Contradictions Unveiled: Fomento Económico Mexicano's 2024 Q4 Earnings Call Highlights OXXO's Growth Challenges and U.S. Strategy

These are the key contradictions discussed in Fomento Económico Mexicano, S.A.B. de C.V.'s latest 2024Q4 earnings call, specifically including: OXXO Store Expansion Strategy and Traffic Performance, Consumer Behavior and Economic Conditions, and Growth Strategy in the U.S.:



Revenue and Profit Growth:
- FEMSA reported total revenue growth of 12.8% for Q4 2024, while operating income rose by 31.5% compared to the previous year.
- The growth was driven by the strong performance of their Proximity Americas and Coca-Cola FEMSA business units, supported by disciplined revenue management strategies and strategic capital investments.

Capital Allocation Strategy:
- FEMSA deployed MXN 44.8 billion (approximately $2.5 billion) in a combination of ordinary dividends, extraordinary dividends, and share buybacks for 2024.
- The company aims to accelerate capital returns to reach its target leverage ratio of 2 times net debt to EBITDA by 2026 through increased dividends and buybacks.

Store Expansion and Traffic Dynamics:
- Proximity Americas added 205 net new OXXO stores in Q4, with a shift in focus towards higher-growth regions like Colombia and Brazil.
- Despite a 2.8% decline in average traffic, driven by a weaker consumer environment, the average ticket increased by 6.8%, resulting in 3.8% same-store sales growth.

Digital and Consumer Engagement:
- FEMSA's digital ecosystem reached 8.6 million active users for OXXO by with 24.9% year-on-year growth, and 24.6 million active users for the SPIN Premia loyalty program, growing 27.5% year-over-year.
- The increase in digital engagement was attributed to data analytics and personalized offers, which enhance customer loyalty and retention.