Mexican bottler and retailer Fomento Económico Mexicano (Femsa) plans to increase the number of its OXXO convenience stores by as much as 50% across Latin America over the next decade, executives said on Monday, with hundreds planned for Brazil, Chile, and Colombia in 2022 alone.
Femsa already operates 20,431 OXXO stores in Latin America, under its Proximity Division, generating some 35% of the parent’s revenue, its fourth-quarter results showed.
In addition to adding some 800 new OXXO stores in its home country in 2022, executives told investors on a call the company hoped to open another 200 Oxxo stores in Brazil as well as 150 between Chile and Colombia.
Proximity commerce has gained strength in Brazil due to the COVID-19 pandemic. Last December, David Pestana, Grupo Nós expansion director in Brazil, said that the revenue of the first OXXO stores (30 in Campinas and 25 in Sao Paulo) in the country had been 30% higher than expected.
As we’re getting bigger in these other countries, obviously, the profitability there begins to kind of superchargeJuan Fonseca, investor relations director at Femsa.
Femsa also said it had completed the purchase of OK Market, which operates 134 convenience stores in Chile.
Earlier on Monday, Femsa posted a fourth-quarter net profit of 6.7 billion pesos ($328 million), up from a net loss of 1.2 billion pesos in the year-earlier period, boosted by a higher operating profit and a decrease in net interest expenses.
The conglomerate, which manages one of the largest Coca-Cola producers in the world, also reported a 16.3% increase in quarterly revenue, helped by growth in all its business units.
Earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter rose to 23.4 billion pesos, in line with a Refinitiv estimate of 23.07 billion pesos.
The company’s subsidiary, Coca-Cola Femsa, reported an 82.8% increase in quarterly net profit last week. Chief Executive John Santa Maria attributed the rise to increased sales across Latin America in the quarterly earnings report.
It is not yet clear how much OXXO stores’ expansion across Latin America also opens new markets for Femsa’s fintech Spin by OXXO and loyalty program OXXO Premia.
Launched through a pilot project in March last year, Spin is an app for financial services such as sending and receiving money, making deposits and checking balance accounts. Until last month, it had already 1.6 million users registered (about 60% of them are active).
According to data from the National Banking and Securities Commission (CNBV), OXXO is the leading banking correspondent in the country. At the end of 2019, OXXO’s stores accounted for 43% of the 43,397 points to make payments or transfers in operation in Mexico.
The potential of bringing together physical convenience stores, which have been working for decades with their own means of payment (OXXO vouchers), with a digital wallet, in a region like Latin America, where the digitization of money is in full swing, is enormous.