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Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, shares have rolled down 35.7% in the past year. With this decline, FMX shares have underperformed the broader industry and the Consumer Staples sector’s dip of 6.7% and 4.4%, respectively. The company’s shares have also underperformed the S&P 500’s rally of 23.6% in the same period.
FMX’s One-Year Stock Performance
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At the current price of $83.59, the FMX stock trades at a 41.7% discount to its 52-week high of $143.43. The current stock price reflects a 3.1% premium from its 52-week low mark. FEMSA trades below its 50 and 200-day moving averages, indicating a bearish sentiment.
Challenges Facing FEMSA’s Stock Performance
FMX continued to witness a soft consumer environment, particularly in the Mexico market, its largest growth driver, in third-quarter 2024. Consequently, the company reported mixed trends in Proximity Americas, with year-over-year sales growth of 4.8% and flat same-store sales. The segment’s same-store sales reflected a 6.1% rise in average customer tickets, offset by a 5.7% store traffic decline. The lower store traffic was due to adverse weather conditions in Mexico, a challenging comparison period and a weaker consumer environment in Mexico since the end of the second quarter of 2024.
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Looking further, the Thirst and Gathering consumption occasions, which are crucial for OXXO, were notably affected by adverse weather conditions, leading to significant underperformance in beer, sparkling beverages and water in the third quarter. Additionally, the company’s Health segment showed impacts of the intense competitive environment in Mexico, which partly offset the otherwise strong results for the segment.
Can FMX’s Strategies Aid a Turnaround?
FEMSA stays on the list of investors’ favorite beverage stocks, mainly because of effective growth strategies and strong market demand. The company is progressing on the FEMSA Forward Strategy, which is focused on the long-term value creation of its core businesses — retail, Coca-Cola FEMSA KOF and Digital@FEMSA. Its retail business provides substantial opportunities for long-term growth, backed by improvements in the Proximity division.
FMX has been gaining pace in the digital space through its tech and innovation unit, Digital@FEMSA, which aims to build a value-added digital and financial ecosystem for consumers and businesses. This unit also focuses on enhancing and leveraging the strategic assets of FEMSA’s core business verticals.
Coca-Cola FEMSA is at the forefront with its omni-channel approach, whereas the Proximity division continues to advance digital initiatives within OXXO stores. The company is actively investing in digital offerings, loyalty programs and fintech platforms within its OXXO chains to strengthen its long-term position.
FMX has been witnessing solid growth trends across all business units. FEMSA’s Proximity and Health retail businesses offer significant opportunities for long-term growth and value creation. The company is on track to accelerate earnings growth in its retail division through organic expansion, and by continually enhancing the value it provides to consumers across various formats and markets.