10.76 square feet.

References to Super Chedraui

In January of 2010, we initiated a gradual renaming of our Super Che stores to Super Chedraui in order to take advantage of the Chedraui brand recognition. On January 15, 2010, we opened a new store in Ecatepec de Morelos, Estado de Mexico, which was our first store to be named Super Chedraui. We intend for all our new stores in this format to be opened as Super Chedraui, however existing Super Che stores will be renamed as they are renovated. References in this offering circular to “Super Chedraui” refer to both our Super Che and Super Chedraui stores.

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GLOSSARY OF TERMS AND DEFINITIONS

Unless otherwise specified, references in these definitions to financial statement line items are references to those line items as set forth in our Audited Financial Statements.

“Banorte” means Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte.

“CAGR” means the compounded annual growth rate in any given period.

“CINIF” means the Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera S.C., which is the Mexican Board for Research and Development of Financial Information Standards.

“Inventory Days” means, for any fiscal year, the average number of days a company holds its inventory before selling it and is calculated as the value of the inventory at period end multiplied by 365 divided by cost of sales for such period.

“Invested Capital” means property and equipment-net plus Net Working Capital as of December 31 of any given year.

“Invex” means Banco Invex, S.A. Institución de Banca Múltiple, Invex Grupo Financiero.

“Days Payables” means, for any fiscal year, the average number of days a company takes to pay its suppliers and is calculated as an amount equal to accounts payable at period end multiplied by 365 divided by cost of sales for such period.

“GDP” means gross domestic product.

“Net Working Capital” is calculated as accounts and notes receivables-net, plus inventories-net, minus trade notes and accounts payable.

“Principal Competitors” means Walmart de México, S.A.B. de C.V. (“Walmex”), Organización Soriana, S.A.B. de C.V., (“Soriana”) and Controladora Comercial Mexicana, S.A.B. de C.V. (“Comerci”).

“ROIC” means return on invested capital, which is a common measure of profitability over investment in our industry. We calculate ROIC as (i) operating income for any period, multiplied by an amount equal to one minus the Statutory Tax Rate, divided by (ii) Invested Capital as of the end of such period.

“Same-Store Sales” means the sales of our retail stores, operating throughout both financial periods being compared. If a retail store has not operated during the entire prior 13-month period prior to a relevant period end date, we exclude its sales from our calculation of same-stores sales data. For example, if a new retail store was opened on July 1, 2008 and operated throughout the last six months of 2008, (i) our “Same-Store Sales” data would exclude the sales of that retail store until August 1, 2009 and (ii) we would account for the sales of that new retail store during that 13-month period as sales from a newly opened retail store. Our calculations of Same-Store Sales data may differ from same-store sales calculations of other retailers.

“Southwestern United States” means the following states of the United States of America: California, Arizona, Nevada and New Mexico.

“Statutory Tax Rate” means 28%, or the statutory tax rate in effect in Mexico during the period from January 1, 2007 through December 31, 2009. As of January 1, 2010 the statutory tax rate in Mexico is 30%.

“Supplier Financing” means, for any fiscal year, an amount equal to Days Payables divided by Inventory Days.

“TIIE” means Tasa de Interés Interbancaria de Equilibrio (or Mexican Interbank Equilibrium Interest Rate).

“UDIs” means Unidades de Inversión, a peso equivalent unit of account indexed for Mexican inflation on a daily basis, as measured by changes in the NCPI.

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EXECUTIVE SUMMARY

This summary highlights selected information from this offering circular and may not contain all the information that is important to you. For a more complete understanding of us, our business and this offering, you should read this entire offering circular, including the “Risk Factors” and our Audited Financial Statements appearing elsewhere in this offering circular.

Overview

We are a leading Mexican multi-format retailer with operations in Mexico and the United States. Through our stores located in over 20 states throughout Mexico, we sell a variety of food items, including basic groceries and perishables, as well as non-food items, including consumer electronics, white goods (e.g., major household appliances), furniture, small appliances, apparel, cellular phones and other goods. We also operate stores in Southwestern United States selling perishables and other grocery items, primarily to Hispanic, and in particular Mexican-American, customers. As of December 31, 2009, we operated 142 retail stores in Mexico under two retail store formats, Chedraui and Super Chedraui and 21 stores in the United States under the El Super format, with a total selling area of approximately 967,160 square meters (10.4 million square feet). We believe that the Chedraui brand name has historically been associated with a broad assortment of products at affordable prices for the lower-to middle-income segments of the Mexican population; and the El Super brand name has had a similar association for the Hispanic, and in particular the Mexican-American community, in Southwestern United States for over 12 years. We believe our strategy of offering the most competitive prices, combined with our broad product offering has been a key strategic differentiator and an important factor in the growth of our businesses. In recent years, we have maintained a successful track record of consistent profitability and growth. From 2005 to 2009, we more than doubled our number of stores, from 69 to 163, by opening or acquiring 94 new stores, of which 29 were acquired from Carrefour, S.A. de C.V. (“Carrefour”) in Mexico in 2005 and seven were acquired from Grupo Gigante, S.A.B. de C.V. (“Grupo Gigante”) in the United States in 2008. In addition, our consolidated net revenues have increased from Ps.27.7 billion in 2005 to Ps.47.9 billion in 2009, implying a 14.7% Revenue CAGR, and our consolidated EBITDA increased from Ps.1.6 billion to Ps.3.2 billion over the same period yielding a 18.9% EBITDA CAGR.

We operate three distinct lines of business: Mexican Retail, U.S. Retail and Real Estate. Our Mexican retail business operates under two store formats which target different market niches and segments of the population, including 109 hyper-market stores under the name Chedraui that carry a breadth of products and brands in cities with populations of at least 100,000 inhabitants. In 2005, we opened our smaller format stores, Super Che, which are generally concentrated in smaller cities and towns with populations of at least 25,000. Over the past four years, we opened 33 Super Che stores, which we recently decided to gradually rename Super Chedraui in order to take advantage of our brand recognition. Our Chedraui and Super Chedraui retail stores are mainly located in southern and central Mexico, including Mexico City. Our Chedraui stores, which accounted for 75.2% of our consolidated revenues for 2009, range from 3,226 square meters (approximately 34,724 square feet) to 11,592 square meters (approximately 124,775 square feet), with an average of 7,408 square meters (approximately 79,739 square feet) and contain 57,000 stock-keeping units (“SKUs”) on average. Super Chedraui stores, which accounted for 8.4% of our consolidated revenues for 2009, range from 1,737 square meters (approximately 18,696 square feet) to 2,481 square meters (approximately 26,705 square feet), with an average of 2,069 square meters (approximately 22,173 square feet) and contain over 29,000 SKUs on average.

Our U.S. retail operations target the Hispanic, and more specifically the Mexican-American, communities, in California, Nevada and Arizona through our 21 El Super stores, which accounted for 15.4% of our consolidated revenues in 2009. Our El Super stores range from 2,811 square meters (approximately 30,257 square feet) to 7,536 square meters (approximately 81,116 square feet), averaging 4,353 square meters (approximately 46,855 square feet) and contain 5,000 SKUs on average. Our U.S. Retail Operations, held through Bodega Latina Corporation (“Bodega Latina”), are independently managed and self-funded from our operations in Mexico. Grupo Chedraui holds a 66.2% ownership interest in Bodega Latina, with the remainder held by minority shareholders, none of whom hold more than a 5.5% interest.

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Our real estate operations are responsible for the administration of our owned and leased real estate assets in Mexico, the development of existing and projected stores and shopping centers, and the expansion, construction and remodeling of our stores in Mexico. Real estate revenues account for only 1% of our consolidated revenues in 2009, however, contributed 11% to our total EBITDA.

The following table sets forth key financial and operating data for each of our segment markets:

As of or for the year ended December 31, 2007 2008 2009 Retail Business in Mexico Number of retail stores(1) 112 139 142 Selling area (square meters) (1) 761,209 854,106 875,745 Net sales (millions of pesos) 31,515 36,506 40,033 Same-Store Sales growth (%) 8.55 7.90 1.69 EBITDA (millions of pesos) 1,909 1,907 2,589 Retail Business in the United States

Number of retail stores(1) 8 16 21 Selling area (square meters)(1) 30,965 68,916 91,415 Net sales (millions of pesos) 2,465 3,665 7,363 Same-Store Sales growth (%) 15.9 25.9 10.7 EBITDA (millions of pesos) 106 141 245 Real Estate Business Gross leasable area (square meters) (1)

256,805 278,591 267,368

Average monthly revenue, pesos per square meter

131 139 171

Total revenue (millions of pesos) 473 487 505 Occupancy rate (%) 94% 92% 93% EBITDA (millions of pesos) 270 345 340 Consolidated Business Net retail sales (millions of pesos) 33,979 40,171 47,396 Total retail selling area (square meters) (1)

792,174 923,022 967,160

Total revenue (millions of pesos) 34,452 40,658 47,901 Revenue growth (%) 15.1% 18.0% 17.8% EBITDA (millions of pesos) 2,285 2,393 3,174 EBITDA growth (%) 18.0% 4.7% 32.6% EBITDA margin (%) 6.6% 5.9% 6.6%

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(1) As of December 31. Not a weighted average.

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Our Business Model

Our mission statement, which is to deliver to all possible locations, the products our customers prefer at the best prices, is the main driver behind our business model and the key reason underpinning our continued strong financial performance. We believe this simple but powerful strategy results in a successful business model that positions us well to take full advantage of both Mexican and U.S. growth opportunities. The fundamentals are as follows:

Lowest Price: Our focus is to always offer all our products at the lowest price in the markets in which we operate. We believe this commitment to the lowest price clearly differentiates us from our competitors. While certain of our competitors focus on targeted or seasonal promotions and sales, we seek to offer a consistent message of every-day lowest prices for each product we sell. We believe our strategy and price positioning is widely recognized in the industry. In order to always provide our customers with their preferred products at the lowest price, we engage in extensive price comparison efforts in Mexico at both national and local levels to guarantee our competitive position among retailers and specialty stores. This process is supported by innovative technology and quick response capacity at a local level, which is led by empowered store managers. By engaging in these price comparisons on behalf of our customers, we believe we have been successful in providing our customers with a one-stop shopping experience in which they are comfortable purchasing a broad assortment of merchandise without independently undertaking local price and merchandise comparisons. As a result of this strategy, we believe we successfully offer our customers their preferred products at the best price, which enhances customer loyalty as reflected by our growing customer base.

Our wide selection of products: We believe our retail stores offer a broad selection of value-based, competitively-priced brand name and private label goods. Our Chedraui stores contain above-industry an average of 57,000 SKUs. Our Super Chedraui format carries an average of 29,000 SKUs and our El Super stores in the United States carry an average of 5,000 SKUs. Our objective is to carry not only leading brands, but also a full range of brands and products within each product category, including value items for our target market at each store location. Our assortment of merchandise, consisting of both imported and domestic brand-name products, is tailored to each store and is responsive to such store’s climate, region and client preference and socioeconomic level. In addition, our logistics system and strategically located modern and custom-built distribution centers enable us to readily and efficiently meet the merchandising demands of our stores.

Customer experience: As part of our core strategy, we focus on offering superior customer service in our stores by maintaining clean stores, with clearly labeled departments, products and prices, that we believe are more comfortable than those of our Principal Competitors. We believe we offer our customers an attractive shopping environment. We have a policy of continuously evaluating whether we need to remodel our stores based on the age of our equipment, construction improvement needs and our local competitors’ stores. This remodeling policy assures that we are able to provide our customers with clean, well-labeled and sizeable stores, supported by the appropriate number of trained employees to provide superior customer service, further enhancing the shopping experience. In addition, in order to increase traffic to our stores in Mexico, we offer a variety of services to our customers, such as extended warranties through Garex, wire transfers through Cartera Dinámica, and the ability to make bill payments to certain government and private entities.

Our Strengths

We believe that the following key competitive strengths differentiate us and are critical to our continuing success:

Unique Position as the “Lowest Price” Mexican Retailer with a Broad Product Assortment Compared to Other Competitors

Our simple but powerful pricing strategy is based on always offering all our products at the lowest prices in the markets in which our stores operate. Unlike many of our competitors, who price their products based on target margins, we engage in central, company-wide and local pricing comparison and price our products accordingly. As a result, we make approximately 1,900 price adjustments daily on a company-wide level. In addition, individual store managers are empowered to implement real-time price adjustments based on the prices offered by local competitors resulting in approximately 85,200 daily price adjustments made at a local level. We believe we have been

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successful in executing and communicating this strategy through our slogan “En Chedraui, Cuesta Menos” (At Chedraui, It Costs Less) and our quick and effective responses to changes in prices, which we believe has also contributed to an increase in customer loyalty as well as our overall customer base. Each of our retail stores is connected by a customized and integrated communications network that allows the transmission of information 24-hours a day in order to provide real-time information between our stores, corporate offices and distribution centers in Mexico. We believe we are also recognized for our broad product assortment, which is based on specific demographics and regional and local customer preferences. In particular, our high-quality perishable section is one of our distinguishing factors vis-à-vis our competitors. Our shopping area is also greater than that of similar competitors and we believe offers a more attractive shopping environment. In addition, we continuously evaluate whether we need to remodel our stores based on the age of our equipment, construction improvement needs and our local competitors’ stores. This remodeling policy assures that we are able to provide our customers with clean, sizeable stores, with clearly labeled departments, products and prices, which are supported by superior customer service, further enhancing the shopping experience. Each of these factors supports our distinct position in the Mexican retail market as the lowest-priced retailer that also offers a broad product assortment and superior customer experience as compared to other low-price competitors.

Proven Track Record and Strong Platform for Future Growth.

Our current network of stores is a result of both consistent organic growth and the successful integration of acquisitions, such as Carrefour’s Mexican operations, which added 29 stores, and certain Gigante stores in the United States, which added seven stores. Those 29 Carrefour stores increased our number of stores in Mexico by 45% and represented approximately 40% of our net sales in 2005. We believe the Mexican market continues to offer significant organic growth potential given the low levels of formal retail penetration relative to the U.S., European and other Latin American markets. Furthermore, low retail penetration in our core southwestern and southeastern Mexican markets presents attractive new store potential in our existing markets. In addition, we believe the Mexican retail market offers additional consolidation opportunities. Hence, we believe this market environment presents attractive growth opportunities in both our current, as well as potential new markets, specifically in northern Mexico. We continue to dedicate time and resources to developing a strong growth platform as evidenced by our expansion plan begun in 2007. In addition, we believe that the capacity of our existing distribution centers and improved IT systems infrastructure, which results from our significant investments over the last few years, supports our planned growth. Moreover, we believe our Super Chedraui format, introduced in 2005 under the name Super Che, has been successful at serving smaller cities and should allow us to enter the approximately 70 cities in Mexico of at least 25,000 inhabitants that typically are not only highly fragmented but also underserved by large retailers. Due to our established retail platform, including our strong presence in southeastern Mexico, and our growth strategy, we believe we are well positioned to benefit from other favorable market conditions such as population and economic growth as well as an increase in disposable income of our target market.

We believe El Super stores enjoy strong positioning within the Hispanic, and in particular the Mexican-American, communities in Southwestern United States. We have focused on personalized service as well as an emphasis on the Mexican culture and Spanish language within our stores, which we believe has contributed to our strong reputation for quality customer service and has increased customer loyalty. We believe there are additional opportunities within these communities and through our expansion plan, we intend to reinforce our presence in Southwestern United States and capitalize on our existing presence and strong reputation to expand our operations to other regions with significant Hispanic populations.

Market Leader in Southeastern Mexico Benefiting from Strong Presence and Strategic Store Locations.

We are the leading retailer in Mexico’s southeastern region with approximately 39% of the market share,

according to Nielsen and we have a strong presence in over 20 states. We believe we have successfully established and defended this leading position in southeast Mexico during the past 40 years. We believe we are Mexico’s fourth leading food and general merchandise retailer on a national basis, and that we lead the market in southeastern Mexico, which has enhanced our bargaining position with our suppliers. Within southeastern Mexico, we believe we benefit not only from our scale but also from the strategic location of our stores, which has resulted in a proven record of long-term Same-Store Sales growth. We also believe the

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success of our new store strategy is evidenced by the closure of only three stores in our 40 years of operation. Furthermore, we believe that in many states the strategic location of our stores would be difficult to replicate due to the lack of available retail space in key locations. We believe these factors, combined with our strong brand recognition and reputation, create substantial barriers to entry for our competitors. Also, given that we own 68% of the stores we operate in Mexico, we believe we are not significantly exposed to lease re-negotiation risks, and at the same time, we can benefit from potential appreciation of the underlying economic value of our real estate assets, which provides us with an additional competitive advantage. Efficient Operation, Focus on Low Cost and Efficient Inventories Supported by Cutting Edge IT and Distribution Platforms.

One of the pillars of our strategy is our ability to efficiently manage costs and inventories while increasing sales. Given our competitive pricing policy, we focus on reducing each store’s working capital and investing capital needs in a cost-efficient way, while maintaining high sales volume and superior store quality. Our efficient supply chain network, supported by continued investments in IT, allows us to optimize our working capital requirements through high inventory rotation and reduce our inventory related costs, such as shrinkage. In addition, our strategically located, modern and custom-built distribution centers, and our logistics system, enable us to readily meet the merchandising demands of our stores. In recent years, we have also made significant investments in technology systems focused primarily on supporting our pricing strategy, improving inventory and operational efficiency and optimizing human resources. Innovative technologies currently under implementation include SAP, Manhattan, Intactix, Reflexis and People Soft, among others. We believe that continued upgrading of our operations allows us to further increase efficiency, reduce expenses and provide the necessary product and sales information to enhance merchandising decisions at each store.

Historically Strong Financial Performance.

We have a track record of consistent growth, profitability and cash flow generation. We have been able to

maintain a 20.3% Revenue CAGR from 2000 through 2009, while opening a total of 114 new stores throughout the same period. We believe our focus on growth is proved by our top line performance. Our net sales for 2009 were Ps.47.9 billion, which represented increases of 17.8% and 39.0% over our net sales in 2008 and 2007, respectively. We believe our Revenue CAGR of 17.0% between 2006 and 2009 is well above that of our Principal Competitors, which registered an average growth of 6.3% over the same period. Our EBITDA for 2009 was Ps.3.2 billion, which represented increases of 32.7% and 38.9% over our EBITDA in 2008 and 2007, respectively. We believe our EBITDA CAGR of 18.7% between 2006 and 2009 is also well above that of our Principal Competitors, which registered an average EBITDA growth of 6.7%. We believe our Supplier Financing results for 2009, 2008 and 2007 of 181.5%, 193.4% and 198.0%, respectively, exceeded our publicly-traded competitors’ average by 59%, 68% and 63% for 2009, 2008 and 2007, respectively. As a result of our strong operating performance and working capital management, we believe we have also consistently generated above average ROIC in 2009, 2008 and 2007 of 11.5%, 9.0%, and 9.6%, respectively. In addition, we believe our strong financial performance and cash generation has enabled us to reduce our indebtedness following our acquisition of Carrefour in Mexico in 2005, resulting in an attractive capital structure of 1.3x to 1.2x debt to EBITDA ratio as of December 31, 2009 with additional leverage capacity if required for future capital expenditures or strategic acquisitions. Moreover, we do not have significant credit risk as nearly 95% of our sales are in cash or cash equivalents, such as debit and credit card and electronic market vouchers sales, and we do not offer consumer financing at our stores.

We believe the success of our business model also relies on our focus on efficient working capital, cash

management and asset returns. We believe our strong ROIC is a result of our strong store operating performance together with superior Supplier Financing ratios, high inventory rotations and efficient capital deployment. In order to maintain attractive ROIC, we intend to continue to focus on efficient capital expenditure and cash flow generation.

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Experienced Management Team Supported by a Committed and Well-Trained Workforce.

Our senior management team has an average of 14 years of experience in the retail industry and we believe has the depth, expertise and motivation to execute our growth strategy, as proven by its capacity to open new stores as well as successfully integrate the Carrefour and Gigante operations from our recent acquisitions. Under our management, the Carrefour stores experienced a 43% increase in sales through 2009 and sales per square meter have improved from Ps.6,135 per square meter in 2005 to Ps. 8,803 per square meter in 2009, which represents a 9.4% CAGR. In addition, we believe our management team is responsible for the transformation of the seven stores acquired from Grupo Gigante, six of which had been operating at a loss at the time of their acquisition in August 2008. By August of 2009, all seven of the acquired Gigante stores were profitable. We believe that creating a culture based on both teamwork and strong economic incentives has also produced a loyal management team dedicated to achieving our corporate goals. We believe the team’s experience has enabled us to anticipate and respond effectively to industry trends and competition, better understand our customer base and build strong business relationships. Furthermore, we believe that our goal-oriented culture and incentive programs have also contributed to developing a motivated work-force that is focused on building solid relationships with customers while maintaining high operating and financial performance by delivering quality personalized service, increasing sales, lowering inventories, growing profitability and achieving operational efficiency. Moreover, we have invested in our employees through Universidad Chedraui, our in-house training and certification program. We believe our efforts have resulted in a competent, well-trained and loyal work-force. Through our training programs, variable compensation schemes, promotions and relocations, we seek to align the goals of the Company, its management and our employees. Our Strategy Our strategy emphasizes strengthening our position as a leading retailer in Mexico, which offers the lowest prices in the market, while continuing to grow in Mexico and the United States and focus on our key business strengths. The key elements of our strategy are the following:

Continue Expanding our Store Network in Mexico.

We believe that our compelling retail store formats, our focus on ROIC and cash generation and our successful track record of opening stores provide us with a strong foundation for continued organic growth. From the beginning of 2007, when we operated 105 stores, through year-end 2009, we opened 58 new stores, which represents a 55% increase to our operations during that period. Our strategic expansion in Mexico includes focusing on larger as well as smaller cities through our Chedraui and Super Chedraui formats. We believe there are significant growth opportunities to expand into Mexico’s northern region, where we currently have a limited presence, as well as Mexico’s smaller cities (with populations of approximately 25,000 inhabitants), which according to CONAPO represent approximately an additional 15.4 million of potential customers through 2030 that are currently underserved by modern retailers. We intend to use our smaller Super Chedraui format to target these smaller cities. In addition, further market consolidation is expected to create growth opportunities through potential acquisitions of both national and regional players that can complement our existing retail platform. We therefore intend to both pursue an organic growth plan in existing as well in new domestic markets in order to continue achieving national coverage, and to evaluate potential consolidation opportunities. Our aggressive growth strategy is supported by our technology and logistics capability, and underpinned by the capacity at our distribution centers which we believe can support approximately an additional 160 stores over our current operation.

Improve Sales and Market Position by Continuing to Focus on our Business Strengths.

We intend to capitalize on our business strengths, including our unique position as a low-priced Mexican retailer committed to providing its customers with a broad assortment of quality merchandise and a superior shopping experience. We intend to continue to promote our “Lowest Price” pricing strategy and to improve our product offering in order to increase sales and customer loyalty from our current customers as well as from new customers. We recognize that the retail business is highly competitive and therefore also seek to increase our average total ticket spending by offering a combination of quality products, assorted merchandise and an

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attractive “one-stop” shopping environment in clean, well-labeled, sizeable and comfortable stores. To this end, we plan to continue to remodel our stores, including six stores in 2010. We also intend to further increase brand recognition and customer loyalty by expanding the use of our logo across all formats in Mexico and the United States to leverage the strength of the Chedraui brand across formats and markets. By taking advantage of our strong retail platform, purchasing power, economies of scale, private label development and customer services, we seek to continue to offer our customers the best prices while maintaining competitive margins.

Continue to Focus on Maintaining Attractive Returns on Investment Capital While Executing our Growth Strategy.

Chedraui enjoys strong return on invested capital (ROIC) as a result of our robust operating performance and our superior Supplier Financing ratios. Our ROIC reached 11.5% in 2009, second only to Walmex among our Principal competitors. In order to maintain attractive ROIC, we intend to continue to focus on efficient inventory management and capital deployment while maximizing cash flow generation. We will also seek to further these goals by implementing best practices and efficient IT systems to maintain high inventory rotation and reduced operating costs and shrinkage. In addition, although our business strategy revolves around our “Lowest Price” pricing strategy, and not the achievement of specific operating margins, we believe that we can improve margins by increasing scale and operating leverage opportunities and continuing to successfully implement our pricing strategy.

Continue to Fully Integrate Operations Utilizing a Highly Developed Information Technology and Systems Platform.

We believe that we have made significant investments in maintaining and updating our technology infrastructure, systems applications and business solutions. In collaboration with various third-party providers, we are in the process of a company-wide roll-out of a new information technology system, which incorporates certain worldwide best practices into our current processes to facilitate the implementation of our growth strategy. Moreover, we expect that these and other highly advanced systems, including SAP, People Soft, Reflexis, Intactix and Manhattan and other customized applications, will result in additional operating efficiencies and margin improvement initiatives. Operating efficiencies, for example, would include streamlining daily operations to improve our real-time responses to local market prices, reductions in inventory and out-of-stock days, decline in obsolete product or shrinkage, optimization of product distribution and on-time delivery. By continuing to integrate these applications, we hope to be better positioned to adopt and implement the best business practices across our formats and markets.

Grow in the U.S. Retail Market.

We have established ourselves as a Mexican food retailer with operations in Southwestern United States, where we currently operate 21 retail stores in cities with large Hispanic, and more specifically, Mexican-American, populations in southern California, Arizona and Nevada. With more than 12 years of successful operations in Southwestern United States, we have acquired significant experience and knowledge of the U.S. retail market. We have focused on perishable and Latin American products targeted to Hispanic, and in particular Mexican-American, consumers and believe the Mexican-American retail market is a niche that presents important growth opportunities, given the growing size and increasing purchasing power of this group of consumers. We also believe we have successfully taken advantage of these opportunities, by differentiating ourselves with an every day low price strategy: a specific product offering based on Mexican-Americans’ preferences and a superior customer service with Spanish speaking employees. We have also significantly increased our scale through the acquisition of seven Gigante stores in 2008. We intend to continue to target the Hispanic populations and focus on the Mexican-American communities in the areas surrounding Los Angeles, Tucson, Phoenix, Las Vegas and other select U.S. cities.

Risks Related to Our Business

For a discussion of certain considerations that should be taken into account in deciding whether to invest in the Shares, see “Risk Factors” beginning on page 16.

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Recent Developments

On January 15, 2010, we opened one new Super Chedraui in Ecatepec de Morelos, Estado de Mexico, Mexico. Our board of directors also made the decision to close two of our Super Chedraui stores in March 2010. The decision to close the Super Chedraui stores of Tacambaro, Michoacan and San Pablo, Tlaxcala was based on the stores’ inability over the past three years to generate the target sales volumes.

In addition, on March 8, 2010, we executed a binding letter of intent, pursuant to which we plan to acquire three stores in Baja California, Mexico from Centro Comercial Californiano, S.A. de C.V. for an amount equal to Ps.500 million, plus the cost of inventory. The consummation of the transaction is subject to customary conditions and the negotiation and execution of definitive documentation.

We recently agreed to provide certain minority shareholders representing approximately 20% of the capital stock of Bodega Latina, the entity that operates our El Super stores in the United States, the right to sell a portion of their shares in Bodega Latina to us each year. Following the announcement of our proposed global offering, several minority shareholders in Bodega Latina advised us that they believed our proposed offering would violate certain terms of an agreement among shareholders of Bodega Latina. Although we believe these claims were without merit, we agreed to resolve our differences by amending the agreement among shareholders of Bodega Latina. The amended agreement will allow certain minority shareholders of Bodega Latina to sell to us a portion of their Bodega Latina shares each year, allowing us to further consolidate our investment in Bodega Latina. We will be required in 2010 to repurchase at a set price up to US$14 million of Bodega Latina shares, representing up to approximately 6% of the capital stock of Bodega Latina, and up to an additional US$10 million worth of shares of Bodega Latina in each subsequent year at a variable price. In subsequent years the per share purchase price will be based on an average of an EBITDA-multiple and a revenue-multiple applied to Bodega Latina's most recent fiscal year end results. The future purchase price is based on our own EBITDA and revenue multiples, and we therefore believe the result will be non-dilutive, although no assurances can be given. This agreement will remain in place until all the shares of the minority shareholders have been repurchased.

Grupo Comercial Chedraui, S.A.B. de C.V. is a variable capital public corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. Our principal executive offices are located at Privada de Antonio Chedraui Caram #248, Colonia Encinal, 91180, Xalapa, Veracruz, Mexico. Our telephone number at that address is +52 22-8842-1100. Our website is located at www.chedraui.com.mx. Any information contained on, or accessible through, our website is not incorporated by reference herein and shall not be considered part of this offering circular.

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THE GLOBAL OFFERING

The following is a brief summary of certain terms of this offering. For a more complete description of the Shares, see “Description of our Capital Stock and Bylaws.”

Issuer........................................................ Grupo Comercial Chedraui, S.A.B. de C.V.

The selling shareholder............................ The selling shareholder is offering 14,407,647 Shares as part of the Mexican Offering. For more information regarding our principal shareholders and the selling shareholder, see “Principal and Selling Shareholders.”

Offering price per Share .......................... The initial offering price is Ps.34.00 per Share, equivalent to U.S. $2.78 per Share based on the exchange rate of Ps.12.25 per U.S. dollar on April 29, 2010.

Shares offered .......................................... 133,793,545 Shares of our Series B, Class I common stock, no par value, of which we are offering 119,385,898 Shares and the selling shareholder is offering 14,407,647 Shares.

The Mexican Offering ............................. As part of our primary public offering in Mexico, we are offering 45,799,448 Shares and the selling shareholder is offering 14,407,647 Shares in Mexico to the general public in a secondary offering. See “Plan of Distribution.”

The International Offering....................... We are offering 73,586,450 Shares in the United States to qualified institutional buyers (“QIBs”) in reliance on Rule 144A under the Securities Act and in other countries outside Mexico, to non-U.S. persons in reliance on Regulation S under the Securities Act.

The Global Offering ................................ 133,793,545 Shares are being offered in the international and Mexican offerings, together with an additional 20,069,032 Shares, assuming the exercise of the over-allotment options in full. See “Plan of Distribution.”

Reallocations ........................................... The number of Shares to be offered pursuant to the international offering and the Mexican offering is subject to reallocation among the initial purchasers and the Mexican underwriters. See “Plan of Distribution.”

Shares outstanding after the Global Offering ...................................................

936,838,320 Shares (assuming no exercise by the initial purchasers or the Mexican underwriters of the options granted by us to the initial purchasers and the Mexican underwriters to purchase additional Shares in the Global Offering).

Use of proceeds ....................................... The net proceeds to us from the sale of the Shares being offered in the Global Offering by us will be Ps.3,911 million, assuming the over-allotment option is not exercised and after deducting commissions and estimated offering expenses. We intend to use the net proceeds to fund our ongoing store expansion plan and for general corporate purposes. See “Use of Proceeds.”

We will not receive any of the proceeds from the sale of Shares by the selling shareholder.

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Listing...................................................... An application has been filed to register the Shares with the RNV maintained by the CNBV, and to list the Shares on the Mexican Stock Exchange. Upon consummation of the Global Offering, such registration and listing will have been effected. Prior to the Global Offering, there has been no trading market for the Shares in Mexico, the United States or elsewhere. We cannot assure you that a trading market will develop or will continue if developed.

Mexican Stock Exchange symbol............ “CHDRAUI”

Payment, settlement and delivery ............ Settlement of the Shares will be made on May 5, 2010 through the book-entry, settlement and custody system of Indeval.

Voting rights ............................................ All of our Shares have voting rights in our general shareholders’ meetings. Each Share grants full voting rights to its holder. See “Description of our Capital Stock and Bylaws” for a discussion of your voting rights.

Control Trust ........................................... Certain of our existing shareholders have created a control trust, where Banco Nacional de México, S.A., integrante de Grupo Financiero Banamex, División Fiduciaria, acts as trustee (the “Control Trust”). Pursuant to the Control Trust, these existing shareholders have transferred to the Control Trust shares, representing 95.73% of our Series B, Class II, common stock shares outstanding prior to consummation of the Global Offering. In general terms, the Control Trust provides for uniform voting of the shares maintained through the Control Trust and includes provisions relating to transfer of shares and trust rights by beneficiaries. See “Principal and Selling Shareholders” for a description of the Control Trust.

Transfer restrictions................................. The international offering is being made in accordance with Rule 144A and Regulation S. The Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any U.S. state or other jurisdiction and, accordingly, may not be offered, sold, pledged or otherwise transferred or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except as set forth in “Transfer Restrictions.” As a result of these restrictions, investors are advised to consult legal counsel prior to making any reoffering, resale, pledge or transfer of the Shares.

Lock-up period ........................................ We, the selling shareholder and other principal shareholders have agreed that they will not, subject to certain exceptions, for a period of 180 days from the date of this offering circular, without the prior written consent of the initial purchasers, issue, sell or transfer, any shares of our capital stock or any securities convertible into or exchangeable for, or that represent the right to receive, shares of our capital stock. See “Plan of Distribution.”

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Over-allotment options ............................ We have granted to the initial purchasers and the Mexican underwriters options, exercisable within 30 days of the date of this offering circular, to purchase up to 20,069,032, at the initial offering price thereof, to cover over-allotments, if any.

Dividends................................................. See “Dividends and Dividend Policy” for further information.

Taxation................................................... Under Mexican law, dividends paid by us to holders of our Shares who are not residents of Mexico for tax purposes are not subject to any Mexican withholding or other similar tax but generally will be subject to corporate taxes if not paid from a net after-tax profits account. We currently intend that any dividends we pay will come from such account. See “Taxation” for a discussion of certain U.S. federal and Mexican tax consequences of holding and disposing of the Shares.

Risk factors .............................................. See “Risk Factors” and the other information in this offering circular for a discussion of factors you should carefully consider before deciding to invest in the Shares.

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following tables present our summary consolidated financial information and operating data as of the dates and for each of the periods indicated. This information is qualified in its entirety by reference to, and should be read together with, “Presentation of Certain Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Audited Financial Statements included elsewhere in this offering circular. The consolidated balance sheet data as of December 31, 2007, 2008 and 2009 and the income statement data for the years ended December 31, 2007, 2008 and 2009, are derived from the Audited Financial Statements appearing elsewhere in this offering circular.

Our Audited Financial Statements have been prepared in accordance with Mexican FRS, which differ in significant respects from IFRS. See “Significant Differences Between Mexican FRS and IFRS” for a description of certain principal differences between Mexican FRS and IFRS as they relate to us.

The exchange rate used in translating pesos into U.S. dollars in calculating the convenience translations included in the following tables is determined by reference to the rate published by the Banco de México in the Official Gazette on December 31, 2009, which was Ps.13.07 per U.S. dollar. The exchange rate translations contained in this offering circular should not be construed as representations that the peso amounts actually represent the U.S. dollar amounts presented or could be converted into U.S. dollars at the rate indicated as of the dates mentioned herein or at any other rate.

See Annex A for a discussion of our results for the three-month periods ended March 31, 2010 and 2009 and our unaudited interim financial information as of and for the three-month periods ended March 31, 2010 and 2009.

Years Ended December 31,

2007 2008 2009 2009

(millions of pesos, except per share amounts)

(millions of U.S. dollars, with same

exceptions) Income Statement Data: Revenues Net sales .......................................................... 34,452 40,658 47,901 3,665 Cost of sales .................................................... 27,147 32,174 37,535 2,872 Gross profit ........................................................... 7,305 8,483 10,366 793 Operating expenses ............................................... 5,563 6,620 7,879 603 Operating income.................................................. 1,742 1,864 2,487 190 Other (income) expenses – Net............................. (44) 3 (11) (1) Net comprehensive financing cost ........................ 500 615 767 59 Interest expenses ............................................. 816 689 677 52

Interest income................................................ (105) (123) (111) (8) Exchange gain................................................. (4) (70) (1) (.08) Monetary position gain ................................... (362) – – – Valuation of derivative ................................... 155 118 202 15

Participation in the results of associate

companies .......................................................(19)

(39) – – Non-ordinary item................................................. 114 – – – Income before income taxes ................................. 1,192 1,285 1,731 132 Income taxes ......................................................... 627 371 337 26 Income before discontinued operations 565 914 1,394 107 Discontinued operations ....................................... 26 – – – Consolidated net income ................................. 539 914 1,394 107 Net income of majority stockholders .............. 524 924 1,349 103 Net income (loss) of minority stockholders .... 15 (11) 45 3 Basic earnings per common share................... 15 26 35 3

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Years Ended December 31,

2007 2008 2009 2009

(millions of pesos, except per share amounts)

(millions of U.S. dollars, with same

exceptions) Cash or Resources Provided by (Used In): Operating activities ......................................... 1,704 3,011 2,504 192 Investing activities .......................................... (857) (3,346) (1,138) (87) Financing activities ......................................... (573) 570 (2,029) (155) As of December 31,

2007 2008 2009 2009

(millions of pesos) (millions of U.S.

dollars) Balance Sheet Data: Cash ................................................................ 888 1,100 351 27 Accounts and notes receivable-Net................. 976 803 1,022 78

Recoverable taxes ........................................... 320 570 523 40 Due from related parties ................................. 110 102 95 7

Inventories-Net ............................................... 3,375 4,054 4,533 347 Discontinued operations 7 – – – Total current assets ............................................... 5,676 6,631 6,523 499

Restricted cash................................................ – 114 148 11 Long-term due from related parties ................ – 64 515 39 Property and equipment-Net ........................... 15,364 17,899 18,272 1,398

Idle assets........................................................ – 116 116 9 Investment in shares of associated companies ....................................................... 13 61 31 2 Long-term accounts receivable....................... 87 104 100 8 Other assets-Net.............................................. 266 537 710 54 Discontinued operations ................................. 7 – – –

Total assets ........................................................... 21,414 25,526 26,414 2,021 Current liabilities Notes payable to financial institutions ............ 64 1,157 336 26 Trade notes and accounts payable................... 6,683 7,841 8,229 630

Accrued expenses and taxes 1,226 1,568 1,580 121 Income tax from previous fiscal years payable............................................................ 114 – – – Income tax ...................................................... – 65 – – Discontinued operations ................................. 36 – – –

Total current liabilities.......................................... 8,125 10,631 10,145 776 Bank loans ...................................................... 2,500 3,197 3,191 244 Contribution for future capital increases......... 149 – – – Deferred income tax ....................................... 614 843 936 72

Employee benefits........................................... 111 167 193 15 Derivative financial instruments premium...... 198 – – – Derivative financial instruments..................... 438 419 491 38 Receivables held in trust contracts.................. 1,223 976 648 50

Total liabilities...................................................... 13,357 16,234 15,605 1,194

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As of December 31,

2007 2008 2009 2009

(millions of pesos) (millions of U.S.

dollars) Stockholders’ equity

Capital stock ................................................... 197 197 197 15 Retained earnings ........................................... 12,632 8,983 10,087 772 Insufficiency in restated stockholders’ equity .............................................................. (2,728) – – – Initial cumulative effect of deferred income taxes ................................................... (1,819) – – – Translation effects of foreign operations or entities............................................................. (9) 92 38 3 Valuation of hedging derivatives.................... (334) (178) (248) (19) Majority stockholders’ equity......................... 7,940 9,094 10,075 771 Noncontrolling interest in consolidated subsidiaries ..................................................... 116 198 734 56

Total stockholders’ equity .................................... 8,056 9,292 10,809 827 Total liabilities and stockholders’ equity.............. 21,414 25,526 26,414 2,021

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As of and for the Years Ended December 31, 2007 2008 2009 2009

(millions of pesos, except percentages, ratios

and Other Operating Data)

(millions of U.S. dollars, with same exceptions)

Selected Segment Financial Data: Segment Net Sales: Retail operations in Mexico ....................................... 31,515 36,506 40,033 3,063Retail operations in the U.S. ...................................... 2,465 3,665 7,363 563Real estate segment ................................................... 473 487 505 39

Total consolidated net sales ................................... 34,452 40,658 47,901 3,665 Segment Operating Income (Loss) Retail operations in Mexico ....................................... 1,421 1,452 2,015 154Retail operations in the U.S. ...................................... 72 91 164 13Real estate segment 249 321 309 24

Total consolidated operating income (loss) ............ 1,742 1,864 2,487 190 Growth and Profitability Ratios: Net sales growth ......................................................... 15.1% 18.01% 17.82% Gross margin ............................................................... 21.2% 20.9% 21.6% EBITDA margin ......................................................... 6.6% 5.9% 6.6% EBITDA growth .......................................................... 18.0% 4.7% 32.6% Operating income margin ........................................... 5.1% 4.6% 5.2% Net income margin ...................................................... 1.6% 2.2% 2.9% Other Operating Data: Number of retail stores (1) ............................................ 120 155 163 Total store area (square meters) (1) .............................. 792,174 923,022 967,160 Mexican Same-Store Sales growth (percentage) ......... 8.55% 7.90% 1.69% U.S. Same-Store Sales growth (percentage in USD) .. 15.9% 25.9% 10.7% Mexican retail sales per square meter (pesos)(2) .......... 41,401 42,741 45,713 3,498U.S. retail sales per square meter (pesos)(2) ................. 79,593 53,178 80,546 6,163 ________________________________________

(1) Calculated as of December 31 of each year.

(2) Retail sales for the year divided by the number of square meters at year-end. Not a weighted average number.

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RISK FACTORS

An investment in our Shares involves risks. Before making a decision to buy our Shares, you should carefully consider the risks described below as well as the other information contained in this offering circular. Any of the following risks could materially affect our business, prospects, financial condition and/or results of operations. In such case, the price of our Shares or the liquidity of our Shares could decline and you could lose all or part of your investment. The risks described below are those that we currently believe may adversely affect us. Additional risks that are presently unknown to us or that we currently deem immaterial may also impair our business.

Risks Related to Our Business

We Participate in a Highly Competitive Market and Increased Competition May Adversely Affect Our Business.

The retail industry in Mexico is characterized by intense competition and increasing pressure on profit margins. The number and type of competitors and the degree of competition experienced by individual stores vary by location. Competition occurs principally on the basis of price and, to a lesser extent, location, selection of merchandise, quality of merchandise (in particular perishables), service, store conditions and promotions. We face strong competition from other national and international operators of supermarket and retail stores, including Walmex, Soriana, Comerci, and other Mexican and international retailers. Additional retailers may enter the market in Mexico in the future either through joint ventures or directly. We also compete with numerous local and regional supermarket and self-service store chains, as well as small, family-owned neighborhood stores (“mom and pops”) and street markets, in each region in which we do business. We cannot assure you that our performance will not be adversely affected by increased competition, whether resulting from the competitors described above or others.

Over the last several years, the retail sector in Mexico has been undergoing consolidation as large retail chains have gained market share at the expense of small, independently-owned and-operated stores. We believe that further consolidation will likely occur as competition intensifies and economies of scale become increasingly important. Future consolidation may occur rapidly and materially alter the current competitive situation in Mexico. Some of our competitors are national and international in scope and are larger and better capitalized than we are and as a result, are likely to be better positioned to take advantage of strategic acquisition and consolidation opportunities. We cannot assure you that any further market consolidation will not be detrimental to our market position, our competitiveness or will not materially and adversely affect our business, financial condition and results of operations.

In addition, the adoption by competitors of innovative store formats, aggressive pricing strategies and retail sale methods, such as the internet and informal and grey-market imports, could cause us to lose market share and could have a material adverse effect on our business, financial condition and results of operations. We believe our competitive position is in large part derived from our commitment to provide our customers with the lowest price product-by-product among local competitors. Over the years, competitors, such as Walmex, have instituted an “Every Day Low Prices” pricing strategy, which compels us to further lower the prices of certain of our products from time to time, increasing the pressure on our operating margins. See “Business—Pricing Strategy.” Other competitors have also announced expansion and modernization plans. These actions by our competitors may cause us to respond by adopting more aggressive pricing policies, advertising at affected store locations, and implementing our growth strategy more rapidly. As other retailers currently in the market in Mexico expand their operations, and as other U.S. and international retailers enter the market in Mexico, competition will continue to intensify and may adversely impact our performance. See “Business—Competition.”

Our business is highly dependent on the Mexican and U.S. economies

In 2009, approximately 85% of our revenue was derived from Mexico and 15% from the United States. The success of our business is to a very large extent subject to the cycles of the Mexican and United States economies. Downturns in the Mexican economy may directly and adversely impact the purchasing power of our primarily lower-to-middle class target market. The macroeconomic environment in which we operate is beyond our control. Additionally, economic conditions in Mexico are heavily influenced by the conditions of the U.S. economy due to various factors. Changes in the Mexican or U.S. economies may adversely affect our business, results of operations, prospects and financial condition.

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We may not be able to successfully execute our growth strategy or effectively manage our growth.

A major component of our future growth is expected to come from adding new stores. Successful execution of our expansion program will require considerable expenditures before any significant associated revenues are generated and is dependent upon a number of factors, including our ability to locate and secure prime locations, the hiring and training of qualified personnel, the level of existing and future competition in areas where new stores are to be located, the availability of additional capital, our ability to execute our retail concepts successfully in new markets and favorable financial market and macroeconomic conditions in Mexico. We cannot assure you that our future retail stores will generate revenues and cash flow comparable with those generated by our existing retail stores.

We expect that our expansion will also place significant demands on our management resources. We will be required to identify attractive retail store locations, negotiate favorable rental terms or acquire the property, obtain permits, licenses and zoning variances to open new retail stores on a timely and cost-effective basis while maintaining a high level of quality, efficiency and performance at both existing and newly opened retail stores. We cannot guarantee that we will be able to obtain and distribute adequate product supplies to our retail stores at acceptable costs. We also cannot assure you that our new stores will not result in diversion of sales from our existing operations.

In the event we are unable to effectively manage and implement our growth strategy, such failure could have an adverse effect on our business, financial condition and results of operations.

A significant portion of our business is concentrated geographically, and adverse regional conditions or events could adversely affect us.

Our principal properties and operations are concentrated in the southern and central regions in Mexico. Although we operate 21 medium-sized stores in Southwestern United States, most of our stores are located in Mexico and a significant portion of our revenues is derived from stores in southern and central Mexico. Natural disasters, such as earthquakes, fire, flooding, power shortages and hurricanes, adverse economic conditions or increased competition in southern and central Mexico could have adverse effects on our financial condition and results of operations. Public health threats, such as the H1N1 flu virus, the bird flu, Severe Acute Respiratory Syndrome (SARs) and other highly communicable diseases, affect travel, tourism and shopping patterns. During the second quarter of 2009, for example, our results of operation were negatively impacted as a result of the H1N1 flu crisis, which disproportionately affected Mexico. In addition, political and social disturbances that affect southern and central Mexico may significantly affect Mexican economic policy and, consequently, our operations. See “—Risks Related to Mexico.” Although Mexico has enjoyed a relatively stable political environment in recent years, political unrest and instability in southern and central Mexico, where our principal properties and operations are concentrated, may adversely affect our business results of operations and financial condition. Moreover, although conditions throughout Latin America vary from country to country, our investors’ reactions to developments in Latin America generally may affect the market price of our Shares. Although we may diversify geographically, we expect that our business will continue to depend to a very large extent on the continued viability of the conditions in southern and central Mexico.

Our success depends on our retention of certain key personnel, our ability to hire additional key personnel and the maintenance of good labor relations.

We depend on the performance of our executive officers and key employees. In particular, our senior management has significant experience in the retail apparel, electronics, appliance, white goods, household furniture, perishable goods, and grocery sectors and the loss of any of them, or our inability to attract and retain sufficient qualified management, could negatively affect our ability to execute our business strategy. Additionally, we do not have “key person” life insurance policies on any of our management or employees.

Our future success also depends on our continuing ability to identify, hire, train and retain other qualified sales, marketing and managerial personnel. Competition for such qualified personnel is intense. We generally do not hire outside of Mexico and we may be unable to attract, assimilate or retain qualified personnel. Our businesses will be harmed if we cannot attract the necessary personnel.

In addition, approximately 53% of our employees are members of various unions and we could incur higher ongoing labor costs and disruptions in our operations in the event of a strike or other work stoppage.

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We may have difficulty in obtaining enough quality, low-cost merchandise.

Our future success depends on our ability to select and purchase quality merchandise at attractive prices. We have historically been able to locate and purchase quality merchandise, but such merchandise may not be available in the future, or it may not be available in quantities necessary to accommodate our expanding businesses. We are not generally dependent on any single supplier or group of suppliers. Our business and results of operations may be adversely affected by a disruption in the availability of sufficient quantities of high quality, affordable merchandise.

In addition, our pricing strategy is based on our commitment to always provide our customers at all locations with the lowest price for every product we sell. Unlike many of our competitors that price their products based on target margins, we engage in local comparison shopping on a daily, weekly, bi-weekly, monthly and quarterly basis (depending on the product) and price our products accordingly. Although this pricing strategy has served us well historically, we cannot assure you that this strategy will always be successful or sustainable in the long-term. Certain of our competitors could maintain their low prices for extended periods of time, which could force us to change our product selections. In the event we are unable to renegotiate our cost of goods based on the prices we charge our customers, we may experience reduced margins or losses or be forced to change our pricing strategy, which may adversely affect our business, financial condition and results of operations.

If we are unable to predict or react to changes in consumer demand or competitors’ pricing, we may lose customers and our sales may decline.

Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand and preferences regarding new products and services. Our products and services must appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to change. We often make commitments to purchase products from our vendors several months in advance of the proposed delivery. If we misjudge the market for our merchandise our sales may decline significantly. We may overstock unpopular products and be forced to take significant inventory markdowns or miss opportunities for other products, both of which could have a negative impact on our profitability. Conversely, shortages of items that prove popular could reduce our net revenues. In the event that our competitors are better able to anticipate market trends, our market share could decrease.

In addition, our pricing strategy requires that we engage in regular comparisons of market prices at both a regional and local level in order to provide our customers with the lowest price among our local competitors. In the event that our processes for such comparison is delayed or malfunctions, we may not be able to respond to our competitors’ prices with a price adjustment of our products. We believe our customers perceive us as committed to our lowest-price strategy and any failure or perceived failure in this regard, may harm our competitive position and may cause us to lose customers.

Our future success depends on our ability to effectively deliver our products to our retail stores in a timely and cost-effective manner.

We operate a 60,000 square meter distribution center in Zumpango, outside Mexico City, a 60,457 square meter distribution center in Villahermosa, and an 883 square meter distribution center in Monterrey. In the United States, we rely on a 4,068 square meter produce warehouse operated by a third-party. Our business depends on delivering our products to our stores in a timely and cost-effective manner. Approximately 71% of our inventory in Mexico is shipped directly from suppliers and delivered to one of our three distribution centers in Mexico. The merchandise is then processed and distributed to our retail stores. Any natural disaster or other serious disruption to one or more of these facilities due to fire, flooding, earthquakes, power shortages, hurricane or any other cause would damage a significant portion of our inventory, impair our ability to adequately stock our retail stores and process returns of products to vendors and negatively affect our sales and profitability. We believe our facilities have the capacity to serve an additional approximately 160 stores in Mexico; however, in the event we experience significant growth outside our current geographic area, we may need to acquire additional facilities or seek alternative cost efficiencies. Such expansion or alternatives could adversely affect our business, financial condition and results of operations.

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We may not be able to obtain the capital we need to finance our working capital needs or implement our growth strategy.

We depend on the availability of credit for our working capital needs and the implementation of our growth strategy. Our credit facilities with certain Mexican and foreign banks enable us to finance our growth strategy. To implement our expansion and modernization plans, we may require additional capital. In addition to the proceeds of this Global Offering, we intend to rely upon internally generated cash from our operations, and if necessary, bank debt and bond issuances in the domestic and international capital markets. We cannot assure you that we will be able to generate sufficient cash flows from operations or obtain financing on favorable conditions, or otherwise. Similarly, we cannot assure you that we will be able to continue to raise financing from past sources, or from other sources, or on terms comparable to our existing financing. In addition, the global credit crisis and the related recessionary environment has tightened the availability of credit, which may impact our ability to obtain financing on terms attractive to us, or at all, in the future. If we are unable to continue to obtain financing on favorable terms, we may face increased financing costs or be unable to implement our growth strategy as planned, thus adversely affecting our business, financial condition and results of operations.

Our results of operation and Same-Store Sales will fluctuate and may not be a meaningful indicator of future performance.

Our net sales and operating results fluctuate significantly, and we cannot assure you that our Same-Store Sales will continue to grow at the rates achieved in the past. Moreover, our Same-Store Sales growth may decline. Changes in our Same-Store Sales performance could affect our results of operations and the price of our Shares. A number of factors have historically affected, and will continue to affect, our Same-Store Sales, including:

• competition;

• our new store openings;

• general regional and national economic conditions;

• consumer trends and preferences;

• changes in the other businesses in the areas surrounding our locations;

• new product introductions and changes in our product mix;

• timing and effectiveness of promotional events; and

• weather.

In addition, our retail business is seasonal in nature and our net sales and operating results fluctuate from quarter to quarter. We have historically experienced seasonality in our sales, principally due to stronger sales during the Christmas holiday season. In addition, our quarterly results of operations and profitability may fluctuate significantly due to the timing of the opening of new stores and their operating results. For example, the opening of a new store in a region in which we already have a presence, could adversely affect the level of sales in existing stores. Conversely, the opening of a store in an area in which we have previously not operated any stores may lead to an initial peak of sales due to the novelty of our brand. Our results of operations for any one quarter are not necessarily indicative of our annual results of operations and an unanticipated decline in revenue or Same-Store Sales may cause the price of our Shares to fluctuate significantly.

We may pursue strategic acquisitions, which could have an adverse impact on our business.

In 2005, we acquired 29 stores from Carrefour. More recently, in 2008, we acquired seven Gigante stores in the United States from Grupo Gigante. We may from time to time acquire complementary companies or businesses. Acquisitions may result in difficulties in assimilating acquired companies, and may result in the diversion of our capital and our management’s attention from other business issues and opportunities. We may not be able to successfully integrate operations that we acquire, including their personnel, financial systems, distribution, operations and general operating procedures. If we fail to successfully integrate acquisitions, our business could suffer. In addition, the integration of any acquired business, and their financial results, into ours may adversely affect our operating results. Furthermore, we cannot assure you that any acquisitions we may want to pursue or that could be attractive to us in the future could be successfully achieved.

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Our credit facilities contain restrictions that may limit our ability to operate our businesses, and in the event of a default, all of our borrowings may become immediately due and payable.

Our existing credit facilities contain a number of significant covenants that impose financial and other restrictions on us, including:

• limitations on the incurrence of additional debt;

• the maintenance of certain financial ratios;

• restrictions on the payment of dividends;

• the ability to create liens; and

• the ability to dispose of assets.

Our debt and these financial restrictions are likely to make us more vulnerable to economic downturns, limit our ability to withstand competitive pressures and reduce our flexibility to respond to changing business or economic conditions. See “—Risks Related to Mexico.”

Our ability to execute our expansion plan, including our ability to obtain additional financing on terms and conditions acceptable to us, could be affected as a result of the financial restrictions included in our credit facilities. Although we intend to comply with these restrictions, we may not be able to do so in the future and, upon an event of default, we may not be able to obtain a waiver to prevent termination of our credit facilities. In addition, a significant portion of our financial indebtedness is subject to cross default provisions. Our breach of any of the restrictive covenants or our inability to comply with the financial covenants would result in a default under the other applicable debt instruments. If any such default occurs, the lenders may elect to declare all outstanding borrowings, together with accrued interest and fees, to be immediately due and payable. If such debt were accelerated, we cannot guarantee you that our assets would be sufficient to repay in full all our liabilities, and as a result the value of the Shares would be materially reduced or eliminated. If we fail to comply with our obligations and our lenders decide to terminate our agreements, our financial condition and results of operations may be adversely affected.

We are subject to risks affecting shopping centers.

Shopping centers are subject to various factors that affect their development, administration and profitability some of which are outside our control. Many of our stores are located in shopping centers, and as a result a substantial portion of our revenues is sensitive to factors affecting these and other shopping centers. These factors include:

• the accessibility and the attractiveness of the area where the shopping center is located;

• the flow of people and the level of sales of each shopping center rental unit;

• increased competition from other shopping centers which might drive down our prices and profits;

• the need to periodically renovate, repair and release space, the higher costs thereof and the ability of a tenant to provide adequate maintenance and insurance; and

• the fluctuations in occupancy levels in the shopping center which could result in lower rent prices and lower revenues.

In addition, given that a portion of our revenues is derived from the rental of retail properties within shopping centers, our results from operations depend in part on our ability to lease these properties on economically favorable terms. In our shopping centers, lease payments generally consist of a minimum fixed portion plus a portion based upon a negotiated percentage of a retail tenant’s sales. Pursuant to our lease agreements, if retail sales decline, we may receive only the minimum, fixed portion of these payments from a retail tenant. In addition, if retail sales decline substantially for an extended period of time, some retail tenants may be unable to pay their minimum fixed rental

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obligations. Furthermore, if we are forced to evict a tenant for non-payment, new tenants may be less likely to agree to pay a minimum lease payment as high as those that the previous tenant paid. In addition, the voluntary closure of operations or the bankruptcy or concurso mercantil of a major retail tenant, may also have a material adverse effect on the shopping center where such tenant is located and may make it substantially more difficult to lease the remainder of the affected retail property. During times of economic recession, these risks increase.

Moreover, the shopping center business is closely related to consumer spending, and therefore, to the economy in which such customers are located. An economic downturn in the areas in which the shopping centers are located may result in early termination of tenant leases, bankruptcy of tenants and reductions in shopping center sales due to lower disposable income, which may materially and adversely affect our business, financial condition and results of operations.

Our U.S. operations expose us to additional risks, some of which differ from the risks we face in Mexico.

We operate 21 retail stores under the El Super format in the southwest region of the United States. Although we currently operate only in southern California, Arizona and Nevada, we intend to pursue any attractive commercial opportunities that may arise in other regions of the United States populated by our target demographic, the Mexican-American community. Net sales from our retail operations in the United States represented 15.4% of our consolidated revenues in 2009. We are subject to the risks inherent in conducting business in multiple countries, any one of which could negatively impact our business. These risks include:

• economic downturns;

• changes in governmental policy;

• international incidents;

• military outbreaks or acts of war or terrorism;

• government or political instability;

• devaluation of the U.S. dollar;

• different, more stringent or inconsistent regulation of our business between various jurisdictions; and

• government protectionism.

Further, our presence in the United States subjects us to a number of federal immigration laws and regulations, including requirements applicable to the verification of our employees’ eligibility to work in the United States, and the documentation of our compliance therewith. The enactment of more demanding requirements could result in our having to incur additional expenses in order to adjust our employment and/or credit extension, procedures and to ensure continued compliance with the new requirements. One or more of these factors could impair our current or future U.S. operations and, as a result, harm our overall business.

Any material disruption of our information systems or difficulties or delays in the implementation of new information systems could disrupt our business and impair our operations.

We are dependent on multiple customized information systems to operate our businesses, including processing transactions, responding to customer inquiries, managing inventory, purchasing, selling and shipping goods on a timely basis and maintaining cost-efficient operations. We may experience operational problems with our information systems as a result of system failures, viruses, computer “hackers” or other causes. Any material disruption or slowdown of our systems could cause information to be lost or delayed which could—especially if the disruption or slowdown occurred during the high-sales seasons—result in delays in the delivery of merchandise to our stores and our customers and ultimately could cause our sales to decline.

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In addition, we, in collaboration with various third-party providers, are in the process of a company-wide roll-out of a new information system. Although the current system has contributed significantly to our competitiveness and growth to date, management believes this update will facilitate the implementation of our growth strategy. The new technology should simplify the current processes and is expected to facilitate a more efficient application of our systems in new or acquired stores and keep us competitive and responsive to the needs of our customers. If we experience delays or malfunctions in the new systems, we could lose customers.

Recent reforms to Mexican federal tax laws may have an adverse effect on our financial condition and results of operations.

The Mexican government, under the Calderón administration, has recently begun implementing certain tax reforms. As a result, on October 1, 2007, the Ministry of Finance (Secretaría de Hacienda y Crédito Público), announced the enactment of a federal business flat rate tax and a federal tax on cash deposits, both applicable to all Mexican corporations.

More recently, on October 31, 2009, the Ministry of Finance announced that a temporary increase to the fixed corporate tax rate was approved. As a result, the highest income tax rate was increased from 28% rate to a maximum rate of 30%. The maximum rate will be reduced to 29% for 2013 and to 28% for 2014. In addition, the value added tax rate was increased from 15% to 16% on January 1, 2010.

The low rate at which we pay income tax has been critical to our profitability in recent years and if it were to continue to increase, our financial performance and results of operations would be materially and adversely affected.

We cannot assure you that we will not be subject to additional taxes in the future or that current taxes will not be increased. Our provision for income taxes was Ps.626.8 million, Ps.371.4 million and Ps.337.4 million in 2007, 2008 and 2009, respectively, which represented an effective income tax rate of 52%, 28% and 20%, respectively.

Our trademarks and trade names may be misappropriated or challenged by others.

We own the material trademark and trade name rights used in connection with our brand and the marketing and sale of our products, which include Chedraui, Super Che, Super Chedraui, “Cuesta Menos”, D’Calidad Chedraui and others. We believe our brand names and related intellectual property are important to our continued success. We attempt to protect our trademarks and trade names by exercising our rights under applicable trademark and copyright laws. To date, however, we have registered our material trademarks only in Mexico and may not be successful in asserting trademark or trade name protection in other jurisdictions. Any infringement of our intellectual property rights or denial of registration in a foreign jurisdiction would likely result in a commitment of our time and resources to protect these rights through litigation or otherwise, which could be expensive, time-consuming or require certain rebranding and repackaging. If we were to fail to protect our intellectual property rights for any reason, it could have an adverse effect on our business, results of operations and financial condition.

We are a holding company with no revenue generation of our own and depend upon dividends and other funds from subsidiaries to fund our operations and, to the extent we decide to do so, pay dividends.

We are a holding company and our operations are conducted through our subsidiaries. We do not have any material assets other than the shares of our subsidiaries. As a result, our ability to fund our operations and, to the extent we decide to do so, pay dividends, primarily depends on the ability of our subsidiaries to generate earnings and to pay dividends to us.

Our subsidiaries are separate and distinct legal entities. Any payment of dividends, distributions, loans or advances by our subsidiaries is limited by general provisions of Mexican law regarding allocation of corporate profits, including those regarding mandatory employee profit sharing. If a shareholder were to assert a claim against us, the enforcement of any related judgment would be limited to the available assets of our subsidiaries. Payment of dividends by our subsidiaries will also be contingent upon our subsidiaries’ earnings and business considerations. Additionally, our right to receive any assets of any of our subsidiaries as an equity holder of those subsidiaries, upon their liquidation or reorganization, will be effectively subordinated to the claims of our subsidiaries’ creditors, including trade creditors.

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We may face financial risks related to derivative financial instruments.

We have used, and we may continue to use, derivative financial instruments to manage the risk related to interest rates and foreign currency exchange rates of our indebtedness, reduce our financing costs, obtain alternative financing sources and cover some of our financial risks.

Most of our derivative financial instruments are subject to margin calls in the event the market value of such instruments exceeds pre-agreed caps. In several scenarios, cash required to cover the margin call requirements may be considerable and may reduce our capacity to fund our operations and other needs.

If the interest rate decreases below current levels, the risk exposure may increase. If the underlying credits covered by the derivatives are modified, we may need to restructure them.

Risks Related to the Shares

The Shares have never been publicly traded, and an active market for the shares may not develop and the market price for our Shares may decline following the offering.

Prior to the offering, there has been no public market for our Shares. Although we have applied for our Shares to be admitted for listing on the BMV, an active trading market may not develop or, if developed, may not be maintained. The Mexican securities markets, including the BMV as the primary trading market, are substantially smaller, less liquid, more volatile, have a lower institutional investor base, and are more concentrated than major international securities markets, such as those of the United States. For example, the BMV had an exchange capitalization of approximately U.S.$357 billion (Ps.4,615 billion) on December 31, 2009, and an average daily trading volume of U.S.$318 million in 2009. The top ten stocks in terms of trading volume accounted for approximately 55% of all shares traded on the BMV in 2009. Such market characteristics may substantially limit the capacity of holders of our Shares to sell them, or to sell them at the price and time which such holders want to sell them, and this may negatively affect the market price of, and liquidity for our Shares.

Shares of companies offered in an initial public offering often trade at a discount to the initial offering price due to underwriting discounts and related offering expenses. This represents an immediate dilution in shareholders’ equity value per Share to new investors purchasing Shares in the offering at the initial public offering price. As a result of this dilution, investors purchasing Shares in the offering may receive significantly less than the full purchase price that they paid for the shares purchased in the offering in the event of a liquidation. The possibility that our Shares may trade at a discount to our net asset value is separate and distinct from the risk that our net asset value per Share may decline. We cannot predict whether our Shares will trade above, at or below net asset value.

The market price of our Shares may fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of our Shares may prevent you from being able to sell your shares at or above the price you paid for your shares. The market price and liquidity of the market for our Shares may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, among others:

• significant volatility in the market price and trading volume of securities of companies in our sector, which are not necessarily related to the operating performance of these companies;

• changes in earnings or variations in operating results;

• operating performance of companies comparable to us;

• new laws or regulations or new interpretations of laws and regulations, including tax guidelines, applicable to our businesses;

• general economic trends in the Mexican, U.S. or global economies or financial markets, including those resulting from war, incidents of terrorism or responses to such events; and

• political conditions or events.

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In addition, although there is no present intention to do so, in the future, we may issue additional equity securities or our principal shareholders may dispose of their interests in us. Any such issuances or sales or the prospect of any such issuances or sales could result in a dilution of shareholders’ economic and voting rights in us or a negative market perception and potentially a decrease in the market price of the shares.

Our current principal shareholders will continue to have significant influence over us after the Global Offering, and their interests could conflict with yours.

Upon the consummation of this transaction, considering the selling shareholder has sold 14,407,647 Shares and assuming no exercise of the over-allotment options, the original shareholders will beneficially own approximately 86% of our outstanding common stock. Our principal shareholders have the ability to determine the outcome of substantially all matters submitted for a vote to our stockholders and thus exercise control over our business policies and affairs, including the following:

• the composition of our board of directors and, consequently, any determinations of our board with respect to our business direction and policy, including the appointment and removal of our officers;

• determinations with respect to mergers, other business combinations and other transactions, including those that may result in a change of control;

• whether dividends are paid or other distributions are made and the amount of any such dividends or distributions;

• sales and dispositions of our assets; and

• the amount of debt financing that we incur.

Our principal shareholders vote in concert as a result of the existence of a family trust and may direct us to take actions that could be contrary to your interests and under certain circumstances may be able to prevent other shareholders, including you, from blocking these actions or from causing different actions to be taken. Also, the principal shareholders may prevent change of control transactions that might otherwise provide you with an opportunity to dispose of or realize a premium on your investment in the shares. We cannot assure you that the original shareholders will act in a manner consistent with your best interests.

Preemptive rights may be unavailable to U.S. shareholders.

Under current Mexican law, whenever we issue new shares for cash, subject to certain exceptions (including exceptions related to public offerings) we must grant preemptive rights to our shareholders, giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. We may not be able to offer shares to U.S. shareholders pursuant to preemptive rights granted to our shareholders in connection with any future issuance of shares unless:

• a registration statement under the Securities Act is effective with respect to such rights and shares; or

• an exemption from the registration requirements of the Securities Act is available.

We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with a registration statement to enable U.S. shareholders to exercise their preemptive rights, the indirect benefits of enabling U.S. shareholders to exercise preemptive rights and any other factors that we consider appropriate at the time. We will then decide whether to file such a registration statement.

Such a registration statement may not be filed. As a result, U.S. shareholders may not be able to exercise their preemptive rights in connection with future issuances of our Shares. In this event, the economic and voting interest of U.S. shareholders in our total equity would decrease in proportion to the size of the issuance. Depending on the price at which shares are offered, such an issuance could result in dilution to U.S. shareholders.

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The protections afforded to minority shareholders in Mexico are not as comprehensive as those in the United States.

Under Mexican law, the protections afforded to minority shareholders and the fiduciary duties of officers and directors are, in certain respects, not as comprehensive or different from those in the United States and other jurisdictions. Although Mexican law has been modified to reduce the percentage necessary to file a stockholder derivative suit (to 5%) and to impose specific duties of care and loyalty applicable to our directors and to our principal officers, the Mexican legal regime concerning fiduciary duties of directors is not as comprehensive or has been the subject of judicial interpretation, as in the United States, and the criteria applied in the United States to ascertain the independence of corporate directors is different from the criteria applicable under corresponding Mexican laws and regulations. Further, in Mexico, there are no procedures for class actions as such actions are conducted in the United States, and there are different procedural requirements for stockholder derivative suits. As a result, in practice it may be more difficult for our minority shareholders to enforce their rights against us or our directors or officers than it would be for shareholders of a U.S. company.

It may be difficult to enforce civil liabilities against us or our directors, executive officers and controlling persons.

We will be a publicly traded variable capital stock corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. Most of our directors, executive officers, controlling persons and experts named in this offering circular are non-residents of the United States, and substantially all of the assets of such non-resident persons and substantially all of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States or in any other jurisdiction outside of Mexico upon such persons or us or to enforce against them or us in courts of any jurisdiction outside of Mexico judgments predicated upon the laws of any such jurisdiction, including any judgment predicated upon the civil liability provisions of United States federal and state securities laws. There is doubt as to the enforceability in Mexican courts, in original actions or in actions for enforcement of judgments obtained in courts of jurisdictions outside Mexico, of civil liabilities arising under the laws of any jurisdiction outside Mexico, including any judgment predicated solely upon United States federal or state securities laws. See “Service of Process and Enforcement of Civil Liabilities.”

If we issue additional equity securities in the future, you may suffer dilution, and trading prices for our securities may decline.

We may issue additional shares of our common stock for financing future acquisitions or for other general corporate purposes, although there is no present intention to do so. Our existing stockholders may dispose of some of their shares. Any such issuance or sale could result in a dilution of your ownership stake and/or the perception of any such issuances or sales could have an adverse impact on the market price of the Shares.

Risks Related to Mexico

Adverse economic conditions in Mexico may adversely affect our financial condition and results of operations.

We are a Mexican company, substantially all of our operations are conducted in Mexico and are dependent upon the performance of the Mexican economy. The global credit crisis and the related recessionary environment has had significant consequences worldwide, including Mexico, such as increased costs of financing, lower demand for our products, lower real pricing of our products or a shift to lower margin products. Moreover, in the past, Mexico has experienced prolonged periods of economic crises, caused by internal and external factors over which we have no control. Such periods have been characterized by exchange rate instability, high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates. We cannot assure you that such conditions will not worsen or reemerge, as applicable, in the future, or that such conditions will not have an adverse effect on our business, financial condition or results of operations.

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Political conditions in Mexico could affect Mexican economic policy and adversely affect us.

Political events in Mexico may significantly affect Mexican economic policy and, consequently, our operations. Mexican President Felipe Calderón Hinojosa, of the political party Partido Acción Nacional (“PAN”), may implement significant changes in laws, public policies and/or regulations that could affect Mexico’s political and economic situation, which could adversely affect our business. Furthermore, following Mr. Calderón’s election in 2006, the Mexican Congress became politically divided, as the PAN does not have majority control. Elections for the Mexican Senate and House of Representatives and for the governorship of certain states of Mexico took place on July 5, 2009, giving the Partido Revolucionario Institucional a majority in the legislature. The lack of alignment between the legislature and the President could result in deadlock and prevent the timely implementation of political and economic reforms, which in turn could have an adverse effect on Mexican economic policy, on our business and the prices of and returns on Mexican securities. It is also possible that political uncertainty may adversely affect Mexico’s economic situation.

We cannot provide any assurance that future political developments in Mexico, over which we have no control, will not have an adverse effect our business, financial position or results of operations. The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. Mexican governmental actions concerning the economy could have a significant impact on Mexican private sector entities in general, as well as on market conditions and prices and returns on Mexican securities.

The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert pesos into dollars or other currencies, and Mexico has not had a fixed exchange rate control policy since 1982. The Mexican peso has been subject to significant devaluations against the U.S. dollar in the past, however, and may be subject to significant fluctuations in the future. Severe devaluation or depreciation of the Mexican peso may result in governmental intervention to institute restrictive exchange control policies, as has occurred before in Mexico and other countries. Accordingly, fluctuations in the value of the Mexican peso against the U.S. dollar may have an adverse effect on our financial position. We cannot assure you that the Mexican Government will maintain its current policies with regard to the peso or that the peso’s value will not fluctuate significantly in the future.

Developments in other countries could adversely affect the Mexican economy, our results of operations and the price of our Shares.

The Mexican economy may be, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in other countries may differ significantly from economic conditions in Mexico, investors’ reactions to adverse developments in other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, for example, prices of both Mexican debt securities and equity securities decreased substantially as a result of developments in Russia, Asia and Brazil. Most recently, credit issues in the United States related principally to the sale of sub-prime mortgages have resulted in significant fluctuations in the financial markets.

In addition, in recent years economic conditions in Mexico have become increasingly correlated with economic conditions in the United States as a result of the North American Free Trade Agreement (“NAFTA”) and increased economic activity between the two countries. Therefore, adverse economic conditions in the United States, the termination of NAFTA or other related events could have a significant adverse effect on the Mexican economy. We cannot assure you that events in other emerging market countries, in the United States or elsewhere will not adversely affect our business, financial condition and results of operations.

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USE OF PROCEEDS

The net proceeds to us from the sale of the Shares being offered by us in the Global Offering will be Ps.3,911 million after deducting commissions and estimated offering expenses based on an initial offering price of Ps. 34.00 per Share and assuming no exercise of the over-allotment options granted by us to the initial purchasers and the Mexican underwriters. We intend to use the net proceeds to fund our ongoing expansion plan and for general corporate purposes, including payment of our short-term debt obligations.

We will not receive any proceeds from the sale of Shares by the selling shareholder.

The above does not reflect any proceeds from the sale of Shares pursuant to our Executive Stock Compensation Plan or from the concurrent sale of up to Ps.157 million of Shares to certain members of our board of directors. See “Management – Share Ownership.”

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CAPITALIZATION

The following table sets forth (i) our historical capitalization as of December 31, 2009 and (ii) as adjusted to reflect our receipt of the net proceeds from the sale of the Shares sold by us, assuming no exercise of the over-allotment options granted by us to the initial purchasers and the Mexican underwriters. You should read this table together with the information under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Audited Financial Statements included elsewhere in this offering circular. Solely for the convenience of the reader, peso amounts appearing in the table below have been translated to U.S. dollar amounts at the Banco de México published rate as of April 29, 2010, which was Ps.12.25 per U.S. dollar.

As of December 31, 2009 Actual As Adjusted(2)

(millions of

pesos) (millions of

dollars) (millions of

pesos) (millions of

dollars) Short-term debt

Notes payable to financial institutions......................................... 336 27 - -

Long-term debt: Bank loans ................................................................................... 3,191 261 3,191 261

Other long-term obligations(1) 648 53 648 53 Total long-term debt ................................................................ 3,840 313 3,840 313

Total debt ................................................................................... 4,176 341 3,840 313

Stockholders’ equity: Capital stock ................................................................................ 197 16 4,108 335 Retained earnings ........................................................................ 10,087 824 10,087 824 Translation effects of foreign operations and valuations of

hedging derivatives.................................................................. (209) (17) (209) (17)Majority stockholders’ equity...................................................... 10,075 823 13,986 1,142 Minority interest in consolidated subsidiaries ............................. 734 60 734 60

Total stockholders’ equity ....................................................... 10,809 882 14,720 1,202

Total capitalization .................................................................... 14,985 1,223 18,560 1,515 (1) Consists of the Banorte Financing Trust, as defined herein. (2) As adjusted for this offering, assuming no exercise of the over-allotment option. These figures do not

reflect the dividend payment of Ps.224 million that we paid to our shareholders on April 7, 2010 or any receipt of proceeds from the sale of Shares pursuant to our Executive Stock Compensation Plan. See “Management – Share Ownership.”

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DILUTION

As of December 31, 2009, our net tangible book value was Ps. 13.22 per Share. Net tangible book value per Share represents the book value of our total tangible assets minus our total liabilities, divided by our number of Shares outstanding. Our pro forma net tangible book value per Share as of December 31, 2009 would increase to Ps. 2.49 per Share (or Ps. 2.85 if the initial purchasers and the Mexican underwriters exercise in full their options to purchase additional Shares in this offering):

• after giving effect to a primary base offering of 119,385,898 Shares at the initial offering price of 34.00 per Share; and

• after deducting underwriting fees and other expenses we must pay in connection with the Global Offering.

This amount represents an immediate increase of Ps. 2.49 in net tangible book value per Share to our existing shareholders listed below and an immediate dilution of Ps. 18.29 in net tangible book value per Share (or of Ps. 17.92 per Share if the initial purchasers and the Mexican underwriters exercise in full their options to purchase additional Shares in this offering) to new investors purchasing at an initial offering price of Ps. 34.00 per Share.

The following table illustrates the dilution in net tangible book value:

Per Share Initial offering price.............................................................................................................. Ps. 34.00

Net tangible book value before the Global Offering ..................................................... 13.22 Increase in net tangible book value attributable to the sale of Shares ........................... 2.49

Pro forma net tangible book value after the Global Offering ............................................... 15.71 Dilution in net tangible book value to purchasers ................................................................ 18.29

Our existing shareholders did not acquire any Shares during the five-year period ended December 31, 2009.

For the year ended December 31, 2009, our earnings per Share were Ps.1.58. Giving effect to a primary base offering of 119,385,898 Shares, our earnings per Share would have been Ps.1.38 as of December 31, 2009. This represents a decrease of approximately 13% in our earnings per Share.

The information above does not reflect any dilution resulting from the sale of Shares pursuant to our Executive Stock Compensation Plan or from the concurrent sale of up to Ps.157 million of Shares to certain members of our board of directors. See “Management – Share Ownership.”

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DIVIDENDS AND DIVIDEND POLICY

A vote by the majority of our shareholders present at a shareholders’ meeting determines the declaration, amount and payment of dividends. Under Mexican law, dividends may only be paid from retained earnings included in financial statements that have been approved by a company’s shareholders and if losses for prior fiscal years have been recovered. In addition, payment of dividends could be limited by covenants contained in any of our debt instruments.

Although we have not paid dividends in the past, on April 7, 2010, we paid dividends in the amount of approximately Ps.224 million to our shareholders. Our board of directors is currently considering the adoption of a dividend policy. This policy and the payment of dividends would be subject to applicable law and will be based on a number of factors, including our results of operations, financial condition, cash requirements, tax considerations, future prospects and other factors that our board of directors and our shareholders deem relevant, including the terms and conditions of future debt instruments that may limit our ability to pay dividends. Our controlling shareholders currently have the power to determine matters related to the payment of dividends and they will continue to do so after consummation of the Global Offering.

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EXCHANGE RATES

The following table sets forth, for the periods indicated, the period-end, average, high and low exchange rates published by Banco de México expressed in pesos per U.S. dollar. The average annual rates presented in the following table were calculated by using the average of the exchange rates on the last day of each month during the relevant period. The rates shown below are in nominal pesos that have not been restated in constant currency units. No representation is made that the peso amounts referred to in this offering circular could have been or could be converted into U.S. dollars at any particular rate or at all.

We cannot assure you, however, that the Mexican government will maintain its current policies with respect to the peso or that the peso will not depreciate significantly in the future.

Banco de México Exchange Rate(1) (Ps. Per U.S.$) Period-End Average High Low

Year Ended December 31, 2005 ............................................................................................. 10.63 10.89 11.40 10.412006 ............................................................................................. 10.81 10.90 11.48 10.432007 ............................................................................................. 10.92 10.93 11.27 10.662008 ............................................................................................. 13.83 11.14 13.92 9.92 2009 ............................................................................................. 13.07 13.50 15.37 12.60Month Ended October 31, 2009 ......................................................................... 13.15 13.23 13.68 12.92November 30, 2009 ..................................................................... 12.92 13.11 13.38 12.87December 31, 2009...................................................................... 13.07 12.86 13.07 12.60January 31, 2010.......................................................................... 13.01 12.80 13.01 12.65February 28, 2010........................................................................ 12.78 12.94 13.18 12.78March 31, 2010............................................................................ 12.33 12.57 12.75 12.33

(1) Source: Banco de México.

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THE MEXICAN SECURITIES MARKET

The information concerning the Mexican securities market set forth below has been prepared based on materials obtained from public sources, including the CNBV, the BMV, Banco de México and information made public by market participants. The following summary does not purport to be a comprehensive description of all of the material aspects related to the Mexican securities market.

Prior to the offering, there has been no trading market for any of our outstanding capital stock in Mexico, the United States or elsewhere. Our Shares will be registered in the RNV, and we have applied for listing on the BMV under the symbol “CHDRAUI.”

We cannot predict the extent to which a trading market in Mexico, the United States or elsewhere will develop with respect to our Shares. We also cannot predict the liquidity of any trading market for our Shares, should any develop. If the trading volume of our Shares on the BMV falls below certain levels, the price for our Shares may be affected and our Shares may be delisted or deregistered in that market.

Trading on the BMV

The BMV, located in Mexico City, is the only stock exchange in Mexico. Operating continuously since 1907, the BMV is organized as variable capital public stock corporation, or sociedad anónima bursátil de capital variable. Securities trading on the BMV occurs each business day from 8:30 a.m. to 3:00 p.m., Mexico City time, subject to adjustments to operate uniformly with certain United States markets.

Since January 1999, all trading on the BMV has been electronic. The BMV may impose a number of measures to promote an orderly and transparent trading price of securities, including the operation of a system of automatic suspension of trading in shares of a particular issuer, when price fluctuations exceed certain limits.

Settlement on the BMV is effected three business days after a share transaction. Deferred settlement is not permitted without the approval of the BMV, even where mutually agreed. Most securities traded on the BMV, including our Shares, are on deposit with Indeval, a securities depositary that acts as a clearinghouse, depositary and custodian, as well as a settlement, transfer and registration agent for BMV transactions, eliminating the need for physical transfer of securities.

Transactions must be settled in pesos except under limited circumstances in which a settlement in foreign currencies may be permitted. Although the Mexican Securities Market Law (Ley del Mercado de Valores) provides for the existence of an over-the-counter market, no such market for securities in Mexico has developed.

Market Regulation and Registration Standards

In 1925, the Mexican Banking Commission (Comisión Nacional Bancaria) was established to regulate banking activity and in 1946, the Mexican Securities Commission (Comisión Nacional de Valores) was established to regulate stock market activity. In 1995, these two entities were merged to form the CNBV.

Among other things, the CNBV regulates the public offering and trading of securities and participants in the Mexican securities market, and imposes sanctions for the illegal use of insider information and other violations of the Mexican Securities Market Law. The CNBV regulates the Mexican securities market, the BMV, and brokerage firms through its staff and a board of governors comprised of thirteen members.

Mexican Securities Market Law

On December 30, 2005, the current Mexican Securities Market Law was enacted and published in the Official Gazette and became effective on June 28, 2006; however, an additional period of 180 days was granted to issuers to incorporate to their bylaws the new adopted corporate governance provisions. This Mexican Securities Market Law changed the Mexican securities regulation in various material respects. The reforms introduced by this law were intended to update the Mexican regulatory framework applicable to the securities market and publicly traded companies, as compared to international standards. Publicly traded companies are regulated by the Mexican Securities Market Law and, secondarily, by the Mexican Corporations Law (Ley General de Sociedades Mercantiles).

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The Mexican Securities Market Law (i) establishes that public entities and the entities controlled by them are considered a single economic unit (e.g., holding companies and wholly owned subsidiaries), (ii) clarifies the rules for tender offers, dividing them into voluntary and mandatory categories, (iii) clarifies standards for disclosure of holdings of shareholders of public companies, (iv) expands and strengthens the role of the board of directors of public companies, (v) defines the standards applicable to the board of directors and the duties of the board, each director, its secretary, the chief executive officer and other executive officers (introducing concepts such as the duty of care, duty of loyalty and safe harbors), (vi) replaces the statutory auditor (comisario) and its duties with an audit committee, a corporate practices committee and external auditors, (vii) defines the roles and responsibilities of executive officers, (viii) improves the rights of minority shareholders relating to legal remedies and access to company information, (ix) introduces concepts such as consortiums, groups of related persons or entities, control, related parties and decision-making power, and (x) expands the definition of applicable sanctions for violations of the Mexican Securities Market Law, including the punitive damages.

Under the Mexican Securities Market Law public companies must have a board of directors comprised of no more than 21 members, of which at least 25% must be independent. Independent members must be selected at the issuer’s general ordinary shareholders’ meeting based on their experience, ability and reputation, among other factors. The conclusion as to whether a director is independent must be determined by the issuer’s shareholders, and such determination may be challenged by the CNBV. As a departure from legislative precedents, the Mexican Securities Market Law permits then-acting members of the board of directors, under certain circumstances, to appoint, on a temporary basis, new members of the board of directors.

The board of directors of a public company is required to meet at least four times during each calendar year. Its principal duties are (a) the determination of the issuer’s general business strategies, (b) the approval of guidelines for the use of corporate assets, (c) the approval, on an individual basis, of transactions with related parties, subject to certain limited exceptions, (d) the approval of unusual or nonrecurring transactions and any transaction related to the acquisition or sale of assets with a value equal to or exceeding 5% of the issuer’s consolidated assets, or the granting of collateral or guarantees, or the assumption of liabilities, equal to or exceeding 5.0% of the issuer’s consolidated assets, (e) the appointment or removal of the chief executive officer, (f) the approval of accounting and internal control policies, and (g) the approval of policies for disclosure of information. Directors are required to seek the best interests of the issuer, and may not favor any shareholder or group of shareholders.

The Mexican Securities Market Law requires the creation of one or more committees in charge of the audit and corporate practices functions of the company. These committees must consist of at least three members appointed by the board of directors, and each member must be independent (except for corporations controlled by a person or group holding 50% or more of the outstanding capital stock, in which case the majority of the members of the committee in charge of the corporate practice functions must be independent). The audit activities of the committees (coupled with certain obligations now entrusted to the board of directors) replace the statutory auditor (comisario) that had been previously required by the Mexican Corporations Law.

The committee in charge of the corporate practice functions is required to provide opinions to the board of directors, to request and obtain opinions from independent third-party experts (primarily in respect of transactions with related parties and securities transactions), to call shareholders’ meetings, to provide assistance to the board in the preparation of annual reports and to provide a report, on an annual basis, to the board of directors.

The principal activity of the committee entrusted with the audit function is to supervise the outside auditors of the issuer, to analyze the outside auditors’ reports, to inform the board of directors with respect to existing internal controls, to supervise related party transactions, to require the issuer’s executives to prepare reports when deemed necessary, to inform the board of any irregularities that it encounters, to supervise the activities of the issuer’s executives and to provide a report, on an annual basis, to the board of directors.

The duty of care generally requires that directors obtain sufficient information and be sufficiently prepared to support their decisions, and to act in the best interests of the issuer. The duty of care is principally discharged by a director by requesting and obtaining from the issuer or officers of the issuer, as the case may be, all information that may be necessary to participate in discussions requiring the presence of such director, by requesting and obtaining information from third-party experts, by attending board meetings and disclosing material information in possession of such director. Failure of directors to act with due care makes the relevant directors jointly and severally liable for

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damages and losses caused to the issuer and its subsidiaries, which may be limited in the company’s bylaws or by resolution of the shareholders’ meeting, except in the case of bad faith, willful misconduct or illegal acts. Liability for breach of the duty of care may also be covered by indemnification provisions and director and officer insurance policies.

The duty of loyalty primarily consists of maintaining the confidentiality of information received in connection with the performance of the director’s duties and abstaining from discussing or voting on matters, where the director has a conflict of interest. In addition, the duty of loyalty is violated if a shareholder or group of shareholders is knowingly favored or if, without the express approval of the board of directors, a director takes advantage of a corporate opportunity. The duty of loyalty also implies not disclosing information that is false or misleading, or omitting to register any such information in the issuer’s minute books and other corporate records. The violation of the duty of loyalty makes the relevant directors jointly and severally liable for damages and losses caused to the issuer and its subsidiaries. This liability also arises if damages and losses are sustained as a result of benefits wrongfully obtained by the director or directors or third parties as a result of activities carried out by the breaching directors. Liability for breach of the duty of loyalty may not be limited by the company’s bylaws, by resolution of the shareholders’ meeting or otherwise. The duty of loyalty is also breached if the director uses corporate assets or approves the use of corporate assets, in violation of an issuer’s policies, discloses false or misleading information, orders, or causes, an incorrect entry of any transaction in an issuer’s records, that could affect its financial statements, or causes material information not to be disclosed or to be modified.

Liability for breach of the duty of care or the duty of loyalty may be exercised solely for the benefit of the issuer (as a derivative suit) and may only be exercised by the issuer or by shareholders, holding shares of any class, representing at least 5% of any outstanding shares in the aggregate.

As a safe-harbor for directors, the liability discussed above does not attach if the director acted in good faith and (i) complied with applicable law and the bylaws of the issuer, (ii) the decision was taken based upon information provided by officers, external auditors or third-party experts, the capacity and credibility of which were not the subject of reasonable doubt, (iii) the director selected the more appropriate alternative in good faith and any negative effects of such decision were not reasonably foreseeable, and (iv) actions were taken in compliance with resolutions adopted at the shareholders’ meeting.

The issuer’s principal executives are also required, under the Mexican Securities Market Law, to act for the benefit of the issuer and not for the benefit of any shareholder or group of shareholders. These executives are required to submit the major business strategies to the board of directors for approval, to submit proposals for internal controls to the audit committee, to disclose all material information to the public, and to maintain adequate accounting and registration systems and mechanisms for internal control.

The Mexican Securities Market Law also requires that any transaction or series of transactions which represent 20% or more of the consolidated assets of a public issuer during any fiscal year, be approved at a shareholders’ meeting.

In addition to the rights granted to minority shareholders representing 5% or more of the outstanding shares of a public company, to initiate a shareholder derivative suit for the benefit of the issuer in an amount equal to the damages or losses incurred by the issuer against directors for a breach of the duties of care or loyalty, the Mexican Securities Market Law sets forth the right of shareholders representing 10% of the outstanding voting shares to appoint a director, call a shareholders’ meeting, and request that the vote on resolutions in respect of which they were not sufficiently informed be postponed. Also, holders of 20% of the outstanding voting shares may judicially oppose resolutions that were passed by a shareholders’ meeting and file a petition for a court order to suspend the resolution, if the claim is filed within 15 days following the adjournment of the meeting at which the action was taken, provided that (i) the challenged resolution violates Mexican law or the company’s bylaws, (ii) the opposing stockholders either did not attend the meeting or voted against the challenged resolution, and (iii) the opposing stockholders deliver a bond to the court to secure payment of any damages that we may suffer as a result of suspending the resolution in the event that the court ultimately rules against the opposing stockholder; these provisions have seldom been invoked in Mexico and, as a result, action that may be taken by a competent court is uncertain.

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The Mexican Securities Market Law does not permit issuers to implement mechanisms for common shares and limited or non-voting shares to be jointly traded or offered to public investors, unless the limited or non-voting shares are convertible into common shares within a term of up to five years, or when as a result of the nationality of the holder, the shares or the securities (typically ordinary participation certificates or CPOs), representing the shares, limit the right to vote to comply with foreign investment laws. The aggregate amount of shares with limited or non-voting rights, that are not convertible, may not exceed 25% of the aggregate amount of publicly held shares. The CNBV may authorize the increase of this 25% limit, provided that the limited or non-voting shares exceeding 25% of the aggregate amount of publicly held shares are convertible into common shares within five years of their issuance.

Regulations Applicable to Issuers, Brokerage Firms and Other Market Participants

In March 2003, the CNBV issued certain general regulations applicable to issuers and other securities market participants. The general regulations, which repealed several previously enacted CNBV regulations (circulares), now provide a single set of rules governing issuers and issuer activity, among other things. In September 2006, these general regulations were amended to give effect to the provisions of the then recently enacted Mexican Securities Market Law.

In addition, in September 2004, the CNBV issued general rules applicable to brokerage firms, Rules for Brokerage Firms (Circulares Aplicables a Casas de Bolsa). The Rules for Brokerage Firms now provide a single set of rules governing participation of Mexican underwriters in public offerings, among other things.

Registration and Listing Standards

To offer securities to the public in Mexico, an issuer must meet specific qualitative and quantitative requirements. In addition, only securities that have been registered with the RNV pursuant to the CNBV’s approval may be listed on the BMV.

The CNBV’s approval for registration does not imply any kind of certification or assurance related to the investment quality of the securities, the solvency of the issuer, or the accuracy or completeness of any information delivered to the CNBV. The general regulations state that the BMV must adopt minimum requirements for issuers to list their securities in Mexico. These requirements relate to matters such as operating history, financial and capital structure, minimum trading volumes and minimum public floats, among others. The general regulations also state that the BMV must implement minimum requirements for issuers to maintain their listing in Mexico. These requirements relate to matters such as financial condition, trading minimums, capital structure and minimum public floats, among others. The CNBV may waive some of these requirements in certain circumstances. In addition, some of the requirements are applicable to each series of shares of the relevant issuer.

The BMV will review compliance with the foregoing requirements and other requirements on an annual, semi-annual and quarterly basis, and may also do it at any other time.

The BMV must inform the CNBV of the results of its review and this information must, in turn, be disclosed to investors. If an issuer fails to comply with any of the foregoing requirements, the BMV will request that the issuer propose a plan to cure the violation. If the issuer fails to propose a plan, if the plan is not satisfactory to the BMV or if an issuer does not make substantial progress with respect to the corrective measures, trading of the relevant series of shares on the BMV will be temporarily suspended. In addition, if an issuer fails to propose a plan or ceases to follow the plan once proposed, the CNBV may cancel the registration of the shares, in which case the majority shareholder or any controlling group must carry out a tender offer to acquire 100.0% of the outstanding shares of the issuer in accordance with the tender offer rules discussed below.

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Reporting Obligations

Issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements, as well as various periodic reports with the CNBV and the BMV. Mexican issuers of listed securities must file the following reports with the CNBV:

• an annual report prepared in accordance with the CNBV general regulations by no later than June 30 of each year;

• quarterly reports, within 20 business days following the end of each of the first three quarters and 40 days following the end of the fourth quarter; and

• reports disclosing material events promptly upon their occurrence.

Pursuant to the CNBV’s general regulations, the internal rules of the BMV were amended to implement an automated electronic information transfer system (Sistema Electrónico de Envío y Difusión de Información or “SEDI”), for information required to be filed with the BMV. Issuers of listed securities must prepare and disclose their financial information via a BMV-approved electronic financial information system (Sistema de Información Financiera y Contable de las Emisoras or “SIFIC”). Immediately upon its receipt, the BMV makes the financial information submitted via SIFIC available to the public.

The CNBV’s general regulations and the rules of the BMV require issuers of listed securities to file information through SEDI that relates to any act, event or circumstance that could influence an issuer’s share price. If listed securities experience unusual price volatility, the BMV will immediately request that the issuer inform the public as to the causes of the volatility or, if the issuer is unaware of the causes, that the issuer make a statement to that effect. In addition, the BMV will immediately request that the issuer disclose any information relating to relevant material events, when it deems the information currently disclosed to be insufficient, as well as instruct the issuer to clarify the information when necessary. The BMV may request that issuers confirm or deny any material events that have been disclosed to the public by third parties when it deems that the material event may affect or influence the securities being traded. The BMV must immediately inform the CNBV of any such requests.

In addition, the CNBV may also make any of these requests directly to issuers. An issuer may defer the disclosure of material events under some circumstances, as long as:

• the issuer implements adequate confidentiality measures (including maintaining records of persons or entities in possession of material non-public information);

• the information is related to incomplete transactions;

• there is no misleading public information relating to the material event; and

• no unusual price or volume fluctuation occurs.

Similarly, if an issuer’s securities are traded on both the BMV and a foreign securities exchange, the issuer must simultaneously file the information that it is required to file pursuant to the laws and regulations of the foreign jurisdiction with the CNBV and the BMV.

Suspension of Trading

In addition to the authority of the BMV under its internal regulations as described above, pursuant to the rules of the CNBV, the CNBV and the BMV may suspend trading in an issuer’s securities:

• if the issuer does not disclose a material event; or

• upon price or volume volatility or changes in the offer or demand in respect of the relevant securities that are not consistent with the historic performance of the securities and cannot be explained solely through information made publicly available pursuant to the CNBV’s general regulations.

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The BMV must immediately inform the CNBV and the general public of any such suspension. An issuer may request that the CNBV or the BMV resume trading, provided that the issuer demonstrates that the causes triggering the suspension have been resolved and, if applicable, that it is in full compliance with the periodic reporting requirements under applicable law. The BMV may reinstate trading in suspended shares when it deems that the material events have been adequately disclosed to investors, when it deems that the issuer has adequately explained the reasons for the changes in offer and demand, volume traded, or prevailing share price or when the events affecting share prices have ceased to exist. If an issuer’s request has been granted, the BMV will determine the appropriate mechanism to resume trading. If trading in an issuer’s securities is suspended for more than 20 business days and the issuer is authorized to resume trading without conducting a public offering, the issuer must disclose via SEDI the causes that resulted in the suspension and reasons why it is now authorized to resume trading, before trading may resume.

Under current regulations, the BMV may consider the measures adopted by other non-Mexican stock exchanges to suspend and/or resume trading in an issuer’s shares in cases where the relevant securities are simultaneously traded on stock exchanges located outside of Mexico.

Insider Trading, Trading Restrictions and Disclosure Requirements

The Mexican Securities Market Law contains specific regulations regarding insider trading, including the requirement that persons in possession of information deemed privileged abstain (i) from trading in the relevant issuer’s securities, (ii) from making recommendations to third parties to trade in such securities and (iii) from trading in options and derivatives of the underlying security issued by such entity.

Pursuant to the Mexican Securities Market Law, the following persons must notify the CNBV of any transactions undertaken as they relate to a listed issuer’s stock:

• members of a listed issuer’s board of directors;

• shareholders controlling 10% or more of a listed issuer’s outstanding share capital;

• groups controlling 25% or more of a listed issuer’s outstanding share capital; and

• other insiders.

In addition, under the Mexican Securities Market Law insiders must abstain from purchasing or selling securities of the issuer within 90 days from the last sale or purchase, respectively.

Subject to certain exceptions, any acquisition of a public company’s shares that results in the acquirer owning 10.0% or more, but less than 30.0%, of an issuer’s outstanding share capital must be publicly disclosed to the CNBV and the BMV by no later than one business day following the acquisition.

Any acquisition by an insider that results in the insider holding an additional 5% or more of a public company’s outstanding share capital must also be publicly disclosed to the CNBV and the BMV no later than one business day following the acquisition. Some insiders must also notify the CNBV of share purchases or sales that occur within any three-month or five-day period and that exceed certain value thresholds. The Mexican Securities Market Law requires that convertible securities, warrants and derivatives to be settled in kind, be taken into account in the calculation of share ownership percentages.

Tender Offers

The Mexican Securities Market Law contains provisions relating to public tender offers in Mexico. According to the Mexican Securities Market Law, tender offers may be voluntary or mandatory. Both are subject to the prior approval of the CNBV and must comply with general legal and regulatory requirements. Any intended acquisition of a public company’s shares that results in the buyer owning 30% or more, but less than a percentage that would result in the buyer acquiring control of a company’s voting shares, requires the buyer to make a mandatory tender offer for the greater of (a) the percentage of the share capital intended to be acquired or (b) 10% of the company’s outstanding capital stock. Finally, any acquisition of a public company’s shares that is intended to obtain voting

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control, requires the potential buyer to make a mandatory tender offer for 100% of the company’s outstanding capital stock (however, under certain circumstances the CNBV may permit an offer for less than 100%). Any tender offer must be made at the same price to all shareholders and classes of shares. The board of directors, with the advice of the audit committee, must issue its opinion of any tender offer resulting in a change of control, which opinion must take minority shareholder rights into account and which may be accompanied by an independent fairness opinion.

Under the Mexican Securities Market Law, all tender offers must be open for at least 20 business days and purchases thereunder are required to be made pro rata to all tendering shareholders. The Mexican Securities Market Law also permits the payment of certain amounts to controlling shareholders over and above the offering price, if these amounts are fully disclosed, approved by the board of directors and paid in connection with non-compete or similar obligations of such controlling shareholders. The law also provides exceptions to the mandatory tender offer requirements and specifically sets forth remedies for non-compliance with tender offer rules (e.g., suspension of voting rights, possible annulment of purchases, among others) and other rights available to former shareholders of the issuer.

Anti-Takeover Protections

The Mexican Securities Market Law provides that public companies may include anti-takeover provisions in their bylaws if such provisions (i) are approved by a majority of the shareholders, without shareholders representing 5% or more of the capital stock present at the meeting voting against such provision, (ii) do not exclude any shareholders or group of shareholders, (iii) do not restrict, in an absolute manner, a change of control, and (iv) do not contravene legal provisions related to tender offers or have the effect of disregarding the economic rights related to the shares held by the acquiring party.

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following tables present our selected consolidated financial information and operating data as of the dates and for each of the periods indicated. This information is qualified in its entirety by reference to, and should be read together with, “Presentation of Certain Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Audited Financial Statements included elsewhere in this offering circular. The balance sheet data as of December 31, 2007, 2008 and 2009, and the income statement data for the years ended December 31, 2007, 2008 and 2009, are derived from the Audited Financial Statements appearing elsewhere in this offering circular.

Our Audited Financial Statements have been prepared in accordance with Mexican FRS, which differ in significant respects from IFRS. For a summary of the significant differences between Mexican FRS and IFRS as they relate to the Financial Statements, See “Significant Differences Between Mexican FRS and IFRS”.

The exchange rate used in translating pesos into U.S. dollars in calculating the convenience translations included in the following tables is determined by reference to the rate published by the Banco de México in the Official Gazette on December 31, 2009, which was Ps.13.07 per U.S. dollar. The exchange rate translations contained in this offering circular should not be construed as representations that the peso amounts actually represent the U.S. dollar amounts presented or could be converted into U.S. dollars at the rate indicated as of the dates mentioned herein or at any other rate.

See Annex A for a discussion of our results for the three-month periods ended March 31, 2010 and 2009 and our unaudited interim financial information as of and for the three-month periods ended March 31, 2010 and 2009.

Years Ended December 31,

2007 2008 2009 2009

(millions of pesos, except per share

amounts)

(millions of U.S. dollars, with same exceptions)

Income Statement Data: Revenues Net sales................................................................... 34,452 40,658 47,901 3,665 Cost of sales ............................................................. 27,147 32,174 37,535 2,872 Gross profit .................................................................... 7,305 8,483 10,366 793 Operating expenses........................................................ 5,563 6,620 7,879 603 Operating income .......................................................... 1,742 1,864 2,487 190 Other (income) expenses – Net...................................... (44) 3 (11) (1)

Net comprehensive financing cost................................. 500 615 767 59 Interest expenses ...................................................... 816 689 677 52

Interest income ........................................................ (105) (123) (111) (8) Exchange gain.......................................................... (4) (70) (1) (.08) Monetary position gain ............................................ (362) – – – Valuation of derivative ............................................ 155 118 202 15

Participation in the results of associate companies........ (19) (39) – – Non-ordinary item ......................................................... 114 – – – Income before income taxes .......................................... 1,192 1,285 1,731 132 Income taxes.................................................................. 627 371 337 26 Income before discontinued operations 565 914 1,394 107 Discontinued operations ................................................ 26 – – – Consolidated net income.......................................... 539 914 1,394 107 Net income of majority stockholders ....................... 524 924 1,349 103 Net income (loss) of minority stockholders ............. 15 (11) 45 3 Basic earnings per common share............................ 15 26 35 3 Cash or Resources Provided by (Used In): Operating activities .................................................. 1,704 3,011 2,504 192 Investing activities ................................................... (857) (3,346) (1,138) (87) Financing activities .................................................. (573) 570 (2,029) (155)

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As of December 31,

2007 2008 2009 2009

(millions of pesos)

(millions of U.S.

dollars) Balance Sheet Data: Cash ......................................................................... 888 1,100 351 27 Accounts and notes receivable-Net.......................... 976 803 1,022 78

Recoverable taxes .................................................... 320 570 523 40 Due from related parties .......................................... 110 102 95 7

Inventories-Net ........................................................ 3,375 4,054 4,533 347 Discontinued operations 7 – – – Total current assets ........................................................ 5,676 6,631 6,523 499

Restricted cash......................................................... – 114 148 11 Long-term due from related parties ......................... – 64 515 39 Property and equipment-Net .................................... 15,364 17,899 18,272 1,398

Idle assets................................................................. – 116 116 9 Investment in shares of associated companies......... 13 61 31 2 Long-term accounts receivable................................ 87 104 100 8 Other assets-Net....................................................... 266 537 710 54 Discontinued operations .......................................... 7 – – –

Total assets .................................................................... 21,414 25,526 26,414 2,021 Current liabilities Notes payable to financial institutions ..................... 64 1,157 336 26 Trade notes and accounts payable............................ 6,683 7,841 8,229 630

Accrued expenses and taxes 1,226 1,568 1,580 121 Income tax from previous fiscal years payable........ 114 – – – Income tax ............................................................... – 65 – – Discontinued operations .......................................... 36 – – –

Total current liabilities................................................... 8,125 10,631 10,145 776 Bank loans ............................................................... 2,500 3,197 3,191 244 Contribution for future capital increases.................. 149 – – – Deferred income tax ................................................ 614 843 936 72

Employee benefits.................................................... 111 167 193 15 Derivative financial instruments premium............... 198 – – – Derivative financial instruments.............................. 438 419 491 38 Receivables held in trust contracts........................... 1,223 976 648 50

Total liabilities............................................................... 13,357 16,234 15,605 1,194 Stockholders’ equity

Capital stock ............................................................ 197 197 197 15 Retained earnings .................................................... 12,632 8,983 10,087 772 Insufficiency in restated stockholders’ equity ......... (2,728) – – – Initial cumulative effect of deferred income taxes... (1,819) – – – Translation effects of foreign operations or entities...................................................................... (9) 92 38 3 Valuation of hedging derivatives............................. (334) (178) (248) (19) Majority stockholders’ equity.................................. 7,940 9,094 10,075 771 Noncontrolling interest in consolidated subsidiaries .............................................................. 116 198 734 56

Total stockholders’ equity ............................................. 8,056 9,292 10,809 827 Total liabilities and stockholders’ equity....................... 21,414 25,526 26,414 2,021

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As of and for the Years Ended December 31, 2007 2008 2009 2009

(millions of pesos, except percentages,

ratios and Other Operating Data)

(millions of U.S. dollars, with same exceptions)

Selected Segment Financial Data: Segment Net Sales: Retail operations in Mexico ....................................... 31,515 36,506 40,033 3,063Retail operations in the U.S. ...................................... 2,465 3,665 7,363 563Real estate segment ................................................... 473 487 505 39

Total consolidated net sales ................................... 34,452 40,658 47,901 3,665 Segment Operating Income (Loss) Retail operations in Mexico ....................................... 1,421 1,452 2,015 154Retail operations in the U.S. ...................................... 72 91 164 13Real estate segment 249 321 309 24

Total consolidated operating income (loss) ............ 1,742 1,864 2,487 190 Growth and Profitability Ratios: Net sales growth ......................................................... 15.1% 18.01% 17.82% Gross margin ............................................................... 21.2% 20.9% 21.6% EBITDA margin ......................................................... 6.6% 5.9% 6.6% EBITDA growth .......................................................... 18.0% 4.7% 32.6% Operating income margin ........................................... 5.1% 4.6% 5.2% Net income margin ...................................................... 1.6% 2.2% 2.9% Other Operating Data: Number of retail stores (1) ............................................ 120 155 163 Total store area (square meters) (1) .............................. 792,174 923,022 967,160 Mexican Same-Store Sales growth (percentage) ......... 8.55% 7.90% 1.69% U.S. Same-Store Sales growth (percentage in USD) 15.9% 25.9% 10.7% Mexican retail sales per square meter (pesos)(2) .......... 41,401 42,741 45,713 3,498U.S. retail sales per square meter (pesos)(2) ................. 79,593 53,178 80,546 6,163 ________________________________________

(1) Calculated as of December 31 of each year.

(2) Retail sales for the year divided by the number of square meters at year-end. Not a weighted average number.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with our audited consolidated financial statements and the accompanying notes, as well as our unaudited interim financial information as of and for the three-month periods ended March 31, 2010 and 2009 and which appear elsewhere in this offering circular. All financial information included in this offering circular, unless otherwise indicated, is presented in Mexican pesos.

The financial information included in the following discussion has been prepared in accordance with Mexican FRS, which differ from IFRS and may differ from financial reporting standards adopted in other countries in a number of respects. See “Significant Differences between Mexican FRS and IFRS” for a summary of the significant differences between Mexican FRS and IFRS as they relate to the financial statements. We have made no attempt to quantify the impact of those differences by a reconciliation of our financial statements or other financial information in this offering circular to IFRS.

This offering circular contains forward-looking statements that reflect our plans, estimates and beliefs and involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this offering circular, particularly in “Risk Factors.” In addition to the other information in this offering circular, investors should consider carefully the following discussion and the information set forth under “Risk Factors” before evaluating us and our business.

Overview

We are a leading Mexican multi-format retailer, with operations in Mexico and the United States. Through our stores located in over 20 states in Mexico, we sell a variety of food items, including basic groceries and perishables, as well as non-food items, including consumer electronics, white goods, furniture, small appliances, apparel, cellular phones and other goods. We also operate stores in Southwestern United States selling perishables and other grocery items, primarily to Hispanic, and in particular Mexican-American, customers.

As of December 31, 2009, we operated 142 retail stores in Mexico under two retail store formats and 21 retail stores in the United States under the El Super format, with a total selling area of approximately 967,160 square meters (10.4 million square feet). Our retail stores in Mexico include 109 hyper-market stores under the name Chedraui, which are generally concentrated in cities in southern and central Mexico with populations of at least 100,000 inhabitants. Since 2005, we have opened 33 of our smaller format stores under the Super Chedraui brand, which target cities and towns with populations of at least 25,000 inhabitants. Our U.S retail operations target the Hispanic, and more specifically the Mexican-American, communities in California, Nevada and Arizona through our 21 El Super stores. Our Chedraui stores, which accounted for 75.2% of our consolidated revenues in 2009, range from 3,226 square meters (approximately 34,724 square feet) to 11,592 square meters (approximately 124,775 square feet), and average 7,408 square meters (approximately 79,739 square feet) and contain over 57,000 SKUs. Our smaller format, Super Chedraui, which accounted for 8.4% of our consolidated revenues in 2009, has an average size per store of 2,069 square meters (approximately 22,270 square feet) and contain an average of 29,000 SKUs and a more limited selection of products.

Overall demand for the products and services offered at our stores is highly dependent on the economic environment in Mexico and the United States, including the evolution of GDP growth and GDP per capita of our targeted market.

Revenues

We derive our revenues primarily from the sale of brand name and private label food items, including basic groceries and perishables, as well as non-food items, including consumer electronics, white goods, furniture, appliances, clothing, cellular phones and other durable goods. For the year ended December 31, 2009, 65.3% of our total sales were cash sales, 11.1% were credit card sales, 15.0% were debit card sales, and 8.6% were market voucher sales.

Net sales per square meter reflect the productivity of our stores-sales area. Our stores-sales area is measured in square meters and is a parameter to measure the growth of our net sales. The following table sets forth the evolution of our stores-sales area and selected productivity metrics:

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As of or for Years Ended December 31, 2007 2008 2009

Number of retail stores at year-end................................................... 120 155 163 Total store area (square meters) at year-end .................................... 792,174 923,022 967,160 Mexican retail sales per square meter (pesos)(1) ............................... 41,401 42,741 45,713 U.S. retail sales per square meter (pesos)(1) ...................................... 79,593 53,178 80,546 Mexican Same-Store Sales growth (percentage) .............................. 8.55% 7.90% 1.69% U.S. Same-Store Sales growth (percentage in USD) ........................ 15.9% 25.9% 10.7%

(1) Retail sales for the year divided by the number of square meters at the end of the year. Not a weighted average

number.

Since the end of 2007, we have been pursuing an aggressive growth strategy, which has added 43 total stores, or 35.8%, resulting in 163 total stores as of December 31, 2009 compared to 120 total stores as of December 31, 2007. Our total store area increased by 44,137 square meters, or 4.8%, to 967,160 square meters as of December 31, 2009, from 923,022 square meters as of December 31, 2008, as compared to an increase of 130,848 square meters, or 16.5%, from 792,174 square meters as of December 31, 2007. Mexican retail sales per square meter increased Ps.2,972, or 7.0%, to Ps.45,713 in 2009, from Ps.42,741 in 2008, and increased Ps.1,340, or 3.2%, to Ps.42,741 in 2008 from Ps.41,401 in 2007, reflecting the increases in net sales in both periods that exceeded the increase in our store-sales area. U.S. retail sales per square meter increased Ps.27,369, or 51.5%, to Ps.80,546 in 2009, from Ps.53,178 in 2008, as a result of new store openings in the latter part of 2009, as compared to a decrease of Ps.26,415, or 33.2%, to Ps.53,178 in 2008, from Ps.79,593 in 2007. The decrease in 2008 principally reflected several store openings in the third quarter of 2008, which resulted in their inclusion in our store-sales area for the year without a corresponding full-year contribution to sales.

As a general matter, we believe that a period of several years is frequently required after opening a store for it to mature and achieve its full potential to generate sales. As a result, the increasing maturation of a newly-opened store may need to be taken into account when comparing period-to-period store sales.

Seasonality

A large percentage of our net sales, for both our Mexico and U.S. stores, is recognized during the fourth quarter of each year in connection with the holiday shopping season. For example, in 2007, 2008 and 2009, we recognized 30.1%, 29.5% and 28.3% of our net sales in the fourth quarter of the year. Our costs, except for the cost of goods sold, distribution costs and other selling and marketing and advertising expenses, in contrast to our revenues, tend to be more evenly incurred throughout the year and generally do not correlate with the amount of our sales. Therefore, our profitability and results of operations are affected by these seasonal trends.

Cost of Goods Sold

The main components of our cost of goods sold are the cost of the merchandise sold through our retail store network within Mexico and the United States. Cost of goods sold is recognized at the time the sale is realized.

Operating Expenses

The main components of our operating expenses are salaries and benefits, rental expense on leased real estate, advertising and marketing expenses, depreciation and electricity.

Net Comprehensive Financing Cost

Net comprehensive financing cost significantly impacts our financial statements in periods of high inflation or currency fluctuations. Under Mexican FRS, net comprehensive financing cost reflects interest income, interest expense, valuation effects of derivatives, foreign exchange gain or loss attributable to monetary assets and liabilities denominated in foreign currencies, transaction costs related to credit or debit cards, as well as interest-free installment sales, and, during inflationary periods, gain or loss attributable to holding monetary assets and liabilities exposed to inflation.

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Our foreign exchange position is affected by our assets and liabilities denominated in foreign currencies. We record a foreign exchange gain or loss if the exchange rate of the peso to the other currencies in which our monetary assets or liabilities are denominated rises or falls.

Income Taxes

The main components of our tax expense consist of income taxes incurred in both Mexico and the United States. In Mexico, we are subject to federal income taxes, while in the United States we are subject to federal and state income taxes. Our statutory tax rates vary by country and are subject to changes in the tax laws of each jurisdiction.

Our income tax expense consists of both current tax amounts due and deferred taxes, computed based on the requirements of Mexican FRS as further explained in Note 18 to our financial statements.

Preparation of Financial Statements

Our consolidated year-end financial statements have been prepared in accordance with Mexican FRS, which differ in some significant respects from IFRS. See “Significant Differences Between Mexican FRS and IFRS.”

Inflation under Mexican FRS

Through 2007, Mexican FRS required that our financial statements recognize the comprehensive effects of inflation. The recognition of the effects of inflation as provided for under Mexican FRS had generally been considered a more meaningful presentation than historical cost financial reporting, given the past periods of inflation experienced in Mexico.

Effective as of January 1, 2008, NIF B-10, Effects of Inflation modifies the accounting for inflationary effects and defines two economic environments, an “inflationary environment” and a “non-inflationary environment.” An inflationary environment is one in which the cumulative inflation of the three preceding years is 26% or more; in this environment, the effects of inflation should be recognized using the comprehensive method; a non-inflationary environment is one in which the cumulative inflation of the three preceding years is less than 26%; in this environment, no inflationary effects should be recognized in the financial statements. Based on current levels of inflation, the Company discontinued inflation accounting for periods ending and dates on or after January 1, 2008. Assets, liabilities and stockholders’ equity, however, include the effects of inflation through December 31, 2007.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with Mexican FRS requires us to make significant estimates and assumptions that affect the reported amounts of our assets and liabilities, the disclosure of our contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The application of these estimates requires us to make subjective and objective judgments. We base our estimates and judgments on our historical experience and on various other reasonable factors, which together form the basis for making judgments about the carrying values of our assets and liabilities. Our actual results may differ from these estimates under different assumptions or conditions. We believe our most critical accounting policies that require the application of estimates and/or judgments are as follows:

Inventories

We value our inventories at the lower of cost or realizable value. Markdowns designated for clearance items are recorded at the time management determines the salability of inventory has diminished. Factors we consider in the determination of markdowns include current and anticipated demand, customer preferences, age of merchandise, as well as seasonal and fashion trends.

We provide for estimated inventory losses (“shrinkage”) based on the difference between physical inventory counts and the accounting value of the inventory as a percentage of revenues. This percentage is multiplied by monthly revenues to determine our shrinkage provision. We adjust this provision annually to reflect the historical trend of the actual physical inventory count results. In recent years, our shrinkage has not varied significantly from one year to another.

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Property and Equipment

Property and equipment are depreciated over their useful lives. The estimated useful lives represent the period we expect the assets to remain in service and to generate revenues. We base our estimates on independent appraisals and the experience of our technical personnel.

Impairment of Assets

We evaluate long-lived assets other than goodwill for indicators of impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. Recoverability is determined based on the greater of the present value of future net cash flows generated by such assets or the net sales price per disposal. Management’s judgments regarding the existence of impairment indicators are based on factors such as market conditions and our operational performance, such as operating income. The variability of these factors depends on a number of conditions, including uncertainty about future events; thus our accounting estimates may change from period to period. These factors could cause management to conclude that impairment indicators exist and require that impairment tests be performed which could result in management determining that the value of long-lived assets is impaired, resulting in a write-down of the long-lived assets.

We evaluate goodwill for impairment annually. This evaluation requires management to make judgments relating to future cash flows, growth rates, economic and market conditions. These evaluations are based on discounted cash flows that incorporate the performance of our existing businesses. Historically, we have generated sufficient returns to recover the cost of goodwill. Because of the uncertain nature of the factors used in impairment tests, if unexpected conditions occur in future periods, our future operating results could be materially impacted.

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statements carrying amounts and the tax bases of assets and liabilities. In order to determine the basis of deferred income taxes, we prepare projections of taxable income and determine whether we will be subject to regular income tax (“ISR”) or the Mexican business flat tax (“IETU”).

The determination of our provision for income taxes includes a valuation allowance against a portion of our deferred tax assets. Determination of the valuation allowance requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and recoverability of deductible and taxable items. We establish a valuation allowance when we believe that it is probable that we will not generate sufficient taxable income to be able to utilize the deferred tax assets generated from tax on assets paid and tax loss carryforwards. When facts and circumstances change, we adjust our valuation allowance through our provision for income taxes.

Post-employment Obligations

We record annual amounts related to our post-employment obligations based on actuarial calculations which include various actuarial assumptions including discount rates, assumed rates of return, compensation increases, turn-over rates and inflation rates. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when we deem appropriate to do so. The effect of modifications is deferred and amortized over future periods. We believe that the assumptions utilized in recording our obligations are reasonable based on our experience, market conditions and input from our actuaries.

Other Contingencies

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We are also subject to proceedings, lawsuits, investigations and other claims (some of which may involve substantial amounts), including proceedings under laws and governmental regulations related to securities, income and other taxes and other matters. As a result, we consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. Accordingly, we recognize liabilities for contingencies when we believe it is probable that the outcome of the contingency will result in the use of economic resources and when we can reasonably estimate such amount.

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Derivative Financial Instruments

The Company obtains financing under different conditions. For variable rate debt instruments, interest rate swaps are entered into to reduce exposure to the risk of rate volatility, thus converting the interest payment profile from variable to fixed. These instruments are negotiated only with institutions of recognized financial strength and when trading limits have been established for each institution. Our policy is not to enter into derivative transactions for the purpose of speculation.

We recognize all assets or liabilities that arise from transactions with derivative financial instruments at fair value in the consolidated balance sheet, regardless of its intent for holding them. Fair value is determined using prices quoted on recognized markets.

EBITDA and Other Measures

We believe EBITDA, Store EBITDA, Net Working Capital and ROIC provide useful tools for comparing our results between periods and comparing our results with those of other companies. These measures have certain limitations as described below and we note that our computations of these measures may not be comparable to such measures as reported by other companies.

EBITDA

EBITDA is a not a financial measure computed under Mexican FRS or IFRS. We calculate EBITDA as operating income plus depreciation and amortization expense. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods, but the metric has the following material limitations: (i) it does not include interest expense, which, because we have borrowed money to finance some of our operations, is a necessary and ongoing part of our costs and assisted us in generating revenue; (ii) it does not include taxes, which are a necessary and ongoing part of our operations; (iii) it does not include depreciation, which, because we must utilize property and equipment in order to generate revenues in our operations, is a necessary and ongoing part of our costs; (iv) it does not include other income and expenses and (v) it may be calculated differently than that of other retailers. EBITDA should not be construed as an alternative to (i) operating or net income as an indicator of our operating performance, or (ii) cash flow from operations as a measure of our liquidity.

We provide a reconciliation of EBITDA to operating income in the table below.

Years Ended December 31, 2007 2008 2009

(millions of pesos) EBITDA ............................................................................. 2,285 2,393 3,174

Less Depreciation and amortization.............................. 543 529 687 Operating income ............................................................... 1,742 1,864 2,487 Store Economics

Store EBITDA

We also calculate EBITDA per store by format for our Mexican operations (“Store EBITDA”). We calculate Store EBITDA for any given period as (i) consolidated EBITDA minus general corporate expense and rent expense for such period, divided by (ii) the number of stores in operation as of the end of the prior year. In order to evaluate a store’s profitability on a stand-alone basis, we deduct general corporate overhead from the numerator in Store EBITDA. We also deduct rental expense from the numerator in Store EBITDA to eliminate the disparity between the expenses of our leased and owned stores.

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We provide a reconciliation of Store EBITDA to operating income by format in the table below:

For the year ended December 31, 2009

(millions of pesos) Chedraui Super Chedraui Aggregate Store EBITDA(1) ............................................... 3,335 308

Less General corporate expense ...................................... 722 0 Rental expense ...................................................... 268 64

EBITDA ............................................................................. 2,345 244 Less Depreciation and amortization ................................ 533 41

Operating income ............................................................... 1,812 203

(1) Aggregate Store EBITDA is equal to Store EBITDA multiplied by number of stores.

Net Working Capital

We use Net Working Capital as a component in the calculation of ROIC. We believe that ROIC is a useful metric to measure profitability over investment, because it allows management to compare the performance of different stores. We calculate Net Working Capital for any given year as accounts and notes receivables-net, plus inventories-net, minus trade notes and accounts payable. Consistent with industry practice, we consider Net Working Capital (as opposed to working capital) to be useful because we believe the current assets and liabilities included in Net Working Capital are more representative of our current operating assets and liabilities. We have excluded other current assets and liabilities typically included in working capital (such as various taxes and cash invested in marketable securities) from our calculation of Net Working Capital, because we believe they are not directly related to our core operations. We also believe our calculation of Net Working Capital also facilitates comparisons with our peers.

We provide a reconciliation of Net Working Capital to working capital in the table below:

For the year ended December 31, 2009

(millions of pesos) Net working capital deficit ............................................................ (2,674)

Plus Cash .................................................................................. 351 Recoverable taxes. ............................................................ 523 Due from related parties.................................................... 95

Less Notes payable to financial institutions (336) Accrued expenses and taxes.............................................. (1,580)

Working capital deficit (3,622)

Invested Capital

We use Invested Capital as a component in the calculation of ROIC. We believe that ROIC is a useful metric to measure profitability over investment, because it allows management to compare the performance of different stores. We calculate Invested Capital for any given year as Net Working Capital as of December 31 of any given year, plus property and equipment-net. We add accounts receivable, net and inventories, net, to property and equipment and deduct trade notes and accounts payable because we believe the aggregate of these accounts yields a more accurate representation of the investment required to operate our stores. We also believe this measure provides comparability with our peers given that Invested Capital is a common performance indicator used in the industry.

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We provide a reconciliation of Invested Capital to property and equipment-net below:

For the year ended December 31, 2009

(millions of pesos) Invested Capital ............................................................................. 15,598

Plus Trade notes and accounts payable...................................... 8,229 Less Accounts and notes receivables-net ................................... (1,022)

Inventories-net ................................................................... (4,533) Property and equipment-net........................................................... 18,272 Summary of Business Segment Results

The following tables set forth the segment net sales, segment net sales as a percentage of net sales, segment operating income (loss) and segment operating margin of each of our business segments for the years ended December 31, 2007, 2008 and 2009. Information regarding our business segments was prepared in accordance with the provisions of Bulletin B-5, “Financial Information by Segments” issued by the CINIF. These standards require us to identify our business segments according to our internal organizational structure and reporting systems. In accordance with these standards, we currently classify our operations into the following three business segments: (i) retail operations in Mexico, (ii) retail operations in the United States and (iii) our real estate operations. Operating decisions are made separately for the retail operations in the United States.

Year Ended December 31, 2007 2008 2009 Pesos

(millions) %

Sales Pesos

(millions) %

Sales Pesos

(millions) %

Sales Segment Net Sales: Mexican retail operations ................ 31,515 91.5 36,506 89.8 40,033 83.6U.S. retail operations ....................... 2,465 7.2 3,665 9.0 7,363 15.4Real estate operations ...................... 473 1.4 487 1.2 505 1.1 Total consolidated net sales...... 34,452 100 40,658 100 47,901 100 Year Ended December 31, 2007 2008 2009 Pesos

(millions) %

Margin Pesos

(millions) %

Margin Pesos

(millions) %

Margin Segment Operating Income: Mexican retail operations ................ 1,421 4.5 1,452 4.0 2,015 5.0 U.S. retail operations ...................... 72 2.9 91 2.5 164 2.2 Real estate operations ...................... 249 52.8 321 65.9 309 61.1 Total consolidated operating

income ...................................... 1,742 5.2 1,864 4.6 2,487 5.2 Consolidated Results of Operations for the Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Net Sales

Our consolidated net sales increased by Ps.7,243 million, or approximately 17.8 %, to Ps.47,901 million for the year ended December 31, 2009 from Ps.40,658 million for the year ended December 31, 2008. This increase primarily reflected higher sales volumes as a result of eight new retail store openings in 2009, including five stores

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that were opened in the United States and additional sales from a full year of operations for the 35 stores that opened in 2008. Also, our Same-Store Sales growth of 1.69% in Mexico retail operations and 10.7% in U.S. retail operations, for the year ended December 31, 2009, supported our consolidated revenue growth, primarily reflecting a higher average ticket spending.

Retail Operations in Mexico

Net sales of our retail operations in Mexico increased by Ps.3,528 million, or approximately 9.7 %, to Ps.40,033 million for the year ended December 31, 2009 from Ps.36,506 million for the year ended December 31, 2008. This increase was primarily due to sales derived from three Chedraui stores opened in 2009, sales from a full year of operations for seven Chedraui stores and 20 Super Chedraui stores opened in 2008 and a 1.69% increase in our Same-Store Sales. The 1.69% increased in Same-Store Sales in 2009 from 2008, reflected a lower year-over-year increase than we have historically experienced as a result of the effects of the global economic downturn starting in the third quarter of 2008.

Net sales per retail square meter for our retail operations in Mexico increased 7.0% to Ps.45,713 per retail square meter in 2009 from Ps.42,741 per retail square meter in 2008 primarily as a result of the incorporation of a full year of operations for the eight stores that opened in 2008. Net sales per employee increased 4.7% to Ps.1,427 million in 2009 from Ps.1,362 million per employee in 2008, primarily as a result of the incorporation of a full year of operations for the stores that opened in 2008, as well as an increase of 1.69% in Same-Store Sales.

Retail Operations in the United States

Net sales of our retail operations in the United States increased by Ps.3,698 million, or approximately 100.9%, to Ps.7,363 million for the year ended December 31, 2009 from Ps.3,665 million for the year ended December 31, 2008. This increase was primarily due to sales derived from five El Super stores opened in 2009, additional sales from a full year of operations for eight El Super stores that opened in 2008 and a 10.7% increase in Same-Store Sales. This increase also resulted from seven Gigante stores acquired in August of 2008.

Net sales per retail square meter for our retail operations in the United States increased 51.5% to Ps.80,546 million per retail square meter in 2009 from Ps.53,178 million per retail square meter in 2008, primarily as a result of the incorporation of a full year of operations of the stores that opened in 2008, as well as a 10.7% increase in Same-Store Sales.

Real Estate Operations

Net sales of our real estate operations increased by Ps.17 million, or approximately 3.6 %, to Ps.505 million for the year ended December 31, 2009 from Ps.487 million for the year ended December 31, 2008. This increase was primarily due to annual increases in the amounts collected as rental payment under certain lease agreements reflecting inflation.

Cost of Sales

Our consolidated cost of sales increased by Ps.5,361 million, or 16.7%, to Ps.37,535 million for the year ended December 31, 2009 from Ps.32,174 million for the year ended December 31, 2008. This increase primarily reflected an increase in net sales for the same period. Our cost of sales as a percentage of net sales decreased to 78.4% in 2009 from 79.1% in 2008 reflecting increased efficiency in our supply chain and improved price negotiations with suppliers.

Retail Operations in Mexico

Cost of sales for our retail operations in Mexico increased 8.7% to Ps.31,929 million in 2009 from Ps.29,371 million in 2008 due to increased sales in this segment. Cost of sales as a percentage of revenues, however, decreased to 79.8% in 2009 from 80.5% in 2008 primarily as a result of increased efficiency in our supply chain through our distribution centers in Villahermosa, Tabasco and Zumpango, Estado de México and improved price negotiations with suppliers.

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Retail Operations in the United States

Cost of sales for our retail operations in the United States increased 100.3% to Ps.5,596 million in 2009 from Ps.2,794 million in 2008 primarily reflecting the 100.9% increase in net sales. Cost of sales as a percentage of net sales was substantially the same in both years.

Real Estate Operations

There are no significant cost of sales attributed to our real estate operations due to the nature of the business, which consists of collecting rental payments from shopping centers we own where we operate retail stores.

Gross Profit

As a result of the factors discussed above, our consolidated gross profit increased by Ps.1,883 million, or 22.2%, to Ps.10,366 million for the year ended December 31, 2009 from Ps.8,483 million for the year ended December 31, 2008. As a percentage of sales, consolidated gross profit for 2009 improved to 21.6% compared to 20.9% for 2008.

Retail Operations in Mexico

Gross profit for our retail operations in Mexico increased 13.6% to Ps.8,104 million in 2009 from Ps.7,134 million in 2008, primarily as a result of a greater increase in net sales relative to cost of sales given efficiencies in our supply chain and improved prices from suppliers. As a result of these efficiencies, gross profit as a percentage of net sales for our retail operations in Mexico increased to 20.2% in 2009 from 19.5% in 2008.

Retail Operations in the United States

Gross profit for our retail operations in the United States increased 103.0% to Ps.1,767 million in 2009 from Ps.871 million in 2008, primarily as a result of a greater increase in net sales relative to cost of sales. Gross profit as a percentage of net sales for our retail operations in the United States remained relatively stable at 24.0% in 2009 compared to 23.8% in 2008.

Real Estate Operations

Gross profit in our real estate division increased 3.5% to Ps.495 million in 2009 from Ps.478 million in 2008, primarily as a result of a nominal increase in rent payments attributed to the renewal of our lease agreements. Gross profit as a percentage of net sales for our real estate division remained stable at 98% in 2008 and 2009.

Operating Expenses

Our consolidated operating expenses increased by Ps.1,259 million, or 19.1%, to Ps.7,879 million for the year ended December 31, 2009 from Ps.6,620 million for the year ended December 31, 2008. This increase reflected increased expenses corresponding to the opening of eight new retail stores in 2009 and additional expenses from a full year of operations for the 35 stores that opened in 2008. Our consolidated operating expenses for 2009 as a percentage of total revenues, however, only increased 0.1% to 16.4% in 2009 from 16.3% in 2008. Of our consolidated operating expenses for 2009, 77.3% were attributable to our retail operations in Mexico, 20.4% were attributable to our retail operations in the United States and 2.4% were attributable to the operations of our real estate division.

Retail Operations in Mexico

The operating expenses of our retail operations in Mexico increased by Ps.406 million, or 7.2%, to Ps.6,089 million for the year ended December 31, 2009 from Ps.5,683 million for the year ended December 31, 2008. This increase primarily reflected higher expenses corresponding to the opening of three new Chedraui stores in 2009, additional expenses from a full year of operations for seven Chedraui stores and 20 Super Chedraui stores that opened in 2008. The increase in operating expenses was mainly attributable to rent payments made in respect of our retail properties and computer equipment, which represented approximately 20% of the total increase in expenses. The increase in operating expenses also included increases in salaries and benefits, advertising and marketing

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expenses, lease payments, and depreciation, which were partially offset by a decrease in electricity expenses. Our operating expenses as a percentage of net sales decreased 0.4% during this period to 15.2% for the year ended December 31, 2009 from 15.6% for the year ended December 31, 2008.

Retail Operations in the United States

The operating expenses of our retail operations in the United States increased by Ps.824 million, or 105.6%, to Ps.1,604 million for the year ended December 31, 2009 from Ps.780 million for the year ended December 31, 2008. This increase primarily reflected higher expenses corresponding to the opening of five new El Super stores in 2009, additional expenses from a full year of operations for eight El Super stores that opened in 2008. The increase in operating expenses also included increases in salaries and benefits, advertising and marketing expenses, lease payments, and depreciation, in each case due to the opening of the new stores. Our operating expenses as a percentage of net sales increased 0.5% during this period to 21.8% for the year ended December 31, 2009 from 21.3% for the year ended December 31, 2008 as a result of the increased costs associated with the new store openings.

Real Estate Operations

The operating expenses of our real estate operations increased by Ps.29 million, or 18.6%, to Ps.186 million for the year ended December 31, 2009 from Ps.160 million for the year ended December 31, 2008. This increase reflected the absence of an Ps.18 million gain from fixed asset sales, which had occurred in 2008, and decreased operating expenses during that year when compared to 2009. Our operating expenses as a percentage of net sales increased 4.7% during this period.

Operating Income

As a result of the factors described above, our operating income increased by Ps.624 million, or 33.5%, to Ps.2,487 million for the year ended December 31, 2009 from Ps.1,864 million for the year ended December 31, 2008. On a consolidated basis, our operating income as a percentage of net sales increased 0.6% to 5.2% in 2009 from 4.6% in 2008.

Retail Operations in Mexico

Operating income for our retail operations in Mexico increased by Ps.563 million, or 38.8%, to Ps.2,015 million for the year ended December 31, 2009 from Ps.1,452 million for the year ended December 31, 2008. Operating income for our retail operations in Mexico as a percentage of net sales increased to 5.0% in 2009 from 4.0% in 2008 mainly due to increased supply chain efficiencies.

Retail Operations in the United States

Operating income for our retail operations in the United States increased by Ps.73 million, or 80.8%, to Ps.164 million for the year ended December 31, 2009 from Ps.91 million for the year ended December 31, 2008. Operating income for our retail operations in the United States as a percentage of net sales decreased to 2.2% in 2009 from 2.5% in 2008 primarily resulting from the disproportionate increase in operating expenses due to new stores.

Real Estate Operations

Operating income for our real estate division decreased by Ps.13 million, or 3.9%, to Ps.309 million for the year ended December 31, 2009 from Ps.321 million for the year ended December 31, 2008. Operating income for our real estate division as a percentage of net sales decreased to 61.1% in 2009 from 65.9% in 2008 due to the Ps. 18 million gain from the sale of fixed assets.

Net Comprehensive Financing Cost

Net comprehensive financing cost increased by Ps.153 million, or 24.9%, to Ps.767 million for the year ended December 31, 2009 from Ps.615 million for the year ended December 31, 2008. This increase primarily reflected an additional Ps.84 million loss from the valuation of our derivative instruments entered into primarily for interest rate hedging purposes, a Ps.13 million decrease in interest income due to a lower amount of interest-earning investments in 2009 compared to 2008, and a Ps.68 million decrease in exchange gain, related to a gain recognized on the settlement of a trading derivative in 2008, all of which more than offset a Ps.13 million decrease in interest expense.

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Income Tax Expense

Income tax expense decreased to Ps.337 million for the year ended December 31, 2009 as compared to Ps.371 million for the year ended December 31, 2008, primarily reflecting a Ps.209 million, or 82.3%, decrease in deferred income taxes. This decrease in deferred income taxes was due in part to a credit in the amount of Ps.74 million for 2009 due to amounts we did not expect to recover after the repeal of the Asset Tax Law.

The Mexican corporate statutory income tax rate was 28% in 2009 and 2008, and is set to increase to 30% from 2010 to 2012. Our effective tax rate was 20% in 2009 and 28% in 2008. This decrease in effective tax rate was mainly due to the reversal of a valuation allowance on our deferred income tax asset related to an asset tax credit. Such reversal generated a benefit for financial reporting purposes, without affecting the determination of taxable income, for which reason it reduced the effective tax rate in 2009. We received the benefit from the asset tax credit in 2009. See Note 18 to our audited consolidated financial statements for an analysis of the applicable effective tax rate.

Consolidated Net Income

We generated consolidated net income of Ps.1,394 million in the year ended December 31, 2009 as compared to consolidated net income of Ps.914 million for the year ended December 31, 2008. The increase of Ps.480 million, or 52.5% primarily reflected the improvement in sales and operating income and our lower effective tax rate in 2009.

Consolidated Results of Operations for the Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007 Net Sales

Net Sales

Our consolidated net sales increased by Ps.6,206 million, or 18.0%, to Ps.40,658 million for the year ended December 31, 2008 from Ps.34,452 million for the year ended December 31, 2007. This increase primarily reflected higher sales volumes as a result of 35 new retail store openings in 2008, including eight stores that were opened in the United States and additional sales from a full year of operations for the 15 stores that opened in 2007.

Retail Operations in Mexico

Net sales of our retail operations in Mexico increased by Ps.4,991 million, or approximately 15.8%, to Ps.36,506 million for the year ended December 31, 2008 from Ps.31,515 million for the year ended December 31, 2007. This increase was primarily due to sales derived from seven Chedraui stores and 20 Super Chedraui stores opened in 2008 and additional sales from a full year of operations from five Chedraui stores and 10 Super Chedraui stores that opened in 2007 and a 7.9% increase in Same-Store Sales, which is similar to year-over-year increases we have experienced in the past based on increases in average total ticket spending. This 15.8% increase was offset in part by the decline of the Mexican economy, particularly in the fourth quarter of 2008.

Net sales per retail square meter for our retail operations in Mexico increased 3.2% to Ps.42,741 per retail square meter in 2008 from Ps.41,401 per retail square meter in 2007, primarily as a result of a 7.9% increase in Same-Store Sales complemented by a robust increase in sales per retail square meter in retail stores with less than one year’s worth of sales. Net sales per employee decreased 1.8% to Ps.1.362 million in 2008 from Ps.1.387 million per operating employee in 2007, primarily as a result of the incorporation of the employees of the 27 stores opened in Mexico in 2008.

Retail Operations in the United States

Net sales of our retail operations in the United States increased by Ps.1,200 million, or approximately 48.7%, to Ps.3,665 million for the year ended December 31, 2008 from Ps.2,465 million for the year ended December 31, 2007. This increase was primarily due to sales derived from the eight El Super stores opened in 2008, which included the seven Gigante stores that were acquired by Bodega Latina in August of 2008. In addition, retail operations in the United States experienced a 25.9% increase in Same-Store Sales in 2008 compared to 2007. We believe our Same-Store Sales increased as a result of the improvement in the quality of the fruits and vegetables due to the opening of our distribution center outside Mexico City, inflation of 4.5% during 2008 and the economic downturn that began during the third quarter of 2008, which attracted new customers to our low-prices.

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Net sales per retail square meter for our retail operations in the United States decreased 33.19% to Ps.53,178 per retail square meter in 2008 from Ps.79,593 per retail square meter in 2007, primarily as a result of only incorporating a partial year of sales volume for the Gigante stores acquired in August of 2008. Net sales per employee decreased 25.0% to Ps.1.965 million in 2008 from Ps.2.619 million per employee in 2007 primarily as a result of the incorporation of the seven Gigante stores acquired in August of 2008.

Real Estate Operations

Net sales of our real estate operations increased by Ps.15 million, or approximately 3.1 %, to Ps.487 million for the year ended December 31, 2008 from Ps.473 million for the year ended December 31, 2007. This increase was attributed to annual increases in the amounts collected as rental payments under certain lease agreements due to inflation.

Cost of Sales

Our consolidated cost of sales increased by Ps.5,027 million, or 18.5%, to Ps.32,174 million for the year ended December 31, 2008 from Ps.27,147 million for the year ended December 31, 2007, while our cost of sales as a percentage of net sales increased to 79.1% in 2008 from 78.8% in 2007. This increase in cost of sales primarily reflected an increase in net sales for the same period.

Retail Operations in Mexico

Cost of sales for our retail operations in Mexico increased to 16.4% to Ps.29,371 million in 2008 from Ps.25,242 million in 2007 primarily as a result of decreased merchandise discounts from our suppliers, which increased the cost of sales of such merchandise in relation to 2007.

Retail Operations in the United States

Cost of sales for our retail operations in the United States increased to 49.3% to Ps.2,794 million in 2008 from Ps.1,871 million in 2007 primarily as a result of the increase in net sales and the introduction of the operations of the Gigante stores acquired in August of 2008.

Real Estate Operations

There are no significant cost of sales attributed to our real estate operations due to the nature of the business.

Gross Profit

As a result of the factors discussed above, our consolidated gross profit increased by Ps.1,178 million, or 16.1%, to Ps.8,483 million for the year ended December 31, 2008 from Ps.7,305 million for the year ended December 31, 2007. Consolidated gross profit margin for 2008 was 20.9% compared to 21.2% for 2007.

Retail Operations in Mexico

Gross profit for our retail operations in Mexico increased 13.7% to Ps.7,134 million in 2008 from Ps.6,273 million in 2007. Gross profit as a percentage of net sales for our retail operations in Mexico decreased to 19.5% in 2008 from 19.9% in 2007, primarily as a result of a smaller increase in net sales relative to cost of sales as well as decreased merchandise discounts from our suppliers.

Retail Operations in the United States

Gross profit for our retail operations in the United States increased 46.8% to Ps.871 million in 2008 from Ps.593 million in 2007. Gross profit as a percentage of net sales for our retail operations in the United States decreased to 23.8% in 2008 from 24.1% in 2007, primarily as a result of a proportionately smaller increase in net sales relative to cost of sales due to the increased costs related to the introduction of the operations of the Gigante stores acquired in August of 2008.

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Real Estate Operations

Gross profit in our real estate division increased 8.8% to Ps.478 million in 2008 from Ps.440 million in 2007, primarily as a result of a marginal decrease in the cost of sales. Gross profit as a percentage of net sales for our real estate division increased to 98.1% in 2008 from 93.0% in 2007, due to the cost of sales associated with the sale of commercial space in our shopping centers.

Operating Expenses

Our consolidated operating expenses increased by Ps.1, 056 million, or 19.0%, to Ps.6,620 million for the year ended December 31, 2008 from Ps.5, 563 million for the year ended December 31, 2007. This increase primarily reflected higher expenses corresponding to the opening of 35 new retail stores in 2008 and additional expenses from a full year of operations for 15 stores that opened in 2007. Despite this increase, our consolidated operating expenses as a percentage of net sales increased by only 0.1% in 2008 compared to 2007.

Retail Operations in Mexico

The operating expenses of our retail operations in Mexico increased by Ps. 831 million, or 17.1%, to Ps.5,683 million for the year ended December 31, 2008 from Ps.4,852 million for the year ended December 31, 2007. This increase primarily reflected higher pre-operating expenses corresponding to the opening of seven new Chedraui stores and 20 new Super Chedraui stores in 2008 and additional expenses from a full year of operations for five Chedraui stores and 10 Super Chedraui stores that opened in 2007.

Retail Operations in the United States

The operating expenses of our retail operations in the United States increased by Ps.259 million, or 49.6%, to Ps.780 million for the year ended December 31, 2008 from Ps.521 million for the year ended December 31, 2007. This increase primarily reflected higher expenses corresponding to the opening of eight new El Super stores in 2008. The increase in operating expenses included increases in salaries and benefits, advertising and marketing expenses, lease payments, depreciation and other expenses. Our operating expenses as a percentage of net sales increased 0.1% during this period.

Real Estate Operations

The operating expenses of our real estate operations decreased by Ps.33 million, or 17.4%, to Ps.157 million for the year ended December 31, 2008 from Ps.190 million for the year ended December 31, 2007. This decrease primarily reflected a reduction in net expenses due to gains from the sale of Ps.18 million worth of assets in 2008 also causing our operating expenses as a percentage of net sales to decrease 8.0% from 2007 to 2008.

Operating Income

As a result of the factors described above, our operating income increased by Ps.122 million, or 7.0%, to Ps.1,864 million for the year ended December 31, 2008 from Ps.1,742 million for the year ended December 31, 2007. On a consolidated basis, our operating income as a percentage of net sales decreased by 0.5% to 4.6% in 2008 from 5.1% in 2007.

Retail Operations in Mexico

Operating income for our retail operations in Mexico increased by Ps.31 million, or 2.2%, to Ps.1,452 million for the year ended December 31, 2008 from Ps.1,421 million for the year ended December 31, 2007. Operating income for our retail operations in Mexico as a percentage of net sales decreased to 4.0% in 2008 from 4.5% in 2007 given the lower margins earned in 2008 compared to 2007 due to the large number of stores opened in 2008.

Retail Operations in the United States

Operating income for our retail operations in the United States increased by Ps.19 million, or 26.2%, to Ps.91 million for the year ended December 31, 2008 from Ps.72 million for the year ended December 31, 2007. Operating income for our retail operations in the United States as a percentage of net sales decreased 0.4% to 2.5% in 2008 from 2.9% in 2007 mainly due to the decrease in gross profit margin attributed to the large number of stores opened in 2008.

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Real Estate Operations

Operating income for our real estate division increased by Ps.72 million, or 28.8%, to Ps.321 million for the year ended December 31, 2008 from Ps.249 million for the year ended December 31, 2007. Operating income for our real estate division as a percentage of net sales increased to 65.9% in 2008 from 52.8% in 2007.

Net Comprehensive Financing Cost

Net comprehensive financing cost increased by Ps.115 million, or 23.0%, to Ps.615 million for the year ended December 31, 2008 from Ps.500.0 million for the year ended December 31, 2007. This increase primarily reflected the fact that we did not recognize a gain on monetary position in 2008 due to the elimination of inflation accounting after December 31, 2007. In addition, we benefited from a decrease of Ps.126 million in interest expense, which primarily reflected a decrease in our average indebtedness during 2008, partially offset by an increase of Ps.17.67 million in interest income and an increase in foreign exchange gains of Ps.65.8 million.

Income Tax Expense

Income tax expense decreased by Ps.255 million, or 40.7%, to Ps.371 million for the year ended December 31, 2008 from Ps.627 million for the year ended December 31, 2007, principally due to the write-off of asset tax credits in 2007 due to the elimination of the asset tax in that year.

The Mexican corporate statutory income tax rate was 28 % in 2008 and 2007. Our effective tax rate was 28% in 2008 and 52% in 2007. This decrease in the effective tax rate was mainly due to the amortization of certain losses related to real estate operations which were discontinued in 2008. See Note 18 to our audited consolidated financial statements for an analysis of the applicable effective tax rate.

Non-recurring events

In 2007, we generated a net loss of Ps.26 million from discontinued operations related to the disposal of the wholesale operations of our subsidiary Suma y Multiplica, S.A. de C.V. See Note 19 of our audited consolidated financial statements. In 2008, we did not experience any loss from discontinued operations.

Also in 2007, we recorded a provision of Ps.114 million for losses related to proceedings against the tax authorities regarding the payment of Asset Tax. See Note 17 of our audited consolidated financial statements.

Consolidated Net Income

We generated consolidated net income of Ps.914 million in the year ended December 31, 2008 as compared to consolidated net income of Ps.539 million for the year ended December 31, 2007. The net increase of Ps.375 million, or 69.5%, primarily reflected the decrease in income tax expense and increase in operating income.

Liquidity and Capital Resources

General

Our primary sources of liquidity are cash flows from operations and borrowings under our credit facilities. Our cash requirements have historically consisted primarily of working capital needs, including the funding of new store openings and the payment of principal and interest on indebtedness. Our management of trade payables and inventory is also an important source of our liquidity. The excess of the Days Payables over Inventory Days was 44 days in 2007, 43 days for 2008 and 36 days for 2009.

Cash Flows

We manage all cash, including that from our subsidiaries, at the holding company level. By doing so, we distribute cash to our subsidiaries for them to meet their commitments with suppliers and others.

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Through December 31, 2007, Mexican FRS required the presentation of a statement of changes in financial position, which presented sources and uses of resources, determined based on the change in assets and liabilities in the balance sheet in constant pesos. Therefore, changes in financial position not affecting cash were not necessarily excluded from the statement of changes in financial position. Beginning January 1, 2008, Mexican FRS requires the presentation of a cash flow statement, using either the direct or indirect method, presented in nominal pesos.

Accordingly, the following table summarizes our cash flows for the years ended December 31, 2009 and 2008 and changes in our financial position for the year ended December 31, 2007.

Year ended December 31, 2007 2008 2009 (millions of pesos) Cash or net resources provided by operating activities....................... 1,705 3,011 2,504 Cash or net resources used in investing activities............................... (857) (3,347) (1,138) Cash or net resources provided by (used in) financing activities........ (574) 570 (2,029) (Decrease) increase in cash................................................................. 274 234 (663)

Cash or resources provided by operating activities for the years ended 2009, 2008 and 2007 reflect primarily

the profit obtained in such fiscal years, plus the working capital of the same period. Our trade accounts receivable increased by Ps. 178.2 million in 2009, decreased Ps. 164.3 million in 2008 and increased Ps. 699.4 million in 2007, while our inventory increased by Ps. 478.1 million in 2009, Ps. 678.9 million in 2008 and Ps. 540.8 million in 2007.

Variations in cash or resources used in investing activities for the years ended 2009, 2008 and 2007 primarily reflect the following: in 2009, investment for the opening of eight stores, offset by proceeds from the sale of assets used in sale and leaseback transactions and the interest collected on investments; in 2008, the investment for the opening of 35 stores, offset by proceeds from the sale of assets used in sale and leaseback transactions and interest collected on investments; and, in 2007, the investment for the opening of 15 stores, and the acquisition of shares of an affiliate offset by dividends received from an associated entity.

Variations in cash or resources provided by (used in) financing activities for the years ended 2009, 2008 and 2007 reflect the following: in 2009, the payment of certain loans entered into in 2008, as well as interest paid during such year and repayments of trust financing; in 2008, an increase in funds obtained from bank loans used to finance such year’s growth, offset by the interest paid during the period, repayments of trust financing, and a dividend distribution; and, in 2007, the payment of certain short-term loans entered into in 2007, a dividend distribution and the net effect of the valuation of certain derivative instruments offset by the creation of a reserve of funds held in trust.

Based on current operating results, we believe that cash flow from operations and other sources of liquidity, including borrowings under our credit facilities, will be adequate to meet anticipated requirements for working capital, capital expenditures, interest payments and scheduled principal payments for the foreseeable future.

Capital Expenditures

During 2010, we expect to make aggregate capital expenditures of approximately Ps. 3,814 million for the opening of approximately 20 stores, the remodeling of certain stores and investment in IT. Based on the annual budget for new store openings in Mexico in 2010, we anticipate that each new fully-owned Chedraui store will require a Ps.150 million investment, and each new fully-owned Super Chedraui store will require a Ps.50 million investment, in each case including the cost of land (for each format, the “Estimated New Store Capex”).

During 2009, we made aggregate capital expenditures of Ps. 1,489 million, which included capital expenditures in the amount of:

• Ps. 994 million for store openings;

• Ps. 241 million for store maintenance; and

• Ps. 254 million for store remodelation.

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During 2008, we made aggregate capital expenditures of approximately Ps. 3,669 million, which included capital expenditures in the amount of:

• Ps. 3,263 million for store openings;

• Ps. 206 million for store maintenance; and

• Ps. 200 million for store remodelation.

Indebtedness

The following table sets forth a description of our outstanding indebtedness as of December 31, 2009.

As of December 31, 2009 Description of Debt Debt Interest Rate Currency Maturity Date (millions of Ps.) Long-term Debt BBVA Bancomer, S.A. ..................... 600 TIIE + 0.375 Mexican pesos June 2012 BBVA Bancomer, S.A. ..................... 750 TIIE + spread (1) Mexican pesos September 2012 Banco Nacional de Mexico, S.A........ 1,750 TIIE + spread(1) Mexican pesos July 2017 City National Bank ............................ 91.5 Libor + 1.25% U.S. dollars Revolving Total long-term debt........................ 3,191.5 Short-term Debt

BBVA Bancomer S.A. ...................... 100 7.765% Mexican pesos January 2010 BBVA Bancomer Miami ................... 56 Libor + 0.75% U.S. dollars December 2010 Banco Santander S.A. ....................... 180 TIIE + 2.8% Mexican pesos June 2010 Total short-term debt ...................... 336 (1) Spread may range from 0.55% to 1.0%.

Credit Facilities

As of December 31, 2009, we had Ps.3.191 billion (approximately U.S.$244 billion) of outstanding borrowings under the credit facilities. We do not intend to prepay the credit facilities with the proceeds of this offering. However, we intend to pay certain short-term loans with the proceeds of this offering.

Subject to certain exceptions and qualifications, the credit facilities contain certain covenants that, among other things, limit the ability of Grupo Chedraui and its subsidiaries to: make certain restricted payments; consolidate or merge with any other companies or sell substantially all of their assets; incur liens upon our property or assets; guarantee indebtedness; materially change the nature of the business and pay dividends in certain situations and require us to maintain certain financial ratios. As of the date of this offering circular, we are in compliance with all such covenants.

Banorte Financing Trust

On December 22, 2005, we, together with six of our subsidiaries, entered into a trust agreement with Supervision y Mantenimiento de Inmuebles, S.A. de C.V., as administrator, and Invex, as trustee, pursuant to which the trustee requested a loan from Banorte in the aggregate amount of Ps.1,200 million in exchange for the assignment of certain accounts receivable, as well as existing and future collection rights on certain lease agreements of the Company (the “Banorte Financing Trust”). The loan bears an interest rate equivalent to the sum of the TIIE rate applicable to such interest period, plus 1.7 percentage points, and matures in June 2020. This financing arrangement requires that we maintain a cash reserve sufficient to cover six months of interest and principal

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payments, which is recorded as a long-term account receivable and shall be recovered when the loan is repaid. The agreement further provides that, as accounts receivables from real estate operations are collected by the Company, such funds shall be used to cover the expenses of the trust. Any remaining amounts are used for the repayment of the loan. In the event that the remainder is not enough to cover the minimum debt payment, the difference shall be obtained from the cash reserve, which shall be reestablished with the future collection rights. If the reserve is insufficient, we may transfer eligible receivables in favor of the trustee to allow for the reestablishment of the reserve.

We estimate that the loan will be repaid in advance of its scheduled maturity. As of December 31, 2009, we had recorded a long-term liability with respect to the loan of Ps. 648,156 (Ps. 976,194 as of December 31, 2008 and Ps. 1,223,112 as of December 31, 2007) and a long-term account receivable for Ps. 89,070 (Ps. 104,061 as of December 31, 2008 and Ps. 87,365 as of December 31, 2007).

Contractual Obligations and Commercial Commitments

The following table sets forth our contractual obligations and commercial commitments as of December 31, 2009.

Payment Due by Period Contractual Obligations

Total

Less than 1 Year

1-3 Years

3-5 Years

More than 5 Years

(millions of pesos) Long-term debt obligations........... 3,191 91 1,350 350 1,400 Banorte Financing Trust 648 23 56 72 497 Operating lease obligations........... 1,285 240 429 399 218 Total.......................................... 5,125 355 1,835 821 1,986

Risk Management

We are exposed to market risks arising from changes in interest rates, inflation and foreign currency exchange rates, in both the Mexican and U.S. markets.

Interest rate risk exists with respect to our cash flows related to our floating rate financial assets and liabilities and with respect to the fair value of our fixed-rate financial assets and liabilities. We do not believe that we are exposed to significant interest rate risk as a result of the hedging instruments we have entered into to cover such risk. Foreign exchange rate risk exists with respect to our financial assets and liabilities denominated in currencies other than Mexican pesos. At December 31, 2009, we had approximately Ps.112.2 million (at the exchange rate in effect on December 31, 2009) in financial assets denominated in U.S. dollars, principally consisting of bank accounts, and approximately Ps.69.1 million in financial liabilities denominated in U.S. dollars consisting of bank loans for Ps.55.8 million and accounts payable for Ps.13.3 million.

In the past, we have entered into derivative instruments to mitigate any market risks arising from changes in interest rates, inflation and foreign currency exchange rates. From time to time, we have assessed our interest rate and currency exchange exposures to determine whether to enter into derivative financial instruments to hedge our exposure(s) or modify any existing instruments. Currently, only officers authorized by power of attorney to dispose of assets are authorized to enter into derivative transactions on behalf of the Company.

When we enter into derivative transactions that meet certain risk coverage requirements, at the outset of each transaction we document the objective, characteristics, accounting treatment and the effectiveness of the transaction.

We recognize changes in the valuation of our derivatives designated under hedge accounting depending on the type of hedge. For example, with respect to cash flow hedging arrangements, the effective portion is temporarily recognized in comprehensive income and applied to income when the hedged item is affected, and the ineffective portion is immediately recognized as income.

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We suspend hedge accounting when the derivative is past due, has been sold, cancelled or exercised, does not reach a level of effectiveness to compensate for the changes in the fair value or cash flows of the covered item, or when the entity decides to cancel the hedging designation. When we suspend hedge accounting for cash flow hedging instruments, the amounts recorded in stockholders' equity as part of comprehensive income remain in equity until the effects of the future transaction or firm commitment affect income. In the event that the proposed transaction or the firm commitment becomes unlikely to occur, the accumulated gain or loss in comprehensive income is immediately recognized as income. When hedge accounting is satisfactorily determined to be effective but subsequently proves to be ineffective, the accumulated effect of comprehensive income in stockholders' equity is proportionally recycled to income, to the extent the asset or liability affects income.

During 2009, we entered into an exchange rate financial derivative instrument for an obligation denominated in dollars for U.S.$20.4 million, due in February 2010, fixing an exchange rate of Ps. 13.16 for U.S.$1.00, to cover a payment obligation established in U.S. dollars for the same amount and with the same due date. In addition, we have entered into interest rate collars, with the objective of managing the risk of the interest rates for our loans and to control the integration of debt from fixed rate to variable rates, and vice versa. On December 3, 2009, we executed four interest-rate collars, pursuant to which we collect or pay amounts that are calculated based on interest rates with a fixed floor and cap, related to the 28-day TIIE rate. The first collar, for Ps. 1,750 million is due on August 4, 2017, the second collar, for Ps. 750 million is due on September 29, 2012, the third collar, for Ps. 600 million is due on June 29, 2012, and the fourth collar, for Ps. 782 million is due on March 28, 2018. Each of the amounts and maturities of these derivative instruments are tied to the loans they cover. The margin calls, if any, are covered by cash flows from operations.

The following table sets forth our derivative instruments as of December 31, 2009.

Type of Derivative Purpose Nominal Value (1) Value of Underlying Asset / Reference Value Estimated Value As of December 31, 2009

Interest Rate Collar Hedge 1,750,000,000 1,750,000,000 256,383,612 Interest Rate Collar Hedge 750,000,000 750,000,000 76,716,510 Interest Rate Collar Hedge 600,000,000 600,000,000 52,241,040 Interest Rate Collar Hedge 782,087,244 776,056,809 105,939,020

TOTAL 491,280,182

(1) The transaction threshold is U.S.$27 million

As of December 31, 2009, collateral in the amount of Ps.147,612,290 was issued.

Internal Controls

We have adopted internal control policies and procedures designed to provide reasonable assurance that our operations are subject to and in compliance with guidelines set forth by our management and that our financial reporting complies with Mexican FRS. We believe that our advanced information technology platform and our organizational structure provide us with the necessary tools to accurately and effectively apply our internal control policies and procedures. In addition, our various operational processes are subject to periodic internal audits. From the delivery of services to our customers to the manner in which we acquire goods and services required for our operations, our internal controls are governed by various policies and procedures.

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New Mexican Accounting Standards

As part of its efforts to converge Mexican standards with international standards, in 2009, CINIF issued the following NIFs, Interpretations to Financial Information Standards (“INIFs”) and improvements to NIFs applicable to profitable entities, which become effective as follows:

For fiscal years that begin on or after January 1, 2010:

NIF C-1, Cash and Cash Equivalents, changes the “cash” concept to be consistent with the definition in NIF B-

2, “Statement of Cash Flows,” and introduces definitions for restricted cash, cash equivalents and readily available investments.

The main improvements generating accounting changes that must be recognized retroactively are: NIF B-1, Accounting Changes and Correction of Errors – Requires further disclosures when a company

applies a particular standard for the first time. NIF B-2, Statement of Cash Flows – Requires recognition of the effects of fluctuations in exchange rates used

for translating cash in foreign currencies, and changes in fair value of cash in the form of precious metal coins, and other cash items, at fair value, in a specific line item.

NIF B-7, Business Acquisitions – Permits recognition of intangible assets or provisions in a business

acquisition for a contract whose terms and conditions are favorable or unfavorable with respect to market, only when the acquired business is the lessee in an operating lease. This accounting change should be recognized retroactively for acquisitions made on or after January 1, 2009.

NIF C-7, Investments in Associated Companies and Other Permanent Investments – Modifies how the effects

derived from increases in equity percentages in associated companies are determined. It also establishes that the effects due to an increase or decrease in equity percentages in associated companies should be recognized under equity in income (loss) of associated companies, rather than in the non-ordinary line item within the statement of income.

NIF C-13, Related Parties – Requires that, if the direct or ultimate controlling entity of the reporting entity

does not issue financial statements available for public use, the reporting entity should disclose the name of the closest, direct or indirect, controlling entity that issues financial statements available for public use.

INIF 14, Construction Contracts, Sale of Real Property and Rendering of Related Services - Supplements

Bulletin D-7, Construction and Manufacturing Contracts for Certain Capital Assets, and requires segregation of the different components of the contracts in order to define whether the contract refers to construction of real property, sale of real property, or rendering related services, and establishes the rules for recognizing revenue and related costs and expenses, based on the different elements identified in the contract. INIF 14 provides guidance for the appropriate use of the percentage-of-completion method for revenue recognition.

INIF 17, Service Concession Contracts – Supplements Bulletin D-7, Construction and Manufacturing

Contracts for Certain Capital Assets, and establishes that, when the infrastructure of the service concession contracts falls within the scope of this INIF, it should not be recognized under property, plant and equipment. It also establishes that when the operator renders construction or improvement services, as well as operation services under the same contract, revenues should be recognized for each type of service, based on the fair value of each consideration received at the time the service is rendered. When amounts are clearly identified and, after they are quantified, the applicable revenue recognition criterion should be followed, taking the nature of the service rendered into consideration. Also, INIF 17 establishes that, when the operator renders construction or improvement services, both revenues and the associated costs and expenses should be recognized under the percentage-of-completion method and consideration received, or receivable, should be recognized, initially, at fair value. Revenues from operation services should be recognized as the services are rendered and taking into account suppletory Standard IAS 18.

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For fiscal years that begin on January 1, 2011:

NIF B-5, Financial Segment Information – Uses a managerial approach to disclose financial information by segments, as opposed to Bulletin B-5, which also used a managerial approach but required that the financial information be classified by economic segments, geographical areas, or client groups. NIF B-5 does not require the existence of different risks among business areas in order to separate them. It allows areas in the preoperating stage to be classified as a segment, and requires separate disclosure of interest income, interest expense and liabilities, as well as disclosure of the entity’s information as a whole with respect to products, services, geographical areas and major customers. Like the previous Bulletin, this standard is mandatory only for public companies or companies in the process of becoming public.

NIF B-9, Interim Financial Information – As opposed to Bulletin B-9, this standard requires presentation of the

statement of changes in stockholders' equity and statement of cash flows as part of the interim financial information. For comparison purposes, it requires that the information presented at the closing of an interim period contain the information of the equivalent interim period of the previous year, and in the case of the balance sheet, presentation of the previous years’ annual balance sheet.

At the date of issuance of our consolidated financial statements, we have not fully assessed the effects of

adopting these new standards on our financial information. We believe that the adoption of these new standards will not have a significant effect on our financial position or results of operations.

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BUSINESS

Overview

We are a leading Mexican multi-format retailer with operations in Mexico and the United States. Through our stores located in over 20 states throughout Mexico, we sell a variety of food items, including basic groceries and perishables, as well as non-food items, including consumer electronics, white goods (e.g., major household appliances), furniture, small appliances, apparel, cellular phones and other goods. We also operate stores in Southwestern United States selling perishables and other grocery items, primarily to Hispanic, and in particular Mexican-American, customers. As of December 31, 2009, we operated 142 retail stores in Mexico under two retail store formats, Chedraui and Super Chedraui and 21 stores in the United States under the El Super format, with a total selling area of approximately 967,160 square meters (10.4 million square feet). We believe that the Chedraui brand name has historically been associated with a broad assortment of products at affordable prices for the lower-to middle-income segments of the Mexican population; and the El Super brand name has had a similar association for the Hispanic, and in particular the Mexican-American, community in Southwestern United States for over 12 years. We believe our strategy of offering the most competitive prices combined with our broad product offering has been a key strategic differentiator and an important factor in the growth of our businesses. In recent years, we have maintained a successful track record of consistent profitability and growth. From 2005 to 2009, we opened or acquired 94 retail stores, of which 29 were acquired from Carrefour in Mexico in 2005 and seven were acquired from Grupo Gigante in the United States in 2008. In addition, our consolidated net revenues have increased from Ps.27.7 billion in 2005 to Ps.47.9 billion in 2009, implying a 14.7%Revenue CAGR, and our consolidated EBITDA increased from Ps.1.6 billion to Ps.3.2 billion over the same period yielding a 18.9% EBITDA CAGR.

We operate three distinct lines of business: Mexican Retail, U.S. Retail and Real Estate. Our Mexican retail business operates under two store formats, which target different market niches and segments of the population, including 109 hyper-market stores under the name Chedraui that carry a breadth of products and brands in cities with populations of at least 100,000 inhabitants. In 2005, we opened our smaller format stores, Super Che, which are generally concentrated in smaller cities and towns with populations of at least 25,000. Over the past four years, we opened 33 Super Che stores, which we recently decided to gradually rename Super Chedraui in order to take advantage of our brand recognition. Our Chedraui and Super Chedraui retail stores are mainly located in southern and central Mexico, including Mexico City. Our Chedraui stores, which accounted for 75.2% of our consolidated revenues for 2009, range from 3,226 square meters (approximately 34,724 square feet) to 11,592 square meters (approximately 124,775 square feet), with an average of 7,408 square meters (approximately 79,739 square feet) and contain 57,000 SKUs on average. Super Chedraui stores, which accounted for 8.4% of our consolidated revenues for 2009, range from 1,737 square meters (approximately 18,696 square feet) to 2,481 square meters (approximately 26,705 square feet), with an average of 2,069 square meters (approximately 22,173 square feet) and contain over 29,000 SKUs on average.

Our U.S. retail operations target the Hispanic, and more specifically the Mexican-American, communities in California, Nevada and Arizona through our 21 El Super stores, which accounted for approximately 15.4 % of our consolidated revenues in 2009. Our El Super stores range from 2,811 square meters (approximately 30,257 square feet) to 7,536 square meters (approximately 81,116 square feet), averaging 4,353 square meters (approximately 46,855 square feet) and contain 5,000 SKUs on average. Our U.S. Retail Operations, held through Bodega Latina, are independently managed and self-funded from our operations in Mexico. Grupo Chedraui holds a 66.2% ownership interest in Bodega Latina, with the remainder held by minority shareholders, none of whom hold more then a 5.5% interest.

Our real estate operations are responsible for the administration of our owned and leased real estate assets in Mexico, the development of existing and projected stores and shopping centers, and the expansion, construction and remodeling of our stores in Mexico. Real estate revenues account for only 1% of our consolidated revenues in 2009, however, contributed 11% to our total EBITDA.

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The following table sets forth key financial and operating data for each of our segment markets:

As of or for the year ended December 31, 2007 2008 2009 Retail Business in Mexico Number of retail stores(1) 112 139 142 Selling area (square meters)(1) 761,209 854,106 875,745 Net sales (millions of pesos) 31,515 36,506 40,033 Same-Store Sales growth (%) 8.55 7.90 1.69 EBITDA (millions of pesos) 1,909 1,907 2,589 Retail Business in the United States

Number of retail stores(1) 8 16 21 Selling area (square meters) (1) 30,965 68,916 91,415 Net sales (millions of pesos) 2,465 3,665 7,363 Same-Store Sales growth (%) 15.9 25.9 10.7 EBITDA (millions of pesos) 106 141 245 Real Estate Business Gross leasable area (square meters) (1) 256,805 278,591 267,368 Average monthly revenue, pesos per square meter

131 139 171

Total revenue (millions of pesos) 473 487 505 Occupancy rate (%) 94% 92% 93% EBITDA (millions of pesos) 270 345 340 Consolidated Business Net retail sales (millions of pesos) 33,979 40,171 47,396 Total retail selling area (square meters) (1)

792,174 923,022 967,160

Total revenue (millions of pesos) 34,452 40,658 47,901 Revenue growth (%) 15.1% 18.0% 17.8% EBITDA (millions of pesos) 2,285 2,393 3,174 EBITDA growth (%) 18.0% 4.7% 32.6% EBITDA margin (%) 6.6% 5.9% 6.6%

________________________________________

(1) As of December 31. Not a weighted average.

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Our Business Model

Our mission statement, which is to deliver to all possible locations, the products our customers prefer at the best prices, is the main driver behind our business model and the key reason underpinning our continued strong financial performance. We believe this simple but powerful strategy results in a successful business model that positions us well to take full advantage of both Mexican and U.S. growth opportunities. The fundamentals are as follows:

Lowest Price: Our focus is to always offer all our products at the lowest price in the markets in which we operate. We believe this commitment to the lowest price clearly differentiates us from our competitors. While certain of our competitors focus on targeted or seasonal promotions and sales, we seek to offer a consistent message of every-day lowest prices for each product we sell. We believe our strategy and price positioning is widely recognized in the industry. In order to always provide our customers with their preferred products at the lowest price, we engage in extensive price comparison efforts in Mexico at both national and local levels to guarantee our competitive position among retailers and specialty stores. This process is supported by innovative technology and quick response capacity at a local level, which is led by empowered store managers. By engaging in these price comparisons on behalf of our customers, we believe we have been successful in providing our customers with a one-stop shopping experience in which they are comfortable purchasing a broad assortment of merchandise without independently undertaking local price and merchandise comparisons. As a result of this strategy, we believe we successfully offer our customers their preferred products at the best price, which enhances customer loyalty as reflected by our growing customer base.

Our wide selection of products: We believe our retail stores offer a broad selection of value-based, competitively-priced brand name and private label goods. Our Chedraui stores contain above-industry an average of 57,000 SKUs. Our Super Chedraui format carries an average of 29,000 SKUs and our El Super stores in the United States carry an average of 5,000 SKUs. Our objective is to carry not only leading brands, but also a full range of brands and products within each product category, including value items for our target market at each store location. Our assortment of merchandise, consisting of both imported and domestic brand-name products, is tailored to each store and is responsive to such store’s climate, region and client preference and socioeconomic level. In addition, our logistics system and strategically located modern and custom-built distribution centers enable us to readily and efficiently meet the merchandising demands of our stores.

Customer experience: As part of our core strategy, we focus on offering superior customer service in our stores by maintaining clean stores, with clearly labeled departments, products and prices, that we believe are more comfortable than those of our Principal Competitors. We believe we offer our customers an attractive shopping environment. We have a policy of continuously evaluating whether we need to remodel our stores based on the age of our equipment, construction improvement needs and our local competitor’s stores. This remodeling policy assures that we are able to provide our customers with clean, well-labeled and sizeable stores, supported by the appropriate number of trained employees to provide superior customer service, further enhancing the shopping experience. In addition, in order to increase traffic to our stores in Mexico, we offer a variety of services to our customers, such as extended warranties through Garex, wire transfers through Cartera Dinámica, and the ability to make bill payments to certain government and private entities.

Our Strengths

We believe that the following key competitive strengths differentiate us and are critical to our continuing success:

Unique Position as the “Lowest Price” Mexican Retailer with a Broad Product Assortment Compared to Other Competitors

Our simple but powerful pricing strategy is based on always offering all our products at the lowest prices in the markets in which our stores operate. Unlike many of our competitors, who price their products based on target margins, we engage in central, company-wide and local pricing comparison and price our products accordingly. As a result, we make approximately 1,900 price adjustments daily on a company-wide level. In addition, individual store managers are empowered to implement real-time price adjustments based on the prices offered by local competitors resulting in approximately 85,200 daily price adjustments made at a local level. We believe we have

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been successful in executing and communicating this strategy through our slogan “En Chedraui, Cuesta Menos” (At Chedraui, It Costs Less) and our quick and effective responses to changes in prices, which we believe has also contributed to an increase in customer loyalty as well as our overall customer base. Each of our retail stores is connected by a customized and integrated communications network that allows the transmission of information 24-hours a day in order to provide real-time information between our stores, corporate offices and distribution centers in Mexico. We believe we are also recognized for our broad product assortment, which is based on specific demographics and regional and local customer preferences. In particular, our high-quality perishable section is one of our distinguishing factors vis-à-vis our competitors. Our shopping area is also greater than that of similar competitors and we believe offers a more attractive shopping environment. In addition, we continuously evaluate whether we need to remodel our stores based on the age of our equipment, construction improvement needs and our local competitors’ stores. This remodeling policy assures that we are able to provide our customers with clean, and sizeable stores, with clearly labeled departments, products and prices, which are supported by superior customer service, further enhancing the shopping experience. Each of these factors supports our distinct position in the Mexican retail market as the lowest-priced retailer that also offers a broad product assortment and superior customer experience as compared to other low-price competitors.

Proven Track Record and Strong Platform for Future Growth.

Our current network of stores is a result of both consistent organic growth and the successful integration of acquisitions, such as Carrefour’s Mexican operations, which added 29 stores, and certain Gigante stores in the United States, which added seven stores. Those 29 Carrefour stores increased our number of stores in Mexico by 45% and represented approximately 40% of our net sales in 2005. We believe the Mexican market continues to offer significant organic growth potential given the low levels of formal retail penetration relative to the U.S., European and other Latin American markets. Furthermore, low retail penetration in our core southwestern and southeastern Mexican markets presents attractive new store potential in our existing markets. In addition, we believe the Mexican retail market offers additional consolidation opportunities. Hence, we believe this market environment presents attractive growth opportunities in both our current, as well as potential new markets, specifically in northern Mexico. We continue to dedicate time and resources to developing a strong growth platform as evidenced by our expansion plan begun in 2007. In addition, we believe that the capacity of our existing distribution centers and improved IT systems infrastructure, which results from our significant investments over the last few years, supports our planned growth. Moreover, we believe our Super Chedraui format, introduced in 2005 under the name Super Che, has been successful at serving smaller cities and should allow us to enter the approximately 70 cities in Mexico of at least 25,000 inhabitants that typically are not only highly fragmented but also underserved by large retailers. Due to our established retail platform, including our strong presence in southeastern Mexico, and our growth strategy, we believe we are well positioned to benefit from other favorable market conditions such as population and economic growth as well as an increase in disposable income of our target market.

We believe El Super stores enjoy strong positioning within the Hispanic, and in particular the Mexican-American, communities in Southwestern United States. We have focused on personalized service as well as an emphasis on the Mexican culture and Spanish language within our stores, which we believe has contributed to our strong reputation for quality customer service and has increased customer loyalty. We believe there are additional opportunities within these communities and through our expansion plan, we intend to reinforce our presence in Southwestern United States and capitalize on our existing presence and strong reputation to expand our operations to other regions with significant Hispanic populations.

Market Leader in Southeastern Mexico Benefiting from Strong Presence and Strategic Store Locations.

We are the leading retailer in Mexico’s southeastern region with approximately 39% of the market share, according to Nielsen and we have a strong presence in over 20 states. We believe we have successfully established and defended this leading position in southeast Mexico during the past 40 years. We believe we are Mexico’s fourth leading food and general merchandise retailer on a national basis, and that we lead the market in southeastern Mexico, which has enhanced our bargaining position with our suppliers. Within southeastern Mexico, we believe we benefit not only from our scale but also from the strategic location of our stores, which has resulted in a proven record of long-term Same-Store Sales growth. We also believe the success of our new store strategy is evidenced by the closure of only three stores in our 40 years of operation. Furthermore, we believe that in many states the strategic location of our stores would be difficult to replicate due to the lack of available retail space in key

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locations. We believe these factors, combined with our strong brand recognition and reputation, create substantial barriers to entry for our competitors. Also, given that we own 68% of the stores we operate in Mexico, we believe we are not significantly exposed to lease re-negotiation risks, and at the same time, we can benefit from potential appreciation of the underlying economic value of our real estate assets, which provides us with an additional competitive advantage.

Efficient Operation, Focus on Low Cost and Efficient Inventories Supported by Cutting Edge IT and Distribution Platforms.

One of the pillars of our strategy is our ability to efficiently manage costs and inventories while increasing sales. Given our competitive pricing policy, we focus on reducing each store’s working capital and investing capital needs in a cost-efficient way, while maintaining high sales volume and superior store quality. Our efficient supply chain network, supported by continued investments in IT, allows us to optimize our working capital requirements through high inventory rotation and reduce our inventory related costs, such as shrinkage. In addition, our strategically located, modern and custom-built distribution centers, and our logistics system, enable us to readily meet the merchandising demands of our stores. In recent years, we have also made significant investments in technology systems focused primarily on supporting our pricing strategy, improving inventory and operational efficiency and optimizing human resources. Innovative technologies currently under implementation include SAP, Manhattan, Intactix, Reflexis and People Soft, among others. We believe that continued upgrading of our operations allows us to further increase efficiency, reduce expenses and provide the necessary product and sales information to enhance merchandising decisions at each store.

Historically Strong Financial Performance.

We have a track record of consistent growth, profitability and cash flow generation. We have been able to maintain a 20.3% Revenue CAGR from 2000 through 2009, while opening a total of 114 new stores throughout the same period. We believe our focus on growth is proved by our top line performance. Our net sales for 2009 were Ps.47.9 billion, which represented increases of 17.8% and 39.0% over our net sales in 2008 and 2007, respectively. We believe our Revenue CAGR of 17.0% between 2006 and 2009 is well above that of our Principal Competitors, which registered an average growth of 6.3% over the same period. Our EBITDA for 2009 was Ps.3.2 billion, which represented increases of 32.7% and 38.9% over our EBITDA in 2008 and 2007, respectively. We believe our EBITDA CAGR of 18.7% between 2006 and 2009 is also well above that of our Principal Competitors, which registered an average EBITDA growth of 6.7%. We believe our Supplier Financing results for 2009, 2008 and 2007 of Ps.181.5%, 193.4% and 198.0%, respectively, exceeded our publicly-traded competitors’ average by 59%, 68% and 63% for 2009, 2008 and 2007, respectively. As a result of our strong operating performance and working capital management, we believe we have also consistently generated above average ROIC in 2009, 2008 and 2007 of 11.5%, 9.0%, and 9.6%, respectively. In addition, we believe our strong financial performance and cash generation has enabled us to reduce our indebtedness following our acquisition of Carrefour in Mexico in 2005, resulting in an attractive capital structure of 1.3x to 1.2x debt to EBITDA ratio as of December 31, 2009, with additional leverage capacity if required for future capital expenditures or strategic acquisitions. Moreover, we do not have significant credit risk as nearly 95% of our sales are in cash or cash equivalents, such as debit and credit card and electronic market vouchers sales and we do not offer consumer financing at our stores.

We believe the success of our business model also relies on our focus on efficient working capital, cash management and asset returns. We believe our strong ROIC is a result of our strong store operating performance together with superior Supplier Financing ratios, high inventory rotations and efficient capital deployment. In order to maintain attractive ROIC, we intend to continue to focus on efficient capital expenditure and cash flow generation.

Experienced Management Team Supported by a Committed and Well-Trained Workforce.

Our senior management team has an average of 14 years of experience in the retail industry and we believe has the depth, expertise and motivation to execute our growth strategy, as proven by its capacity to open new stores as well as successfully integrate the Carrefour and Gigante operations from our recent acquisitions. Under our management, the Carrefour stores experienced a 43% increase in sales through 2009 and sales per square meter have improved from Ps.6,135 per square meter in 2005 to Ps. 8,803 per square meter in 2009, which represents a 9.4% CAGR. In addition, we believe our management team is responsible for the transformation of the seven stores

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acquired from Grupo Gigante, six of which had been operating at a loss at the time of their acquisition in August 2008. By August of 2009, all seven of the acquired Gigante stores were profitable. We believe that creating a culture based on both teamwork and strong economic incentives has also produced a loyal management team dedicated to achieving our corporate goals. We believe the team’s experience has enabled us to anticipate and respond effectively to industry trends and competition, better understand our customer base and build strong business relationships. Furthermore, we believe that our goal-oriented culture and incentive programs have also contributed to developing a motivated work-force that is focused on building solid relationships with customers while maintaining high operating and financial performance by delivering quality personalized service, increasing sales, lowering inventories, growing profitability and achieving operational efficiency. Moreover, we have invested in our employees through Universidad Chedraui, our in-house training and certification program. We believe our efforts have resulted in a competent, well-trained and loyal work-force. Through our training programs, variable compensation schemes, promotions and relocations, we seek to align the goals of the Company, its management and our employees.

Our Strategy

Our strategy emphasizes strengthening our position as a leading retailer in Mexico, which offers the lowest prices in the market, while continuing to grow in Mexico and the United States and focus on our key business strengths. The key elements of our strategy are the following:

Continue Expanding our Store Network in Mexico.

We believe that our compelling retail store formats, our focus on ROIC and cash generation and our successful track record of opening stores provide us with a strong foundation for continued organic growth. From the beginning of 2007, when we operated 105 stores, through year-end 2009, we opened 58 new stores, which represents a 55% increase to our operations. Our strategic expansion in Mexico includes focusing on larger as well as smaller cities through our Chedraui and Super Chedraui formats. We believe there are significant growth opportunities to expand into Mexico’s northern region, where we currently have a limited presence, as well as Mexico’s smaller cities (with populations of approximately 25,000 inhabitants), which according to CONAPO represent an additional 15.4 million of potential customers through 2030 that are currently underserved by modern retailers. We intend to use our smaller Super Chedraui format to target these smaller cities. In addition, further market consolidation is expected to create growth opportunities through potential acquisitions of both national and regional players that can complement our existing retail platform. We therefore intend to both pursue an organic growth plan in existing as well in new domestic markets in order to continue achieving national coverage, and to evaluate potential consolidation opportunities. Our aggressive growth strategy is supported by our technology and logistics capability, and underpinned by the capacity at our distribution centers which we believe can support approximately an additional 160 stores over our current operation.

Improve Sales and Market Position by Continuing to Focus on our Business Strengths.

We intend to capitalize on our business strengths, including our unique position as a low-priced Mexican retailer committed to providing its customers with a broad assortment of quality merchandise and a superior shopping experience. We intend to continue to promote our “Lowest Price” pricing strategy and to improve our product offering in order to increase sales and customer loyalty from our current customers as well as from new customers. We recognize that the retail business is highly competitive and therefore also seek to increase our average total ticket spending by offering a combination of quality products, assorted merchandise and an attractive “one-stop” shopping environment in clean, well-labeled, sizeable and comfortable stores. To this end, we plan to continue to remodel our stores, including six stores in 2010. We also intend to further increase brand recognition and customer loyalty by expanding the use of our logo across all formats in Mexico and the United States to leverage the strength of the Chedraui brand across formats and markets. By taking advantage of our strong retail platform, purchasing power, economies of scale, private label development and customer services, we seek to continue to offer our customers the best prices while maintaining competitive margins.

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Continue to Focus on Maintaining Attractive Returns on Investment Capital While Executing our Growth Strategy.

Chedraui enjoys strong return on invested capital (ROIC) as a result of our robust operating performance and our superior Supplier Financing ratios. Our ROIC reached 11.5% in 2009, second only to Walmex among our Principal competitors. In order to maintain attractive ROIC, we intend to continue to focus on efficient inventory management and capital deployment while maximizing cash flow generation. We will also seek to further these goals by implementing best practices and efficient IT systems to maintain high inventory rotation and reduced operating costs and shrinkage. In addition, although our business strategy revolves around our “Lowest Price” pricing strategy, and not the achievement of specific operating margins, we believe that we can improve margins by increasing scale and operating leverage opportunities and continuing to successfully implement our pricing strategy.

Continue to Fully Integrate Operations Utilizing a Highly Developed Information Technology and Systems Platform.

We believe that we have made significant investments in maintaining and updating our technology infrastructure, systems applications and business solutions. In collaboration with various third-party providers, we are in the process of a company-wide roll-out of a new information technology system, which incorporates certain worldwide best practices into our current processes to facilitate the implementation of our growth strategy. Moreover, we expect that these and other highly advanced systems, including SAP, People Soft, Reflexis, Intactix and Manhattan and other customized applications, will result in additional operating efficiencies and margin improvement initiatives. Operating efficiencies, for example, would include streamlining daily operations to improve our real-time responses to local market prices, reductions in inventory and out-of-stock days, decline in obsolete product or shrinkage, optimization of product distribution and on-time delivery. By continuing to integrate these applications, we hope to be better positioned to adopt and implement the best business practices across our formats and markets.

Grow in the U.S. Retail Market.

We have established ourselves as a Mexican food retailer with operations in Southwestern United States, where we currently operate 21 retail stores in cities with large Hispanic, and more specifically, Mexican-American, populations in southern California, Arizona and Nevada. With more than 12 years of successful operations in Southwestern United States, we have acquired significant experience and knowledge of the U.S. retail market. We have focused on perishable and Latin American products targeted to Hispanic, and in particular Mexican-American, consumers and believe the Mexican-American retail market is a niche that presents important growth opportunities, given the growing size and increasing purchasing power of this group of consumers. We also believe we have successfully taken advantage of these opportunities, by differentiating ourselves with an every day low price strategy: a specific product offering based on Mexican-American’s preferences and a superior customer service with Spanish speaking employees. We have also significantly increased our scale through the acquisition of seven Gigante stores in 2008. We intend to continue to target the Hispanic populations and focus on the Mexican-American communities in the areas surrounding Los Angeles, Tucson, Phoenix, Las Vegas and other select U.S. cities.

History

The origins of our business date back to 1920, when Mr. Lazaro Chedraui Chaya and Mrs. Anita Caram de Chedraui, opened a retail store in Xalapa, Veracruz called “El Puerto de Beyrouth”. Over the next fifty years, under the direction of various members of the Chedraui family, the store offered fabric, apparel and sewing supplies. In 1970, the first large, multi-department Chedraui store opened in Xalapa, Veracruz. Throughout the 1970’s and 1980’s, additional stores were opened in Veracruz, Villahermosa, Coatzacoalcos and Xalapa and Grupo Chedraui ventured into other retail formats.

Grupo Chedraui continued to grow and, in 1985, the six existing stores were merged under the corporate entity Tiendas Chedraui, S.A. de C.V and we began operations of shopping centers in Mexico. By the mid-nineties, Grupo Chedraui had concentrated its efforts on its principal business—the multi-department hypermarket. In 1995, Grupo Chedraui made its first investment in Bodega Latina, the company that

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operated El Super, a food retailer in California focusing on the Hispanic, and primarily the Mexican-American, consumer. By November 2004, Grupo Chedraui had increased its investment in Bodega Latina to a 66.2% interest, which was operating six stores in southwest United States.

In 2005, we acquired 29 Carrefour stores throughout Mexico, including Mexico City and other locations where we previously had a limited presence. Moreover, also in 2005, we introduced our newest format, the Super Chedraui supermarkets, targeting smaller cities with populations of at least 25,000. In 2007, we decided to pursue an aggressive growth policy and subsequently opened 27 Chedraui and Super Chedraui stores in Mexico and allowed our real estate business, which had grown due to our shopping center operations, to become ancillary to our core business: retail stores. More recently in 2008, our subsidiary Bodega Latina acquired and incorporated seven Gigante stores throughout Southwestern United States into the El Super chain. As of the date of this offering circular, we own 109 Chedraui stores, 32 Super Chedraui stores and hold a controlling interest in the 21 El Super stores.

Our Subsidiaries

The chart below sets forth all of our direct and indirect subsidiaries and our percentage of direct ownership of such subsidiaries as of December 31, 2009.

Retail Operations

General

As of December 31, 2009, we operated 163 stores in Mexico and the United States operating under three retailing formats with a total selling area of approximately 967,160 square meters (approximately 10.4 million square feet). Across our various store formats, we offer a full range of products intended to appeal to various types of consumers. The merchandise we carry includes one or more of the leading manufacturers in each category. Our objective is not only to carry leading brands, but a full range of products within each product category, including the value items for our target market. We also believe that the range of merchandise and variety in the store formats we offer allows us to compete effectively against our competitors, from traditional independent grocery stores and food specialists to the modern format of mass market retailers such as department stores. Our assortment of merchandise is tailored to each store and that store’s prevalent climate, region and clients’ preferences and socioeconomic status.

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We believe we have established a track record of consistent profitability and growth. The following table sets forth certain performance metrics related to our growth for the period from 2005 to 2009:

As of or for the Year Ended December 31, 2005 2006 2007 2008 2009 Number of retail stores .............................................. 101 105 120 155 163 Total store area (square meters)................................. 712,341 735,681 792,174 923,022 967,160 Net sales (billions of pesos)....................................... 27.7 29.9 34.5 40.7 47.9

Total sales growth (percentage)................................ 49.7% 3.9% 15.1% 18.0% 17.8%

Mexican Same-Store Sales growth (percentage) 7.28% 5.96% 8.55% 7.90% 1.69% U.S. Same-Store Sales growth (percentage) 6.9% 5.5% 15.9% 25.9% 10.7% U.S. sales as percentage of total consolidated

retail sales............................................................... 6.5% 5.8% 7.2% 9.0% 15.4%

EBITDA (billions of pesos) ...................................... 1.6 1.9 2.3 2.4 3.2

We conduct our Mexican retail business through two store formats: Chedraui and Super Chedraui. Through these formats, we are able to target various population segments in the areas that we serve. All of our U.S. operations are carried out through our El Super stores.

The following table sets forth certain information regarding each of our retail business segments:

As of or for the Year Ended December 31, 2007 2008 2009 Mexican Retail Stores:

Number of retail stores ............................. 112 139 142 Chedraui........................................... 99 106 109 Super Chedraui................................. 13 33 33

Total store area (square meters)................ 761,209 854,106 875,745 Net sales (billions of pesos)...................... 31.5 36.5 40.0 Same-Store Sales growth (percentage) ..... 8.55 7.90 1.69 EBITDA (millions of pesos) 1, 909 1, 907 2, 589

U.S. Retail Stores: Number of retail stores ............................. 8 16 21 Total store area (square meters)................ 30,965 68,916 91,415 Net sales (millions of pesos)..................... 2,465 3,665 7,363 Same-Store Sales growth (percentage in USD)......................................................... 15.9 25.9 10.7 EBITDA (millions of dollars) 106 141 245

As of December 31, 2009, we operated a total of 142 stores in Mexico and 21 stores in the United States. For the year ended December 31, 2009, our Mexican retail operations generated revenues of Ps. 40.0 billion, representing approximately 84% of our total revenues for 2009 and our U.S. operations generated revenues of Ps. 7.4 billion, representing approximately 15% of our total revenues for 2009.

Between 2007 and 2009, we opened 45 stores in Mexico, including 31 stores in cities in which we previously had no presence. In the same period, we opened and acquired 13 stores in the United States. In 2008, we acquired seven stores in southern California. We intend to continue expanding our retail store network and open 12 stores in Mexico (six Chedraui and six Super Chedraui) and five stores in the United States in 2010, including one Super Chedraui store opened in Mexico as of the date of this offering circular.

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Our Pricing Strategy

Our competitive strength is largely derived from our well-known pricing strategy. Our pricing strategy is consistent with our mission statement to deliver to all possible locations the products our customers prefer at the best prices. Our overall pricing strategy reflects our commitment to offer products to our customers at prices that are the lowest in the market in which each store operates. This strategy is highlighted in our principal marketing slogan, “En Chedraui Cuesta Menos” (“At Chedraui, Costs Less”), and our logo, which includes the phrase “Cuesta Menos” (“Costs Less”). Unlike many of our competitors that price their products based on target margins, we engage in both central company-wide and local comparison shopping to identify competitors with the most aggressive pricing in each product category and price our products accordingly. Our centralized purchasing department monitors published prices to ensure that our products are the lowest priced products in each market we serve. This task involves scanning and comparing an average of 2,400 products at our competitors’ stores daily. At the local level, each store independently verifies among its local competition that the centrally mandated prices are, in fact, the lowest prices for each such product or adjusts the sales price as necessary to ensure the price is the lowest in the local market. We then demonstrate our lowest prices to our customers by placing comparison tags, which include copies competitor receipts, highlighting the price differential next to each product. Moreover, at all of our stores, individual store managers have the flexibility to match the prices of local competitors with respect to certain products in order to guarantee the best price locally. This strategy results in daily price adjustments of approximately 1,900 and 85,200 products on a national and local level, respectively. Since this strategy implies everyday low prices, we do not match one-off promotional pricing or liquidations sales but rather the published prices at competing stores.

Mexican Operations

Historically, the Mexican retail sector has been fragmented, with consumers served by a number of formats, including traditional formats like independent grocery stores and food specialists, modern formats like supermarkets, department stores and hypermarkets, as well as informal outlets like street vendors and markets. Hypermarkets are large stores that include features of both supermarkets and department stores. In recent years, the Mexican retail sector has experienced consolidation and the entry of large international retailers. We estimate, however, that we, and our Principal competitors, represent approximately 30% of the existing market with the remainder of the market remaining highly fragmented. We believe that there is considerable potential for growth as the Mexican retail sector becomes more mature. We believe that consumer preferences are shifting away from smaller, traditional and informal outlets toward larger, standardized supermarket and hypermarket chains. These chains offer consumers superior value through greater merchandise selection, convenience and better prices through the chains’ greater purchasing power.

According to Planet Retail, from 2005 to 2009, the food and general merchandise retail market in which we operate experienced 5.1% CAGR and totaled Ps. 1.6 trillion at December 31, 2009, which is lower than Brazil but higher than other South American countries, such as Colombia, Argentina, Peru and Chile. According to Planet Retail, formal retail penetration in Mexico, however, is still low with only 0.15 retail meters square per inhabitant, as compared to 1.90 retail meters square per inhabitant in the United States. Certain regions, such as the Metropolitan region which includes Mexico City experience have higher formal retail penetration at one store per 11,000 inhabitants as opposed to Southeastern Mexico, where a retail store may serve up to 94,000 inhabitants.

We operated 142 retail stores in Mexico as of December 31, 2009, which accounted for approximately 84% of our net revenues. Of our 142 stores, 109 were our hypermarket Chedraui stores and 33 were Super Chedraui stores. Cash and cash equivalent sales, such as credit and debit card sales and electronic market vouchers, accounted for almost 95% of our sales in Mexico and we do not offer consumer financing.

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Target Market

Our target market is primarily the lower-to middle-income segment of the Mexican population. We estimate that our target market represents approximately 80% of the total population in Mexico, or approximately 44.54 million people as of December 31, 2009, according to data compiled by Encuesta Nacional de Ocupación y Empleo (the National Employment and Occupation Survey) and based on the statutory minimum wage in Mexico City of Ps.57.46 (approximately U.S.$4.39) per day as set by the Comisión Nacional de los Salarios Mínimos (the National Minimum Wages Commission) of the Secretaría del Trabajo y Previsión Social (the Mexican Ministry of Labor) effective as of January 1, 2010 (or Ps. 1723.80 per month based on an assumed 30-day month). The table below sets forth the breakdown of the Mexican population by income level according to a classification made by AMAI, as of September 2009, and the breakdown of our customer base using a similar classification.

Grupo Chedraui’s Demographic Store

Classification

AMAI Equivalent

Demographic Group(1)

Percentage of Total

Population(2) Income as a Multiple of Minimum Wage(3)

Household Income per Month

“AAA” A/B & C+ 21.3% 20.3x or more Ps. 35,000 or more “A/B” A/B & C+ 21.3% 20.3x or more Ps. 35,000 or more “CD” C & D+ 53.4% From 3.9x – 20.3x Ps. 6,800 – Ps. 34,999 “E” D+, D & E 61.4% Below 6.7x Below Ps. 11,599

(1) Source: AMAI. (2) Considers only urban centers with more than 100,000 inhabitants. The Grupo Chedraui classification and the AMAI classification experience some overlap, for example, AAA amd A/B stores target the same demographic group. Both C/D and E stores target the D+ demographics group. (3) Source: Comisión Nacional de Salarios Mínimos. Based on Mexico City’s minimum wage of Ps. 57.46 per day effective January 1, 2010.

Our Mexican stores target customers who are primarily in the A/B and B/C groups. We believe we offer the types of products and services that primarily appeal to this segment of the population. Moreover, we believe that there will be significant growth in our target market in Mexico in light of the following factors:

• According to INEGI, approximately 54.65% of the Mexican population is between the ages of 20 and 74, which is the primary consumer group for our products.

• According to INEGI, approximately 40.44% of the Mexican population is under the age of 20, which we believe represents future growth potential for our customer base.

We determine a location’s anticipated customer base by referring to a number of factors, including the current and expected future population density, income levels and competitive conditions surrounding that location. Most of our stores are open to the public on a daily basis, generally from 7 a.m. to 11 p.m.

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Geographic Distribution As of December 31, 2009, we operated a total of 142 retail stores and three distribution centers in 78 cities

throughout Mexico.

Aguascalientes: Chedraui: 1

Jalisco: Chedraui: 3

Guerrero: Chedraui: 1 Super Chedraui: 6

Distrito Federal: Chedraui: 7

Morelos: Chedraui: 1

Tlaxcala: Super Chedraui: 2

Puebla: Chedraui: 8 Super Chedraui: 1

Oaxaca: Chedraui: 3 Super Chedraui: 3

Chiapas: Chedraui: 4 Super Chedraui: 3

Quintana Roo: Chedraui: 11

Yucatán: Chedraui: 6 Super Chedraui: 2

Campeche: Chedraui: 4 Super Chedraui: 2

Tabasco: Chedraui: 8 Super Chedraui: 3 Distribution Center: 1

Veracruz: Chedraui: 23 Super Chedraui: 9

Querétaro: Chedraui: 4

Tamaulipas: Chedraui: 7

San Luis Potosí: Chedraui: 2

Nuevo Leon: Distribution Center: 1

Distribution Center

Super Chedraui Store

Chedraui Store

Guanajuato: Chedraui: 3

Estado de México: Chedraui: 12 Super Chedraui: 1 Distribution Center: 1

Michoacan: Chedraui: 1 Super Chedraui: 1

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The following chart illustrates the geographic distribution of our retail stores by Mexican state as of December 31, 2009:

Chedraui Super Chedraui Total Stores

Sq. Meters of Selling Space

NORTHWEST – – – – NORTHEAST 7 – 7 46,736 Tamaulipas .................................. 7 – 7 46,736 CENTRAL 23 4 27 183,422 Aguascalientes............................. 1 – 1 5,123 Guanajuato................................... 3 – 3 25,880 Jalisco .......................................... 3 – 3 24,870 Michoacan ................................... 1 1 2 9,994 Morelos........................................ 1 – 1 10,700 Tlaxcala ....................................... – 2 2 4,200 Puebla .......................................... 8 1 9 55,915 Queretaro ..................................... 4 – 4 31,519 San Luis Potosi ............................ 2 – 2 15,221 METROPOLITAN 19 1 20 163,845 Distrito Federal............................ 7 – 7 66,286 Estado de Mexico ........................ 12 1 13 97,559 SOUTHEAST 52 16 68 401,947 Quintana Roo............................... 11 – 11 79,909 Yucatan........................................ 6 2 8 51,092 Campeche .................................... 4 2 6 32,708 Tabasco........................................ 8 3 11 61,388 Veracruz ...................................... 23 9 32 176,850 SOUTHWEST 8 12 20 79,795 Oaxaca......................................... 3 3 6 25,629 Chiapas ........................................ 4 3 7 34,963 Guerrero ...................................... 1 6 7 19,203 TOTAL 109 33 142 875,745

Formats

In opening new stores, we select the retail store format that offers the merchandise and service mix we consider most appropriate for each location’s anticipated customer base.

Chedraui Format. The Chedraui store is our largest store format with an average of 57,000 SKUs, including competitively priced food items and non-food items. Food items include meats, poultry, fish, fresh fruits and vegetables, dairy products, baked goods, frozen goods, canned goods, prepared foods, delicatessen items, wines and liquors and imported foods. Non-food items include apparel and shoes for men, women and children, paper products, office supplies, books and magazines, health and beauty products, garden supplies, automotive supplies, photography and graphic supplies, appliances, sporting goods, toys and gifts and numerous household items.

These stores typically have a selling area in a range between 3,226 and 11,592 square meters, with an average of 7,408 square meters (approximately 79,739 square feet), a staff of approximately 211 people, and are located in shopping malls or as stand-alone stores in high-profile areas. Our Chedraui stores carry our full line of products and brands, at a variety of price points. As of December 31, 2009, we operated 109 stores in this format and in 2009 these stores accounted for approximately 75.2% of our consolidated revenues for 2009. Of the 109 stores, 55 were stand-alone and 54 were in shopping malls. Our Chedraui stores served approximately 192

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million clients in 2009, each of whom spent an average of Ps.187 per visit. We classify sales into six product categories (i) perishable goods, (ii) general consumption, (iii) electronics, (iv) general merchandise (v) apparel and (vi) prepared foods. Chedraui stores carry a wide selection of products and brands within these product categories.

Each Chedraui contains a bakery, a tortilleria, a pharmacy, a delicatessen, meat and seafood counters and other complementary services operated by us. In addition, many Chedraui stores contain separate specialty retail facilities operated by third parties, such as our optical centers. Our stores incorporate merchandising techniques, like bright lighting, wide aisles and store layouts that are designed to encourage greater average ticket spending per customer. Chedraui stores, for example, contain a wide center aisle that, in connection with the location of most perishables and groceries at the rear of the store, is intended to draw customers into the store past special advertising displays, as well as past the apparel and general merchandise areas. All Chedraui stores are identified by an easily recognizable Chedraui shopping cart logo and the orange colored exterior.

Super Chedraui Format. The typical Super Chedraui store has an average selling area of 2,069 square meters, has an average staff of 103 people and offers on average 29,000 SKUs. Super Chedraui stores are built to serve smaller cities with at least 25,000 in population. Similar to the Chedraui format, a Super Chedraui carries primarily food and non-food items, but is located within a market that cannot support the larger Chedraui format. Generally, Super Chedraui stores, have smaller perishable, prepared foods and electronic departments than the Chedraui hypermarket and do not carry apparel. Our Super Chedraui stores served approximately 30 million clients in 2009, each of whom spent an average of Ps.132 per visit.

Super Chedraui is our newest format with the opening of our first Super Chedraui in December 2005 in Huamantla, Tlaxaca. At December 31, 2009, we operated 33 Super Chedraui stores and in 2009 they accounted for approximately 8.4% of our consolidated revenues for 2009 sales. Recently, we have decided to gradually rename all of our Super Che stores to Super Chedraui in order to take advantage of the Chedraui brand name recognition associated with our larger format store.

Products

We manage over 2.3 million products per year on a consolidated basis. Our retail stores typically carry up to six specific product categories, although not all store formats carry all six categories. The breadth of product offerings varies by store format and size. The six product categories (and some of their representative products) are:

• prepared foods (bakery, tortilleria and self-serve cafeteria items)

• perishable goods (fruits and vegetables, meats and seafood and frozen foods);

• general consumption (grocery and non-grocery items, wine and liquor, perfume and pharmacy);

• electronics (white goods, home goods, furniture, audio and video equipment, computer and telephone devices and equipment);

• general merchandise (linens, hardware, stationary, toys, automobile, gardening, entertainment, and sporting goods); and

• apparel and accessories (women, men, children, infants, lingerie, fabric and shoes).

We believe one of our strengths is our ability to respond to our customer’s needs and anticipate their preferences. We seek to tailor the product mix of each of our stores according to the preferences of the consumers in the particular communities it serves. In order to have the appropriate assortment of merchandise in each store, we regularly review the products that have been categorized as permanent, seasonal, local or excluded from our inventory selection to determine which adjustments are necessary to provide our customers with their preferred products. The merchandise in our stores may be tailored to climate, geography and socioeconomic level, among others.

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In recent years, our Mexican consumers have shown an increasing preference for food stores that offer not only a wide variety of traditional food and non-food items, but also an expanded assortment of prepared items and international foods. To respond to this trend, we continue to upgrade existing departments with new selections and to add new specialty departments such as full-service delicatessens, fresh seafood and bakery departments along with our “pasillo del mundo,” or aisle-of-the-world, which carries food from countries around the world. By customizing our merchandise selection in this manner, we are able to deliver to our customers the products they prefer.

In recent years, we have begun to emphasize our own private label merchandise, in particular, within the general consumption category. We currently address our client’s needs through three private label brands: “D’Calidad Chedraui”, which offers our most-competitively priced products and “Vitale” and “Simple Fashion” which offers higher quality products that compete with the market leaders in each product category. Each of our private label brands reflects a special image and delivers high quality merchandise at prices lower than brand name products. Sales of private label products as percentage of total store sales were approximately 3.7% in 2009. Our margins on private label products are similar to those on brand name products, although prices on private label products are lower to the consumer.

Purchasing

In Mexico, we maintain a centralized purchasing department that is responsible for coordinating and sharing information with suppliers, as well as the negotiating of the terms and conditions of products. The respective buyers determine which products will be stocked in our stores and are responsible for maintaining our relationships with our suppliers. The centralized purchasing department in Mexico is responsible for all merchandise purchasing.

In order to guarantee that we receive the lowest cost from our suppliers and are able to maintain our pricing strategy, we have centralized our purchasing operations and devised separate purchasing methods for recurring and non-recurring merchandise. Recurring merchandise, which accounts for approximately 60% of our purchases are automatically ordered from the supplier based on a sophisticated re-stocking system that evaluates the sale history of a product, estimates future sales and determines the number of units to order from the supplier. Non-recurring merchandise consists of seasonal or novelty items that are stocked in the stores to respond to a specific and temporal demand. This bifurcation helps to avoid shortages and inventory obsolescence and also assists the purchasing department in ascertaining optimal prices and inventory for our purchases. Real-time information regarding order status is also made available to our suppliers through our intranet site. The purchasing department is supervised directly by our general management.

We believe our information systems give us a competitive advantage and have allowed us to negotiate more effectively with suppliers. Our efficient supply chain network supported by continued investments in technology infrastructure allows us optimize our working capital needs. We have increased productivity and customer service by improving our working capital management through high inventory rotation, regular inventory control and efficient cash management systems. For example, among our Principal competitors we lead with 80 Days Payable and are second only to Walmex with 44 Inventory Days as of December 31, 2009.

Suppliers

We purchase our products from more than 2,300 suppliers. No single supplier or group of related suppliers accounts for more than 4% of the total products purchased by us in 2009 in our Mexican operations. We believe that the sources and availability of materials for our retail store operations are adequate and will continue to be so for the foreseeable future. We have not experienced any difficulty in obtaining the types or quantities of the merchandise we require on a timely basis and believe that, if any of our current sources of supplies were to become unavailable, alternative sources could be obtained without any material disruption to our business.

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The following table sets forth information regarding our main suppliers in Mexico for the year ended December 31, 2009.

Name of Supplier Percentage of our Total Purchases

Compania Procter and Gamble México S.R.L. de C.V. ........................... 3.48% Comercializadora de Lacteos y Derivados, S.A. de C.V. ......................... 3.18% Marcas Nestle, S.A. de C.V...................................................................... 3.10% Kimberly Clark de México, S.A. de C.V.................................................. 2.73% Colgate Palmolive, S.A. de C.V. .............................................................. 2.56% Sigma Alimentos Comercial, S.A. de C.V. .............................................. 2.29% Bachoco S.A. de C.V................................................................................ 1.98% Unión Ganadera Reg. de Tabasco............................................................. 1.83% Bimbo S.A. de C.V................................................................................... 1.71% Unilever de México, S. de R.L. de C.V. ................................................... 1.67%

In 2009, approximately 1.4% of our sales from Mexican operations consisted of products imported from outside of Mexico. In addition, we sell certain imported products that we acquire from multinational corporations, distributors and wholesalers in Mexico at prices denominated in pesos. We believe that we conduct business with our suppliers on terms that are not less favorable than those generally available in the retail industry. Domestic suppliers are paid in pesos on terms that vary with the product being purchased. Foreign suppliers are paid in foreign currencies, primarily U.S. dollars.

Distribution

We currently use a 60,000 square meter (approximately 640,840 square feet) distribution center in Zumpango, Estado de Mexico, located outside Mexico City, a 60,457 square meter (approximately 650,759 square feet) distribution center in Villahermosa and an 883 square meter (approximately 9,504 square feet) distribution center in Monterrey for our Mexican operations. Our Mexico City and Villahermosa distribution centers were specifically designed for our use and combined contain over 169 docks or warehouses to house either dry grocery, refrigerated or frozen products. Our smaller center in Monterrey is used exclusively for refrigerated products to improve the quality of our fruits and vegetables in our northernmost stores. We lease all of our distribution centers under 10-year terms with two five-year renewal options. The distribution centers allow us to achieve operational efficiencies as suppliers can deliver their products to three centralized locations rather than to our many store locations and we can benefit from economies of scale. We believe our current facilities have the capacity to serve 303 of our larger format Chedraui stores, which means that our distribution centers can support an over 100% expansion of our current operations. In the event we experience significant growth outside our current geographic area, however, we may choose to lease additional facilities under similar terms or seek alternatives in order to recognize certain cost efficiencies.

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The following table sets forth information regarding our distribution centers in Mexico as of December 31, 2009.

Zumpango,

Edo. de Mexico Villahermosa,

Tabasco Monterrey, Nuevo León

Size (m2) Dry 51,500 49,257 – Perishables 3,500 5,300 – Fruits/Vegetables 5,000 5,900 883

Total 60,000 60,457 883

Capacity Dry/Refrigerated/ Frozen/Chilled

Dry/Refrigerated/ Frozen/Chilled Refrigerated

Stores Supported 90 53 10 Total Store Capacity(1) 151 151 10 Docks 169 169 16 Crate/Month (in thousands) 4,798 3,012 175 Employees 953 689 15 Opening date April 2008 October 2009 April 2003

____________________________________________

(1) Estimated total number of stores that each distribution center can support.

Our distribution centers are responsible for the traffic of approximately eight million boxes of products each month. Each center strictly monitors and controls on-site inventory levels through daily inspections to ensure 48-hour rotation of merchandise. Moreover, each center is subject to constant inventory review by our internal audit department. Combined with the high sales levels of products kept in stock, these strict monitoring procedures are designed to eliminate shrinkage. In the event inventory does become damaged, we immediately recognize a loss in respect of such inventory within our distribution and logistics expenses.

Our logistics teams are responsible for the packaging and distribution of 71% of our products. Using established delivery routes, we ship products to our 142 retail stores as soon as a delivery vehicle is full. Full delivery vehicles help us achieve distribution cost efficiencies and therefore certain delivery vehicles are divided into refrigerated and non-refrigerated sections in order to accommodate both perishables and dry grocery products. In addition, due to the reliability of our center of distribution operations, our stores receive shipments from distribution centers without taking inventory of the received merchandise, resulting in additional logistics and supply chain efficiencies.

Deliveries are made using external carriers. We negotiate the fees, volume and delivery time for each delivery route with each of over 48 ground transport carriers on an annual basis. Our agreements with the carriers also set forth the transport’s specifications, including the size, age and refrigeration method and temperature, as well as penalties in the event of robberies, delays or malfeasance. The remaining 29% of our products are distributed to our retail stores in Mexico directly by our suppliers.

Marketing

We spent Ps. 316 million, Ps. 378 million and Ps. 424 million in 2007, 2008 and 2009, respectively, for advertising and promotion of our retail stores. Historically, we have primarily advertised through television and, to a lesser extent, through radio, printed media and other promotional activities. In 2009, our advertising expenditures were allocated as follows: 47.5% to television, 11.3% to radio, 22.1% to flyers and bulletins, and 19.1% to other advertising media.

Other Services

Convenience Services. By leveraging off our existing store network and targeting client preferences, we have a history of developing highly successful “store-within-the-store” business concepts, including money transfers, photo processing, third-party payment services and extended warranties. These additional services provide a “one-stop shopping” environment and increased store traffic.

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Optical Centers. In 50 of our Chedraui stores, we house optical centers that are operated by independent third-party optical technicians for the convenience of our customers. We receive as commission a percentage on the sales realized at the optical center.

Photo-Processing Services. Through our partnership with Kodak, we offer photo-processing services at selected Chedraui and Super Chedraui stores. The photography stations at our stores offer instant self-service photograph printing. As of December 31, 2009, we had photography stations in 82 Chedraui and Super Chedraui stores.

Extended Warranties. We offer an extended warranty service that includes warranty certificates and additional service contracts under the trademark “Garex.” Under the extended warranty program, we independently repair and provide maintenance for products priced at Ps.1,500 or higher in addition to, and for a longer duration than, the manufacturer’s warranty. This program is currently only offered in respect of electronics, computer, audio and video equipment and white goods at the Chedraui and Super Chedraui stores.

Payment of Third-Party Services. In all of our Chedraui stores, we have kiosks where our customers may make payments to certain third parties with whom we have established a relationship. We have established such relationships with Banco Compartamos, Teléfonos de Mexico, Cartera Dinamica, various water and electricity providers and even local taxing authorities. These companies pay us a commission fee for each payment transaction that occurs at one of our retail stores.

Customer Service. We strive to complement our merchandise selection and consumer friendly services with superior customer service. We believe that our commitment to customer service is a significant factor in establishing a loyal and expanding customer base. We offer a wide range of customer services, including, among others:

• home delivery;

• limited warranties;

• return policy; and

• customer service counter.

We believe that our employees’ enthusiasm and ability to demonstrate and explain the advantages of the products we offer increases sales. Furthermore, we believe our prompt, knowledgeable and enthusiastic service fosters the confidence and loyalty of our customers and differentiates us from other retailers.

Advantage Card. We complement our marketing strategies with an advantage card program in Mexico, known as “Monedero Chedraui.” This reward program enables us to increase same-client visits to our stores and customer satisfaction while reducing the attractiveness of our competitors’ cash discounts. Our customers are able to earn certain credits for purchases attributed to their Monedero Chedraui account. When the customer returns to our stores to make additional purchases, they have the option of applying credits stored in the account for the purchase of full-price items. We train our staff to remind customers that since they are receiving a discount on their purchase, they may wish to purchase additional items.

Promotions. We have also implemented 10-for-100 and 100-for-1000 promotional programs at our stores throughout Mexico, which have proven to be our most significant promotional strategies. On certain days each month, our customers receive a refund to their Monedero Chedraui) of Ps.10 for every Ps.100 worth of purchases made at our stores with market vouchers. Our 100-for-1000 program, grants customers a Ps.100 refund to their Monedero Chedraui for each Ps.1000 worth of purchases made using a credit card issued by BBVA Bancomer S.A., Institución de Banca Múltiple. We invested Ps.231 million in 2007, Ps.290 million in 2008 and Ps.330 million in 2009 in these promotions, which are recognized as cost of sales.

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Consumer Financing

“Months Without Interest.” Like many other Mexican retailers, we offer interest-free sales promotions on our higher-priced merchandise in certain departments (typically purchases over Ps. 500) in coordination with credit card companies. Under these promotional plans, marketed as “months without interest” (meses sin intereses), customers pay the full purchase price through their credit card company, and pay off their credit card balances over a pre-defined period ranging from three to 20 months through a series of equal, monthly, interest-free payments. The credit risk is assumed by the issuing banks and not by us. At the time of sale, we typically collect the purchase price less a discount negotiated with the credit card company. The availability of this feature depends on each individual credit card bank’s policies, and the terms of the discount with us are negotiated on a bank-by-bank basis

Layaway Option. We also offer customers a layaway system (sistema de apartado) as an alternative to traditional cash sales. Because many of our customers do not typically have access to other forms of credit, we believe that this system of consumer financing increases the number of potential customers and the purchasing power of our existing customers, thereby increasing overall sales and profitability. Pursuant to our layaway policy, customers can purchase apparel, general merchandise and, during the fall months, toys, through weekly installments, without interest, with delivery of the merchandise to customers upon full payment of the purchase price. The layaway option requires a deposit of 10% of the total amount of the items to be purchased.

Regulation

In Mexico, the Ministry of Economy and Health regulates our pharmaceutical sales and we are subject to periodic audits of our records and practices. The Ministry of Economy also verifies that all imported products have a label in Spanish specifying the product’s origin and ingredients and identifies the company importing the product. Although there are no price controls currently in effect in Mexico, in the past the Mexican government has enacted price controls that cover some of the products we sell. We cannot assure you that price controls may not be imposed by the Mexican government in the future. Our supermarkets are subject to periodic inspection and sampling for analysis by various federal and local regulators.

The Ley General de Organizaciones y Actividades Auxiliares del Crédito (the Organizations and Auxiliary Credit Activities Act), and its provisions establish the rules, procedures and mechanisms that should be observed by companies that offer and operate money transfer services. Entities operating as exchange centers (centros cambiarios) in providing money transfer services are required to provide certain information to the Mexican Ministry of Finance in respect of material or suspicious transactions. The main purpose of these regulations is to prevent the funding of terrorist activities as well as to prevent money laundering, fraud and illegally funded transactions.

In addition, our expansion plan depends upon obtaining the licenses, permits and zoning approvals necessary to build on and develop our stores. We also maintain licenses, such as licenses to sell liquor, which are granted by governmental agencies and which we consider important to our business.

Due to the types of business in which the Company is involved, we do not have any significant environmental policies and are not subject to any special environmental regulation that may affect or significantly regulate our operations.

As a company with securities registered with the RNV and listed on the BMV, we will be subject to additional laws and regulations, such as the Mexican Securities Market Law. For more information regarding regulation affecting registered companies, see “The Mexican Securities Market.”

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$1,604$1,948

$2,465

$3,665

$7,363

2.1% 2.2%

4.3% 3.8% 3.3%

2005 2006 2007 2008 2009Sales % EBITDA margin

U.S. Operations

Our U.S. operations, held through Bodega Latina, are independently managed and self-funded from our operations in Mexico. Grupo Chedraui has a 66.2% ownership interest in Bodega Latina. The net sales of our U.S. operations have increased from Ps.1.6 million in 2005 to Ps.7.3 million in 2009, representing a 46.4% Revenue CAGR over the same period. The following graph illustrates the net sales (in millions) and EBITDA margin of our U.S. operations during the past five years.

Target Market

Our target market in the United States primarily consists of the Hispanic community in Southwestern United States, which according to Nielsen represented approximately 27.7 million people in 2009. Within the Hispanic community, we have focused our product selection and marketing efforts on the Mexican-American consumer, which represents approximately 60% of the Hispanic population in the United States, most of which are located in the southwest region. We believe the Hispanic community is likely to have one of the highest growth rates of any ethnic group in the United States over the next two decades, primarily driven by continued immigration and higher birth rates. As of December 31, 2009, we were serving approximately 19 million clients in the metropolitan areas surrounding Los Angeles, California, Phoenix and Tucson, Arizona and Las Vegas, Nevada. Approximately 58% of the Hispanic population of the United States is concentrated in California, Texas, Arizona, Nevada and New Mexico, Colorado and Utah, which allows us to focus our marketing efforts in specific geographic areas and manage the growth of our El Super stores more effectively. In addition, according to estimates published by Nielsen, the average income of the U.S. Hispanic household was approximately U.S.$41,700 in 2009 and is expected to continue growing, which we believe should lead to an increase in the purchase power of our target market in the United States.

The target demographic of the El Super format is the Mexican American population of the metropolitan areas in Southwestern United States. Generally, we consider opening new stores in areas with approximately 20,000, 125,000 or 250,000 of our target demographic located within a one-mile, three-mile and five-mile radii, respectively.

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Geographic Distribution

We operate 21 El Super stores and one produce warehouse in the United States, primarily in cities with large Hispanic, and particularly, Mexican-American, populations in California, Arizona and Nevada. The following chart illustrates the geographic distribution of our retail stores by U.S. metropolitan area as of December 31, 2009:

Metropolitan Area Number of Stores Sq. Meters of Selling Space

Los Angeles, California 17 75,461 Phoenix, Arizona 2 8,390 Tucson, Arizona 1 3,473 Las Vegas, Nevada 1 4,090

Format

The El Super stores are the exclusive format for our U.S. retail operations. El Super are medium-sized supermarkets, which offer an average of 5,000 SKUs per store, mainly perishables, with a limited assortment of general merchandise items. El Super stores range in size from approximately 30,257 to 81,116 square feet (2,811 to 7,536 square meters), with an average selling area of approximately 46,855 square feet (4,353 square meters). As of December 31, 2009, we operated 21 El Super stores and employed a total of 2,575 individuals in Southwestern United States.

Although El Super’s operations are completely independent from the Mexican retail operations, due to our capital investment and industry know-how, many of the strategies and policies of our Mexican operations have been implemented in El Super stores. The El Super format strategy rests on two fundamental factors: quality perishables and low prices. Unlike our other retail formats, El Super focuses primarily on the sale of perishables and general consumption food items. El Super offers a wide assortment of perishable items, focused on produce, meat, fish, deli, bakery and a tortilleria, in a full customer service environment. Complementing the strong focus on perishables is a limited assortment of key grocery items, many of which are from Mexican suppliers with production and distribution capacity in the United States, or focused on Mexican customer purchasing and eating habits. All grocery items are offered at significantly lower prices than those offered at conventional or large independent food retailers. Our U.S. operations also utilize the comparison shopping method to price the products offered at El Super stores at the lowest locally available price. Our U.S. purchasing department monitors published prices by scanning the 150 top-selling products (approximately 40% of our U.S. sales) at two or three direct local competitors of our El Super stores on a weekly basis. The U.S. purchasing department also scans the 500 top-selling products on a monthly basis and the 1,000 top-selling products on a quarterly basis.

Suppliers

Similar to our Mexican operations, we rely on a variety of suppliers from which we purchase the products frequently carried or used by our U.S. stores. In 2009, our most significant supplier was Unified Grocers, a wholesaler, which accounted approximately 12% of the total products purchased by us in 2009. We believe that other suppliers could also meet our requirements and during 2010, we intend to decrease our reliance on Unified Grocers.

El Super does not import any goods from Mexico. Due to the parallel U.S. operations of many Mexican suppliers, all of the products sold in El Super are purchased in the United States.

Purchasing

Similar to our Mexican operations, we maintain a centralized purchasing department that is responsible for the coordination, sharing of information on suppliers and the terms and conditions on products offered by suppliers. Our direct sourcing represents 56% of sales and our third-party wholesaler sourcing represents 44% of sales.

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Distribution

In the United States, El Super operates a 44,000 square foot produce warehouse in Vernon, California. In addition, a third party, ALTO Systems (“ALTO”), operates a dry grocery warehouse at which it receives and consolidates products from large national vendors and ships the products to our stores. In return for this warehouse management service, El Super pays ALTO a monthly fee plus shipping costs. Each of our distribution centers strictly monitors and controls on-site inventory levels through weekly physical inventories.

Our logistics team is responsible for the day-to-day operations and management of our produce warehouse facility as well as the negotiation of all third-party transportation services, including freight services to deliver products from the ALTO warehouse and the Unified Grocers warehouse to our stores. Freight negotiations are conducted on an annual basis. Our agreements with the carriers also set forth the transport’s specifications, including the size, age and refrigeration method and temperature, as well as penalties in the event of robberies, delays or malfeasance.

Marketing

Advertising costs reached U.S.$3.65 million in 2009. These expenditures are primarily focused on the printing and distribution of our weekly flyer, which promotes our weekly specials. Radio advertising is used exclusively for new store grand opening promotions.

Properties

We lease all of our 21 properties in the United States under lease agreements, which generally contain an average term of 15 years, and three five-year renewal options and rent escalation provisions. We believe that our leases were negotiated at commercially reasonable terms. Most leases also provide for periodic rent adjustments, and generally include limits provided to protect us from large increases in annual rental payments. In 2009, our monthly lease payments for our retail stores in the United States totaled Ps. 1.2 million. We own the buildings at our Panorama City, California and Las Vegas, Nevada locations, however, we rent the land associated with these properties under different terms, depending on the agreement reached with the landlord. In the next several years, we plan to execute an aggressive growth strategy, which includes evaluating additional real estate opportunities in the regions in which we already have a presence, as well as in northern California. In order to carry out such plans, we will rely exclusively on cash flows from our U.S. operations as well as bank debt, secured by the assets of Bodega Latina.

Regulation

Our U.S. operations are subject to customs, truth-in-advertising and other laws, including consumer protection regulations and zoning and occupancy ordinances that regulate U.S. retailers generally and/or govern the importation, promotion and sale of merchandise and the operation of retail stores and warehouse facilities in the United States.

Real Estate Operations

Our real estate development division is responsible for the following areas of our Mexican operations:

• the administration of real estate;

• the commercialization of existing and projected shopping centers;

• expansion; and

• the construction and remodeling of Mexican stores.

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Administration

Our properties primarily consist of different store formats and distribution centers, most of which are located in the southern and central regions of Mexico. Our principal executive offices are located in owned office space in Mexico City, Mexico and Xalapa, Veracruz. We believe that our current facilities are adequate for our current operations and contemplated growth. We plan to continue the expansion of all our store formats.

Of the 142 stores open as of December 31, 2009, 98 were owned and 44 were leased. In Mexico, we either rent the land and construct a store or rent the building. Depending on the terms of the lease, we either negotiate a fixed monthly payment or a variable payment based on a percentage of the store’s sales, each adjusted annually based on the Mexican consumer price index. We believe that the duration of our leases extend for the maximum period allowed under the laws of the jurisdiction in which such store is located, but in no event less than 20 years. In 2009, our monthly lease payments for our retail stores in Mexico totaled Ps. 121 million.

The following table sets forth our owned and leased retail space in Mexico by store format, number of stores and total area at December 31, 2009.

At December 31, 2009

Store Format Owned Leased Total Total Selling Area(1)

Super Chedraui 11 22 33 68,291 Chedraui 86 23 109 807,454

(1) In square meters.

Shopping Centers

In Mexico, our real estate division engages in the development of commercial and shopping centers in which our stores participate as anchor tenants, with the remaining space being leased to third parties. Currently, we have stores in 78 commercial centers, 41 of which contain over 20 commercial tenants and which we consider shopping centers. The administration of these commercial and shopping centers, approximately 267,368 square meters (2,877,925 square feet) of which are for lease, includes all services related to operational issues, legal matters, finance, and maintenance.

The following sets forth certain information as of and for the years ended December 31, 2007, 2008 and 2009 related to our real estate segment and the shopping centers we operate.

Year-Ended December 31, 2007 2008 2009 Total revenue (millions of pesos) ......................................... 473 487 505 Percentage of consolidated revenues ................................... 1.4% 1.2% 1.1% EBITDA (millions of pesos)................................................ 270 345 340 Percentage of consolidated EBITDA.................................... 11.8% 14.4% 10.7% Total number of tenant space and kiosks.............................. 2,742 2,864 2,817

Percentage of square meters available ........................ 5.6% 8.3% 7.0% Average monthly revenue per square meter ............... Ps.131 Ps.139 Ps.171

————————

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Our real estate segment generated Ps.505 million in revenue in 2009, representing 1.1% of our consolidated revenue for that year. The rent payments in respect of our shopping centers are paid to a trust, which was established with Banorte in order to guarantee certain financing arrangements executed with Banorte. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources— Banorte Financing Trust Arrangement” and Note 12 to the Audited Financial Statements included in this offering circular. We seek to develop and manage shopping centers around “anchor” stores and to promote the flow of consumers to such destinations by including other tenants that complement the services and merchandise offered by the “anchor” tenants.

Expansion

New Store Development. We select geographic markets and store sites on the basis of demographic information, market studies, quality and nature of neighboring tenants, store visibility, traffic, public transportation, zoning and accessibility. The variable key demographics include population density, household income, age and average number of occupants per household. Of these factors, a potential Chedraui site must allow for a selling floor of between 5,500 and 7,500 square meters, and a potential Super Chedraui store must allow for a selling floor of between 1,500 and 3,000 square meters.

In our experience, when opening a new retail store, the planning stage typically lasts six months and construction typically lasts five to eight months, depending on the format. We expect each new store to be profitable upon its opening, however, historically, it has taken up to 36 months following a store’s opening for such store to reach maturity.

The following table provides a history of our retail store openings since the beginning of 2006:

Year Ended December 31,

Number of Stores 2006 2007 2008 2009 Total stores at beginning of period ...... 101 105 120 155 Stores closed........................................ 1 – – – New stores opened............................... 5 15 35 8

Total stores at end of period ................ 105 120 155 163

We seek to balance our retail store expansion between new and existing markets. In our existing markets, we add stores as necessary to cover complementary market areas. By clustering stores, we seek to take advantage of economies of scale in advertising, marketing, distribution and supervisory costs. We seek to locate stores within separate market areas within each metropolitan area, in order to establish long-term market penetration. In new markets, we generally seek to expand in geographically contiguous areas to build on our experience in the same or nearby regions as we believe that local knowledge is an important part of success. In considering new markets, we locate our stores in areas we believe are underserved and within routes that complement our existing logistics system. In addition to larger metropolitan markets, we also target smaller population centers in which we locate single stores, generally in regional shopping centers with a wide regional draw.

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The table below shows the geographic distribution of our retail stores by region (as defined by ANTAD) as of December 31, 2009:

Number of Stores

Percentage of Total Stores

Northwest ................................................... – – Northeast .................................................... 7 4% Central........................................................ 27 17% Metropolitan............................................... 20 12% Southwest ................................................... 20 12% Southeast .................................................... 68 42%

Total Mexico: 142 87% United States 21 13%

Total: 163 100%

Although historically we have primarily operated in the southeastern region of Mexico, our recent success with the implementation of our expansion plan and the acquisition of Carrefour has provided us with experience relevant to executing our growth strategy. Over the next four years, we intend to grow organically and possibly through acquisitions to expand the presence of Grupo Chedraui to northern and pacific Mexico as well as northern California.

Construction and Remodeling

In our experience, when opening a new retail store, the planning stage typically lasts six months and construction typically lasts five to eight months, depending on the format. Typically, the cost of constructing a Chedraui store is approximately Ps.150 million while the cost of constructing a Super Chedraui store is approximately Ps.50 million, in each case including the cost of land. Historically, we have mainly relied on cash flows from operations to finance our expansion.

The determination to remodel a store typically involves considering the lifespan of the relevant equipment, an evaluation of the sufficiency of selling space, changed circumstances in the commercial or shopping center and the store’s ability to generate target ROICs. Over the next several years, we intend to renovate six Chedraui stores in 2010 and 12 stores annually starting in 2011 at approximately Ps.40 to Ps.45 million per store during the remainder of our expansion plan. We do not expect to remodel any Super Chedraui stores in the next five years given that they all have five or less years of operation.

We consider our investments in the construction and remodeling of our stores to be critical to providing our customers with a top of the line shopping experience. In addition to the competitive prices we offer, we focus on creating a network of clean, and comfortable stores with clearly labeled departments, products and prices. For example, we recently engaged a renowned architectural firm to design the Chedraui store that opened in Guadalajara in December of 2008. The Guadalajara store utilizes a bright white and minimalist design and a simple well-organized color scheme in the signage to indicate different product categories and create a more spacious and approachable shopping experience.

Competition

The retail industry is highly competitive and characterized by high inventory turnover, controlled operating expenses and small profit margins as a percentage of sales. Earnings primarily depend upon the maintenance of high per-store sales volumes, efficient product purchasing and distribution and cost-effective store operations and inventory management. Advertising and promotional expenses are necessary to maintain our competitive position in our major markets. We compete principally on the basis of price and, to a lesser extent, location, selection of merchandise, quality of merchandise (in particular perishables), service, store conditions and promotions. Our competitive strength is largely based on our commitment to offer the lowest prices among national and local competitors and specialty stores which we achieve through daily comparative shopping. We believe that our strategy of empowering store managers to implement price adjustments based on the prices offered by national and local competitors is highly valued by our customers and improves our competitive position.

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Our ability to always offer the lowest price in each market we serve for all our products, while also offering superior product assortment and customer service largely determines our competitive position within the retail industry. We employ many programs and policies designed to meet the competitive pressures within our industry. These programs and policies include, among others, our strategy of always pricing items at the lowest price in order to gain our customers’ trust that our prices will not fluctuate as a result of frequent promotional activity; and our strategy of ensuring a broad product assortment that fits the demographic needs of the local community. By implementing these strategies, we believe we offer our customers a one-stop shopping experience, a reliable supply of their preferred products and long operating hours that allow customers to shop at their convenience, each of which provides us with additional competitive advantages.

Mexico

In Mexico, we compete with numerous local, regional and national supermarket and self-service store chains as well as mom and pops and street markets, in each region in which we do business. In addition, certain major U.S. and international retailers have established joint ventures with Mexican companies or have acquired the majority of shares to control businesses which compete with our stores and may continue to do so in the future. We also compete against a number of wholesale operators and informal markets. We believe, however, that we have competitive advantages over our Mexican competitors due to our clear commercial strategy of offering the lowest prices, our strategic locations and our strong brand recognition. In addition to these strengths, we believe that our product offering and customer experience grants us an additional competitive edge over our Principal competitors.

The following table sets forth the percentage of annual hypermarket and supermarket sales attributable to us and to each of our Principal Competitors over time.

Year Ended December 31, Percentage Point

Increase (Decrease) 2000 2009 Groupo Chedraui(1) ................. 5% 10% 5% Walmex(1) ............................... 44% 58% 14% Comerci(1) ............................... 19% 12% (7)% Soriana(1)................................. 32% 20% (12)% Total ....................................... 100% 100% 0%

___________________ (1) Source: Public filings with the BMV.

The most significant challenge we face in terms of improving our competitive position in Mexico is the dominant market position of Walmex. Walmex currently holds 58% of the national market, which amounts to greater sales than the combined sales of Comerci, Soriana, and Grupo Chedraui, the next three retailers in terms of sales in Mexico. We believe, however, that due to Walmex’s current dominant position and relative saturation levels, we will experience stronger growth in terms of percentage increase over our respective existing retail networks. Due to recent acquisitions and balance sheet positions with limited liquidity, we believe that neither Comerci nor Soriana will be able to execute an expansion program as aggressive as ours over the next several years.

In recent years, we have steadily improved our national market share, reaching 10% by 2009, twice the 5% market share we had in 2000. According to Nielsen, in 2007, 2008 and 2009, our market share was 9.1%, 9.7% and 10.2%, respectively. In addition, although our market share on a national level places us as Mexico’s fourth leading food and general merchandise retailer, we have captured and maintained higher market share levels in southeastern Mexico.

According to Nielsen, as of December 31, 2009, our market share by revenue within Southeastern Mexico was approximately 39%, notwithstanding the fact that our market share by number of stores only reaches 25% within the same region. Due to our strong position in this region, our growth strategy will be focused on increasing our presence in central Mexico and expanding to the North and Pacific regions in order to improve our competitive position on a national level, while maintaining our leadership in southeastern Mexico.

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Furthermore, during the period between January 1, 2006 and December 31, 2009, we led among all our Principal competitors in both revenue and EBITDA growth. There are also several areas of operating performance in which we are second only to Walmex in the market in 2009. The following table sets forth several performance metrics for each of our Principal Competitors for 2009:

Walmex(1) Chedraui Comerci(2) Soriana(3) In Pesos unless otherwise stated

Revenue per square meter 65,472 49,528 33,583

32,503

EBITDA per square meter(4) 6,516 3,282

2,456

2,325

Net income per square meter 4,069 1,441

287

1,016 Product Offering (average SKUs) 90,000 57,000

50,000

50,000

Price Differential (percentage)(5) 7.06% 0% 6.96% 8.28% Same-stores sales growth(6) 3.4% 1.7%

(0.7)%

(5.5)%

2009 ROIC (percentage) (4) 19.4% 11.5%

6.3%

9.2%

Revenue CAGR (percentage)(4) 10.9% 17.0%

6.4%

1.6%

EBITDA CAGR (percentage)(4) 11.5% 18.7%

4.0%

4.6%

Source: Public filings of our Principal Competitors. (1) Consolidated figures for Walmex include VIPS restaurants and Suburbia retail stores. (2) Consolidated figures for Comerci include Restaurantes California and Beer Factory. (3) Soriana figures are as pro forma the Gigante acquisition in Mexico. (4) Calculated using the Company’s definitions set forth herein and the figures of our Principal Competitors as set forth in the relevant financial statement line item in their public filings with the BMV. We cannot assure you of the accuracy of such figures. (5) Based on information gathered during the course of our price-comparison shopping during the weekend of April 10, 2010. (6) Reflects growth during the period between January 1, 2006 and December 31, 2009.

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In addition, the following chart illustrates our accumulated Same-Store Sales growth during the past seven years as compared to ANTAD and Walmex: (1)

(1) Calculated using the definition of Same-Store Sales set forth in the glossary herein and the figures set forth in the Company’s public filings with the BMV. We cannot assure you of the accuracy of such figures.

United States

Competition comes primarily from several independent retailers in each area we serve as well as national chains. In the Los Angeles market, El Super competes with Superior Warehouse, Northgate Supermarkets, as well as Food 4 Less, a subsidiary of The Kroger Co.. In Arizona, El Super competes with Food City, a subsidiary of Bashas’ Inc, as well as Ranch Markets, an independent retailer. In Las Vegas, El Super competes with Food 4 Less and Cardenas, a Los Angeles based independent retailer.

Human Resources

We believe one of the contributors to our success as an organization is the engaged participation of all our employees. In addition, we strive to maintain an organization that rewards competitive, engaged and qualified employees and offers them opportunity for development and advancement. For example, in order to engage our employees, we offer job and company orientations, job and store rotations, and opportunities to earn competency and knowledge qualifications for various job positions, among other things. We emphasize the values of honesty, commitment, respect and efficacy in our employees and evaluate them on those factors. As a result, we believe that our prompt, knowledgeable and enthusiastic staff fosters the confidence and loyalty of our customers and differentiates us from other retailers.

As of December 31, 2009, we had a total of 30,635 employees, of which 94.6% worked in our retail stores 3.7% in administration and 1.2% in the distribution centers; these figures do not include any independent contractors such as third-parties employees that manage certain warehouse operations. 28,060 of our employees, or 91.6%, are employed by our Mexican operations while our U.S. operations employ 2,575 people. During our busiest retail months, part-time employees may constitute up to 9% of our work force.

80%

10%

18%

29%

41%

55%64%

74%

107%103%

88%

74%64%

53%

39%

18%

(2%)1%

6%6%

12% 18%25% 27%

(5%)

15%

35%

55%

75%

95%

115%

2002 2003 2004 2005 2006 2007 2008 20090%

5%

10%

15%

20%

25%

30%

Chedraui Walmex ANTAD Walmex Chedraui ANTAD

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As of December 31, 2007 2008 2009 Mexican Retail Operations:

Total unionized employees ................................................... 12,245 15,857 15,691 Total of non-unionized employees........................................ 9,269 9,665 10,844

U. S. Retail Operations: Total unionized employees ................................................... – – 609 Total of non-unionized employees........................................ 941 1,865 1,966

Distribution Centers:

Total unionized employees ................................................... 65 65 – Total of non-unionized employees........................................ 76 76 378

Administration: Total unionized employees ................................................... – – – Total non-unionized employees ............................................ 1,058 1,131 1,147

TOTAL EMPLOYEES 23,654 28,659 30,635

Hiring. In Mexico, our policy is to hire store employees from within the local community where the store is located to offer better customer service. We also recruit from universities to fill our management positions. In the United States, we recruit employees primarily through newspaper advertising and postings inside the stores, as well as from universities. In order to obtain certain tax advantages, we have contracted certain third-party providers of professional management services, to hire and employ our management-level employees. All of our other employees have been hired by our subsidiaries, Servigalas, S.A. de C.V., Operadora Chedraui, S.A. de C.V. and Bodega Latina Co.

Training. We believe that our employees’ enthusiasm and ability to demonstrate and explain the advantages of our products increases sales. Furthermore, we believe our prompt, knowledgeable and enthusiastic service fosters the confidence and loyalty of our customers and differentiates us from other retailers. Therefore, we emphasize product knowledge at both the hiring and training stages. In respect of certain departments, such as electronics, white goods, bakery and meat counters, we hire our sales staff specifically for a department or product category. We train new employees through Universidad Chedraui, a virtual classroom in which each employee is assigned classes and activities that foster the knowledge, abilities and attitudes necessary to complete their job effectively. Training is divided between 32 technical retail courses and 11 management courses. We then monitor our new employees for a period of six weeks and provide them with regular feedback regarding their performance. We emphasize the values of honesty, commitment, respect and effectiveness in our employees and evaluate them on those factors.

Retention. We also believe that maintaining an enthusiastic and knowledgeable employee base requires us to minimize the rate of turnover of our employees. While high turnover rates are typical for staff in the retail industry, we have made special efforts to improve the quality of life of our employees, through measures such as better training, comprehensive orientation with respect to both the position and the Company in order to cultivate a sense of loyalty and community, as well as rapid salary ramp-ups for staff who remain with us in order to encourage them to stay. In 2007, 2008 and 2009, the annual staff turnover rate at our retail stores in Mexico was 97.04%, 83.50% and 61.62%%, respectively, which reflects a 36.5% decrease in turnover during the same period.

Local Management. In addition to our employees, we typically staff our stores with area and department coordinators that report to our store managers. The store operations are supervised by 16 regional managers, each of whom report to the Director of Operations.

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The diagram below shows the organization structure our local management:

Director(e.g. operating,

marketing, merchandising)

Store Manager

Area Coordinator

DepartmentCoordinator

Corporate Manager

Zone Manager

Store Manager Key Functions:

Price changes at local levelMarketing of products (e.g. product layout)Customer service

We believe this structure is effective at linking supply and demand. Our managers also play a pivotal role by (i) sharing the input they receive from customers and employees and analyzing market demand at the store level with specialized purchasers and (ii) authorizing the product offerings proposed by the purchasing departments at the store level. Our store managers also implement our marketing strategy through the creation of floor displays that promote the sale of certain products and their ability to effectuate price adjustments at the individual store level.

Labor Relations. As of December 31, 2009, 53% of our employees were represented by unions. Our employees in Mexico are affiliated with 26 separate labor unions and labor relations with each of these labor unions are governed by 142 collective bargaining agreements, which are negotiated separately for each union. Under Mexican law, these collective bargaining agreements are renegotiated on a yearly basis with respect to wages and every two-years with respect to benefits. In the United States, only the 609 employees that we inherited during the acquisition of Gigante, representing 23% of our U.S. employees, are unionized. We believe we have good labor relations with our employees and have not experienced any strikes that have materially affected our overall operations. We also believe that the keys to successful working relationships are based on respect, and we know that this mutual respect and cooperation will improve the productivity and quality of life for our employees, as well as the level of satisfaction of our customers.

Compensation. Executive level employees receive a fixed salary and variable compensation (including an annual bonus) which ranges from 16% to 100% of their total compensation to align executives with the strategic plan of the Chedraui Group and our financial results.

Store managers and salespersons are compensated by a combination of a fixed salary and performance bonuses in each business area within which they work. Performance bonuses range from 16% to 100% of an employee’s fixed salary depending on the employee’s position. Salespersons are evaluated periodically based on pre-established financial and operational goals, and receive performance bonuses in August and February, based on semi-annual results. On average, the performance bonus ranges from 13% to 50% of an employee's total compensation.

In accordance with Mexican law, all of our employees are entitled to, and receive, social security benefits, paid vacation days, and Christmas bonuses. We also provide our corporate employees with additional medical insurance and pension and retirement plans. For eligible employees, we have established a plan covering compensation for personnel electing voluntary retirement, calculated in accordance with Mexican Labor Law. For additional information regarding our retirement plan, please see Note 11 to the Audited Financial Statements included in this offering circular.

This compensation program has contributed to the successful implementation of our business strategies, and our successful employees receive a competitive compensation package. In addition, we have implemented systems and procedures that we believe will help us to more efficiently monitor the performance of our employees and more accurately apply our compensation structure.

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Intellectual Property

We own and use various trademarks in our business, the most important of which are our store names and a family with a shopping cart symbol identified with our stores. In general, trademarks are valid as long as they are in use and/or their registrations are properly maintained. In Mexico, trademark protection can be indefinite so long as they are renewed every ten years and remain in use.

As of December 31, 2009, we held, through our subsidiary Tiendas Chedraui, S.A. de C.V., registered commercial names and trademarks in respect of Chedraui and Super Che, in addition to the advertising slogans “En Chedraui Cuesta Menos” (“At Chedraui, It Costs Less”) and “La Familia Está de Acuerdo” (“The Family Agrees”), all of which are registered with the Mexican Institute of Intellectual Property (Instituto Mexicano de la Propieded Industrial, or “IMPI”). These marks, among others, have been registered across a total of 77 classes, including groceries, perishable food, infant items and personal care items. In addition, we are currently in the process of registering with the IMPI the commercial name and trademark associated with Super Chedraui, the trademarks “Selecto Choice,” “Envisage,” “Supramed” and the advertising slogans “Chedraui te escucha” (“Chedraui listens to you”), “Lo Nuestro, Lo Nuestro Es Que Cueste Menos” (“Our Goal, Our Goal is a Lower Price”) and “Lo Nuestro, Lo Nuestro Es Mexico” (“Our Goal, our Goal is Mexico”). Moreover, at our retail stores in Mexico, we sell products under our proprietary brands, “D’Calidad Chedraui,” “Vitale” and “Simple Fashion,” and have registered trademarks in respect of those brands with the IMPI.

Information Technology

We have approximately 75 employees in our information technology department. These employees are responsible for technical support, operations, development and maintenance of our IT platform. Our IT team specializes in providing company-wide business intelligence according to our business strategy to achieve a competitive advantage.

Over time, we have implemented many customized applications to support our entire network of stores, which has resulted in a very complex systems architecture. These applications include, IBM’s Super Market Application designed for sales support; Infor’s Infinium for financial operations, including accounting, collection and billing; E3’s Advanced Store Replenishment and JDA’s Merchandising Management System for support related to purchasing, distribution and inventory levels. Our logistics and distribution operations are supported by Manhattan’s Warehouse Management System, Extended Enterprise Management, Labor Management, Performance Management systems and Sai Systems’ Oasys. We also operate BITAM’s Artus as our data analysis system, which integrates information in respect of our inventory and business transactions into one database from which we can retrieve valuable statistical information about our products and transactions.

We have made significant investments in maintaining and updating our technology infrastructure and systems applications and business solutions. The current customized information systems have contributed significantly to our competitiveness and growth to date, however, they are also diverse, complicated, increasingly expensive and of limited flexibility in respect of evolving technology. Therefore, we are simplifying our systems architecture. For example, we recently replaced our human resources and payroll systems, with Oracle’s Peoplesoft. In addition, we are in the process of a company-wide roll out of a new process based project supported by SAP’s ERP technology, which will simplify the current processes and further enable our growth strategy. This project is expected to improve financial control, inventory optimization, seasonality management, store operations and supply chain planning and execution. Furthermore, given that this project is an SAP template based project it will facilitate and simplify the incorporation of new stores, allowing us to maintain competitiveness and quickly adapt to trends and our customers’ needs. This project is expected to deliver initial results during the second quarter 2010 with full financial operations, including merchandising, occurring during the first quarter of 2011.

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Our central data system is connected to an uninterruptible power supply and an emergency power plant that can support full operations for so long as diesel fuel is available. We backup our systems on a daily basis and we have the ability to restore to any given point in time. Our communications network is based on a transmission control protocol and Internet protocol (TCP/IP) suite and serves to connect all of our stores, corporate offices and distribution centers in Mexico in real time.

Insurance

We maintain the customary insurance policies for companies engaged in similar types of operations, including policies covering risks associated with our owned and leased properties, inventories, equipment and delivery vehicles, with policy specifications and insured limits that we believe are appropriate given the relative risk of loss, the cost of the coverage, regulatory requirements and industry practice. We believe our insurance policies are adequate to meet our needs, however, we may sustain losses that are outside the coverage of our insurance policies or in excess of their limits.

Legal Proceedings

From time to time, we are involved in various claims, lawsuits and regulatory proceedings incidental to our business. In the opinion of management, none of the proceedings, complaints or investigations currently pending are reasonably likely to have a material adverse effect on our financial condition or results of operations. We are currently involved as defendants in a civil proceeding filed by Grupo Internacional Gomo, S.A., one of our suppliers, claiming from the Company a total amount of Ps.112 million. Based on management’s assessment and our legal counsel’s opinion, however, we believe that it is unlikely that we will be held liable for the full amount of the claim and that the outcome of this litigation will not have a material adverse effect on our business or results of operations.

We are also party to several labor proceedings, which in the aggregate could represent a potential contingency of approximately Ps.30 million. However, Ps.17.88 million of this total amount derives from proceedings to which we succeeded Carrefour as defendant a result of the Carrefour acquisition and for which we believe we will be fully indemnified.

Social Responsibility (“Fundacion Chedraui”)

We are a socially responsible company committed to the development of Mexico. Through our non-profit civil association, we aim to have a positive social impact on Mexican society by supporting certain education, health and social welfare programs, cultivating values of integrity, teamwork and respect and working towards the preservation of the environment and Mexico’s cultural heritage.

For over 13 years, the foundation has engaged in education, health, social welfare programs, which include programs focused on donations of perishables, recycling campaigns and various sports and cultural activities, as well as providing assistance to victims of natural disasters. For example, each of our stores is committed to preserving the environment and engages in recycling programs and water, energy and gas conservation. Our stores also offer “rounding-up” and instant lottery tickets at our check-out counters and in each case the proceeds benefit certain charitable institutions in accordance with the social responsibility policies of Grupo Chedraui. In addition, perishables that are in good condition but do not meet our quality standards are donated to food banks and authorized charitable institutions that distribute the food to people in need.

Over the past 20 years, we have created and maintained the educational institution, “Liceo de Artes y Oficios, A.C..” Located over three campuses in Xalapa, Veracruz and Villahermosa, the Liceo de Artes y Oficios offers youths and adults with scarce economic resources opportunities to pursue diverse certifications and degrees. Through courses and workshops, these students are afforded the knowledge and skills necessary to obtain degrees, find employment, or start their own businesses; thus improving their socioeconomic status and the living conditions of their families and communities, which is our foundation’s priority.

With these efforts, we reinforce our commitment to the preservation of the environment, human development and social welfare.

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MANAGEMENT

Our Board of Directors

Our board of directors currently consists of 11 members and is responsible for the management of our business. Each director is appointed for a term of one year, has the opportunity for re-election and must remain in office until a successor has been appointed and has assumed office. The members of the board of directors are elected by our shareholders at their annual meeting. Our board of directors meets at least once quarterly. Pursuant to Mexican law, at least 25% of the members of the board of directors must be independent, as the term independent is defined by the Mexican Securities Market Law. Our bylaws provide for an alternate director to serve in place of an elected director if such director is unable to attend a meeting of the board of directors.

Set forth below are the names of our current directors, their principal occupation, their business experience, including other directorships, and their years of service as directors.

Name Position Alfredo Chedraui Obeso ...................................... Chairman José Antonio Chedraui Obeso ............................. Director José Antonio Chedraui Eguía............................... Director José Ramón Chedraui Eguía ................................ Director Agustín Irurita Pérez (1) ........................................ Director Olegario Vázquez Aldir (1) ................................... Director Alejandro Ramírez Magaña (1) ............................. Director Federico Carlos Fernández Senderos (1) ............... Director Clemente Ismael Reyes-Retana Valdés (1)(2)......... Director Juan Félix Rodríguez Montemayor (1)(2) ............... Director Pablo Prudencio Collado Casares(1)(2)(3) ............... Director

___________ (1) Independent member of our board of directors pursuant to the Mexican Securities Market Law. (2) Member of the audit committee and the corporate practices committee. (3) Mr. Collado’s appointment to the board of directors remains subject to ratification by our shareholders.

Alfredo Chedraui Obeso is Chedraui’s founder. He has been chairman of our board of directors, together with his brother José Antonio Chedraui Obeso, since our inception.

José Antonio Chedraui Obeso is Chedraui’s founder. He has been chairman of our board of directors, together with his brother Alfredo Chedraui Obeso, since our inception and of Bodega Latina since 1997.

José Antonio Chedraui Eguía has been at Chedraui for the past 21 years. He has been a member of our board of directors and our Chief Executive Office since January 1995. Prior to this position, he served as General Director of our Galas division. Mr. José Antonio Chedraui Eguia holds a degree in accounting and finance from the Universidad Anahuac.

José Ramón Chedraui Eguía has been a member of our board of directors since 1995. Mr. José Ramón Chedraui Eguía is our Director of Own Brand Sales (Director de Compras Marca Propia). He holds a degree in Business Administration from the Newport University in New Mexico.

Agustín Irurita Pérez has been a member of our board of directors since 2000. He is currently Director of several corporations in Mexico, such as Grupo ADO S.A. de C.V., Grupo Bimbo, S.A.B. de C.V., Afianzadora Aserta, S.A. de C.V. and Fincomún, S.A. de C.V. He holds a degree in Accounting from the Instituto Tecnológico Autónomo de México (“ITAM”), and participated in the Business Management program of the Instituto Panamericano de Alta Dirección de Empresas (“IPADE”).

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Olegario Vázquez Aldir has been a member of our board of directors since 2004. He is currently the general director of Grupo Empresarial Angeles. He holds degrees in Business Administration from Universidad Iberoamericana and Health Administration and Strategic Planning from Boston University and various post-graduate degrees from ITAM and the Universidad Nacional Autonoma de México (“UNAM”)

Alejandro Ramírez Magaña has been a member of our board of directors since 2006. He is currently the chief executive officer of Cinépolis. He holds a degree in Economics from Harvard University, a Masters degree in Economic Development from Oxford University and a Masters degree in Business Administration from Harvard Business School.

Federico Carlos Fernández Senderos has been a member of our board of directors since 2008. He is currently the executive president of Grupo Sim and serves on the board of directors of Grupo Desc, Consupago S.A. de C.V., and Salud Interactiva S.A. He holds a degree in Business Administration from Universidad Anáhuac and a Masters degree in Senior Management from IPADE.

Clemente Ismael Reyes-Retana Valdés has been a member of our board of directors since 2009. He is currently the general director of Reyes Retana Consultores and currently serves as director of Inmobilaria Granjas de la Loma, Grupo AlCon, Laboratorios Dermatológicos Darier, Indeval and Contraparte Central de Valores. He holds a degree in Advanced Mathematics from the Universidad Nacional Autónoma de México.

Juan Félix Rodríguez Montemayor has been a member of our board of directors since 2009. He is currently the president of the consulting firm, CONNEG. He holds both an undergraduate and masters degree in Business Administration from the Instituto Tecnológico y de Estudios Superiores de Monterrey (“ITESM”) and a Masters degree in Organizational Development from the Universidad de Monterry. He has also completed programs in respect of finance, senior management, and affiliated businesses.

Pablo Prudencio Collado Casares, has been a member of our board of directors since 2010 and currently serves on our audit committee and corporate practices committee. Mr Collado is the chief executive officer of Bodepago, S.A. de C.V. Prior to his current position, he was the chief financial officer of Grupo Elektra, S.A. de C.V. He holds a degree in Business Administration from the Universidad Panamericana and a Master of International Management from the American Graduate School of International Management.

Actions of the Board

The board of directors is our legal representative and is authorized to take any action in connection with our operations not expressly reserved to our shareholders. Pursuant to the Mexican Securities Market Law, our board of directors must approve, among other things, all transactions that deviate from our ordinary course of business, and that involve, among others, (i) a related party, (ii) any purchase or sale of 5% or more of our assets, (iii) the grant by us of guarantees in an amount or amounts exceeding 5% of our assets or (iv) other transactions representing more than 5% of our assets.

Senior Management

Set forth below are the names of our current senior management members, their age as of December 31, 2009, their main occupation, their business experience, including other directorships, and their years of service in their current position.

Name Age Position José Antonio Chedraui Eguia 43 Chief Executive Officer Rafael Contreras Grosskelwing 47 Director of Finance and Administration Eduardo Guiot de la Garza 54 Director of Human Resources Héctor Roberto Gonzalez López 43 Manager of Internal Auditing Alfredo Chedraui López 31 Director of Real Estate Pedro Benitez Obeso 51 Director of Operations and Administration of Real Estate Alejandro Rafael Lara Hakin 51 Director of Construction Ricardo Salmón Valdes 34 Director of New Developments Eduardo Fuentes Duran 41 Director of Operations

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Name Age Position Primo Alvarez Pascual 53 Commercial Director Cesar Alejandro Anaya Jiménez 42 Director of Purchases José Ramón Chedraui Eguia 36 Director of Private Label Brands Miguel Ángel Carrillo Ruiz 39 Legal Director Marhn Ruiz Chiarandani 46 IT Director

José Antonio Chedraui Eguia has been at Chedraui for the past 21 years. He has been a member of our board of directors and our Chief Executive Officer since January 1995. Prior to this position, he served as General Director of our Galas division. Mr. José Antonio Chedraui Eguia holds a degree in accounting and finance from the Universidad Anahuac.

Rafael Contreras Grosskelwing holds a degree in Industrial Engineering from Universidad Panamericana, a diploma in Accounting and Finance from ITAM, a D1 Specialty in Senior Management from IPADE and a diploma in Financial Securities from ITAM. Mr. Contreras has served as Director of Finance and Administration since September 2000 and has been at Chedraui for the past 10 years.

Eduardo Guiot de la Garza holds a degree in Industrial Relations from Universidad Iberoamericana, a degree in Labor Law from ITAM, a degree in Merchandising from ITAM and a Master’s Degree in Business Administration from the Escuela Superior de Administración y Dirección de Empresas (“ESADE”). Mr. Guiot has served as Director of Human Resources since August 1993 and has been in at Chedraui for the past 16 years.

Héctor Roberto González López holds a degree in Public Accounting and a Master’s Degree in Planning and Information Systems from Universidad Iberoamericana and a diploma D1 from IPADE. Mr. González has served as Manager of Internal Auditing since May 2003 and has been at Chedraui for the past 6 years.

Alfredo Chedraui López holds a degree in Business Administration from Universidad Anáhuac and a Diploma in Economics from the University of California Los Angeles. Mr. Chedraui has served as Director of Real Estate Developments since 2005, and has been at Chedraui for 9 years.

Pedro Benítez Obeso holds a degree in Business Administration from Universidad Iberoamericana. Mr. Benítez has served as Director of Operations and Administration of Real Estate since August 2006, and has been at Chedraui for 26 years.

Alejandro Rafael Lara Hakin holds a degree in Architecture from Universidad Veracruzana. Mr Lara has served as Director of Developments since August 1986, and has been at Chedraui for 23 years.

Ricardo Salmón Valdés holds a degree in Architecture from Universidad Anáhuac and a Certification Module C1 101 from CCIM Institute. Mr. Salmón has served as Director of New Developments since January 2007, and has been at Chedraui for 3 years.

Eduardo Fuentes Durán holds a degree in Electronic Systems Engineering from ITESM. Mr. Fuentes has served as Director of Operations since January 2009, and has been at Chedraui for 9 years.

Primo Álvarez Pascual holds a degree in Business Direction from Centro de Estudios Superiores. Mr. Álvarez has served as Director of Marketing since November 1990 and has been at Chedraui for 25 years.

César Alejandro Anaya Jiménez holds a degree in Business Administration from Universidad La Salle. Mr. Anaya has served as Director of Sales since March 2007, and has been at Chedraui for 19 years.

José Ramón Chedraui Eguia holds a degree in Business Administration from Newport University Mexico. Mr. Chedraui has served as Director of Private Label Brands since January 2007, and has been at Chedraui for 15 years.

Miguel Ángel Carrillo Ruiz holds a degree in Law from Universidad La Salle and a degree in Senior Management from ITESM. He also has post-graduate studies in Business, Finance and Labor at Universidad Panamericana. Mr. Carrillo has served as our Legal Director since February 2010.

Marhn Ruiz Chiarandani holds a degree in Computer Sciences from Centro de Altos Estudios Exactas, Universidad de Buenos Aires. Mr. Ruiz has served as our IT director since April 2010.

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Audit and Corporate Practices Committee

The Mexican Securities Market Law requires us to have an audit committee, which must be comprised of at least three independent members appointed by the board of directors (except in the case of corporations controlled by a person or corporate group holding 50% or more of the outstanding capital stock, in which case the majority of the members must be independent). The audit committee (together with the board of directors, which has additional duties) replaces the statutory auditor (comisario) that previously had been required, pursuant to the Mexican Corporations Law.

We established an audit committee at our shareholders’ meeting held on April 17, 2009. The audit committee members are Mr. Clemente Ismael Reyes-Retana Valdés (President), Mr. Juan Félix Rodríguez Montemayor (secretary)and Mr. Pablo Prudencio Collado Casares (member). The current members of the audit committee were appointed or ratified by the board of directors in 2010 for an indefinite term. We believe that both of the members of the audit committee are independent under the Mexican Securities Market Law and each member qualifies as a financial expert. Standards for independence and financial expertise under Mexican law, however, differ from the New York Stock Exchange, NASDAQ or U.S. securities law standards.

The audit committee’s principal role is to supervise our external auditors, analyze the external auditor’s reports, inform the board of directors of any existing internal controls and any irregularities related to internal controls or otherwise, supervise the execution of related party transactions, supervise the activities of the chief executive officer and internal audit function and provide an annual report to the board of directors. This committee is also responsible for rendering its opinions to the board of directors in connection with the performance of our key officers, transactions with related parties, requests for opinions from independent third party experts, calling shareholders’ meetings and providing assistance to the board of directors in the preparation of reports for the annual shareholders’ meeting.

Share Ownership

The following table sets forth the beneficial ownership of our capital stock by our directors and senior management as of the date of this offering circular:

Name Title Shares

Control Trust

Individually

%

Total

Alfredo Chedraui Obeso Chairman 306,544,636 17,452,467 37.50%José Antonio Chedraui Obeso Director 208,450,344 17,452,467 25.50%José Antonio Chedraui Eguía Director/

Chief Executive Officer56,077,217 — 6.86%

José Ramón Chedraui Eguía Director/ Director of Private Label

Brands

56,077,217 — 6.86%

Alfredo Chedraui Lopez Director of Real Estate 65,396,188 — 8.00%

See “Principal and Selling Shareholder” for a description of the Control Trust.

In addition, we have established an executive stock compensation plan pursuant to which certain employees may purchase, simultaneously with, but not as part of the Global Offering up to 3,000,000 Shares (the “Executive Stock Compensation Plan”). In addition, we intend to offer additional Shares to certain members of our board of directors concurrently with but not as a part of the Global Offering in an amount of up to Ps.157 million at the initial offering price. We intend to partially finance such acquisitions by certain key employees as part of their compensation.

Compensation of Directors and Senior Management

For 2010, the board of directors has established that each member of the board of directors will be paid a nominal fee of one centenario, which is a 37.5 gram gold coin, for each board meeting that he or she attends. In

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addition, members of the board of directors who serve on committees receive a cash compensation for each attended meeting.

For 2009, the aggregate amount of compensation paid to our directors and senior management was approximately Ps.108 million, including both fixed and variable compensation.

We offer a bonus plan to our directors and senior management that is based on individual performance and on the results of our operations. This variable compensation may represent the equivalent of up to 50% of their total salary.

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PRINCIPAL AND SELLING SHAREHOLDERS

Control Trust

The Chedraui family entered into a trust (Contrato de Fideicomiso Irrevocable de Administración Número 15136-B), initially among Jose Antonio Chedraui Obeso and Alfredo Chedraui Obeso on July 9, 2004, with Banco Nacional de México, S.A., Integrante de Grupo Financiero Banamex, División Fiduciaria, as trustee, and certain immediate family members as beneficiaries (the “Control Trust”).

Voting and dispositive control of the Control Trust is directed by a technical committee, formed by various members of the Chedraui family. The intent of the Control Trust is that voting be exercised uniformly and that shares intended to be disposed of, first be offered to other family members. Investment of dividends is also directed by the technical committee. The Control Trust has a duration of 30 years and may be revoked at any time by unanimous resolution of the Chedraui family. The Control Trust includes standard provisions for this type of arrangements, such as, provisions dealing with the exercise of preemptive rights, limitations on transfer of shares and rights of first refusal applicable in respect of transfer of shares or rights arising from the Control Trust.

The table below sets forth certain information regarding the ownership of our capital structure as of March 31, 2010, and after giving effect to this Global Offering.

Shares owned after the Global Offering(1)

Shares owned prior to the Global Offering

Non-exercise of over-allotment

option Exercise of over-allotment

option Name of shareholder Number % Number % Number % Control Trust 782,547,488 95.73% 782,547,488 83.53% 782,547,488 81.79%José Antonio Chedraui Obeso

17, 452, 467 2.13% 17, 452, 467 1.86%

17, 452, 467 1.82%

Alfredo Chedraui Obeso

17, 452,467 2.13% 3,044,820 0.32%

3,044,820 0.32%

New investors

— 0% 133,793,545 14.38%

153,862,577 16.16%

Total 817,452,422 100.00% 936,838,320 100.00% 956,785,221 100.00% (1) Without giving effect to the Executive Stock Compensation Plan or the sale of Shares to certain employees and members of our board of directors occurring concurrently with the Global Offering. See "Management - Stock Ownership."

The Selling Shareholder is Alfredo Chedraui Obeso who will sell 14,407,647 Shares or 1.77% of the outstanding shares prior to the offering or 1.50% giving effect to the offering (including the exercise of over-allotment options in full).

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RELATED PARTY TRANSACTIONS

In the ordinary course of our business we engage in a number of transactions with our shareholders and with companies that are owned or controlled, directly or indirectly, by us or our controlling shareholders, subject to the approval of our board of directors. All transactions with related parties have been made in the normal course of our business operations, and are on terms no less favorable to us than would have been obtained in an arm’s-length transaction and comply with the applicable legal standards. In 2009, we engaged in transactions valued at approximately Ps.31.5 million with related parties. As of December 31, 2009, we are owed approximately Ps.95 million from related parties in respect of lease obligations, factoring and other transactions carried out on arm’s length basis. See Note 15 to our Audited Financial Statements.

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DESCRIPTION OF OUR CAPITAL STOCK AND BYLAWS

Set forth below is a description of our capital stock and a brief summary of certain significant provisions of our bylaws and Mexican law. This description does not purport to be complete and is qualified in its entirety by reference to our bylaws and Mexican law.

General

We were incorporated on April 23, 1987 under the name “Grupo Comercial Chedraui, S.A. de C.V.” as a corporation (sociedad anónima) organized pursuant to the Mexican Corporations Law. At our extraordinary shareholders’ meeting held on April 5, 2010, our shareholders approved to amend our bylaws in their entirety to conform them to the provisions of the Mexican Securities Market Law applicable to public corporations, to adopt the form of a listed stock corporation (sociedad anónima bursátil de capital variable) and to change our name to “Grupo Comercial Chedraui, S.A.B. de C.V.” A copy of our bylaws, as amended, has been filed with, and can be examined at, the CNBV and the BMV and is available for review at www.bmv.com.mx.

The duration of our corporate existence is indefinite. We are a holding company and conduct all of our operations through our subsidiaries. Our corporate domicile is the city of Xalapa, Veracruz, and our headquarters are located at Mexico City, Federal District and Xalapa, Veracruz.

Capital Stock

Because we are a variable capital stock company, our capital stock must have a fixed portion and may have a variable portion. As of the date of this offering circular, our issued and outstanding share capital consists of 817,452,422 Series B Class I shares of common stock, without stated par value, representing only fixed capital. In addition, there are 182,547,577 Series B Class I shares held in treasury for use in connection with this Global Offering. Immediately after giving effect to the Global Offering, assuming that we issue and sell 119,385,898 Series B, Class I shares and the initial purchasers and the Mexican underwriters do not exercise their options to purchase additional shares from us, 936,838,320 Series B, Class I shares will be outstanding. Our shares may be issued to, paid for and held by either Mexican or non-Mexican investors.

Voting Rights and Shareholders’ Meetings

All of our Shares have full voting rights. Each share entitles the holder to one vote at any meeting of our shareholders.

Under our current bylaws, we may hold two types of shareholders’ meetings: ordinary and extraordinary. Ordinary shareholders’ meetings are those called to discuss any issue not reserved for extraordinary shareholders’ meetings. An annual ordinary shareholders’ meeting must be held at least once a year within the first four months following the end of each fiscal year to discuss, among other things, the approval of our financial statements, the report prepared by the board of directors on our financial statements, the appointment of members of the board of directors and the determination of compensation for members of the board of directors.

Extraordinary shareholders’ meetings are those called to consider any of the following matters, among other things:

• an extension of the Company’s duration;

• dissolution of the Company;

• an increase or decrease in the Company’s capital stock;

• a change in the Company’s corporate purpose or nationality;

• any transformation, merger or spin-off involving the Company;

• any stock redemption or issuance of preferred stock;

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• redemption of the Company’s Shares payable with retained earnings;

• the issuance of bonds, debentures, obligations, debt or capital instruments or any instrument;

• the delisting of our Shares with the RNV or with any stock exchange;

• amendments to the Company’s bylaws; and

• any other matters for which applicable Mexican law or the bylaws specifically require an extraordinary meeting.

Shareholders’ meetings are required to be held at our corporate domicile, which is Xalapa, Veracruz. The President of the board of directors, the chairman of the audit committee, the chairman of the corporate practices committee, the secretary may call any shareholders’ meetings or a Mexican court of competent jurisdiction. In addition, any shareholders representing 10% of our outstanding capital stock have the right to request that the board of directors, the audit and the corporate practices committee call a shareholders’ meeting to discuss the matters indicated in the relevant request.

Notices of shareholders’ meetings must be published in one of the newspapers of general circulation in Mexico City at least 15 calendar days prior to the date of the meeting. Each call must set forth the place, time and agenda for the meeting and must be signed by whomever convened the meeting. From the date on which a call is published until the date of the corresponding meeting, all relevant information will have to be available to the shareholders.

To be admitted to any shareholders’ meeting, shareholders must present evidence of the deposit of their certificates with a financial institution, brokerage house or deposit institution at least one day prior to the shareholders’ meeting. These documents will be exchanged for certificates issued by us that must be used to be admitted to the meeting. Shareholders may appoint one or more attorneys-in-fact to represent them pursuant to general or special powers of attorney or by a proxy in the form distributed by us 15 days prior to the meeting.

Quorums

Ordinary meetings are legally convened on a first call when at least 50% of the shares representing our outstanding capital are present or duly represented. Resolutions at ordinary meetings of shareholders pursuant to a first call are valid when approved by the holders of the majority of the shares present at such meeting. On second or subsequent calls, any number of shares represented at an ordinary meeting of shareholders constitutes a quorum and resolutions are valid when approved by the holders of a majority of the shares represented at the meeting.

Extraordinary shareholders’ meetings and special shareholders’ meetings are legally convened on a first call when at least 75% of the shares representing our outstanding capital are present or duly represented. Resolutions at an extraordinary meeting of shareholders or special shareholders’ meetings pursuant to a first call are valid when adopted by the holders of at least 50% of our capital. On a second or subsequent call, extraordinary shareholders’ meetings are legally convened when at least 50% of the shares representing our outstanding capital are present or duly represented. Resolutions at an extraordinary meeting of shareholders pursuant to a second or subsequent call are valid when adopted by the holders of shares representing at least 50% of our capital.

Dividends and Distributions

Typically, at an annual ordinary shareholders’ meeting, the board of directors submits our financial statements for the previous fiscal year to the shareholders for approval. Once shareholders approve the financial statements, they determine the allocation of our net profits for the preceding fiscal year. By law, prior to any distribution of dividends, we are required to allocate 5% of our net profits to a legal reserve fund, such legal reserve fund equals 20% of our paid-in capital stock. Additional amounts may be allocated to other reserve funds as the shareholders may determine, including amounts allocated to a reserve for the repurchase of shares. The remaining balance, if any, may be distributed as dividends.

All shares outstanding at the time a dividend or other distribution is declared are entitled to participate in such dividend or other distribution.

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Changes to our Capital Stock

The fixed portion of our capital stock may be increased or decreased by a resolution adopted by our shareholders in a extraordinary shareholders’ meeting, provided that our bylaws are concurrently amended to reflect the increase or decrease in capital stock. The variable portion of our capital stock may be increased or decreased, by our shareholders in an ordinary shareholders’ meeting without the amendment of our bylaws.

Increases or decreases in the fixed or variable portion of our capital stock, must be recorded in our registry of capital variations, which we are required to maintain under the Mexican Corporations Law. Shareholders’ meeting minutes by means of which the corporate fixed capital of the Company is increased or decreased, must be notarized, and registered before the corresponding Public Registry of Commerce. New shares cannot be issued unless the issued and outstanding shares at the time of the issuance have been paid in full, except in certain limited circumstances.

Redemption

In accordance with our bylaws, shares representing our capital stock are subject to redemption in connection with either (i) a reduction of capital stock, or (ii) a redemption with retained earnings, which in either case must be approved by our shareholders. In connection with a capital reduction, the redemption of shares shall be made pro rata among the shareholders. In the case of a redemption with retained earnings, such redemption shall be conducted (a) by means of a tender offer conducted on the BMV at prevailing market prices, in accordance with Mexican law and our bylaws, (b) pro rata among the shareholders, or (c) if the redemption is at a price different from the prevailing market price, shares to be redeemed shall be selected by lot.

Dissolution or Liquidation

Upon dissolution of the issuer, one or more liquidators must be appointed at an extraordinary shareholders’ meeting to wind up the issuer’s affairs. All fully paid and outstanding shares of capital stock will be entitled to participate equally in any liquidation proceeds.

Registration and Transfer

We have filed an application to have our Shares registered with the RNV, as required under the Mexican Securities Market Law and regulations issued by the CNBV. Shares are evidenced by certificates issued in registered form, which are to be deposited with Indeval at all times. Our shareholders may only hold their shares in book-entry form, through participants that have accounts with Indeval. Indeval is the holder of record in respect of all of the Shares. Accounts may be maintained at Indeval by brokers, banks and other Mexican and non-Mexican financial institutions and entities authorized by the CNBV to be participants at Indeval. In accordance with Mexican law, only persons listed in our stock registry, and holders of certificates issued by Indeval coupled with certificates issued by Indeval participants, will be recognized as our shareholders; under the Mexican Securities Market Law, certifications issued by Indeval, together with certifications issued by Indeval participants, are sufficient to evidence ownership of our Shares and to exercise rights in respect of those Shares, at meetings of shareholders or otherwise. Transfers of shares must be registered through book entries that may be traced back to the records of Indeval.

Preemptive rights

Under Mexican law and our bylaws, our shareholders have preemptive rights for all share issuances or capital stock increases, except in the cases noted below. Generally, if we issue additional shares of capital stock, our stockholders will have the right to purchase the number of shares necessary to maintain their existing ownership percentage. Stockholders must exercise their preemptive rights within the time periods set forth by our shareholders at the meeting approving the relevant issuance of additional shares. This period may not be less than 15 days following the publication of notice of the issuance in the Official Gazette and in a newspaper of general circulation in Mexico City.

Under Mexican law, stockholders cannot waive their preemptive rights in advance, and preemptive rights may not be represented by an instrument that is negotiable separately from the corresponding share. Preemptive rights will not apply to (i) shares issued by us in connection with mergers, (ii) shares issued in connection with the

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conversion of convertible securities, the issuance of which was approved by our stockholders, (iii) shares issued in connection with the capitalization of accounts specified in our balance sheet, (iv) the resale by us of shares held in our treasury as a result of repurchases of shares conducted by us on the Exchange, and (v) shares to be placed in a public offering pursuant to Article 53 of the Mexican Securities Market Law, which permits the non-applicability of preemptive rights in connection with public offerings by existing public companies, if the issuance of those shares was approved at a general stockholders’ meeting.

Certain Minority Protections

Pursuant to the Mexican Securities Market Law and the Mexican Corporations Law, our bylaws include a number of minority shareholder protections. These minority protections include provisions that allow:

• holders of at least 10% of our outstanding share capital entitled to vote (including voting in a limited or restricted manner):

• to request a call for a shareholders’ meeting;

• to request that resolutions, with respect to any matter on which they were not sufficiently informed, to be postponed; and

• to appoint or revoke the appointment of one member of our board of directors and one alternate member of our board of directors;

• holders of at least 20% of our outstanding share capital to oppose any resolution adopted at a shareholders’ meeting and file a petition for a court order to suspend the resolution if the claim is filed within 15 days following the adjournment of the meeting at which the action was taken, provided that (i) the challenged resolution violates Mexican law or our bylaws, (ii) the opposing shareholders neither attended the meeting nor voted in favor of the challenged resolution, and (iii) the opposing shareholders deliver a bond to the court to secure payment of any damages that we may suffer as a result of suspending the resolution in the event that the court ultimately rules against the opposing shareholder; however, these provisions have seldom been invoked in Mexico, and, as a result, it is uncertain how a competent court may enforce such provisions; and

• holders of at least 5% of our outstanding shares may initiate an action for civil liabilities against some or all of our directors, as a shareholder derivative suit, for violations of their duty of care or their duty of loyalty, for our benefit, in an amount equal to the damages or losses caused to us; however any such actions have a five-year statute of limitations.

The protections afforded to minority shareholders under Mexican law are different from those in the United States and many other jurisdictions. The substantive law concerning fiduciary duties of directors has not been the subject of extensive judicial interpretation in Mexico, unlike many states in the United States where duties of care and loyalty elaborated by judicial decisions help to shape the rights of minority shareholders. Shareholders cannot challenge corporate action taken at a shareholders’ meeting unless they meet certain procedural requirements.

As a result of these factors, in practice it may be more difficult for our minority shareholders to enforce rights against us or our directors or controlling shareholders than it would be for shareholders of a U.S. company.

Restrictions on Certain Transfers

Our bylaws provide that any transfer of more than 10% of our Shares, consummated in one or more transactions by any person or group of persons acting in concert, requires prior approval by our board of directors. In addition, our credit facilities contain change of control provisions that require us to maintain control over our subsidiaries. We do not expect that this offering will trigger the change of control provisions of our credit facilities.

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Delisting or Cancellation of Registration with the RNV

If we wish to cancel our registration of Shares with the RNV, or if it is cancelled by the CNBV, our controlling shareholders are required to conduct a tender offer to purchase all the outstanding shares held by minority shareholders prior to such cancellation. Shareholders deemed to have “control,” as defined in the relevant provisions, are those that own a majority of our Shares, have the ability to control the outcome of decisions made at our shareholders’ meetings, or have the ability to appoint or revoke the appointment of a majority of the members of our board of directors, managers or equivalent officers, or that may control directly or indirectly the administration, strategy or principal policies.

In accordance with applicable regulations and our bylaws, in the event that our controlling shareholders are unable to purchase all of our outstanding Shares pursuant to a tender offer, they will be required to create a trust for a period not to exceed six months and contribute to it funds in an amount sufficient to purchase, at the same price offered pursuant to the tender offer all of the outstanding shares that remain held by the general public.

The offer price will be the higher of: (i) the weighted average quotation price per share on the BMV for the previous 30 days prior to the date on which the tender offer is made, or (ii) the book value of the shares in accordance with the most recent quarterly report submitted to the CNBV and the BMV.

The voluntary cancellation of the registration shall be subject to (i) the prior authorization of the CNBV, and (ii) the authorization of not less than 95% of the holders of outstanding capital stock in an extraordinary shareholders meeting.

Tender Offer Rules

Under the Mexican Securities Market Law, any person or group of persons that, directly or indirectly, in a single transaction or in a series of transactions, intends to acquire control of our outstanding shares (or any percentage of our outstanding shares equal to or exceeding 30% of our outstanding shares), would be required to, besides obtaining the approval of our board of directors and stockholders, undertake a tender offer for 100% of our outstanding shares or for the relevant lower percentage if the transaction requiring the tender offer is for less than 51% of our outstanding shares, at a price equal to the greater of (i) the average trading price for our shares, for the 30 trading days prior to the offer, or (ii) the last reported book value per share. The Mexican Securities Market Law defines control, for these purposes, as (i) the ability to impose decisions, directly or indirectly, at a stockholders’ meeting, (ii) the right to vote 50% or more of our shares, or (iii) the ability to cause, directly or indirectly, that our management, strategy or policies be pursued in any given fashion.

In connection with a tender offer, our board of directors is required, subject to the prior opinion of our corporate practices committee, to opine in respect of the price of the offer. Prior to expressing such opinion, our board of directors may request the opinion of an independent third party expert. The members of our board of directors and the Director General are required to disclose to the public whether or not each of them will sell any of our shares owned by them in the tender offer

Additional Matters

Variable Capital

We are permitted to issue shares representing fixed capital and shares representing variable capital. The issuance of variable-capital shares, unlike the issuance of fixed-capital shares, does not require an amendment of the bylaws, although it does require a majority vote of our Shares.

Forfeiture of shares

As required by Mexican law, our bylaws provide that any non-Mexican shareholder shall be considered as a Mexican citizen with respect to Shares held by them, property rights, concessions, participations and interests we own and rights and obligations derived from any agreements we have with the Mexican government. Non-Mexican shareholders shall be deemed to have agreed not to invoke the protection of their governments, under penalty, in case of breach of such agreement, of forfeiture to the Mexican government of such interest or participation. Mexican law requires that such a provision be included in the bylaws of all Mexican corporations unless such bylaws prohibit ownership of shares by non-Mexican persons.

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Purchase of our Own Shares

According to the bylaws, we may repurchase our Shares on the BMV at any time at the then prevailing market price. Any such repurchase must conform to guidelines established by the Mexican law, and the amount available to repurchase shares must be approved by an ordinary shareholders’ meeting. The economic and voting rights corresponding to repurchased shares may not be exercised during the period in which we own such shares, and such shares are not deemed to be outstanding for purposes of calculating any quorum or vote at any shareholders’ meeting during such period.

Conflict of Interest

Pursuant to the Mexican Corporations Law, a shareholder that votes on a business transaction in which its interest conflicts with those of the Company must abstain from any deliberation on the applicable matter. A breach by any shareholder of any such obligation may result in the shareholder being liable for damages, but only if the transaction would have not been approved without this shareholders’ vote.

Appraisal rights

Pursuant to the Mexican Corporations Law, whenever the shareholders approve a change in our corporate purposes, nationality or corporate form, any shareholder entitled to vote that voted against the approval of such matter is entitled to withdraw its Shares at book value for its Shares, as set forth in the financial statements last approved by our shareholders; provided it exercises its appraisal rights within 15 days following the adjournment of the meeting at which the relevant change was approved.

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TAXATION

This discussion does not constitute, and should not be considered as, legal or tax advice to prospective holders of our Shares. This discussion is for general information purposes only and is based upon the federal tax laws of Mexico (including the Mexican Income Tax Law and the Mexican Federal Tax Code) and the United States as in effect on the date of this offering circular (including the Tax Treaty, as defined below), which are subject to change, and such changes may have retroactive effect. Holders of our Shares should consult their own tax advisers as to the Mexican, U.S. or other tax consequences of the purchase, ownership and disposition of our Shares, including, in particular, the effect of any foreign, state, municipal or local tax laws and their entitlement to the benefits, if any, afforded by any tax treaty to which Mexico may be a party and which is in effect.

The following summary contains a description of certain Mexican federal and U.S. federal income tax consequences of the acquisition, ownership and disposition of our Shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or sell our Shares. In particular, this summary does not describe any tax consequences arising under the laws of any state, locality or municipality or taxing jurisdiction other than certain federal laws of Mexico and the United States.

Mexican Tax Considerations

The following is a general summary of the principal consequences under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta) and the rules and regulations thereunder, as currently in effect, of an investment in Shares by a holder that is not a resident of Mexico for tax purposes, and that will not hold the Shares or a beneficial interest therein in connection with the conduct of a trade or business, through a permanent establishment for tax purposes in Mexico (a “non-resident holder”).

For purposes of Mexican taxation, the definition of residence is highly technical and residence arises in several situations. Generally, an individual is a resident of Mexico if he or she has established his or her home or center of vital interests in Mexico, and a corporation is considered a resident if it has its place of effective management in Mexico. However, any determination of residence should take into account the particular situation of each person or legal entity.

If a non-resident legal entity or individual is deemed to have a permanent establishment in Mexico for Mexican tax purposes, all income attributable to the permanent establishment will be subject to Mexican income taxes, in accordance with applicable Mexican tax laws.

This summary does not address all of the Mexican tax consequences that may be applicable to specific holders of the Shares (including a holder that controls us, an investor that holds 10% or more of our Shares or holders that constitute a group of persons for purposes of Mexican law).

Tax Treaties

The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion and a Protocol thereto between the United States and Mexico entered into force on January 1, 1994 and has been amended by an additional protocol that entered into force on July 3, 2003 (together, the “Tax Treaty”). The United States and Mexico have also entered into an agreement concerning the exchange of information with respect to tax matters.

The Mexican Income Tax Law has established procedural requirements for a non-resident holder disposing of shares to be entitled to benefits under any of the tax treaties to which Mexico is a party.

These procedural requirements include the obligation to (i) prove tax treaty residence, (ii) appoint a representative in Mexico for taxation purposes, and (iii) present tax calculations prepared by authorized certified public accountants. These requirements are also applicable to provisions of the Tax Treaty that may affect the taxation of certain U.S. holders (as defined in “—U.S. Federal Income Tax Considerations”).

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Taxation of Dividends

Under the provisions of the Mexican Income Tax Law (Ley del Impuesto Sobre la Renta), dividends, either in cash or in kind, paid with respect to our Shares to non-resident holders will not be subject to Mexican withholding or similar tax.

Taxation of Dispositions of Shares

Gains on the sale of our Shares by a non-resident holder, will generally not be subject to Mexican income tax if the transaction is carried out through the BMV or other stock exchange or securities market approved by the Ministry of Finance and Public Credit.

Gains received by a non-resident holder arising out of the sale or other transfers of Shares made in other circumstances, are deemed as income arising from Mexican source subject to Mexican income tax. These transfers of Shares by a non-resident holder are generally subject to a 25% income tax rate in Mexico, which is applicable to the gross proceeds realized from the sale. Should the buyer in any such transactions be a Mexican resident for tax purposes or a non-resident holder with a permanent establishment in Mexico for tax purposes, the applicable tax would be withheld by such Mexican resident buyer from the acquisition price. Alternatively, a non-resident holder may, subject to certain requirements, elect to pay taxes on the gains realized from the sale of our Shares on a net basis at a rate of 30% (for years 2010, 2011 and 2012).

Pursuant to the Tax Treaty, gains realized by a holder that is eligible to claim the benefits under the Tax Treaty may be exempt from Mexican income tax on gains realized on a sale or other disposition of shares, to the extent that such holder owned, directly or indirectly, less than 25% of our outstanding capital stock during the 12-month period preceding such disposition, provided that certain formal requirements set forth by the Mexican Income Tax Law are also complied with.

Gains realized by other non-resident holders that are eligible to receive benefits pursuant to other income tax treaties to which Mexico is a party may be exempt from Mexican income tax in whole or in part. If a corporation is a resident of a tax haven jurisdiction (as defined by the Mexican Income Tax Law), the applicable rate will be 40% on the gross income obtained.

Other Mexican Taxes

Generally, a non-resident holder will not be liable for estate, inheritance, gift, succession or similar taxes with respect to its purchase, ownership or disposition of shares. A gratuitous transfer of shares by a non-resident holder, however, may in certain circumstances result in the imposition of Mexican tax upon the recipient. There are no Mexican stamp, issue, registration or similar taxes payable by a non-resident holder with respect to the purchase ownership or disposition of the Shares.

United States Federal Income Taxation

TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, U.S. HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS OFFERING MEMORANDUM IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY U.S. HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON U.S. HOLDERS UNDER THE U.S. INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) U.S. HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following summary contains a description of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our Shares by U.S. holders (as defined below), but does not purport to be a comprehensive description of all of the federal tax considerations that may be relevant to a decision to purchase our Shares, and does not address any U.S. state or local tax considerations that may be relevant to U.S. holders. This summary is based upon the federal income tax laws of the United States as in effect on the date of this offering memorandum, including the provisions of the Tax Treaty, all of which are subject to change, possibly with

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retroactive effect. This summary does not address all aspects of the federal income tax laws of the United States. In particular, the summary deals only with U.S. holders that will hold the Shares as capital assets and does not address the tax treatment of U.S. holders subject to special tax rules, such as insurance companies, financial institutions, dealers in securities or currencies or traders in securities or currencies, electing to mark their positions to market for tax purposes, tax-exempt investors, persons whose functional currency is not the U.S. Dollar, persons holding the Shares as a position in a “straddle”, as part of a short sale, or as part of a hedging or conversion transaction, or that own or are treated as owning 10% or more (by vote or value) of our outstanding Shares.

The discussion below assumes that we are not a passive foreign investment company, or PFIC. We are not and do not expect to become a PFIC, but this determination is made annually and it is possible that our status could change.

For purposes of this discussion, U.S. holders are beneficial owners of our Shares that, for U.S. federal income tax purposes,

• are individuals that are citizens or residents of the United States,

• are corporations, or any other entities taxable as corporations, created or organized in or under the laws of the United States or any State thereof, or the District of Columbia,

• are estates, the income of which is subject to U.S. federal income tax without regard to its source, or

• are trusts if (a) a court within the United States is able to exercise primary supervision over the administration of the trusts and one or more U.S. persons have the authority to control all substantial decisions of the trusts or (b) they have valid elections in effect under applicable Treasury regulations to be treated as U.S. persons for such purposes.

If a partnership holds our Shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and upon the activities of the partnership. A partner or partnership considering the purchase of our Shares should consult its own independent tax advisor.

Prospective investors in our Shares should consult their own tax advisors as to the U.S. or other tax consequences of the purchase, ownership, and disposition of the Shares, including, in particular, the effect of any non-U.S., state or local tax laws and their entitlement to the benefits, if any, afforded by the Tax Treaty.

Taxation of Dividends

The gross amount of any distributions made by us with respect to our Shares generally will be treated as a dividend for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles) on the date on which the distributions are actually or constructively received by the U.S. holder. A U.S. holder of our Shares generally will be taxed on such dividends as ordinary income. Dividends paid by us will not be eligible for the dividends received deduction available to certain U.S. corporate shareholders. Distributions in excess of our current and accumulated earnings and profits will be treated first as a non-taxable return of capital reducing such U.S. holder’s adjusted tax basis in the common shares and any distribution in excess of such adjusted tax basis will be treated as capital gain. We do not currently maintain, and do not intend to maintain, calculations of our earnings and profits under U.S. federal income tax principles and consequently, U.S. holders will likely be required to treat the full amount of distributions with respect to our Shares as taxable dividends for U.S. federal income tax purposes. Distributions of additional shares to U.S. holders with respect to their Shares that are made as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

Dividends paid by us will be eligible for the preferential tax rates available to U.S. individual shareholders for certain qualified dividend income. Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual prior to January 1, 2011 with respect to our Shares will be subject to taxation at a maximum rate of 15% if the dividends are “qualified dividends”. Dividends paid on the Shares will be

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treated as qualified dividends if we are eligible for benefits under a comprehensive U.S. income tax treaty, provided that we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a PFIC. We believe that dividend payments made to individual U.S. holders will be “qualified dividends” and through December 31, 2010 will be taxed at a maximum rate of 15%. However, no assurance can be given that a change in circumstances will not affect the treatment of dividends paid by us as “qualified dividends” in the future. U.S. holders should consult their own tax advisors regarding whether any dividends received by them qualify for a reduced rate of U.S. federal income taxation.

Dividends, which will be paid in Mexican pesos, will be includible in the income of a U.S. holder in a U.S. Dollar amount calculated by reference to the exchange rate in effect on the date they are actually or constructively received by the U.S. holder (in both cases, whether or not they are converted into U.S. Dollars). U.S. holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss (which will be treated as U.S. source ordinary income or loss) on any pesos that are converted into U.S. Dollars (or otherwise disposed of) on a date subsequent to their actual or constructive receipt by the U.S. holder.

Taxation of Dispositions of Common Shares

A U.S. holder generally will recognize capital gain or loss upon the sale or other disposition of Shares, in an amount equal to the difference between the amount realized on the sale or other disposition (determined in U.S. Dollars in the case of shares sold or otherwise disposed of for currencies other than U.S. dollars by reference to the spot exchange rate in effect on the date of the sale or other disposition or, if the shares sold or otherwise disposed of are traded on an established securities market and the U.S. holder is a cash basis taxpayer or an electing accrual basis taxpayer, the spot exchange rate in effect on the settlement date) and such U.S. holder’s adjusted tax basis in the Shares. The U.S. holder’s initial tax basis in the Shares will be the U.S. holder’s U.S. dollar purchase price for the Shares (determined by reference to the spot exchange rate in effect on the date of the purchase or, if the Shares purchased are traded on an established securities market and the U.S. holder is a cash basis taxpayer or an electing accrual basis taxpayer, the spot exchange rate in effect on the settlement date). Any gain or loss recognized by a U.S. holder on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the Shares have been held for more than one year. Certain U.S. holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains, which rates are currently scheduled to increase on January 1, 2011. The deduction of a capital loss is subject to limitations for U.S. federal income tax purposes. U.S. holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss (which will be treated as U.S. source ordinary income or loss) on any foreign currency received in a sale or other disposition of the Shares that is converted into U.S. Dollars (or otherwise disposed of) on a date subsequent to receipt.

Gain or loss on the sale or other disposition of Shares generally will be treated as U.S. source gain or loss for U.S. foreign tax credit limitation purposes. A U.S. holder may be unable to credit any Mexican taxes imposed on these gains unless it has certain other income from foreign sources. U.S. holders should consult their own tax advisers regarding the application of the foreign tax credit rules to their investment in and disposition of Shares.

U.S. Backup Withholding Tax and Information Reporting Requirements

Dividend payments made to holders and proceeds from the sale or other disposition of the Shares within the United States or by a U.S. payor or U.S. middleman to a non-corporate U.S. holder may be subject to information reporting to the Internal Revenue Service. Such payments may be subject to “backup withholding” with respect to some payments to the U.S. holder, such as dividends or the proceeds of a sale or other disposition of the Shares, unless the U.S. holder:

• is a corporation or falls within certain exempt categories, and demonstrates this fact when so required;

• provides a correct taxpayer identification number, certifies that it is not subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules.

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The backup withholding tax rate is currently 28% and is currently scheduled to increase to 31% for taxable years beginning on or after January 1, 2011. Backup withholding is not an additional tax. Any amount withheld under these rules will be creditable against the U.S. holder’s federal income tax liability, provided that the required information is timely furnished to the United States Internal Revenue Service.

Information reporting generally will apply to payments of any dividends on, and proceeds from the sale or other disposition of, the Shares made within the United States or by a U.S. payor or U.S. middleman to a non-corporate U.S. holder.

In addition, a U.S. holder should be aware that recently enacted legislation imposes new reporting requirements with respect to the holding of foreign financial assets, including equity of foreign issuers, if the aggregate value of all of such assets exceeds $50,000. A U.S. holder should consult its own tax advisor regarding the application of the information reporting rules to our Shares and the application of the recently enacted legislation to its particular situation.

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PLAN OF DISTRIBUTION

Citigroup Global Markets Inc. (“Citi”) and Credit Suisse Securities (USA) LLC (“Credit Suisse”) are acting as

joint book-running managers of the International Offering and as representatives of the initial purchasers named below. Subject to the terms and conditions stated in the purchase agreement dated the date of this offering circular, each initial purchaser named below has severally agreed to purchase, and we have agreed to sell to that initial purchaser, the number of Shares set forth opposite the initial purchaser’s name.

Initial Purchaser Number of Shares Citigroup Global Markets Inc. ..................................................................................... 36,793,225 Credit Suisse Securities (USA) LLC ........................................................................... 36,793,225

Total ......................................................................................................................... 73,586,450

In respect of the Mexican Offering, subject to the terms and conditions stated in the Mexican underwriting agreement dated the date of this offering circular, each Mexican underwriter named below has severally agreed to purchase, and we have agreed to sell to that Mexican underwriter, the number of Shares set forth opposite the Mexican underwriter’s name. Mexican Underwriter Number of Shares Acciones y Valores Banamex, S.A. de C.V., Casa de Bolsa, Integrante del Grupo Financiero Banamex ........................................ 25,588,015 Casa de Bolsa BBVA Bancomer, S.A. de C.V. Grupo Financiero BBVA Bancomer ........................................................................... 34,619,080

Total ......................................................................................................................... 60,207,095

Citi is acting as sole global coordinator of the Global Offering.

The purchase agreement and the Mexican underwriting agreement each provide that the obligations of the initial purchasers and the Mexican underwriters to purchase the Shares, are subject to approval of legal matters by counsel and to other conditions. The initial purchasers and the Mexican underwriters must purchase all the Shares (other than those covered by the initial purchasers’ and the Mexican underwriters’ options to purchase additional Shares described below) if they purchase any of the Shares.

The initial purchasers and the Mexican underwriters propose to resell the Shares at the offering price set forth on the cover page of this offering circular. The initial purchasers propose to sell such Shares within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See “Transfer Restrictions.” The price at which the Shares are offered may be changed at any time without notice.

The Shares have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.”

In addition, until 40 days after the commencement of this offering, an offer or sale of Shares within the United States by a dealer that is not participating in this offering may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A.

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We have granted to the initial purchasers and the Mexican underwriters options, exercisable for 30 days from the date of this offering circular, to purchase up to an aggregate of 20,069,032 additional Shares at the offering price less the discount. To the extent the option is exercised, each initial purchaser and Mexican underwriter must purchase an additional number of Shares approximately proportionate to that person’s initial purchase commitment. The options in the International Offering and the Mexican Offering may be exercised independently in accordance with applicable law in the relevant jurisdiction. Any Shares issued or sold under the option will be issued and sold on the same terms and conditions as the other, Shares that are the subject of this offering.

We, our selling shareholder and our other shareholders have agreed that, for a period of 180 days from the date of this offering circular, we and they will not, without the prior written consent of the initial purchasers and the Mexican Underwriters, dispose of or hedge any of our Shares or any securities convertible into or exchangable for our Shares, subject to certain exceptions. The initial purchasers and the Mexican Underwriters, in their sole discretion, may release any of the securities subject to these agreements at any time without notice.

Prior to this offering, there has been no public market for our Shares. Consequently, the offering price for the Shares was determined by negotiations among us, the selling shareholder and the representatives. Among the factors considered in determining the offering price were our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, currently prevailing general conditions in the equity securities markets, and current market valuations of publicly traded companies considered comparable to our company.

The Shares will constitute a new class of securities with no established trading market. We have applied to have the Shares listed on the Mexican Stock Exchange. However, we cannot assure you that the prices at which the Shares will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the Shares will develop and continue after this offering. The initial purchasers have advised us that they currently intend to make a market in the Shares. However, they are not obligated to do so and they may discontinue any market-making activities with respect to the Shares at any time without notice. Accordingly, we cannot assure you as to the liquidity of, or the trading market for, the Shares.

We will pay to the initial purchasers and the Mexican underwriters a commission equal to Ps.0.935 per share. Therefore, the initial purchasers and the Mexican underwriters will receive in connection with this offering total commissions of Ps.143,861,509, assuming exercise in full of the over-allotment options.

In connection with the offering, Citi, as global coordinator, may purchase and sell Shares in the open market. Purchases and sales in the open market may include short sales and purchases to cover short positions, which may include purchases pursuant to the initial purchasers’ and the Mexican underwriters’ options to purchase additional Shares, and stabilizing purchases.

• Short sales involve secondary market sales by the initial purchasers of a greater number of Shares than they are required to purchase in the offering.

o “Covered” short sales are sales of Shares in an amount up to the number of Shares represented by the initial purchasers’ option to purchase additional Shares.

o “Naked” short sales are sales of Shares in an amount in excess of the number of Shares represented by the initial purchasers’ option to purchase additional Shares. Mexican law does not permit naked short sales.

• Covering transactions involve purchases of Shares either pursuant to the initial purchasers’ and the Mexican underwriters’ options to purchase additional Shares or in the open market after the distribution has been completed in order to cover short positions.

o To close a covered short position, the initial purchasers must purchase Shares in the open market after the distribution has been completed or must exercise their option to purchase additional Shares. In determining the source of Shares to close the covered short position, the initial purchasers will consider, among other things, the price of Shares available for purchase in the open market as compared to the price at which they may purchase Shares by exercising their option to purchase additional Shares.

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• Stabilizing transactions involve bids to purchase Shares so long as the stabilizing bids do not exceed a specified maximum.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial purchasers and the Mexican underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the Shares. They may also cause the price of the Shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of these transactions, they may discontinue them at any time.

The initial purchasers and their affiliates have performed commercial banking, investment banking and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses. The initial purchasers and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In addition, affiliates of some of the initial purchasers are lenders, and in some cases agents or managers for the lenders, under our credit agreements.

The initial purchasers and Mexican underwriters have entered into an intersyndicate agreement, pursuant to which sales may be made between the initial purchasers and the Mexican underwriters of a number of Shares as may be determined jointly by the initial purchasers and the Mexican Underwriters. To the extent that there are sales between the initial purchasers and the Mexican underwriters pursuant to the intersyndicate agreement, the number of Shares initially available for sale by the initial purchasers and the Mexican underwriters may be more or less than the amounts appearing on the cover page of this offering circular.

We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the initial purchasers may be required to make because of any of those liabilities.

Notice to Prospective Investors in the European Economic Area

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of Shares described in this offering circular may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the Shares that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time:

• to any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

• to fewer than 100 natural or legal persons (other than qualified investors as defined below) subject to obtaining the prior consent of the representatives for any such offer; or

• in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive.

Each purchaser of Shares described in this offering circular located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

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For purposes of this provision, the expression an “offer to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

The sellers of the Shares have not authorized and do not authorize the making of any offer of Shares through any financial intermediary on their behalf, other than offers made by the initial purchasers with a view to the final placement of the Shares as contemplated in this offering circular. Accordingly, no purchaser of the Shares, other than the initial purchasers, is authorized to make any further offer of the Shares on behalf of the sellers or the initial purchasers.

Notice to Prospective Investors in the United Kingdom

This offering circular is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a “relevant person”). This offering circular and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Notice to Prospective Investors in France

Neither this offering circular nor any other offering material relating to the Shares described in this offering circular has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The Shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this offering circular nor any other offering material relating to the Shares has been or will be:

• released, issued, distributed or caused to be released, issued or distributed to the public in France; or

• used in connection with any offer for subscription or sale of the Shares to the public in France.

Such offers, sales and distributions will be made in France only:

• to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;

• to investment services providers authorized to engage in portfolio management on behalf of third parties; or

• in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).

The Shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

Notice to Prospective Investors in Hong Kong

The Shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of

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Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Residents of Brazil

The offer and sale of Shares will not be carried out by any means that would constitute a public offering in Brazil under Law No. 6,385, of December 7, 1976, as amended, and under CVM Rule (Instrução) No. 400, of December 29, 2003, as amended. The offer and sale of the Shares have not been and will not be registered with the Comissão de Valores Mobiliários in Brazil. Any representation to the contrary is untruthful and unlawful. Any public offering or distribution, as defined under Brazilian laws and regulations, of the interests in Brazil is not legal without such prior registration. Documents relating to the offering of the shares, as well as information contained therein, may not be supplied to the public in Brazil, as the offering of the shares is not a public offering of securities in Brazil, nor may they be used in connection with any offer for sale of the shares to the public in Brazil. This offer of the Shares is addressed to you personally, upon your request and for your sole benefit, and is not to be transmitted to anyone else, to be relied upon by anyone else or for any other purpose either quoted or referred to in any other public or private document or to be filed with anyone without our prior, express and written consent. Notice to Residents of Chile

The Company and the Shares are not registered in the securities registry maintained by the Superintendencia de Valores y Seguros de Chile (Chilean Securities and Insurance Superintendency or “SVS”) pursuant to the Securities Market Law of Chile, as amended, nor subject to the oversight of the SVS.

Notice to Prospective Investors in Japan

The Shares offered in this offering circular have not been registered under the Securities and Exchange Law of Japan. The Shares have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

Notice to Prospective Investors in Singapore

This offering circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Shares may not be circulated or distributed, nor may the Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

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Where the Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

• a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

Shares, debentures and units of Shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Shares pursuant to an offer made under Section 275 of the SFA except:

• to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such Shares, debentures and units of Shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;

• where no consideration is or will be given for the transfer; or

• where the transfer is by operation of law.

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TRANSFER RESTRICTIONS

The offering is being made in accordance with Rule 144A and Regulation S under the Securities Act. The Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction except Mexico and, accordingly, may not be offered, sold, pledged or otherwise transferred or delivered (i) within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except to qualified institutional buyers (“QIBs”) in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A, or (ii) outside the United States to non-U.S. persons in accordance with Regulation S.

Rule 144A

Each purchaser of Shares offered to U.S. persons, and therefore in reliance on Rule 144A, will be deemed to have represented and agreed that it understands that:

• such Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction except Mexico; and

• such Shares may not be offered, sold, pledged or otherwise transferred except (A) to a person whom the seller and any person acting on its behalf reasonably believe is a QIB in a transaction meeting the requirements of Rule 144A, (B) in accordance with Regulation S under the Securities Act, or (C) in accordance with Rule 144 under the Securities Act (if available), in each case in accordance with any applicable securities laws of any state of the United States.

Regulation S

Each purchaser of Shares offered to non-U.S. persons outside the United States, and therefore in reliance on Regulation S, will be deemed to have represented and agreed that it understands that:

• such Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction except Mexico; and

• such securities may not be offered, sold, pledged or otherwise transferred prior to the expiration of 40 days after the date of this offering circular, except (A) in accordance with Regulation S under the Securities Act or (B) to a person whom the seller and any person acting on its behalf reasonably believe is a QIB in a transaction meeting the requirements of Rule 144A, in either case in accordance with any applicable securities laws of any state of the United States.

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VALIDITY OF THE SHARES

The validity of the Shares will be passed upon by Bufete Robles Miaja, S.C., Mexico City, Mexico and Cleary Gottlieb Steen & Hamilton LLP, New York, New York, our Mexican and U.S. counsel, respectively. Certain legal matters in connection with the Global Offering are being passed upon for the initial purchasers by Milbank, Tweed, Hadley & McCloy LLP, New York, New York and Ritch Mueller, S.C., Mexico City, Mexico, U.S. and Mexican counsel to the initial purchasers and the Mexican underwriters, respectively.

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INDEPENDENT AUDITORS

Our consolidated financial statements as of and for the year ended December 31, 2009 included in this offering circular, have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C. (Member of Deloitte Touche Tohmatsu), independent auditors, as stated in their report appearing herein.

The consolidated financial statements of Grupo Comercial Chedraui, S. A. de C. V.as of December 31, 2008 and 2007 and for each of the two years in the period ended December 31, 2008, have been audited by PricewaterhouseCoopers, S.C., an independent auditor, before adjustments to take into account the effects of retrospectively applying the adoption of both Mexican Financial Reporting Standards NIF B-8, Consolidation and Combined Financial Statements and Valuation of Permanent Investment in Shares (“NIF B-8”), and International Financial Reporting Interpretations Committee (“IFRIC”) Interpretation 13,Customer Loyalty Programs (“IFRIC 13”), as well as certain other reclassifications described in Note 3(a) of the consolidated financial statements for the year ended December 31, 2009 included herein, (such 2008 consolidated financial statements not separately included or incorporated by reference in this offering circular), as stated in their report appearing herein. The adjustments to the 2008 consolidated financial statements to retrospectively apply the adoption of NIF B-8 and IFRIC 13, as well as certain other reclassifications described in Note 3(a) of the consolidated financial statements for the year ended December 31, 2009, included within the offering circular, have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C. (member of Deloitte Touche Tohmatsu), an independent auditor.

The consolidated financial statements as of and for the year ended December 31, 2009, included in this offering circular, have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C. (member of Deloitte Touche Tohmatsu), independent auditors, as stated in their report appearing herein.

F-1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009, 2008 AND 2007

Page Independent Auditors’ Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2 Consolidated Financial Statements:

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4 Consolidated Statements of Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5 Consolidated Statements of Changes in Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . F-6 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7 Consolidated Statement of Changes in Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8 Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9

Independent Auditors’ Report to the

Board of Directors and Stockholders of

Grupo Comercial Chedraui, S. A. de C. V.

We have audited the accompanying consolidated balance sheet of Grupo Comercial Chedraui, S. A. de C. V. and subsidiaries (the Company) as of December 31, 2009, and the related consolidated statement of income, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of the Company for the years ended December 31, 2008 and 2007, before the effects of the adjustments to retrospectively apply the change in Mexican Financial Reporting Standards and certain other reclassifications discussed in Note 3(a) to the consolidated financial statements, were audited by other auditors whose report dated May 21, 2009 (February 24, 2010 as to Notes 2 and 14), expressed an unqualified opinion on those statements and included explanatory paragraphs describing the change in certain accounting policies and restatements for the correction of errors.

We conducted our audit in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and that they are prepared in accordance with Mexican Financial Reporting Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the financial reporting standards used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As mentioned in Note 3a, beginning January 1, 2009, the Company adopted the following new financial reporting standards: B-7, Business Acquisitions, B-8, Consolidated or Combined Financial Statements; C-7, Investment in

Associated Companies and Other Permanent Investments, C-8, Intangible Assets, and supplemental application of International Financial Reporting Interpretations Committee (“IFRIC”) 13, Customer Loyalty Programs.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Grupo Comercial Chedraui, S. A. de C. V. and subsidiaries as of December 31, 2009; and the results of their operations, changes in their stockholders’ equity and their cash flows for the year then ended, in conformity with Mexican Financial Reporting Standards.

We also have audited the adjustments to the 2008 and 2007 consolidated financial statements to retrospectively apply the changes in accounting for the adoption of new financial reporting standard B-8 and supplemental application of IFRIC 13 in such years, as well as certain other reclassifications, as discussed in Note 3(a) to the consolidated financial statements. In our opinion, such retrospective adjustments and reclassifications are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2008 and 2007 consolidated financial statements of the Company other than with respect to the retrospective adjustments and reclassifications and, accordingly, we do not express an opinion or any other form of assurance on the 2008 and 2007 consolidated financial statements taken as a whole.

The accompanying consolidated financial statements have been translated into English for the convenience of readers.

Galaz, Yamazaki, Ruiz Urquiza, S. C. Member of Deloitte Touche Tohmatsu

C. P. C. Francisco Perez Cisneros

February 26, 2010

F-2

REPORT OF INDEPENDENT AUDITORS

Boca del Río, Ver, May 21, 2009 (except for Note 2 and 14 as to which the date is February 24, 2010)

To the Stockholders’ Meeting of

Grupo Comercial Chedraui, S. A. de C. V.

We have audited the consolidated balance sheets of Grupo Comercial Chedraui, S. A. de C. V. and subsidiaries, at

December 31, 2008 and 2007, and the related consolidated income statements and changes in stockholders' equity

for the years then ended, as well as the consolidated statement of cash flows for the year ended December 31, 2008

and the consolidated statement of changes in financial position for the year ended December 31, 2007 before the

effects of the adjustments to retrospectively apply the changes in accounting for the adoption of new financial

reporting standard NIF B-8, Consolidation and Combined Financial Statements and Valuation of Permanent

Investment in Shares and supplemental application of International Financial Reporting Interpretations Committee

(“IFRIC”) Interpretation 13, Customer Loyalty Programs, as well as certain other reclassifications, made in the

consolidated financial statements for the year ended December 31, 2009. Such effects are included in Note 3(a) of

the 2009 consolidated financial statements included herein. These financial statements are the responsibility of the

Company's management. Our responsibility is to express an opinion on these financial statements based on our

audits. The financial statements of a subsidiary, which assets and revenues represent the 3.04% and 8.94% in 2008,

and 2.33% and 7.08% in 2007, respectively, of the total consolidated assets and revenues, were audited by other

auditors and, in our opinion, as to refer to such subsidiary, is only based on the report of the other auditors.

We conducted our audits in accordance with the generally accepted auditing standards in Mexico. Those standards

require that we plan and perform the audit in order to obtain reasonable assurance about whether the financial

statements are free of material misstatements and that they were prepared in accordance with the Mexican Financial

Reporting Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures

in the financial statements, assessing the accounting principle used and significant estimates made by management,

and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis

for our opinion.

As discussed in Note 2 and 14, the Company´s management identified certain errors and changed certain accounting

policies in the consolidated financial statements for the years ended December 31, 2008 and 2007. As a result, the

consolidated financial statements for the years ended December 31, 2008 and 2007 were restated.

In our opinion based in our audit and the report of the other auditors, referred to in the first paragraph the

consolidated financial statements referred to above, present fairly, in all material respects, the consolidated financial

position of Grupo Comercial Chedraui, S. A. de C. V. and subsidiaries, at December 31, 2008 and 2007 and the

consolidated results of its operations and changes in stockholders' equity, as well as the consolidated statement of

cash flows for the year ended December 31, 2008 and the consolidated statement of changes in financial position for

the year ended December 31, 2007 in conformity with the Mexican Financial Reporting Standards (the 2008 and

2007 consolidated financial statements before the effects of the adjustments mentioned in the first paragraph are not

presented herein).

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the

changes in accounting for the adoption of new financial reporting standard NIF B-8, Consolidation and Combined Financial Statements and Valuation of Permanent Investment in Shares and supplemental application of

International Financial Reporting Interpretations Committee (“IFRIC”) Interpretation 13, Customer Loyalty

Programs, as well as certain other reclassifications, for the years ended December 31, 2008 and 2007 described in

Note 3(a) to the consolidated financial statements for the year ended December 31, 2009 included herein and

accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are

appropriate and have properly applied. Those adjustments were audited by other auditors.

PricewaterhouseCoopers, S. C.

C.P.C. Francisco Javier Mariscal

Audit Partner

F-3

2

Gru

po

Co

mercia

l Ch

edra

ui, S

. A. d

e C. V

. an

d S

ub

sidia

ries

Co

nso

lida

ted B

ala

nce S

heets

As o

f Decem

ber 3

1, 2

009, 2

008 y

2007

(In th

ou

san

ds o

f Mex

ican

peso

s)

Assets

20

09

2

00

8

20

07

Curren

t Assets:

Cash

$

350

,79

7

$

1,1

00

,23

7

$

887

,51

1

Acco

unts an

d n

otes receiv

able –

Net

(No

te 4)

1,0

21

,76

5

803

,49

7

975

,60

1

Reco

verab

le taxes (N

ote 5

) 5

23

,35

5

570

,37

0

319

,93

7

Du

e from

related p

arties (No

te 15

b)

94,6

33

1

02

,40

4

110

,22

7

Inv

ento

ries – N

et 4

,532

,54

2

4,0

54

,41

4

3,3

75

,48

4

Disco

ntin

ued

operatio

ns (N

ote 1

9)

-

-

7

,378

Total cu

rrent assets

6,5

23

,09

2

6,6

30

,92

2

5,6

76

,13

8

Restricted

cash

147,6

12

113,7

24

-

Lo

ng

-term d

ue fro

m related

parties

51

4,5

36

6

4,2

18

-

Pro

perty

and

equ

ipm

ent –

Net (N

ote 7

) 1

8,2

72

,00

0

17

,89

9,2

60

1

5,3

64

,15

0

Idle assets

11

5,6

65

1

15

,66

5

-

Investm

ent in

shares o

f associated

com

pan

ies 31,0

39

60,9

63

12,9

42

Lo

ng

-term acco

un

ts receivab

le 1

00

,13

8

104

,06

1

87,3

65

Oth

er assets – N

et (No

te 8)

709

,71

9

537

,33

6

265

,79

1

Disco

ntin

ued

operatio

ns (N

ote 1

9)

-

-

7

,126

Total

$

26,4

13,8

01

$

25,5

26

,149

$

21,4

13

,512

Lia

bilitie

s a

nd

sto

ck

ho

lde

rs’ e

qu

ity2

00

9

20

08

2

00

7

Curren

t liabilities:

Notes p

ayab

les to fin

ancial in

stitutio

ns (N

ote 9

) $

336

,28

7

$

1,1

56

,66

9

$

64,4

03

Trad

e no

tes and

accou

nts p

ayab

le 8

,228

,55

1

7,8

41

,05

2

6,6

83

,46

7

Accru

ed ex

pen

ses and

taxes

1,5

79

,94

1,

1,5

68

,30

0

1,2

26

,49

3

Inco

me tax

from

prev

ious fiscal y

ears pay

able

-

-

11

4,4

40

Inco

me tax

-

6

4,9

22

-

Disco

ntin

ued

operatio

ns (N

ote 1

9)

-

-

35,7

17

Total cu

rrent liab

ilities 1

0,1

44

,779

1

0,6

30

,943

8

,124

,52

0

Ban

k lo

ans (N

ote 1

0)

3,1

91

,46

1

3,1

96

,82

8

2,5

00

,00

0

Contrib

utio

n fo

r futu

re capital in

creases

1

48

,53

7

Deferred

inco

me tax

9

36

,04

4

843

,39

9

613

,64

4

Em

plo

yee b

enefits (N

ote 1

1)

192

,97

9

167

,11

6

110

,59

3

Deriv

ative fin

ancial in

strum

ents p

remiu

m

-

-

19

8,4

62

Deriv

ative fin

ancial in

strum

ents (N

ote 6

) 4

91

,28

0

419

,20

5

438

,14

6

Receiv

ables h

eld in

trust co

ntracts (N

ote 1

2)

6

48

,15

6

9

76

,19

4

1

,223

,11

2

Total liab

ilities 1

5,6

04

,699

1

6,2

33

,685

1

3,3

57

,014

Sto

ckhold

ers’ equity

(Note 1

3):

Cap

ital stock

1

96

,94

0

196

,94

0

196

,94

0

Retain

ed earn

ing

s 1

0,0

86

,853

8

,982

,80

4

12,6

32

,299

Insu

fficiency

in restated

stock

ho

lders’ eq

uity

-

-

(2

,72

7,5

38

)

Initial cu

mulativ

e effect of d

eferred in

com

e

taxes

-

-

(1,8

19

,10

3)

Tran

slation effects o

f foreig

n o

peratio

ns o

r

entities

39,7

21

92,4

76

(8,9

03)

Valu

ation

of h

edg

ing

deriv

atives

(2

48

,476

)

(178

,174

)

(333

,658

)

Majo

rity sto

ckhold

ers’ equity

1

0,0

75

,038

9

,094

,04

6

7,9

40

,03

7

Min

ority

interest in

conso

lidated

subsid

iaries

734

,06

4

1

98

,41

8

1

16

,46

1

To

tal stock

ho

lders’ eq

uity

10,8

09

,102

9,2

92

,46

4

8

,056

,49

8

Total

$

26,4

13

,801

$

25,5

26

,149

$

21,4

13

,512

See acco

mp

any

ing

no

tes to co

nso

lidated

finan

cial statemen

ts.

F-3F-4

3

Grupo Comercial Chedraui, S. A. de C. V. and Subsidiaries

Consolidated Statements of Income For the year ended December 31, 2009, 2008 y 2007

(In thousands of Mexican pesos, except per share amounts)

2009 2008 2007

Revenues:

Net sales $ 47,901,279 $ 40,657,751 $ 34,452,409

Cost of sales 37,535,028 32,174,452 27,146,599

Gross profit 10,366,251 8,483,299 7,305,450

Operating expenses 7,878,757 6,619,636 5,563,468

Operating income 2,487,494 1,863,663 1,741,982

Other (income) expenses – Net (10,879) 2,719 (44,441)

Income before comprehensive financing cost

(income), participation in the results of

associate companies, non-ordinary item and

Income before income taxes 2,498,373 1,860,944 1,786,423

Comprehensive financing cost (income):

Interest expenses 676,969 689,486 815,751

Interest income (110,828) (123,247) (105,580)

Exchange gain (1,040) (69,555) (3,791)

Monetary position gain - - (362,104)

Valuation of derivative 202,337 117,956 155,245

767,438 614,640 499,521

Participation in the results of associate

companies - (38,815) (19,074)

Non-ordinary item (Note 17) - - 114,400

Income before income taxes (Note 18) 1,730,935 1,285,119 1,191,576

Income taxes 337,424 371,403 626,813

Income before discontinued operations 1,393,511 913,716 564,763

Discontinued operations (Note 19) - - 25,787

Consolidated net income $ 1,393,511 $ 913,716 $ 538,976

Net income of majority stockholders $ 1,348,966 $ 924,242 $ 523,674 Net income of minority stockholders 44,545 (10,526) 15,302

Consolidated net income $ 1,393,511 $ 913,716 $ 538,976

Basic earnings per common share $ 35 $ 26 $ 15

See accompanying notes to consolidated financial statements.

F-4F-5

4

Gru

po

Co

mercia

l Ch

edra

ui, S

. A. d

e C. V

. an

d S

ub

sidia

ries

Co

nso

lida

ted S

tatem

ents o

f Ch

an

ges in

Sto

ckh

old

ers’ Eq

uity

F

or th

e yea

r end

ed D

ecemb

er 31, 2

009, 2

00

8 a

nd

2007

(In th

ou

san

ds o

f Mex

ican

peso

s)

Ca

pita

l

Sto

ck

Reta

ined

Ea

rnin

gs

Insu

fficiency

in

Resta

ted S

tock

ho

lders’

Eq

uity

Initia

l Cu

mu

lativ

e

Effect o

f Defer

red

Inco

me T

axes

Tra

nsla

tion

Effect o

f Foreig

n

Op

eratio

ns o

r E

ntities

Va

lua

tion

of

Hed

gin

g D

eriva

tives

Min

ority

Interest in

Co

nso

lida

ted

Su

bsid

iaries

To

tal S

tock

ho

lders’

Eq

uity

Balan

ces as of Jan

uary

1, 2

007

$

196,9

40

$

12,1

46,2

35

$

(2,6

34,1

21)

$

(1,8

19,1

03)

$

(4,3

48

) $

(502,1

79)

$

129,6

05

$

7,5

13,0

29

Correctio

n o

f deferred

taxes rep

orted

in p

rior y

ears -

(3

7,6

10)

-

-

-

-

-

(37,6

10)

Co

mp

rehen

sive in

com

e (No

te 2d

) -

5

23

,67

4

(9

3,4

17)

-

(4

,555

)

168

,52

1

(1

3,1

44)

5

81

,07

9

Balan

ces as of D

ecember 3

1, 2

007

196,9

40

12,6

32,2

99

(2,7

27,5

38)

(1,8

19,1

03)

(8,9

03)

(333,6

58)

116,4

61

8,0

56,4

98

Reclassificatio

n o

f monetary

positio

n in

equity

and

loss fro

m h

old

ing

no

n-m

on

etary assets as o

f

Janu

ary 1

, 20

08

-

(2

,73

6,4

41

) 2

,72

7,5

38

-

8

,90

3

-

-

-

Reclassificatio

n o

f the in

itial cum

ulativ

e effect of

deferred

inco

me tax

es as of Jan

uary

1, 2

00

8

-

(1,8

19

,10

3)

-

1,8

19

,10

3

-

-

-

-

Correctio

n o

f deriv

ative fin

ancial in

strum

ents

repo

rted in

prio

r years

-

(18

,19

3)

-

-

-

14

1,8

47

-

12

3,6

54

Co

mp

rehen

sive in

com

e (No

te 2d

) -

924

,24

2

-

-

92,4

76

13,6

37

81,9

57

1,1

12

,31

2

Balan

ces as of D

ecember 3

1, 2

008

196,9

40

8,9

82,8

04

-

-

92,4

76

(178,1

74)

198,4

18

9,2

92,4

64

Resu

lt from

sale of sh

are -

(2

44

,91

7)

-

-

-

-

506

,23

5

261

,31

8

Co

mp

rehen

sive in

com

e (No

te 2d

) -

1,3

48

,96

6

-

-

(5

2,7

55)

(7

0,3

02)

29,4

11

1,2

55

,32

0

Balan

ces as of D

ecember 3

1, 2

009

$

196,9

40

$

10,0

86

,853

$

-

$ -

$

39,7

21

$

(248

,476

) $

734

,06

4

$

10,8

09

,102

See acco

mp

any

ing

no

tes to co

nso

lidated

finan

cial statemen

ts.

F-5F-6

5

Grupo Comercial Chedraui, S. A. de C. V. and Subsidiaries

Consolidated Statements of Cash Flows For the year ended December 31, 2009, 2008 and 2007

(In thousands of Mexican pesos)

2009 2008

Operating activities: Income before income tax $ 1,730,395 $ 1,285,119 Items related to investing activities:

Depreciation and amortization 686,609 528,945 (Gain) loss on sale of property and equipment (23,052) 33,380 Interest income (110,828) (123,247) Derivative financial instruments 1,773 (80,112) Equity in loss (income) of subsidiaries and associated companies 29,924 (48,021) Employee benefits 25,863 56,523 Decrease in equity by incorporating the consolidation member 246,184 92,483

Items related to financing activities: Interest expense 879,306 807,442

3,466,714 2,552,512 (Increase) decrease in:

Accounts receivable – Net (178,173) 164,330 Inventories – Net (478,128) (678,930) Other assets – Net 47,015 (243,055) Due to related parties – Net (442,547) (56,395) Trade notes and accounts payable 387,499 1,157,585 Other accounts payable (391,334) (114,830) Income taxes paid 92,645 229,755

Net cash provided by operating activities 2,503,691 3,010,972

Investing activities: Purchase of property and equipment (1,488,937) (3,669,808) Proceeds from sale of property and equipment 496,441 481,115

Installation cost (234,035) (269,207) Interest received 88,584 111,401

Net cash used in investing activities (1,137,947) (3,346,499)

Financing activities: Proceeds from loans contracted - 1,789,094 Repayments of borrowings (825,749) - Refund of contributions for future capital increases - (148,537) Interest paid (878,674) (807,442) Repayments of trust financing (324,118) (263,614)

Net cash provided by used in financing activities (2,028,541) 569,501

Net (decrease) increase in cash and cash equivalents (662,797) 233,974

Adjustment to cash flows due to exchange rate fluctuations (52,755) 92,476

Cash and cash equivalents at beginning of year (includes restricted cash of $113,724) 1,213,961 887,511

Cash and cash equivalents at end of year (includes restricted cash of $147,666) $ 498,409 $ 1,213,961

See accompanying notes to consolidated financial statements.

F-6F-7

6

Grupo Comercial Chedraui, S. A. de C. V. and Subsidiaries

Consolidated Statement of Changes in Financial

PositionFor the year ended December 31, 2007

(In thousands of Mexican pesos)

2007

Operating: Consolidated net income $ 538,976

Add (deduct) items that did not require (generate) resources: Depreciation and amortization 542,908 Deferred income taxes 626,218 Amortization of premium on derivative contracts (33,305) Employee obligations 32,387 Equity in income of associated companies (19,074)

1,688,110 Changes in operating assets and liabilities:

(Increase) decrease in: Accounts receivable – Net (699,390) Inventories – Net (540,788) Assets and liabilities of discontinued operations 139,947 Guarantee deposits 41,414

Increase (decrease) in: Trade accounts payable 370,638 Other accounts payable and accrued expenses 704,523

Net resources generated by operating activities 1,704,454

Financing: Net deferred income receivable long-term 192,417 Bank loan paid (539,179) Contributions for future capital increases (132,251) Net effect on derivative valuation (90,804) Payment of portfolio with Factoring Corporativo, S. A. de C. V. (related party) (4,034)

Net resources used in financing activities (573,851)

Investing: Purchase of property and equipment – Net (867,667) Dividends received 13,084 Acquisition of shares in associated company (2,580)

Net resources used in investing activities (857,163)

Cash and cash equivalents: Increase 273,440 Balance at beginning of year 614,071

Balance at end of year $ 887,511

See accompanying notes to consolidated financial statements.

F-7F-8

7

Grupo Comercial Chedraui, S. A. de C. V. and Subsidiaries

Notes to Consolidated Financial Statements For the years ended December 31, 2009, 2008 and 2007

(In thousands of Mexican pesos)

1. Nature of business

Grupo Comercial Chedraui, S. A. de C. V. and Subsidiaries (the Company) operate self-service stores that sell electronic goods, perishables and general merchandise, and are engaged in various real estate activities.

2. Basis of presentation

Explanation for translation into English - The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico. These consolidated financial statements are presented on the basis of Mexican Financial Reporting Standards (“MFRS”, individually referred to as Normas de Información Financiera or “NIFs”). Certain accounting practices applied by the Company that conform with MFRS may not conform with accounting principles generally accepted in the country of use.

a. Monetary unit of the financial statements - The financial statements and notes as of December 31, 2009, 2008 and 2007 and for the years then ended include balances and transactions denominated in Mexican pesos of different purchasing power.

b. Consolidation of financial statements - The consolidated financial statements include the financial statements of Grupo Comercial Chedraui, S.A. de C.V. and those of its subsidiaries in which it holds control shareholding percentage in their capital stock is shown below:

Company or Group Activity

Tiendas Chedraui, S. A. de C. V. A chain of 142 self-service stores specializing in the sale of groceries, clothes and general goods including 33 self-service stores operating under the commercial name of Súper Che.

División Inmobiliaria. A group of companies engaged in the acquisition, construction, marketing and lease of real property used for different activities.

División servicios A group of companies providing administrative, transportation of goods and personnel services.

Bodega Latina Co. A chain of 21 self-service stores located in the southern United States which operate under the commercial name of El Super.

Grupo Crucero Chedraui, S. A. de C. V. A holding company with four real estate entities and two companies with no activities.

Significant intercompany balances and transactions have been eliminated.

F-8F-9

c. Translation of financial statements of foreign subsidiaries - To consolidate financial statements of foreign subsidiaries, the accounting policies of the foreign entity are converted to MFRS using the currency in which transactions are recorded. The financial statements are subsequently translated to Mexican pesos considering the following methodologies:

Foreign operations whose functional currency is the same as the currency in which transactions are recorded translate their financial statements using the following exchange rates: 1) the closing exchange rate in effect at the balance sheet date for assets and liabilities; 2) historical exchange rates for stockholders’ equity, and 3) the rate in effect on the date of accrual of revenues, costs and expenses. Translation effects are recorded in stockholders’ equity.

d. Comprehensive income - Represents changes in stockholders’ equity during the year, for concepts other than distributions and activity in contributed common stock, and is comprised of the net income of the year, plus other comprehensive income items of the same period, which are presented directly in stockholders’ equity without affecting the statement of income. In 2009 and 2008, other comprehensive income includes the effects of translation of foreign operations and valuation of hedging derivatives. In 2007, other comprehensive income includes the effects of translation of foreign operations, valuation of hedging derivatives, the insufficiency of the restated stockholders’ equity and the Initial cumulative effect of deferred income taxes. Upon realization of assets and settlement of liabilities giving rise to other comprehensive income items, the latter are recognized in the statement of income.

e. Classification of costs and expenses - Costs and expenses presented in the consolidated statements of income were classified according to their function because this is the practice of the industry in which the Company operates.

f. Income from operations - Income from operations is the result of subtracting cost of sales and operating expenses from net sales. While NIF B-3, Statement of Income, does not require inclusion of this line item in the consolidated statements of income, it has been included for a better understanding of the Company’s economic and financial performance.

g. Income before comprehensive financing cost (income) - Income before comprehensive financing cost is the result of subtracting other income and expenses from Income from operations.. While NIF B-3, Statement of Income, does not require inclusion of this line item in the consolidated statements of income, it has been included for a better understanding of the Company’s economic and financial performance

3. Summary of significant accounting policies

The accompanying consolidated financial statements have been prepared in conformity with MFRS, which require that management make certain estimates and use certain assumptions that affect the amounts reported in the financial statements and their related disclosures; however, actual results may differ from such estimates. The Company’s management, applying its professional judgment, considers that estimates made and assumptions used were adequate under the circumstances. The significant accounting policies of the Company are as follows:

a. Accounting changes:

Beginning January 1, 2009, the Company adopted the following new NIFs:

NIF B-7, Business Acquisitions, requires valuation of non-controlling interest (formerly minority interest) at fair value, as of the date of acquisition, and recognition of the total goodwill at fair value. NIF B-7 also establishes that transaction expenses should not form part of the purchase consideration and restructuring expenses should not be recognized as an assumed liability.

F-10

NIF B-8, Consolidated or Combined Financial Statements, establishes that special purpose entities over which the Company has control should be consolidated. It also establishes the option of presenting separate financial statements for intermediate controlling entities, provided certain requirements are met. NIF B-8 also requires consideration of potential voting rights to analyze whether control exists.

NIF C-7, Investments in Associated Companies and Other Permanent Investments, requiresvaluation, through the equity method, of investments in special purpose entities over which the Company has significant influence. It also requires consideration of potential voting rights to analyze whether significant influence exists. NIF C-7 establishes a specific procedure and sets a limit for the recognition of losses in associated companies, and requires that the investment in associated companies include the related goodwill.

NIF C-8, Intangible Assets, requires that the unamortized balance of preoperating costs as of December 31, 2008 be cancelled against retained earnings NIF C-8, Intangible Assets, requires that the unamortized balance of preoperating costs as of December 31, 2008 be cancelled against retained earnings.

Additionally, the Company supplementally applied International Financial Reporting Interpretations Committee (“IFRIC”) 13, Customer Loyalty Programs, which provides guidance on the appropriate accounting for reward and other loyalty programs used to incentivize customers.

The most significant effects of adoption of these new standards are as follows:

The effects of applying NIF B-8 resulted in the retrospective consolidation of three entities not previously consolidated, which had the following effects: (i) an increase of $34,211 and $70,126 in consolidated total assets, of $77,951 and $83,125 in consolidated total liabilities, and a decrease of $43,740 and $12,999 in consolidated total stockholders’ equity, in the consolidated balance sheets as of December 31, 2008 and 2007, respectively; (ii) a decrease of $(7,689) and $(55,948) in operating income and of $(30,430) and $(9,181) in net income, in the consolidated statements of income for 2008 and 2007, respectively; (iii) increases (decreases) of $152,254, $28,468 and $(15,401) to the operating section, investing section and financing section, respectively, of the 2008 consolidated statement of cash flows, and (iv) increases of $66,724, $40,120 and $22,608, respectively, to the operating section, investing section and financing section, respectively of the 2007 consolidated statement of changes in financial position.

The effects of applying IFRIC 13 resulted in decreases of $(348,570) and $(373,534) in net sales and increases of $348,570 and $373,534 in cost of sales, in the 2008 and 2007 consolidated statements of income, respectively. Such effects had no net impact on operating income or net income of the Company in the 2008 and 2007 consolidated statements of income.

In addition, the Company reclassified $976,194 and $1,223,112 of deferred revenue from the section between liabilities and stockholders’ equity to liabilities entitled “receivable held in trust contracts”, in the 2008 and 2007 consolidated balance sheets, respectively (see Note 12). While this reclassification had no impact in the Company’s consolidated balance sheets and statements of income, it resulted in the reclassification of $(263,614) from the operating section to the financing section of the 2008 consolidated statement of cash flow. There were no changes in the consolidated statement of changes in financial position for 2007 as a result of this reclassification.

b. Reclassifications - Certain amounts in the financial statements as of and for the years ended December 31, 2008 and 2007 have been reclassified to conform to the presentation of the 2009 financial statements.

c. Recognition of the effects of inflation - Since the cumulative inflation for the three fiscal years prior to those ended December 31, 2009 and 2008, was 15.01% and 11.56%, respectively, the economic environment for 2009 and 2008 may be considered non-inflationary as defined in NIF B-10, Effects of

F-11F-11F-11

Beginning on January 1, 2008, the Company discontinued recognition of the effects of inflation in its financial statements. However, assets, liabilities and stockholders’ equity include the restatement effects for price level changes recognized through December 31, 2007.

On January 1, 2008, the Company reclassified the entire balance of the insufficiency in restated stockholders’ equity to retained earnings, and concluded that it is impractical to identify the gain from holding non-monetary assets related to assets not realized as of that date.

d. Cash - Cash consist mainly of bank deposits in checking accounts and short-term investments, highly liquid and easily convertible into cash, which are subject to insignificant value change risks. Cash is stated at nominal value; any fluctuations in value are recognized in comprehensive financing cost of the period.

e. Inventories and cost of sales - Inventories are stated at the lower of cost or realizable value, using the average cost.

f. Property and equipment - Property and equipment are recorded at acquisition cost. Balances from acquisitions made through December 31, 2007 were restated for the effects of inflation by applying specific cost and factors derived from the Mexican National Consumer Price Index (NCPI) through that date. Depreciation is calculated using the straight-line method based on the useful life of the related assets, as follow:

Year

Buildings 50 Store equipment 11 Furniture and equipment 11 Vehicles 10

Comprehensive financing cost incurred during the period of construction and installation of qualifying property and equipment´s capitalized and was restated for inflation through December 31, 2007 using the NCPI.

g. Investment in shares of associated companies - Investment in shares of associated companies are accounted for using the equity method. Under this method, the investment is initially recognized at the cost of acquiring the shares and adjusted thereafter for the change in the investor's share of net assets of the associated companies. The Company's share in the results of the associates is presented separately in the income statement. If impairment indicators are present, investment in shares of associated companies is subject to impairment testing.

h. Impairment of long-lived assets in use - The Company reviews the carrying amounts of long-lived assets in use when an impairment indicator suggests that such amounts might not be recoverable, considering the greater of the present value of future net cash flows or the net sales price upon disposal. Impairment is recorded when the carrying amounts exceed the greater of the aforementioned amounts. Impairment indicators considered for these purposes are, among others, operating losses or negative cash flows in the period if they are combined with a history or projection of losses, depreciation and amortization charged to results, which in percentage terms in relation to revenues are substantially higher than that of previous years, obsolescence, competition and other legal and economic factors. The Company has not presented impairment indicators as at December 31, 2009, 2008 and 2007.

i. Financial risk management policy - The activities carried out by the Company expose it to a number of financial risks, including market risk (which encompasses foreign exchange, interest rate and price risks – such as investment in share certificates and commodity prices futures), credit risk and liquidity risks. The Company seeks to minimize the potential negative effects of these risks on its financial performance through an overall risk management program. The Company uses derivative and non-derivative financial instruments to hedge against some exposures to financial risks embedded in the

F-12

balance sheet (recognized assets and liabilities) and off-balance sheet risks (firm commitments and highly probable forecasted transactions). Both, financial risk management and the use of derivative and non-derivative financial instruments are subject to Company policies approved by the Board of Directors and are carried out by the Company’s treasury. The Company identifies, assesses and hedges financial risks in collaboration with its subsidiaries. The Board of Directors has approved written policies of a general nature with respect to the management of financial risks, as well as policies and limits associated to other specific risks; guidelines for permissible losses, when the use of certain derivative financial instruments is approved, or when such instruments can be designated as hedges, or when they do not qualify for hedge accounting, but rather for trading, which is the case of and certain interest rate and / or foreign currency forwards and swaps that have been contracted. Compliance by Company’s management of established policies and exposure limits is reviewed by internal audit on an ongoing basis.

j. Derivative financial instruments - The Company obtains financing under different conditions. For variable rate debt instruments, interest rate swaps are entered into to reduce exposure to the risk of rate volatility, thus converting the interest payment profile from variable to fixed. These instruments are negotiated only with institutions of recognized financial strength and when trading limits have been established for each institution. The Company’s policy is not to utilize derivative financial instruments for the purpose of speculation.

The Company recognizes all assets or liabilities that arise from transactions with derivative financial instruments at fair value in the consolidated balance sheet, regardless of its intent for holding them. Fair value is determined using prices quoted on recognized markets. If such instruments are not traded, fair value is determined by applying valuation techniques recognized in the financial sector.

When derivatives are entered into to hedge risks, and such derivatives meet all hedging requirements, their designation is documented at the beginning of the hedging transaction, describing the transaction’s objective, characteristics, accounting treatment and how the effectiveness of the instrument will be measured.

Changes in the fair value of derivative instruments designated as hedges are recognized as follows: (1)

for fair value hedges, changes in both the derivative instrument and the hedged item are stated at fair

value and recognized in current earnings and (2) for cash flow hedges, changes in the effective portion

are temporarily recognized as a component of other comprehensive income in stockholders’ equity and

then reclassified to current earnings when affected by the hedged item.

The Company discontinues hedge accounting when the derivative instrument matures, is sold,

cancelled or exercised; when the derivative instrument does not reach a high percentage of

effectiveness to compensate for changes in fair value or cash flows of the hedged item, or when the

Company decides to cancel its designation as a hedge.

For cash flow hedges, upon discontinuing hedge accounting, the amounts recorded in stockholders’

equity as a component of other comprehensive income remain there until the time when the effects of

the forecasted transaction or firm commitment affect current earnings. If it is not likely that the firm

commitment or forecasted transaction will occur, the gains or losses accumulated in other

comprehensive income are immediately recognized in current earnings. When the hedge of a

forecasted transaction has proven satisfactory, but subsequently the hedge fails the effectiveness test,

the cumulative effects recorded within other comprehensive income in stockholders’ equity are

proportionately recorded in current earnings, to the extent that the forecasted asset or liability affects

current earnings.

k. Goodwill - Goodwill represents the excess of the price paid on the market value of assets and liabilities

assumed related to seven stores located in the south of Los Angeles, California, for what was

considered an intangible asset.

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l. Provisions - Provisions are recognized for current obligations that arise from a past event, that will

probably result in the use of economic resources, and that can be reasonably estimated.

m. Direct employee benefits - Direct employee benefits are calculated for services rendered by employees,

bard on their most recent salaries. The liability is recognized as it accrues. These benefits include

mainly PTU payable, compensated absences, such as vacation and vacation premiums, and incentives.

n. Employee benefits from termination and retirement - Liabilities from seniority premiums, pension

plans and retirement payments similar to pensions and severance payments are recognized as they

accrue and are calculated by independent actuaries based on the projected unit credit method using

nominal interest rates.

o. Statutory employee profit sharing (PTU) - PTU is recorded in the results of the year in which it is

incurred and presented under other income and expenses in the accompanying consolidated statements

of income. In 2009 and 2008, deferred PTU is derived from temporary differences that result from

comparing the accounting and tax bases of assets and liabilities and is recognized only when it can be

reasonably assumed that such difference will generate a liability or benefit, and there is no indication

that circumstances will change in such a way that the liabilities will not be paid or benefits will not be

realized. At January 1, 2008 the Company had not registered any balance for the cumulative effect of

deferred PTU caused by initial recognition because it represented a liability that management has

determined will not materialize in the future. Through December 31, 2007, deferred PTU is recognized

only by non-recurring temporary differences arising from the reconciliation between net income and

tax base to determine PTU on which was determined that would cause a liability or a benefit on a

reasonable basis.

p. Income taxes - Income tax (“ISR”) and the Business Flat Tax (“IETU”) are recorded in the results of the year they are incurred. To recognize deferred income taxes, based on its financial projections, the Company determines whether it expects to incur ISR or IETU and, accordingly, recognizes deferred taxes based on the tax it expects to pay. Deferred taxes are calculated by applying the corresponding tax rate to temporary differences resulting from comparing the accounting and tax bases of assets and liabilities and including, if any, future benefits from tax loss carryforwards and certain tax credits. Deferred tax assets are recorded only when there is a high probability of recovery. According to NIF D-4, Income Taxes, the balance of the initial cumulative effect of deferred income taxes was reclassified to retained earnings as of January 1, 2008.

The tax on assets (IMPAC) that is expected to be recovered is recorded as a tax credit and is presented in the balance sheet under deferred taxes.

q. Foreign currency transactions - Foreign currency transactions are recorded at the applicable exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Mexican pesos at the applicable exchange rate in effect at the balance sheet date. Exchange fluctuations are recorded as a component of net comprehensive financing cost (income) in the consolidated statements of income.

r. Revenue recognition - Revenues are recognized in the period in which the risks and rewards of ownership of the inventories are transferred to customers, which generally coincides with the delivery of products to customers in satisfaction of orders.

Lease revenues are recognized in the period in which they are rendered.

In 2009, the Company adopted International Financial Reporting Interpretations Committee (IFRIC) 13 “Customer Loyalty Programs” recognizing in revenues the fair value of the awards granted through the electronic purse program.

s. Earnings per share - Basic earnings per common share are calculated by dividing consolidated net income by the weighted average number of common shares outstanding during the year.

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4. Accounts and notes receivable – Net

2009 2008 2007

Trade accounts receivable $ 534,252 $ 392,365 $ 570,859 Allowance for doubtful accounts (30,388) (13,555) (9,019) 503,864 378,810 561,840 Other accounts receivable 469,594 383,500 349,276 Notes receivable 48,307 41,187 64,485 $ 1,021,765 $ 803,497 $ 975,601

5. Recoverable taxes

2009 2008 2007

ISR paid in excess $ 119,089 $ 51,646 $ 143,423 Creditable value added tax and excise

tax 327,857 514,459 173,197 Others (primarily the wage credit

subsidy) 76,409 4,265 3,317 $ 523,355 $ 570,370 $ 319,937

6. Derivative financial instruments

During 2009, the Company contracted an exchange rate forward contract on an obligation denominated in US

dollars for US $20,400,000, which matures in February 2010, at an exchange rate of MX $13.16 per US

$1.00. The economic hedge was classified as a trading derivative, so the exchange result of the forward was

recorded in the comprehensive result of financing, offsetting the exchange result derived from the related

liability. Also, the Company has entered into interest rate collars in order to manage the interest rate risks on

the loans received. On December 3, 2009, the Company entered into four such interest rate collars, whereby it

pays or receives amounts calculated based on interest rates with a fixed floor and ceiling, linked to the 28 day

Interbank Interest Rate (TIIE)). The first of the collars, whose notional amount is MX $1750 million, matures

on August 4, 2017; the second, with a notional amount of MX $750,000,000, matures on September 29, 2012;

the third, with a notional amount of MX $600,000,000, matures on June 29, 2012, and the fourth, with a

notional amount of MX $782,000,000, matures on March 28, 2018. The notional amount and maturity dates

of the derivative are linked to the hedged liabilities.

7. Property and equipment

2009 2008 2007

Buildings $ 15,026,086 $ 14,224,992 $ 12,365,799

Store equipment 3,881,144 3,706,297 3,106,147

Office furniture and equipment 1,301,710 1,392,889 1,279,850

Vehicles 206,968 240,483 258,468

20,415,908 19,564,661 17,010,264

Accumulated depreciation (7,312,399) (6,826,576) (6,431,227)

13,103,509 12,738,085 10,579,037

Construction-in-progress 437,642 402,199 250,398

Land 4,730,849 4,758,976 4,534,715

$ 18,272,000 $ 17,899,260 $ 15,364,150

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8. Other assets – Net

2009 2008 2007

Guarantee deposit $ 177,679 $ 121,646 $ 103,977

Goodwill 86,287 91,351 16,646

Other long-term assets 149,672 125,464 95,471

Software and licenses 403,155 264,284 98,372

816,793 602,745 314,466

Accumulated amortization (107,074) (65,409) (48,675)

$ 709,719 $ 537,336 $ 265,791

9. Loans from financial institutions

At December 31, 2009, bank loans directly contracted with different institutions and annual interest rates

averaging 8.31% were as follows:

2009 2008 2007

Working capital note payable to BBVA

Bancomer, S. A., Commercial bank,

with an annual interest rate of 7.765%,

maturing on January 4, 2010 $ 100,000 $ - $ -

Working capital note payable to BBVA

Bancomer Miami, Commercial bank

for U.S. $ 4,274,000, with and annual

interest rate of % maturing on

December 17, 2010. The interest rate

as of December 31, 2009 was 0.92% 55,843 59,120 64,403

Working capital note payable to Banco

Inbursa, S. A., Commercial bank,

Grupo Financiero Inbursa, with an

annual interest rate of 11.68%,

maturing on October 13, 2009 - 1,000,000 -

Working capital note payable to Banco

Santander, S. A., Commercial bank,

Grupo Financiero Santander, with an

annual interest rate equal to the TIIE

rate plus 2.8%, maturing in June 2010.

The interest rate as of December 31,

2009 was 7.72% 180,444 97,549 -

Loans with financial institutions $ 336,287 $ 1,156,669 $ 64,403

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10. Long-term bank loans

2009 2008 2007

Loan contracted with Banco Nacional de México, S. A. (Banamex) with guarantees granted by different subsidiaries, with an annual interest rate equal to the TIIE rate plus a financial margin ranging from 0.65 to 1.0 percentage points depending on the level of consolidated leverage, for a 10-year period as of September 2007. The interest rate as of December 31, 2010 was 5.53%. $ 1,750,000 $ 1,750,000 $ 1,750,000

Loan contracted with BBVA Bancomer,

S. A. (BBVA), with guarantees granted by the different subsidiaries, with an annual interest rate equal to the TIIE rate plus a financial margin ranging from 0.60 to 1.0 percentage points, maturing on September 13, 2012. The interest rate as of December 31, 2010 was 5.48%. 750,000 750,000 750,000

Loan contracted with BBVA Bancomer,

S. A. (BBVA), with guarantees granted by different subsidiaries, with an annual interest rate equal to the TIIE rate plus a financial margin ranging from 0.375 to 1.0 percentage points, maturing on June 12, 2012. The interest rate as of December 31, 2010 was 5.30%. 600,000 600,000 -

Loan contracted by Bodega Latina Co.

with City National Bank for the amount of US$ 7,000, at the LIBOR rate plus 1.25% percentage points with a grace period of 2 years in the main payment. 91,461 96,828 -

$ 3,191,461 $ 3,196,828 $ 2,500,000

At December 31, 2009, the maturities of the long-term portion of these liabilities are as follows:

2011 $ 91,461 2012 1,350,000 2015 350,000 2016 700,000 2017 700,000

Thereafter -

$ 3,191,461

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11. Employee benefits

The Company maintains a defined benefit pension plan for all employees that pays benefits to employees who reach 65 years of age.

This plan also provides seniority premium benefits, which consist of a lump sum payment of 12 days’ wage for each year worked, calculated using the most recent salary, not to exceed twice the minimum wage established by law. The related liability and annual cost of such benefits are calculated by an independent actuary on the basis of formulas defined in the plans using the projected unit credit method.

a. Present value of these obligations and the rates used for the calculations are:

2009

Defined benefit obligation $ 119,805 Plan assets at fair value (6,098)

Funded status 113,707

Unrecognized items: Unrecognized transition obligations 3,807 Prior service costs, change in methodology and

changes to the plan 3,910 Actuarial gains (22,690)

Unrecognized items (14,973)

Bodega Latina liability 28,314 Liability obligations to oursourcing 65,931

Net projected liability $ 192,979

b. Nominal rates used in actuarial calculations are as follows: 2009

%

Discount of the projected benefit obligation at present value 9.25%

Expected yield on plan assets 8.75% Salary increase 4.50%

Unrecognized items are charged to results based on the estimated average remaining service lives of employees, which is 5 years.

c. Net cost for the period includes the following items: 2009

Service cost $ 19,203 Financing cost 8,347 Expected yield on plan assets (579) Transition liability (1,237) Plan improvements 3,311 Actuarial gains 1,013 Effect of reduction or early liquidation (235) Adjustment for immediate recognition of gain 18,608

Net cost of the period $ 48,431

Bodega Latina Net cost of the period 10,921 Liability obligations to oursourcing 21,789 Payments applied to accrual (55,278)

Net cost of the period $ 25,863

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d. Changes in present value of the defined benefit obligation:

2009

Present value of the defined benefit obligation as of

January 1 $ 189,760

Service cost (26,576)

Financing cost (15,240)

Actuarial loss on the obligation 49,809

Present value of the defined benefit obligation as of

December 31 $ 197,753

e. A reconciliation between the present value of defined benefit obligations (PBO) and the fair value of the net projected liability recognized in the balance sheet (NPL) is as follows (balances as of December 31, 2008):

Estimated cost

of termination of

Seniority

premium

employment

relationship Totals

Labor assets (liabilities): PBO $ 158,175 $ 31,585 $ 189,760

Actuarial (losses) gains (13,103) - (13,103) Transition asset (liability) 7,218 (3,332) 3,886 152,290 28,253 180,543 Fund values (26,643) (26,643) Plan improvements 275 (4,452) (4,177)NPL of Mexican companies 125,922 23,801 149,723 NPL Bodega Latina Co. 17,393 - 17,393 Net $ 143,315 $ 23,801 $ 167,116

f. The Net Periodic Cost per type of plan is composed as follows for the year 2008:

Estimated cost

of termination of

Seniority

premium

employment

relationship Totals

Mexican companies: Labor cost of current service $ 16,933 $ 6,777 $ 23,710 Financial cost 13,680 2,245 15,925 Return on assets (1,853) - (1,853) Transition (asset) liability (1,806) 689 (1,117) Plan improvements 1,374 2,404 3,778 Actuarial loss not recognized - - - at the beginning of the year 872 - 872 Actuarial gain for the year (2,185) - (2,185)

27,015 12,115 39,130

Bodega Latina Co. 17,393 - 17,393

Total $ 44,408 $ 12,115 $ 56,523

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Assumptions -

The rates used in the calculation of the obligations from benefits and plan yields are shown below:

2008 2007

Discount rate 9.0% 8.8% Rate of wage increases 4.5% 4.5% Rate of increase in the minimum wage 3.5% 0%

Below is a summary of the principal financial data of the plans up to the year 2007:

Seniority premium

(Pension plan)

Obligation from current benefits $ 144,051

Obligation from projected benefits $ 179,654 Plan assets at market value (1) (33,458) Unamortized transition asset 3,010 Unrecognized plan improvements (7,990) Unrecognized actuarial loss (33,216)

Projected net liability 108,000 Additional liability (2) 2,593

Liability for labor obligations (3) $ 110,593

Net periodic cost: Labor and financial cost $ 27,057 Return on assets (2,075) Amortization of initial transition assets - Plan improvements and actuarial losses (9,475) Increase from restatement 2,942 Other 13,938

$ 32,387

(1) The contribution to the funds was $9,475 in 2007. Settlements for the year are presented within

operating costs as part of the statement of income.

(2) Its counterparty is an intangible asset that is presented within other non-current assets on the

balance sheet.

(3) Presented in the balance sheet as a long-term liability.

Collection rights of contracts held in trusts

12. Collection rights of contracts held in trusts

The Company, in conjunction with six group subsidiaries (trustors) created a nonbusiness trust with

Supervisión y Mantenimiento de Inmuebles, S.A. de C.V. (Supermant), in which a full-service bank was

designated as trustee, instructed by Supermant to enter into a credit agreement with another full-service bank,

while rights to accounts receivable, the existing and future collection rights under certain lease agreements,

advertising and parking of the trustees were assigned to the bank under an assignment contract.

The trust contract requires a cash reserve to be maintained, which will be recovered at the time such contract is terminated. Such reserve is presented in non-current assets as a long-term receivable.

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In accordance with the trust contract, as the collection rights are realized, the results obtained are used to cover the trust’s expenses, which are comprised mainly of the remainder will be applied as an advance payment of the debt. If such remainder is insufficient to cover the minimum payment of the debt, the shortfall is obtained from the cash reserve mentioned in the preceding paragraph, which must be replenished with the realization of the future collection rights. If the reserves were insufficient, the trustors may assign and contribute eligible collection rights in favor of the trustee which will enable such omission to be corrected. Based on the Company’s projections regarding the portfolio dispositions and recovery, management estimates that the credit will be repaid before the end of the original term agreed.

As of December 31, 2009, the Company had recorded a balance of rights for $648,156 ($951,891 in 2008), and a long-term account receivable for $89,070 ($89,155 in 2008).

The revenue is recognized in the results of each year based on the percentage in which such collection rights are earned or realized.

13. Stockholders’ Equity

a. As of December 31, 2009, 2008 and 2007, common stock is comprised of 36,971,616 common shares at par value of $1. Fixed capital stock may not be withdrawn. Variable capital may not be greater than ten times fixed capital.

b. In October 2009, Vogt, a subsidiary of Grupo Comercial Chedraui, S. A. de C. V., sold its 5.07% equity in Grupo Crucero Chedraui, S.A. de C. V. (subsidiary of Grupo Comercial Chedraui, S. A. de C.V.) to a two stockholders of the holding company. As this transaction did not result in the holding company's loss of control of the subsidiary, the difference between the amount of adjustment to non-controlling participation and the fair value of the consideration received was recognized in stockholders' equity, as indicated in the accompanying statement of changes in stockholders' equity.

c. Retained earnings include the statutory legal reserve. The General Corporate Law requires that at least 5% of net income of the year be transferred to the legal reserve until the reserve equals 20% of capital stock at par value (historical pesos). The legal reserve may be capitalized but may not be distributed unless the entity is dissolved. The legal reserve must be replenished if it is reduced for any reason. As of December 31, 2009, 2008 and 2007, the legal reserve, in historical pesos, was $7,394,

d. Stockholders’ equity, except for restated paid-in capital and tax retained earnings will be subject to ISR payable by the Company at the rate in effect upon distribution. Any tax paid on such distribution may be credited against annual and estimated ISR of the year in which the tax on dividends is paid and the following two fiscal years.

e. Net Consolidated Tax Income Account as of December 31, 2009, 2008 and 2007 are $694,152, $80,560 and $70,387, respectively.

14. Foreign currency balances and transactions

a. As of December 31, the foreign currency monetary position is as follows:

2009 2008 2007

U.S. dollars: Monetary assets $ 112,155 $ 34,088 $ 19,723 Monetary liabilities 69,016 40,407 18,523Net monetary asset (liability)

position $ 43,139 $ (6,319) $ 1,200 Equivalent in Mexican pesos $ 563,827 $ (87,392) $ 13,104

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b. Approximately 1.4%, 1.6% y 1.7% of inventory purchases were imported by the company in 2009, 2008 and 2007, respectively.

c. Transactions denominated in thousands of U.S. dollars during the years ended December 31, 2009, 2008 and 2007, mainly represent import purchases of 37,053, $47,250 and $42,623, respectively.

d. Mexican peso exchange rates in effect at the dates of the consolidated balance sheets and at the date of issuance of these financial statements were as follows:

December, 31 February 26,

2009 2008 2007 2010

U.S. dollar $ 13.0659 $ 13.83 $ 10.92 $ 12.85

15. Transactions and balances with related parties

a. Transactions with related parties, carried out in the ordinary course of business were as follows:

2009 2008 2007

Interest received $ (30,356) $ (6,510) $ (2,338) Lease revenues (977) (1,422) (953) Administrative revenues (182) (1,225) (6,000)

b. Due from related parties are as follows:

2009 2008 2007

Operadora de Inmobiliarias del Sureste, S. A. de C. V. $ 63,191 $ 39,113 $ 98,732

Chefu de Tuxpan, S. A. de C. V. - 35,274 - Factoring Corporativo, S. A. de

C. V. 14,428 4,081 (11,351) Hípico Coapexpan, S. A. de

C. V. 2,779 2,247 - Supervisión y Mantenimiento de

Inmuebles, S. A. de C. V. 12,947 11,489 7,560 Other 1,288 234 5,217 94,633 92,438 100,161 Shareholders $ - $ 9,966 $ 10,066 $ 94,633 $ 102,404 $ 110,227

c. Long term accounts receivable from related parties are related to transactions with shareholders of the Company.

d. The average employee benefits granted to key personnel of the Company were as follows:

2009 2008 2007

Direct compensation $ 62,809 $ 58,850 $ 49,738 Variable compensation 44,746 42,532 35,463 $ 107,555 $ 101,382 $ 85,201

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16. Comprehensive financing cost

In 2009 and 2008, qualifying assets of $701,995and $1,507,844, respectively, were acquired; capitalized comprehensive financing cost (CFC) was $26,612 and $82,292, respectively, as follows:

2009 208

Capitalized CFC by asset type: Land $ 17,851 $ 73,461 Construction-in-progress 8,761 8,831

$ 26,612 $ 82,292

CFC capitalization was determined using an average annualized rate of 9.29% and 9.12% in 2009 and 2008 respectively.

17. Non-ordinary items

In 2007, the Company abandoned certain proceedings for annulment filed against the tax authorities provisions regarding the payment of consolidated asset tax (IA). These lawsuits were based on the application of the tax advantage established by the 2007 Federal Income tax Law for differences dating from 1998, 1999 and 2000. The Company also voluntarily recorded a tax correction for 1999, 2001, 2003, 2004 and 2005. A provision was recorded for such losses with a charge to the results of 2007, which is composed as follows:

Nominal amount $ 83,607 Inflation charges 7,059 Surcharges 23,734

Total tax plus accessories $ 114,400

18. Income taxes

The Company and Grupo Crucero Chedraui, S. A. de C. V. (a subsidiary included in the accounting consolidation) have separate authorization from the Treasury Department to determine income tax and asset tax (the latter until it was eliminated in 2007) under the tax consolidation regime, together with its direct and indirect subsidiaries, as stipulated in the respective laws.

The management of the Group has considered the possibility of incorporating the companies of Grupo Crucero Chedraui, S. A. de C. V. into its consolidation regime, for which purpose certain legal and administrative requirements must be fulfilled.

The Company is subject to ISR and IETU.

The ISR rate for 2009,2008 and 2007 was 28%, and will be 30% for 2010 to 2012, 29% for 2013, and 28% for 2014 and thereafter. The Company pays ISR, together with subsidiaries on a consolidated basis.

On December 7, 2009, amendments to the Income Tax Law that would become effective as of 2010 were published. These amendments establish that: a) income tax on tax consolidation benefits obtained from 1999 to 2004 must be realized in partial payments from 2010 to 2015 and b) income tax related to tax benefits obtained in the tax consolidation of fiscal 2005 and thereafter will be paid during the sixth to tenth years after the year in which the advantage was obtained. Taxes on tax consolidation benefits obtained from 1982 (beginning date of the tax consolidation) to 1998 may be requested in certain cases established by tax provisions.

F-23

IETU - Revenues, as well as deductions and certain tax credits, are determined based on cash flows of each fiscal year. The IETU rate is 17% and 16.5%, in 2009 and 2008, respectively; and 17.5% as of 2010. The Asset Tax Law was repealed upon enactment of the IETU Law; however, under certain circumstances, IMPAC paid in the ten years prior to the year in which ISR is paid, may be recovered, according to the terms of the law. In addition, as opposed to ISR, the parent and its subsidiaries will incur IETU on an individual basis.

Based on its financial projections and according to INIF 8, Effects of the Business Flat Tax, the Company determined that it will basically pay ISR. Therefore, it only recognizes deferred ISR.

Income tax incurred will be the higher of ISR and IETU.

a. Income tax as of December 31, 2009 is as follows:

ISR expense: Current $ 292,509 Deferred 44,915

$ 337,424

b. The effect ISR rate for fiscal 2009 differ from the statutory rate as follows:

2009

Statutory rate 28%

Effects of inflation (3%) Change in the valuation of allowance for recoverable tax

on assets (4%)

Other (1%)

Effective rate 20%

c. The main items originating a net deferred ISR liability are:

Deferred ISR asset: Tax loss carryforward effect $ 173,025 Allowance for doubtful accounts 8,812 Inventory shrinkage 37,856 Customer advances 72,321 Prepaid expenses 126,831 Derivative financial instruments 12,861

Deferred ISR asset 431,706

Deferred ISR (liability): Accrued expenses (22,191) Tax inventory of 2004, not yet taxable (51,637) Property and equipment (1,915,887)

Deferred ISR liability (1,989,715)

Recoverable tax on assets 1,056,455

Recoverable tax on assets (434,490)

Net liability $ (936,044)

F-24

d. The benefits of restated tax loss carryforwards and recoverable IMPAC for which the deferred ISR asset and tax credit, respectively, have been recognized, can be recovered subject to certain conditions. Restated amounts as of December 31, 2009 and expiration dates are:

Year of Tax Loss Recoverable

Expiration Carryforwards Tax on Assets

2010 $ - $ 47,433 2011 - 95,074 2012 - 131,754 2013 - 160,228 2014 - 160,371 2015 - 141,783 2016 - 165,596 2017 - 154,416 2020 576,750 -

$ 576,750 $ 1,056,455

e. Income taxes as of December 31, 2008 and 2007 are as follows:

2008 2007

ISR current $ 117,571 -

ISR deferred 253,832 626,213

Total expense $ 371,403 $ 626,213

f. The effective ISR rate for fiscal 2008 and 2007 differ from the statutory rate as follows:

2008 2007

Statutory rate 28% 28%

Add (less) effect of permanent differences:

Non deductible expenses 1% 3%

Annual inflation adjustment 2%

Recoverable tax on assets restated (1%) 19%

Other permanent items (2%) 2%

Effective rate 28% 52%

g. The main items originating a deferred ISR liability as of December 31, 2008 and 2007 are:

2008 2007

Inventories $ 642,500 $ 1,163,996

Property and equipment, net 5,241,984 5,074,409

Derivative financial instruments (419,205) (438,146)

Employee benefits (152,673) (108,000)

Other (114,924) (179,518)

Base before tax loss carryforward amortization 5,197,682 5,512,741

Tax losses carryforward - (1,283,039)

F-25

2008 2007

5,197,682 4,229,702

Statutory rate 28% 28%

1,455,350 1,184,316

Deferred ISR Bodega Latina (37,330) (24,728)

Sub-total deferred ISR 1,418,020 1,159,588

Recoverable tax on asset (1,066,262) (1,013,036)

Valuation of allowance for recoverable tax on asset 491,462 467,092

Recoverable tax on asst (574,621) (545,944)

Net deferred ISR liability $ 843,399 $ 613,644

19. Discontinued operations

The loss resulting from discontinued operations presented in the statement of income for the year ended

December 31, 2007, was generated by the wholesale operations of Suma y Multiplica, S. A. de C. V. during the

period from January through April of 2007.

The net loss from these discontinued operations of $25,787 is presented as a loss from discontinued

operations in the statement of income of the year ended December 31, 2007. According to the guidelines

established by MFRS, the balances of assets and liabilities related to these discontinued operations are

presented as a single line item in the balance sheet at December 31 of that year.

The discontinued operation presented in the statement of income for the year ended December 31, 2007, is

detailed below:

Net sales $ 104,357

Cost of sales (101,119)

Gross profit 3,238

Operating expenses (25,288)

Operating loss (22,050)

Net comprehensive financing cost (3,737)

Loss before the following provisions (25,787)

Tax and PTU provisions (6,133)

Net loss of the year $ (31,920)

F-26

The assets and liabilities related to the discontinued operation at December 31, 2007, are as follows:

Cash $ 253

Customers 6,159

Recoverable taxes 966

Total current assets $ 7,378

Total non-current assets $ 7,126

Suppliers $ 8,375

Recoverable taxes 25,671

Accounts payable and accrued expenses 1,671

Total current liabilities $ 35,717

20. Commitments

The Company has entered into operating leases for buildings and equipment operation. Some of these

contracts require that the fixed portion of income is reviewed annually, waiting for contracts to expire are

renewed or replaced by similar agreements. In 2009, 2008 and 2007, rent expense totaled approximately

$400,127, $ 256,679 and $ 84,252 respectively.

21. Contingencies

At December 31, 2008 the Company has promoted certain rulings for relief and has submitted several

lawsuits seeking relief, as well as certain claims for annulment in disputes against the tax authority, and has

also filed an appeal against the revocation of a tax credit for which legal conclusions thereon by legal counsel

have not been obtained because of its current status.

22. Business segment information

Operating segment information is presented according to management’s criteria. In addition, general

information is presented by product, geographical area and homogeneous customer groups.

a. Analytical information by operating segment

Total revenues

Segment 2009 2008 2007

México retail $ 40,033,107 $ 36,505,559 $ 31,514,626

USA retail 7,363,113 3,664,811 2,464,593

Real estate 505,059 487,381 472,830

Consolidated $ 47,901,279 $ 40,657,751 $ 34,452,049

F-27

Segment

Income before comprehensive financing cost (income), participation in the

results of associate companies, non-ordinary item

and Income before income taxes

2009 2008 2007

México retail $ 2,025,673 $ 1,448,895 $ 1,408,846

USA retail 163,901 90,661 71,836

Real estate 308,799 321,388 305,741

Consolidated $ 2,498,373 $ 1,860,944 $ 1,786,423

Leasehold - Intersegment

2009 2008 2007

México retail $ 2,027,579 $ 2,049,503 $ 265,453

Real estate (2,027,579) (2,049,503) (265,453)

$ - $ - $ -

Total assets

Segment 2009 2008 2007

México retail $ 22,040,830 $ 21,232,153 $ 18,275,354

USA retail 1,402,624 773,700 497,362

Real estate 1,212,139 1,187,787 992,393

Unnassigned items 1,758,208 2,332,509 1,648,403

Consolidated $ 26,413,801 $ 25,526,149 $ 21,413,512

Depreciation and amortization

2009 2008 2007

México retail $ 549,621 $ 454,164 $ 481,654

USA retail 99,632 50,086 34,477

Real estate 31,611 18,320 20,455

Unnassigned items 5,745 6,375 6,322

$ 686,609 $ 528,945 $ 542,908

Net investments in property and equipment

2009 2008 2007

México retail $ 675,278 $ 2,658,669 $ 911,030

USA retail 388,838 357,783 23,432

Real estate (2,390) 142,316 (149,407)

Unnassigned items (2,377) 12,054 19,347

Consolidated $ 1,059,349 $ 3,170,822 $ 804,402

F-28

23. New accounting principles

As part of its efforts to converge Mexican standards with international standards, in 2009, the Mexican Board for Research and Development of Financial Information Standards (“CINIF”) issued the following Mexican Financial Reporting Standards (NIFs), Interpretations to Financial Information Standards (INIFs) and improvements to NIFs applicable to profitable entities which become effective as follows:

a) For fiscal years that begin on January 1, 2010:

C-1, Cash

Improvements to NIFs for 2010 INIF 14, Construction Contracts, Sale of Real Property and Rendering of Related Services

INIF 17, Service Concession Contracts

Some of the most important changes established by these standards are:

NIF C-1, Cash, changes the “cash” concept to be consistent with the definition in NIF B-2, Statement of Cash Flows”, and introduces definitions for restricted cash, cash equivalents and readily available investments.

Improvements to NIFs for 2010 - The main improvements generating accounting changes that must be recognized retroactively are:

NIF B-1, Accounting Changes and Correction of Errors - Requires further disclosures in case the Company applies a particular Standard for the first time.

NIF B-2, Statement of Cash Flows - Requires recognition of the effects of fluctuations in exchange rates used for translating cash in foreign currencies, and changes in fair value of cash in the form of precious metal coins, and other cash items, at fair value, in a specific line item.

NIF B-7, Business Acquisitions - Requires that, when intangible assets or provisions are recognized because the acquired business has a contract whose terms and conditions are favorable or unfavorable with respect to market, it only applies when the acquired business is the lessee in an operating lease. This accounting change should be recognized retroactively and not go further than January 1, 2009.

NIF C-7, Investments in Associated Companies and Other Permanent Investments - Modifies how the effects derived from increases in equity percentages in an associated company are determined. It also establishes that the effects due to an increase or decrease in equity percentages in associated companies should be recognized under equity in income (loss) of associated companies, rather than in the non-ordinary line item within the statement of income.

NIF C-13, Related Parties - Requires that, if the direct or ultimate controlling entity of the reporting entity does not issue financial statements available for public use, the reporting entity should disclose the name of the closest, direct / indirect, controlling entity that issues financial statements available for public use.

INIF 14, Construction Contracts, Sale of Real Property and Rendering of Related Services - is a supplement to Bulletin D-7, Construction and Manufacturing Contracts for Certain Capital Assets,and requires segregation of the different components of the contracts in order to define whether the contract refers to construction of real property, sale of real property, or rendering related services, and establishes the rules for recognizing revenue and related costs and expenses, based on the different elements identified in the contract. INIF 14 provides guidance for the appropriate use of the percentage-of-completion method for revenue recognition.

F-29

INIF 17, Service Concession Contracts - is a supplement to Bulletin D-7, Construction and

Manufacturing Contracts for Certain Capital Assets, and establishes that, when the infrastructure of the service concession contracts falls within the scope of this INIF, it should not be recognized under property, plant and equipment. It also establishes that when the operator renders construction or improvement services, as well as operation services under the same contract, revenues should be recognized for each type of service, based on the fair value of each consideration received at the time the service is rendered. When amounts are clearly identified and, after they are quantified, the applicable revenue recognition criterion should be followed, taking the nature of the service rendered into consideration. Also, INIF 17 establishes that, when the operator renders construction or improvement services, both revenues and the associated costs and expenses should be recognized under the percentage-of-completion method and consideration received, or receivable, should be recognized, initially, at fair value. Revenues from operation services should be recognized as the services are rendered and taking into account suppletory Standard IAS 18.

b) For fiscal years that begin on January 1, 2011:

B-5, Financial Segment Information, and B-9, Interim Financial Information

Some of the most important changes established by these standards are:

NIF B-5, Financial Segment Information – Uses a managerial approach to disclose financial information by segments, as opposed to Bulletin B-5, which also used a managerial approach but required that the financial information be classified by economic segments, geographical areas, or client groups. NIF B-5 does not require different risks among business areas to separate them. It allows areas in the preoperating stage to be classified as a segment, and requires separate disclosure of interest income, interest expense and liabilities, as well as disclosure of the entity’s information as a whole with respect to products, services, geographical areas and major customers. Like the previous Bulletin, this Standard is mandatory only for public companies or companies in the process of becoming public.

NIF B-9, Interim Financial Information – As opposed to Bulletin B-9, this Standard requires

presentation of the statement of changes in stockholders’ equity and statement of cash flows, as part of

the interim financial information. For comparison purposes, it requires that the information presented

at the closing of an interim period contain the information of the equivalent interim period of the

previous year, and in the case of the balance sheet, presentation of the previous years’ annual balance

sheet.

At the date of issuance of these consolidated financial statements, the Company has not fully assessed the

effects of adopting these new standards on its financial information.

24. Financial statement issuance authorization

On February 26, 2010, the issuance of the consolidated financial statements was authorized by Ing. Rafael

Contreras Grosskelwing, the Company’s Chief Financial Officer. These consolidated financial statements are

subject to the approval at the General Ordinary Stockholders’ Meeting, which may decide to modify such

financial statements according to the Mexican General Corporate Law.

* * * * * *

F-30

EXHIBIT I

1

UNAUDITED INTERIM FINANCIAL INFORMATION

Selected Unaudited Consolidated Financial and Operating Information

The following tables present our selected unaudited consolidated financial information and operating

data as of the dates and for each of the periods indicated. This information is qualified in its entirety by

reference to, and should be read together with, “Presentation of Certain Financial and Other Information,”

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Audited

Financial Statements included in the Offering Circular.

Our Financial Statements have been prepared in accordance with Mexican FRS, which differ in

significant respects from IFRS. For a summary of the significant differences between Mexican FRS and IFRS

as they relate the unaudited financial information in the Supplement and to the Audited Financial Statements,

See “Significant Differences Between Mexican FRS and IFRS” in the Offering Circular. In the opinion of

management, the unaudited financial information set forth in this Supplement includes all adjustments, consisting of

only normally recurring adjustments necessary for a fair presentation of the financial information. Our quarterly results

of operations are not necessarily representative of our annual results of operations and therefore the financial

information included in the following tables is not a meaningful indicator of our future performance.

The unaudited financial information contained in this Supplement does not contain all of the information and

disclosures normally included in financial statements prepared in accordance with Mexican FRS.

The exchange rate used in translating pesos into U.S. dollars in calculating the convenience translations included

in the following tables is determined by reference to the rate published by the Banco de México in the Official

Gazette on March 31, 2010, which was Ps.12.3306 per U.S. dollar. The exchange rate translations contained in

this Supplement should not be construed as representations that the peso amounts actually represent the U.S. dollar

amounts presented or could be converted into U.S. dollars at the rate indicated as of the dates mentioned herein or at

any other rate.

For the three-month periods ended March 31,

2009 2010 2010

(millions of pesos) (millions of U.S.

dollars)

Income Statement Data:

Revenues

Net sales................................................................... 11,237 12,237 992

Cost of sales ............................................................. 8,851 9,617 780

Gross profit .................................................................... 2,386 2,620 212

Operating expenses........................................................ 1,838 2,033 165

Operating income .......................................................... 549 587 48

Other expenses – Net..................................................... 2 3

Net comprehensive financing cost................................. 194 179 15

Interest expenses ...................................................... 199 145 12

Interest income ........................................................ (30) (28) (2)

Exchange (loss) gain................................................ (2) 5

Valuation of derivative ............................................ 28 58 5

Investment in shares of associated companies............... 1

Income before income taxes .......................................... 352 405 33

Income taxes.................................................................. 70 81 7

Consolidated net income.......................................... 282 325 26

Net income of majority stockholders ....................... 278 309 25

Net income of minority stockholders....................... 4 16 1

Cash Provided by (Used In):

Operating activities .................................................. (1,366) (1,530) (124)

Investing activities ................................................... (88) (467) (38)

Financing activities .................................................. 324 1,518 123

I-1A-1

ANNEX A

1

As of March 31,

2009 2010 2010

(millions of pesos)

(millions of U.S.

dollars)

Balance Sheet Data:

Cash ......................................................................... 530 372 30

Accounts and notes receivable-Net.......................... 583 1,170 95

Recoverable taxes .................................................... 345 472 38

Due from related parties .......................................... 60 79 6

Inventories-Net ........................................................ 3,328 4,092 332

Prepaid expenses...................................................... 106 282 23

Total current assets ........................................................ 4,953 6,469 525

Restricted cash......................................................... 173 210 17

Long-term due from related parties ......................... 156 91 7

Property and equipment-Net .................................... 17,810 18,460 1,497

Idle assets................................................................. 116 116 9

Investment in shares of associated companies......... 30 32 3

Long-term accounts receivable................................ 104 101 8

Other assets-Net....................................................... 460 529 43

Total assets .................................................................... 23,802 26,008 2,109

Current liabilities

Trade notes and accounts payable............................ 5,739 6,422 521

Notes payable to financial institutions ..................... 1,667 2,000 162

Accrued expenses and taxes..................................... 1,266 1,472 119

Income tax ............................................................... 45 65 5

Total current liabilities................................................... 8,717 9,959 808

Bank loans ............................................................... 3,199 3,250 264

Deferred income tax ................................................ 850 990 80

Employee benefits.................................................... 146 193 16

Derivative financial instruments.............................. 544 546 44

Receivables held in trust contracts 883 568 46

Total liabilities............................................................... 14,339 15,505 1,257

Stockholders’ equity

Capital stock ............................................................ 197 197 16

Retained earnings 9,261 10,395 843

Translation effects of foreign operations or

entities...................................................................... 66 19 2

Valuation of hedging derivatives............................. 265 293 24

Majority stockholders’ equity.................................. 9,259 10,318 837

Noncontrolling interest in consolidated

subsidiaries .............................................................. 204 185 15

Total stockholders’ equity ............................................. 9,462 10,503 852

Total liabilities and stockholders’ equity....................... 23,802 26,008 2,109

I-2A-2

2

As of or for the three-month periods ended March 31,

2009 2010 2010

(millions of pesos, except percentages, ratios and Other

Operating Data)

(millions of U.S. dollars, with same

exceptions) Selected Segment Financial Data: Segment Net Sales:

Retail operations in Mexico ....................................... 9,378 10,186 826 Retail operations in the U.S. ...................................... 1,738 1,927 156 Real estate segment ................................................... 121 124 10

Total consolidated net sales ................................... 11,237 12,237 992

Segment Operating Income Retail operations in Mexico ....................................... 429 477 39 Retail operations in the U.S. ...................................... 53 47 4 Real estate segment 67 63 5

Total consolidated operating income ...................... 549 587 48

Growth and Profitability Ratios: Net sales growth .......................................................... 19.0% 8.9% Gross margin ............................................................... 21.2% 21.4% EBITDA margin (1) ...................................................... 6.5% 6.4% EBITDA growth(1) ....................................................... 28.0% 8.6% Operating income margin ........................................... 4.9% 4.8% Net income margin ...................................................... 2.5% 2.7%

Other Operating Data: Number of retail stores (2) ............................................ 156 162 Total store area (square meters) (2) .............................. 930,027 963,985 Mexican Same-Store Sales growth (percentage) ........ (1.3%) 6.18% U.S. Same-Store Sales growth (percentage in USD) .. 9.7% 1.0%

(1) EBITDA reconciliation

For the three-month periods ended March 31,

2009 2010

(millions of pesos)

EBITDA .............................................................................................. 726 789

Less Depreciation and amortization............................................... 177 201

Operating income ................................................................................ 549 587

(2) Calculated as of March 31 of each year.

I-3A-3

3

Discussion of Quarterly Results

Three-Month Period Ended March 31, 2010 (“Q1 2010”) compared to Three-Month Period Ended March 31,

2009 (“Q1 2009”)

Net Sales

Our consolidated net sales increased by Ps.1,000 million, or approximately 8.9%, to Ps.12,237 million for Q1

2010 from Ps.11,237 million for Q1 2009. This increase primarily reflected higher sales volumes at eight stores

opened during the subsequent three quarters of 2009, which are reflected in Q1 2010 and not Q1 2009. In addition,

we had Same-Store Sales growth of 6.18% in Q1 2010 within our Mexican retail operations and 1% (based on sales

in U.S. dollars) within our U.S. retail operations for Q1 2010. We calculate Same-Store Sales within our U.S. retail

operations using sales in U.S. dollars given that when such sales are converted to pesos, it results in a decrease in

Same-Store Sales of approximately 11%, due to a lower MXP/USD exchange rate in Q1 2010 compared to Q1

2009. As the effect of the exchange rate distorts the calculation of Same-Store Sales, we use U.S. dollars in our U.S.

operations for such measure.

Retail Operations in Mexico

Net sales of our retail operations in Mexico increased by Ps.808 million, or approximately 8.6%, to Ps.10,186

million for Q1 2010 from Ps.9,378 million for Q1 2009. This increase was primarily due to sales derived from the

opening of three stores in 2009 during the subsequent three quarters and a 6.18% increase in our Same-Store Sales.

Retail Operations in the United States

Net sales of our retail operations in the United States increased by Ps.189 million, or approximately 10.8%, to

Ps.1,927 million for Q1 2010 from Ps.1,738 million for Q1 2009. This increase was primarily due to sales derived

from five stores opened during the subsequent three quarters of 2009 and a 1% increase in our Same-Store Sales.

Real Estate Operations

Net sales of our real estate operations increased by Ps.3 million, or approximately 2.4%, to Ps.124 million for

Q1 2010 from Ps.121 million for Q1 2009. This increase was primarily due to annual increases in the amounts

collected as rental payment under certain lease agreements due to inflation.

Cost of Sales

Our consolidated cost of sales increased by Ps.766 million, or 8.7%, to Ps.9,617 million for Q1 2010 from

Ps.8,851 million for Q1 2009. This increase primarily reflected an increase in net sales for the same period. Our

cost of sales as a percentage of net sales remained fairly at 78.6% in Q1 2010 from 78.8% in Q1 2009.

Retail Operations in Mexico

Cost of sales for our retail operations in Mexico increased 8.2% to Ps.8,142 million in Q1 2010 from Ps.7,528

million in Q1 2009 due to increased sales in this segment. Cost of sales as a percentage of sales, however, decreased

to 79.9% in Q1 2010 from 80.3% in Q1 2009 primarily as a result of improved price negotiations with suppliers.

Retail Operations in the United States

Cost of sales for our retail operations in the United States increased 11.5% to Ps.1,474 million in Q1 2010 from

Ps.1,322 million in Q1 2009 primarily reflecting the 10.8% increase in net sales. Cost of sales as a percentage of net

sales increased only slightly from 76% in Q1 2009 to 76.5% in Q1 2010.

Real Estate Operations

There are no significant cost of sales attributed to our real estate operations due to the nature of the business,

which consists of collecting rental payments from shopping centers we own where we operate retail stores.

I-4A-4

4

Gross Profit

As a result of the factors discussed above, our consolidated gross profit increased by Ps.234 million, or 9.8%,

to Ps.2,620 million for Q1 2010 from Ps.2,386 million for Q1 2009. As a percentage of sales, consolidated gross

profit for Q1 2010 remained stable at 21.4% compared to 21.2% for Q1 2009. In our financial statements, our gross

profit from our retail operations in Mexico reflects reclassifications from the application of Mexican accounting

rules (normas de informacion financiera, or NIFs) with respect to the recognition of revenues from logistics

operations. Such revenues are presented herein within gross profit, thereby increasing our gross profit margin from

an accounting standpoint. Although this accounting recognition increases our gross profit and operating expenses, it

has no effect on our EBITDA.

Retail Operations in Mexico

Gross profit for our retail operations in Mexico increased 10.5% to Ps.2,044 million in Q1 2010 from Ps.1,850

million in Q1 2009, as a result of the increase in net sales. Gross profit as a percentage of net sales for our retail

operations in Mexico increased to 20.1% in Q1 2010 from 19.7% in Q1 2009 as a result of improved prices from

suppliers, thereby resulting in a smaller increase in cost of sales relative to the increase in sales and thus a slightly

improved gross margin.

Retail Operations in the United States

Gross profit for our retail operations in the United States increased 8.8% to Ps.453 million in Q1 2010 from

Ps.417 million in Q1 2009, as a result of the increase in net sales. Gross profit as a percentage of net sales for our

retail operations in the United States decreased only slightly to 23.5% in Q1 2010 compared to 24.0% in Q1 2009,

primarily due to changes in the preferences of our customers offset by increased sales from the opening of five new

El Super stores in the subsequent three quarters of 2009.

Real Estate Operations

Gross profit in our real estate division increased 2.5% to Ps.123 million in Q1 2010 from Ps.120 million in Q1

2009, primarily as a result of a nominal increase in rent payments attributed to the renewal of our lease agreements.

Gross profit as a percentage of net sales for our real estate division remained stable at 98.8% in Q1 2010 and Q1 2009.

Operating Expenses

Our consolidated operating expenses increased by Ps.195 million, or 10.6%, to Ps.2,033 million for Q1 2010

from Ps.1,838 million for Q1 2009. This increase reflected increased expenses corresponding to eight new retail

stores opened in the subsequent three quarters of 2009 and additional expenses from almost a full quarter of

operations for a store that opened on January 15, 2010. Our consolidated operating expenses for Q1 2010 as a

percentage of total revenues remained relatively stable at 16.6% in Q1 2010 compared to 16.4% in Q1 2009. Of our

consolidated operating expenses for Q1 2010, 77.1% were attributable to our retail operations in Mexico, 20.0%

were attributable to our retail operations in the United States and 2.9% were attributable to the operations of our real

estate division.

Retail Operations in Mexico

The operating expenses of our retail operations in Mexico increased by Ps.146 million, or 10.3%, to Ps.1,567

million for Q1 2010 from Ps.1,421 million for Q1 2009. This increase primarily reflected higher expenses

corresponding to three new Chedraui stores that were opened during the subsequent three quarters of 2009 and

additional expenses from operations for one Super Chedraui store that opened in January 2010. As such, our

operating expenses as a percentage of net sales increased slightly by 0.2% during this period to 15.4% for Q1 2010

from 15.2% for Q1 2009.

I-5A-5

5

Retail Operations in the United States

The operating expenses of our retail operations in the United States increased by Ps.42 million, or 11.5%, to

Ps.406 million for Q1 2010 from Ps.364 million for Q1 2009. This increase primarily reflected higher expenses

corresponding to five new El Super stores opened in the subsequent three quarters of 2009. Our operating expenses as

a percentage of net sales increased slightly by 0.1% during this period to 21.1% for Q1 2010 from 21% for Q1 2009 as

a result of the increased costs associated with these additional stores opened.

Real Estate Operations

The operating expenses of our real estate operations increased by Ps.7 million, or 12.9%, to Ps.60 million for

Q1 2010 from Ps.53 million for Q1 2009. This increase reflected the payment of significantly higher property taxes

which increased at a rate greater than the rate of inflation and thus, greater than the increase in our real estate sales

prices, as well as higher maintenance costs compared to Q1 2009. Accordingly, our operating expenses as a

percentage of net sales was 47.9%, representing a 4.5 percentage point increase over sales during the previous

period.

Operating Income

As a result of the factors described above, our operating income increased by Ps.39 million, or 7.0%, to Ps.587

million for Q1 2010 from Ps.549 million for Q1 2009. On a consolidated basis, our operating income as a

percentage of net sales remained stable at 4.8% in Q1 2010 compared to 4.9% in Q1 2009.

Retail Operations in Mexico

Operating income for our retail operations in Mexico increased by Ps.48 million, or 11.2%, to Ps.477 million

for Q1 2010 from Ps. 429 million for Q1 2009. Operating income for our retail operations in Mexico as a

percentage of net sales remained stable at 4.7% in Q1 2010 compared to 4.6% in Q1 2009.

Retail Operations in the United States

Operating income for our retail operations in the United States decreased by Ps. 6 million, or 10.4%, to Ps.47

million for Q1 2010 from Ps.53 million for Q1 2009 due to the disproportionate increase in cost of sales when

compared to the increase in sales in this segment. Accordingly, operating income for our retail operations in the

United States as a percentage of net sales decreased to 2.5% in Q1 2010 from 3.0% in Q1 2009.

Real Estate Operations

Operating income for our real estate division decreased by Ps.3.8 million, or 5.7%, to Ps.63 million for Q1

2010 from Ps.67 million for Q1 2009 due to higher property taxes and maintenance costs. Accordingly, operating

income for our real estate division as a percentage of net sales decreased to 50.9% in Q1 2010 from 55.3% in Q1

2009.

Net Comprehensive Financing Cost

Net comprehensive financing cost decreased by Ps.15 million, or 7.5%, to Ps.179 million for Q1 2010 from

Ps.194 million for Q1 2009. This decrease primarily reflected lower interest expense due to lower levels of short-

term debt compared to Q1 2009.

Income Tax Expense

Income tax expense increased to Ps.81 million for Q1 2010 as compared to Ps.70 million for Q1 2009,

primarily reflecting an Ps.11 million, or 14.7%, increase in deferred income taxes, which is proportional with the

increase in our pre-tax income. Our effective income tax rate for both Q1 2009 and Q1 2010 was 20%.

Consolidated Net Income

We generated consolidated net income of Ps.325 million in Q1 2010 as compared to consolidated net income of

Ps.282 million for Q1 2009. The increase of Ps.43 million, or 15.1% primarily reflected the improvement in sales and

operating income and our lower comprehensive financing results in Q1 2010.

I-6A-6

7

Liquidity and Capital Resources

The following table summarizes our cash flows for Q1 2009 and Q1 2010:

For the three-month periods ended March 31,

2009 2010

(millions of pesos)

Income before income taxes ............................................................... 352 405

Cash used in operating activities ........................................................ (1,481) (1,165)

Cash used in investing activities......................................................... (93) (856)

Cash provided by financing activities................................................. 550 1,720

Adjustments to cash flow from changes in exchange rates ................ (26) (21)

(Decrease) increase in cash................................................................. (511) 84

Based on current operating results, we believe that cash flow from operations and other sources of liquidity,

including supplier financing and borrowings under our credit facilities and short term lines of credit, will be

adequate to meet anticipated requirements for working capital, capital expenditures, interest payments and scheduled

principal payments for the next 12 months.

Capital Expenditures

During Q1 2010, we made aggregate capital expenditures for Ps.496 million, which included capital

expenditures in the amount of:

Ps. 362 million for property and equipment; and

Ps. 135 million for intangible assets related to IT.

During Q1 2009, we made aggregate capital expenditures of approximately Ps. 311 million, which included

capital expenditures in the amount of:

Ps. 274 million for property and equipment; and

Ps. 38 million for intangible assets related to IT.

Capital expenditures increased Ps.185 million for Q1 2010 from Ps.311 million for Q1 2009. This increase

reflects the projected opening of 20 stores in 2010. Capital expenditures during Q1 2009 were also lower primarily

due to an increase in leased properties as opposed to purchased properties in Q1 2009.

Indebtedness

The following table sets forth a description of our outstanding indebtedness as of March 31, 2010.

As of March 31, 2010

Description of Debt Debt Interest Rate Currency Maturity Date

(millions of Ps.)

Long-term Debt

BBVA Bancomer, S.A. ..................... 600 TIIE + 0.375%. Mexican pesos June 2012

BBVA Bancomer, S.A. ..................... 750 TIIE + spread (1) Mexican pesos September 2012

Banco Nacional de Mexico, S.A........ 1,750 TIIE + spread(1) Mexican pesos July 2017

City National Bank ............................ 150 Libor + 1.25% U.S. dollars Revolving

Total long-term debt........................ 3,250

I-7A-7

8

As of March 31, 2010

Description of Debt Debt Interest Rate Currency Maturity Date

(millions of Ps.)

Short-term Debt

BBVA Bancomer Suiza..................... 53 Libor + 0.75% U.S. dollars December 2010

Banamex ............................................ 501 7.640% Pesos April 2010

Bank of America................................ 395 2.235% U.S. dollars April 2010

HSBC................................................. 300 7.56% Pesos April 2010

BBVA Bancomer .............................. 524 7.625% Pesos April 2010

Banco Santander, S.A. ...................... 219 TIIE + 2.8% Mexican pesos January 2011

Total short-term debt(2)

................... 2,000

(1) Spread may range from 0.55% to 1.0%. (2) Due to the cyclical nature of the retail business, short-term debt increases during each first quarter in comparison

to the immediately preceding quarter as a consequence of payments to suppliers for inventory purchases during the

December holiday season.

I-8A-8

ANNEX A

A-1

SIGNIFICANT DIFFERENCES BETWEEN MEXICAN FRS AND IFRS

The financial information of the Company included in the offering circular is prepared and presented in accordance with Mexican FRS or “MFRS”. Certain differences exist between MFRS and IFRS, which might be material to the financial information contained herein or to the accounting practice in the retail industry. The Company has not prepared a reconciliation of its financial information included in the offering circular, from MFRS to IFRS, nor has it quantified any differences discussed below. Accordingly, no assurance is provided that the following summary of differences is complete. In making an investment decision, investors must rely upon their own examination of the Company, the terms of the offering and the financial information. Potential investors should consult their own professional advisors for an understanding of the differences between MFRS and IFRS and how those differences might affect the financial information included herein.

Effects of Inflation

Under MFRS, the Company recognized the effects of inflation in its financial statements through December 31, 2007. Beginning January 1, 2008, for non-inflationary economic environments (i.e., an environment with cumulative inflation of less than 26% over the preceding three-year period), MFRS discontinued the recognition of the effects of inflation. However, assets, liabilities and common stock of entities in non-inflationary economic environments should maintain the cumulative effects of inflation that were recognized through December 31, 2007.

IFRS requires recognition of the effects of inflation only in hyperinflationary economies (generally, an economy with cumulative inflation of more than 100% over the preceding three-year period). The Mexican economy ceased to be considered hyperinflationary in 1999. Additionally, IFRS 1, First-time Adoption of International Financial Reporting Standards, allows for certain optional exemptions from retrospective application of other IFRS, for instance, as it relates to measurement of items of property, plant and equipment.

Depreciation of Property, Plant and Equipment

MFRS requires depreciation of property, plant and equipment using a systematic allocation of the cost of the asset, less its residual value, if any, over its useful life. However, there is no explicit requirement to use a component approach with respect to determining the useful lives of fixed assets or to review the residual values, useful life, and depreciation method at each balance sheet date.

IFRS requires depreciation of each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost and which has a useful life different from the other components of that item of property, plant and equipment (i.e., the component approach). Also, IFRS requires that the residual value, useful life and depreciation method of fixed assets be reviewed at least at each financial year-end. Additionally and as explained above, IFRS 1, allows for certain optional exemptions from retrospective application of other IFRS, for instance, to measure an item of property, plant and equipment at the date of transition to IFRS at its fair value.

Inventories

MFRS allows for the use of the direct inventory costing method, which excludes fixed overhead costs from inventory. Inventories are measured at the lower of cost and market (i.e., current replacement cost). Market should not exceed net realizable value (defined as the estimated selling price in the ordinary course of business less costs of disposal) or be less than net realizable value reduced by an allowance for a normal profit margin.

IFRS requires the use of the full absorption inventory costing method, which includes all fixed overhead cost in inventory. Inventories are measured at the lower of cost and net realizable value (defined as the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale). Under IFRS, there is no concept of reducing net realizable value to allow for a normal profit margin.

B-1

ANNEX B

A-2

Employee Benefits

MFRS requires the recognition of employee termination liabilities using actuarial calculations as well as for the recognition of deferred statutory employee profit sharing using the asset and liability method.

IFRS requires the recognition of a provision only when an entity has a present obligation as a result of a past event and certain other conditions are met, for which reason, employee termination liabilities are generally not provisioned for using actuarial calculations. In addition, IFRS does not contemplate the recognition of deferred statutory employee profit sharing. Furthermore, the application of IFRS 1 might result in additional differences.

Financial Instruments

MFRS includes recognition and derecognition, measurement and disclosure criteria for different types of financial instruments. Although some of the underlying principles are similar to those used by IFRS, several differences exist in the detailed application guidance. For example, MFRS does not allow for a fair value option while IFRS does allow for such option; MFRS tends to be less restrictive in practice for derecognizing financial assets when compared to IFRS; and both standards include detailed application guidelines for hedge accounting which may differ in certain significant respects. Further, certain disclosure requirements required by IFRS, including disclosure of risk exposures and management, fair values and sensitivity analyses, among others, are not explicit in MFRS.

Investment in Associates

MFRS establishes that investments in associates should be accounted for using the equity method of accounting when the entity has significant influence over the investee. An entity is presumed to have significant influence when it holds between 10% and 50% of the investee when the investee is a public entity or 25% to 50% when the investee is not a public entity, unless it can be clearly demonstrated that such investment does not constitute significant influence. Investments of less than 10% or 25% can be accounted for using the equity method of accounting if the ability to exercise significant influence can be clearly demonstrated.

Similarly IFRS establishes that investments in associates should be accounted for using the equity method of accounting when significant influence exists. However, significant influence is presumed to exist when the entity holds 20% to 50% of the investee, unless it can be clearly demonstrated that such investment does not constitute significant influence. In addition, investments of less than 20% can be accounted for using the equity method of accounting if the ability to exercise significant influence can be clearly demonstrated.

Income Statement Classification

Although not required by its standards, MFRS allows for the presentation of income from operations. However, MFRS excludes certain items from this measurement, such as gains or losses from sales of fixed assets, employee profit sharing expenses and foreign exchange gains and losses generated by operating assets and liabilities.

IFRS also allows for the presentation of income from operations. However, in such cases, IFRS requires entities to ensure that the amount disclosed is representative of activities that would normally be regarded as having an operating nature. Accordingly, various items excluded from this measurement under MFRS would be included under IFRS.

Business Acquisitions

MFRS states that in the event consideration paid in a business acquisition is lower than value of identifiable assets and assumed liabilities of the acquired business, and after having reviewed the value of such items, an excess persists, long-term non-monetary assets should be reduced by such excess. If after reducing the aforementioned assets to zero, an excess still exists, an acquisition gain shall be recognized within results as a non-ordinary item.

B-2

A-3

In conformity with IFRS, the acquirer shall reassess if all acquired assets and all assumed liabilities have been identified correctly, and shall recognize at fair value, any additional assets or liabilities identified in such review. The acquiring entity shall recognize a gain in the income statement as of the acquisition date, if such a gain remains.

In addition, MFRS does not allow for the recognition of a contingent liability acquired in a business acquisition when an outflow of resources is not likely to occur.

IFRS states that contingent liabilities acquired in a business acquisition shall be recognized if a present obligation arising from past events exists and the fair value of the contingency can measured reliably, even though an outflow of resources reporting economic benefits is not probable.

Segment Information

MFRS requires a profitable business activity to be identified as an operating segment.

In contract, IFRS does not require a business activity be profitable when determining whether it is an operating segment.

In dealing with segment information, both MFRS and IFRS adopt a managerial approach, but MFRS requires economic segment identification (per products or services), by geographical area or homogeneous client groups, thus establishing information deemed as: analytical or primary, and general or secondary.

MFRS declares that deferred tax assets shall not be included in segment assets, and does not specify exclusion of retirement benefit assets and insurance contracts rights. If such are deemed as important, they could be subject to disclosure. Disclosure of total liabilities per segment is not specifically established and depends upon management criteria. Under IFRS, when information concerning liabilities is included in segment information used by management to make decisions and allocate resources, such liabilities must be included in segment disclosures.

IRFS requires that amounts or additions to non-current assets (different from deferred tax assets, retirement benefit assets, and rights from insurance contracts) as well as total liabilities, be disclosed if this information is included in segment integration, or if it is provided regularly to the members of management making operational decisions and allocating resources.

MFRS does not require disclosure of comprehensive cost of financing in segment information, which includes interest income and expense, unless segment activities are fundamentally financial. IFRS requires a separate disclosure of interest income and expense in segment information, or disclosure of net interest income in specific situations.

Presentation of Comprehensive Income

In conformity with MFRS, comprehensive income items are presented in the statement of stockholders’ equity and do not require any additional presentation or disclosure.

IFRS allows a single comprehensive income statement to be presented. The aforementioned statement shall include all income and expense items, as well as a separate section including other comprehensive income items recognized for the period. IFRS also allows for the presentation of comprehensive income in two financial statements: the first, a statement displaying components of profit or loss for the period and the second, beginning with profit or loss and displaying components of other comprehensive income. Income taxes for each component of comprehensive income shall be disclosed.

Deferred Income Taxes

MFRS requires the recognition of deferred income taxes for all temporary taxable or deductible differences between the accounting and tax bases of assets and liabilities and does not provide any exceptions relating to the first-time recognition of an asset or liability.

B-3

A-4

In contrast, IFRS includes an exception for the recognition of a deferred tax asset or liability for taxable or deductible temporary differences (considering taxable income is likely to be obtained) in the first-time recognition of an asset or liability in a transaction not deemed as a business combination and for which at the time of the transaction, recognition of the asset or liability does not affect either accounting or tax profit or loss.

In conformity with MFRS, the acquisition cost of a subsidiary’s shares is identified with goodwill, among other assets. As of the acquisition date, and before any sale of shares of the acquired entity, the income statement of the acquiring entity may be affected due to impairment of the value of goodwill. For tax purposes, the acquisition cost of a subsidiary’s shares affects taxable income at the time such shares are sold. This difference in timing of when goodwill affects accounting or taxable income results in a temporary difference originating a deferred tax asset.

IFRS does not allow for the recognition of a deferred tax liability related to goodwill even though a taxable temporary difference exists, given that goodwill is not frequently deductible in determining the entity’s taxable income, whether by impairment of the goodwill carrying value or when goodwill is cancelled upon the sale of business originating such goodwill.

During 2007, the Mexican tax authorities issued a new Business Flat Tax (“IETU”). For MFRS purposes, based on projections of taxable income, companies must determine whether they will be subject to regular income tax or IETU in the future and, accordingly, must recognize deferred taxes based on the tax they expect to pay. Therefore, deferred taxes are calculated by scheduling the reversal of temporary differences under each tax regime and applying either the regular income tax or IETU rate to such temporary differences. If a company determines, based on its projections, that it will be both subject to IETU and the regular income tax in the future, the company is required to schedule out the reversal of temporary differences under each tax regime and record the amount that represents the larger liability or the smaller benefit.

Under IFRS, similar to MFRS, companies must determine whether they will be subject to regular income tax or IETU in the future based on company projections, and accordingly recognize deferred taxes based on the tax they expect to pay in each period. However, if a company's projections indicate that it will be subject to both IETU and the regular income tax in the future, it is required to record deferred taxes based on what they expect to pay in each future year, which could potentially result in the recognition of a deferred tax asset or liability that includes both income tax and IETU effects.

Asset Retirement Obligations

MFRS does not consider dismantling and removal obligations in the initial cost of an asset, but rather requires recognition of such cost at the time the asset is retired. With respect to site restoration upon retirement of an asset, MFRS does require recognition of an allowance for the corresponding restoration cost estimate through an increase in the cost of the related asset at the time of its acquisition or construction. MFRS has no stated provisions for subsequent recognition of changes in restoration provisions.

IFRS establishes that the cost of property, plant and equipment, encompasses, among others, the initial estimate of dismantling and removal costs, as well as restoration of premises in which an asset is located, when such are deemed obligations incurred by the entity. Likewise, IFRS establishes the standards for the subsequent recognition of changes in provisions for restoration expenses.

Valuation of Property, Plant and Equipment

MFRS states that investments in property, plant and equipment shall be valued at historical cost.

IFRS permits a company to select its accounting policy for the recognition of property, plant and equipment from two alternatives: at historical cost or fair value.

B-4

A-5

Statement of Cash Flows

Through December 31, 2007, MFRS required the presentation of a statement of changes in financial position, which presented sources and uses of resources, determined based on the change in assets and liabilities in the balance sheet in constant pesos. Therefore, changes in financial position not affecting cash were not necessarily excluded from the statement of changes in financial position. No supplemental disclosures were required.

Beginning January 1, 2008, MFRS requires the presentation of a cash flow statement, using either the direct or indirect method, presented in nominal pesos.

IFRS requires a statement of cash flows describing the cash flows provided by or used in operating, investing and financing activities, similar to that presented under MFRS beginning January 1, 2008. Non-cash transactions are excluded from the statement of cash flows. In addition, classification of certain items within the operating, investing and financial activities sections of the statement of cash flow under IFRS may differ from that required by Mexican FRS.

Recognition of Gain or Loss in a Sale Leaseback

In the event of a sale and leaseback transaction, the subsequent lease agreement can be qualified either as an operating or finance lease. MFRS has no restrictions with respect to the timing of the recognition of the gain or loss on the original sale of the asset.

In conformity with IFRS, when the subsequent lease agreement is qualified as an operating lease, the gain or loss on the original sale of the asset is recognized at the time when the sale occurs, provided that the asset sale price is equivalent to its fair value. In the event that such price is different, the amount of said difference shall be deferred and amortized over the period during which the asset is expected to be used.

B-5

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ISSUER

Grupo Comercial Chedraui S.A. de C.V.

Privada de Antonio Chedraui Caram 248 Colonia Encinal Xalapa, Veracruz, 91180, México

LEGAL ADVISORS

To the Issuer

As to U.S. Federal and New York Law: As to Mexican Law:

Cleary Gottlieb Steen & Hamilton LLP Bufete Robles Miaja, S.C.

One Liberty Plaza Bosque de Alisos 47 A-PB New York, NY 10006-1470 Col. Bosques de las Lomas; C.P. 05120

United States of America Mexico, D.F.

To the Initial Purchasers

As to U.S. Federal and New York Law: As to Mexican Law:

Milbank, Tweed, Hadley & McCloy LLP Ritch Mueller, S.C.

1 Chase Manhattan Plaza Torre del Bosque New York, NY 10005-1413 Blvd. Manuel Ávila Camacho No. 24, Piso 7

United States of America Col. Lomas de Chapultepec; C.P. 11000 México, D.F.

AUDITORS

Galaz Yamazaki Ruiz Urquiza S.C. (Member of Deloitte Touche Tohmatsu)

Paseo de la Reforma 486, 6th Floor Col. Cuauhtemoc; C.P. 06500, México D.F.