Fomento Economico Mexicano (NYSE:FMX) executives emphasized improving operating trends at OXXO Mexico, a broad cost and organizational restructuring program, and continued portfolio investment priorities during the company’s fourth-quarter and full-year 2025 results call.
OXXO Mexico trends improved in the second half
CEO José Antonio Fernández Garza said FEMSA saw an “inflection point” in same-store sales and traffic at OXXO Mexico in the second half of 2025, with that improvement continuing into the fourth quarter. Proximity Americas ended the year with same-store sales growth of 4.4%, while traffic remained slightly negative at -0.6%, which management described as “markedly better” than earlier in the year.
- Increasing the mix of returnable beverage packages and multi-serve presentations
- Seeking more competitive supplier promotions and packaging architectures
- Adding lower price-point SKUs in categories such as snacks and tobacco
Management said these actions helped OXXO recover market share, with results now tracking closer to long-term expectations. Fernández noted weather normalized in the fourth quarter after unusually wet conditions earlier in the year, while macro sentiment in Mexico remained “soft” but appeared to have stabilized.
Looking to 2026, FEMSA said its focus in Mexico is to regain growth and relevance through traffic recovery, a sharper value proposition, improved customer experience, and stronger execution. The company highlighted efforts to expand beyond traditional “thirst, impulse, and gathering” occasions by prioritizing coffee and breakfast offerings and developing daily replenishment through better value on pantry essentials, while continuing to grow payments and financial services inside stores.
Growth highlights across the portfolio
Fernández called out several operations for standout performance in 2025. OXXO Colombia generated positive EBITDA for the first full year and was “nearly break-even” at the EBIT line in the fourth quarter. Discount chain Bara posted double-digit same-store sales growth, and FEMSA said private label now approaches 30% of Bara’s mix. In Europe, Valora delivered record operating income in 2025, supported by strong retail performance in Switzerland and expense containment.
CFO Martín Arias added that Proximity Americas fourth-quarter revenue rose 5.3% year over year (6.3% on a comparable basis), driven by Mexico same-store sales improvement and top-line growth in Colombia and Peru. Proximity Americas gross margin expanded 40 basis points to 48.1%, which the company attributed to OXXO LATAM scale and more disciplined supplier negotiations. Operating income rose 7.7%, and operating margin was 12%, reflecting overhead reduction and productivity initiatives.
Proximity Americas added 209 net new stores in the quarter, ending 2025 with 1,125 stores, while also closing underperforming locations, particularly in Colombia, as part of a store base evaluation focused on profitability and unit economics.
Other operational notes discussed on the call included:
- OXXO USA: 50 stores converted under the OXXO banner by year-end; continued work on hot food, coffee, and assortment expansion.
- Bara: 63 net new stores in the quarter and 157 in the full year.
- Valora: Fourth-quarter revenue growth of 2.5% in pesos; operating income up 10.8%. Arias said gross margin declined due to a reclassification of full-year distribution expenses from SG&A to cost of sales recorded in the fourth quarter, with no impact on operating income.
- OXXO Gas: Same-station sales up 8.7%; operating margin of 4.8% supported by higher wholesale volumes and disciplined cost management.
- Coca-Cola FEMSA: Fourth-quarter revenues up 2.9% and operating income up 13.3%, with management pointing investors to Coca-Cola FEMSA’s separate earnings call for details.
Health Division pressures and Mexico pharmacy challenges
Management acknowledged underperformance in the Health Division. Fernández said the division recorded another provision for uncollectible accounts in the Colombian institutional segment (COP 487 million referenced in his remarks), consistent with similar provisions in 2023. Arias said the fourth-quarter charge amounted to MXN 487 million, contributing to operating income of MXN 573 million and a 2.5% operating margin for the quarter; excluding the charge, operating income would have been MXN 1.0 billion and margin 4.6%.
While FEMSA cited strong revenue growth in Colombia and Ecuador and flat results in Chile, it said Mexico remained under pressure due to a smaller store base following closures of underperforming locations tied to restructuring. Fernández said the Health Division’s new management team has launched initiatives aimed at more disciplined capital use and improved commercial practices, emphasizing cash flow and returns, while warning 2026 would be “a tough year” for the division.
In Q&A, Fernández was blunt about the company’s pharmacy business in Mexico, saying FEMSA has “not nailed” the segment and does not currently compete effectively with leading incumbents. He suggested any future approach may be more closely tied to OXXO through over-the-counter offerings and an omni-channel model, but said that without a different strategy or an exit, he does not foresee a near-term turnaround.
Restructuring, Spin alignment, and financial discipline
Executives outlined structural changes designed to create a “leaner, more streamlined organization.” FEMSA consolidated overlapping leadership teams formerly housed in FEMSA Corporate and the Proximity and Health division, with four retail divisions reporting directly to the CEO (OXXO Mexico; Proximity Americas and Mobility; Health and Multi-Formats; and Europe), alongside Coca-Cola FEMSA.
A major strategic adjustment involved aligning Spin more tightly with OXXO Mexico under an “Ecosystem 2.0” approach described as “one client, one strategy, and one aligned PNL.” As part of the shift, the company said it is postponing the application for a full banking license while it clarifies the lending opportunity through the right partnership. Management also discussed narrowing Spin’s scope, including changes such as no longer offering Premia to third parties outside the FEMSA ecosystem and delaying some efforts in payment platforms for small mom-and-pop stores.
Fernández said Spin reduced its negative EBIT for full-year 2025 by almost 30%, and FEMSA estimates an additional improvement of close to 20% in 2026. He added that the combined restructuring efforts and improvement at Spin are expected to deliver an annualized positive impact of approximately MXN 1 billion, with efficiencies ramping during 2026 and reaching full impact in 2027 and beyond. Arias said the initial “Fit for Purpose” initiative focused on OXXO Mexico and Health is expected to generate more than MXN 800 million on an annualized basis, and that additional initiatives across Proximity, Health, FEMSA Corporate, and Spin are expected to generate roughly MXN 1 billion more in annual run-rate savings starting in 2027, with full run-rate benefits not expected until late 2026. The company recorded restructuring provisions in the fourth quarter that will temporarily offset a portion of the savings.
Capital allocation and shareholder returns
On capital allocation, FEMSA reported fourth-quarter CapEx of MXN 14.2 billion and full-year CapEx of MXN 45.3 billion. Arias said spending was below 2024 due to postponed infrastructure investments in Mexico amid a softer macro environment, a measured slowdown in expansion in select markets (especially OXXO LATAM), and increased return discipline.
For shareholder remuneration, FEMSA said total capital return from March 2025 to March 2026 amounted to $3.1 billion through ordinary and extraordinary dividends and share buybacks. The company completed a $1.7 billion extraordinary dividend for 2025 in January. Of a previously announced $900 million repurchase objective, FEMSA executed about $600 million, with $300 million remaining, which Arias attributed mainly to blackout periods in the second half of 2025.
Looking ahead, the company reiterated plans for approximately $1.3 billion of extraordinary returns from March 2026 to March 2027, with a board recommendation expected the following day. Arias said FEMSA expects to end the year slightly below its leverage target of 2 times net debt to EBITDA (excluding Corporación FEMSA) and wants to retain flexibility to pursue inorganic opportunities or announce additional extraordinary returns later in the year.
In response to questions on recent security events in Jalisco, Fernández said no customers were injured, four employees suffered minor injuries and were out of danger, and FEMSA temporarily closed up to 6,000 stores for precautionary reasons. He said more than 90% reopened the next day, with about 300 remaining closed at the time of the call, and noted roughly 200 stores experienced some level of damage.
About Fomento Economico Mexicano (NYSE:FMX)
Fomento Económico Mexicano, SAB. de C.V. (FEMSA) is a Mexican multinational company active primarily in the retail and beverage sectors. Headquartered in Monterrey, Mexico, FEMSA’s operations span convenience store retailing, beverage bottling and distribution, and related logistics and consumer services. The company’s business model combines high-frequency retail outlets with large-scale beverage production and a regional supply chain network.
FEMSA Comercio, the company’s retail arm, operates a large chain of convenience stores under the OXXO brand and has expanded its retail footprint with complementary formats and services.
