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LongYield @LongYield on x 4481 followers
Created: 2025-04-28 20:45:44 UTC
$FMX Fomento Económico Mexicano, S.A.B. de C.V. Earnings Call Key Highlights:
📉 Challenging Start to 2025 for Core Markets
FEMSA experienced significant headwinds in Q1 2025, primarily in Mexico, driven by a soft consumer environment, unfavorable calendar shifts (e.g., Holy Week moving to Q2), and adverse weather.
Same-store sales for Proximity Americas contracted by 1.8%, as a XXX% increase in average ticket was offset by a XXX% decline in traffic.
Traditional trade (mom-and-pop stores) regained some market share at the expense of modern trade formats like OXXO, particularly in Pacific and Northeast Mexico.
Cigarette sales were notably impacted due to the growth of illicit trade and single-stick sales by informal retailers.
🔧 Strategic Response and Commercial Initiatives
FEMSA is implementing initiatives to drive affordability in core categories (tobacco, soft drinks, beer, spirits, snacks) with increased focus on smaller pack sizes and returnable formats.
Spin Premia loyalty program usage is expanding, improving targeted promotions and customer engagement.
Proactive cost containment measures are being adopted, focusing on lean operations without compromising transformational investments.
Expansion of retail media and digital screens across OXXO stores to enhance gross margin contributions.
💲 Financial and Operational Highlights
Consolidated revenues grew XXXX% year-over-year, while operating income rose 4.9%; net income surged XXXX% due to foreign exchange gains and asset sales (e.g., PTM).
OXXO Mexico added XXX net new stores in Q1 2025; Colombia and Brazil also saw network expansions.
Despite top-line challenges, gross margin expansion continues, fueled by commercial income and financial services growth.
🏦 Spin Financial Services Ecosystem Development
Spin active users grew to XXX million; Spin Premia loyalty program now accounts for XXXX% of OXXO Mexico sales.
Ongoing pilot programs are expanding Spin’s reach into mom-and-pop shops, offering POS terminals and rapid crediting of transactions.
Future plans include upgrading to a full banking license to enable broader financial product offerings, with cautious balance sheet management.
🇺🇸 Progress in the United States
Fifteen DK stores have been rebranded as OXXO units in West Texas, showing strong initial traffic and sales uplift.
Focus remains on perfecting the value proposition (notably in foodservice) before pursuing significant organic or inorganic expansion.
Testing includes bringing Andatti coffee and other food offerings to strengthen customer appeal.
🇧🇷 Momentum in Brazil
OXXO Brazil demonstrated improvements in shrinkage, employee turnover, and top-line growth, maintaining plans to open ~100 stores in São Paulo this year.
Expansion is expected to continue at a pace of around XX% of the existing store base annually, with the business now showing strong fundamentals.
🏥 FEMSA Health Turnaround Efforts
Mexico health operations under restructuring due to unsustainable cost structures exacerbated by minimum wage increases.
Over XXX underperforming stores targeted for closure; a shift to a dual-format strategy (value and premium banners) underway, mirroring successful approaches in Colombia, Chile, and Ecuador.
Colombian retail operations remain a highlight, delivering strong sales and margin performance.
🏬 Bara Discount Store Expansion
Strong start in 2025 with store growth doubling year-over-year; plans to add ~235 net new stores.
New distribution center in Querétaro supports acceleration plans; private label partnerships being developed to boost margins and competitiveness.
Future potential foresees thousands of Bara stores nationally, supporting broader FEMSA retail growth.
⛽ OXXO Gas and Other Businesses
OXXO Gas performed solidly in Q1 but faces upcoming headwinds from voluntary gasoline price caps.
Coca-Cola FEMSA continued strong performance despite volume softness in Mexico, aided by diversification across Latin America.
📈 Capital Allocation and Shareholder Returns
Continued heavy investment in CapEx (~4.5% of revenues), with focus on retail and supply chain expansion.
Share buybacks and dividends in progress, with a commitment to return MXN XX billion (~USD XXX billion) to shareholders from March 2025 to March 2026.
FEMSA remains committed to maintaining financial discipline while investing for long-term growth across its portfolio.
XXX engagements
Related Topics mexico quarterly earnings fomento econmico $fmx