Fomento Económico Mexicano, S.A.B. de C.V. Q3 FY2025 earnings call

Jose Antonio Fernandez Carbajal discussed FEMSA Forward strategy, divesting ~$11B of assets, capital allocation plan, and FEMSA's strong business units. Jose Antonio Garza-Laguera talked about third quarter results, OXXO Mexico's same-store sales, initiatives to improve performance (affordability in core categories, promotional campaigns, productivity/efficiency initiatives), and initial thoughts on FEMSA's CEO role. Martin Arias discussed consolidated results, tax rate volatility, and detailed segment performances including Proximity Americas, Health, and Coca-Cola FEMSA.

Proximity Americas: Same-store sales increased 1.7%, with average ticket up 4.9% and traffic down 3.1%. Total revenues grew 9.2%, gross margin expanded 80 basis points to 45%, operating income up 7.1%. Added 198 new stores; OXXO USA converting stores, Bara opened 40 new stores. Europe's Valora had total revenues up 10.1% in pesos. Health division: Total revenues up 2.9% in pesos, same-store sales up 0.8% (Chile/Colombia offset Mexico decline). Operating income down 4%. Coca-Cola FEMSA: Gradual sequential improvement, total volume slightly down in Mexico, South America resilient.

Cautiously optimistic with signs of improvement in October data. Anticipates FIFA World Cup tailwind and better environment in Mexico. Will provide more detailed update in next call.

Tax rate volatility, foreign currency impacts on cash balances/debt, challenges in Mexico's retail market affecting Health division, competition pressures in various segments.

Q: Ben Theurer asked about OXXO Mexico's same-store sales performance, traffic dynamics, and outlook into next year.

A: Jose Antonio Fernandez Carbajal discussed reversing trends, market share gains in categories, coffee growth, and expectations of better comps with World Cup help.

Q: Alejandro Fuchs asked about OXXO Mexico's gross margin, Bara and OXXO Brazil's future.

A: Jose Antonio Fernandez Carbajal talked about OXXO Mexico's gross margin potential, Bara and OXXO Brazil as key growth avenues with significant progress in OXXO Brazil.

Q: Antonio Hernandez asked about health business update in Mexico and Chile.

A: Jose Antonio Fernandez Carbajal discussed Chile's growth and market share gains, and Mexico's challenges with fixing the health business.

Q: Alvaro Garcia asked about fit-for-purpose restructuring and interest expense.

A: Jose Antonio Garza-Laguera and Martin Arias discussed fit-for-purpose efforts and interest expense drivers.

Q: Thiago Bortoluci asked about FEMSA's vision, Coca-Cola FEMSA's role, and management style.

A: Jose Antonio Garza-Laguera talked about Coca-Cola FEMSA's potential, management style focusing on decades-long vision and urgency, and strategic continuity.

Q: Robert Ford asked about OXXO Mexico's gross margin improvements and value proposition opportunities.

A: Martin Arias and Jose Antonio Garza-Laguera discussed reclassifications and opportunities in food and segmentation for OXXO Mexico.

Q: Rodrigo Alcantara asked about food in OXXO and OXXO Brazil's impact on margins.

A: Jose Antonio Garza-Laguera talked about food potential in OXXO and OXXO Brazil's minimal impact on margins.

Q: Ricardo Alves asked about gross margin expansion opportunities and proximity regions' focus.

A: Jose Antonio Garza-Laguera and Martin Arias discussed Mexico's outlier status, CPG partnerships, and focus on Mexico, Brazil, Colombia, etc.

Q: Renata Cabral asked about Spin's ambition and OXXO's digital ecosystem.

A: Jose Antonio Garza-Laguera discussed Spin as a digital extension of OXXO's value proposition and ecosystem potential.

Q: Froylan Mendez asked about growth breakdown, cannibalization, and ROICs.

A: Jose Antonio Garza-Laguera and Juan Fonseca discussed store expansion, same-store sales expectations, and ROIC considerations.

Q: Hector Maya asked about banking license ambitions and Spin's role.

A: Martin Arias and Jose Antonio Garza-Laguera discussed banking license timeline and Spin's innovation.

Q: Carlos Laboy asked about affordability, consumer sampling, and supplier partnerships.

A: Jose Antonio Garza-Laguera discussed affordability efforts, consumer occasions, and supplier collaborations.