The Mexican retail conglomerate says revenues from its 20,000-strong OXXO convenience store network partially offset rising operating costs across the wider business, with further sales growth expected following the acquisition of Valora earlier this month
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FEMSA has expanded the retail and self-serve presence of its Andatti Gourmet coffee brand through its OXXO store expansion | Photo credit: FEMSA
FEMSA has credited accelerated footfall across its 20,000 OXXO convenience store network as driving third quarter sales as it commences European retail operations via its Valora acquisition.
The Mexican retail conglomerate, which operates more than 20,000 OXXO convenience stores across Mexico, Chile, Colombia and Peru, said its third quarter revenues grew 20% to reach ₱171.7bn ($8.7bn) as profits fell by nearly a quarter to ₱10.8bn ($534.1m).
The company opened more than 230 OXXO locations across Latin America during the period, expanding the retail and self-serve presence of its Andatti Gourmet coffee brand in the region.
Total revenues for FEMSA’s Proximity division, comprising OXXO and petrol station chain OXXO Gas, increased 18%. OXXO same-store sales increased by an average of 15%.
FEMSA credited ‘tight expense control’ for its revenue growth but said operating costs rose across almost all its divisions, with increased transportation and labour costs contributing to a 70% rise in operating costs in its logistics and distribution business.
“Our third quarter results reflect sustained positive momentum across all of our business units. OXXO Mexico once again delivered solid results, with accelerated traffic growth, in addition to robust ticket expansion, reflecting a resilient consumer environment. We again saw some of our key categories perform extremely well, resulting in positive revenue performance which, combined with a leaner expense structure, produced strong operating leverage,” said Daniel Rodríguez Cofré, CEO, FEMSA.
Outside of Mexico, FEMSA said its Proximity division has been boosted by the acquisition of Swiss food and beverage operator group Valora.
Marking FEMSA’s first foray into the European retail market, Valora currently operates 2,700 sales outlets at high footfall locations across Switzerland, Germany, Austria, Luxembourg and the Netherlands.
Brands within the Valora portfolio include 32-strong coffee shop chain Caffè Spettacolo, nearly 1,100 k kiosk sites, 59 Brezelkönig pretzel stores, 425 BackWerk bakeries and more than 230 avec convenience stores.
FEMSA currently holds 97.8% of the share capital of Valora and intends to initiate a squeeze-out procedure and request the cancellation of the remaining publicly held shares. The Mexican company said it will develop Valora into the European market leader in convenience stores and foodservice.