Mexican retailer and Coca Cola bottler FEMSA has announced consolidated revenue growth of 10.2% in Q3. Total revenue growth for its OXXO convenience stores reached 10.1%, with the stores generating sales worth MXN48.4 bn (US$2.5 bn). Sales through its convenience stores account for over a third of FEMSA’s total company sales.
Total revenues for its health and fuel divisions were up 26.6% and 1.2% respectively. The business delivered encouraging results for its fuel division, despite not opening any new stores in the quarter.
Strong same-store-sales (SSS) performance
OXXO is FEMSA’s highest performing division for SSS. SSS’s at OXXO increased by 5%, compared to 0.7% in its health store division and 3.9% for its fuel service stations. FEMSA said this was driven by a 6.5% growth in the average customer ticket, which was partially offset by a decrease of 1.4% in store traffic.
OXXO maintains aggressive opening programme…
In Q3 OXXO opened 232 net new stores. The business has opened 1,362 stores in the last 12 months, taking its total estate to 18,840 in Latin America. Eduardo Padilla, FEMSA’s CEO said “OXXO continued to grow at a steady pace in Mexico, and we again saw encouraging data from the international operations”.
…but is this about to slow down?
Mexico’s economy has slowed down since its current president Andres Manuel Lopez Obrador took office in December. This could encourage FEMSA to reduce the pace of its openings in the medium-term. According to Reuters FEMSA reported 841 openings through September, versus 901 for the same period last year.
Could this encourage greater investment in international markets?
Mexico’s current sluggish economy could encourage OXXO to re-focus its attention on its other international markets (Chile, Colombia and Peru). Since opening its first store in Peru in 2018 OXXO now operates over 40 stores. In October 2018 FEMSA said it planned to open 300 stores in Peru by 2021, so it will need to speed up the pace of openings to achieve this.
OXXO’s main competitor in Peru is Tambo+, which has around 350 stores. Given the vast numbers of openings in its home market (roughly 1,300 per year), OXXO could quickly surpass this. Tambo+ has previously mentioned the possibility of extending its presence outside of the capital Lima and into provinces, but has put this on hold for now. If OXXO can get a strong foothold in Lima, it could potentially do this ahead of its competitor.
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