Fomento Económico Mexicano, S.A.B. de C.V.

FEMSA reported Q1 2026 total revenues of 6.1% year over year, operating income growth of 5.5%, and comparable/currency-neutral revenue and operating income growth of 8.5% and 12.1%, respectively. Net consolidated income was 17.6 billion pesos, up 97.3%, though excluding a one-time non-cash BradyPLUS/Imperial Dade accounting gain, net income would have been 5.7 billion pesos, down 36.4% year over year. OXXO Mexico revenue grew 8.3%, same-store sales increased 6%, gross margin expanded 140 bps to 46.2%, and operating margin rose to 7.6%. Americas & Mobility revenue was 25 billion pesos, up 12.9% reported and 10.5% comparable/currency-neutral, with operating income of 281 million pesos and an operating margin of 1.1%. Europe revenue was 12.9 billion pesos, operating income 356 million pesos; Health revenue was 22.2 billion pesos, operating income 657 million pesos; Coca-Cola FEMSA revenue grew 1.1% reported and 6.3% comparable, with operating income down 2.3% reported and up 2.1% comparable. CapEx was 6.2 billion pesos, about 3% of revenue and 29.5% below last year; management expects CapEx to trend toward roughly 5% to 6% of sales. For shareholder returns, ordinary dividends total 15.2 billion pesos, the extraordinary dividend is 25.8 billion pesos, and total expected distributions are about 41 billion pesos on a March 2026 to March 2027 basis; the 300 million share repurchase program is expected to finish in Q2.

Jose Antonio Garza-Laguera framed the quarter as a broad operational improvement, led by OXXO Mexico’s recovery and promising momentum in Latin America. He emphasized that the new reporting structure should make it easier to track progress in OXXO Mexico and the faster-growing Americas & Mobility operations. His tone was constructive but disciplined: he repeatedly said traffic is improving but still not where he wants it, and that the company remains focused on affordability, customer experience, and operational execution.

Martin Arias highlighted the hard numbers and the drivers behind them: consolidated revenue up 6.1%, operating income up 5.5%, and net income boosted by a one-time non-cash gain, which masked an underlying decline. He walked through the main financial headwinds, including a 883 million peso foreign-exchange swing, a 189 million peso financial-instrument expense versus a 1.1 billion peso gain last year, lower interest income, and the absence of 2.5 billion pesos from discontinued operations. He also pointed to CapEx of 6.2 billion pesos, a 29.5% decline year over year, but said spending should accelerate toward a 5% to 6% sales ratio; on leverage, he said FEMSA would likely end the year slightly below 2x net debt/EBITDA excluding cost, absent M&A.

Analysts focused on OXXO traffic, margin sustainability, new-store productivity, and how much of the quarter’s ticket growth came from tax pass-through versus underlying pricing. Management said traffic improved relative to last year but is still not satisfactory, with stronger traffic in the North and weaker trends in Jalisco, the Southeast, and remittance-exposed areas; on margins, they said some of the 140 bps gross margin expansion came from supplier agreements, distribution income, retail media, and financial services, but not all of it should be assumed to repeat. On store growth, management said low-productivity niche stores and store pruning are affecting net openings, and that annual net OXXO openings could be impacted by a few hundred closures. On Spin, management said active users topped 11 million and tender is above 50%, with a long-term aspiration to move toward 66%, while on capital allocation they said leverage should end slightly below 2x and could leave room for another extraordinary dividend, buybacks, or M&A next year.