Q3 2023 Fomento Económico Mexicano SAB de CV Earnings Call
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Speaker 1: transcript
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Speaker 2: Know.
Speaker 1: transcript
Speaker 1: The.
Speaker 3: The.
Hello, and welcome to Reed sensor hub.
Speaker 2: transcript
Speaker 2: Hello and welcome to the Census Third Quarter 2023 results conference call. Please note this conference is being recorded and for the duration of the call your lines will be only done only. However, you'll have the opportunity to ask questions. This can be done by pressing Star 1 on your telephone keypad to register your questions.
Speaker 4: Hello and welcome to the Census Third Quarter 2023 results conference call. Please note this conference is being recorded and for the duration of the call your lines will be only done only. However, you'll have the opportunity to ask questions. This can be done by pressing Star 1 on your telephone keypad to register your questions.
The 20th once you free results Conference call. Please note. This conference is being recorded and for the duration of the call. Your lines will be on listen only however, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question we can.
Speaker 2: transcript
Speaker 2: We kindly ask you to limit yourself to one question only. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to Juan Fonseca to begin today's conference. Thank you.
Speaker 5: We kindly ask you to limit yourself to one question only. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to Juan Fonseca to begin today's conference. Thank you.
We ask you to limit yourself to one question only.
If you require assistance at any point, Please press star zero and you'll be connected it's gone up right now.
I'll now hand, you over to our Quant Fonseca to begin today's conference. Thank you.
Good morning, everyone welcome to fend for third quarter 2023 results conference call.
Speaker 3: transcript
Speaker 3: Good morning, everyone. Welcome to FEMSA's third quarter 2023 results conference.
Speaker 6: Good morning everyone, welcome to Fence the Stair Quarter 2022 self-conference.
Speaker 3: transcript
Speaker 3: Today we are joined by Paco Camacho, our Chief Corporate Officer, Eugenio Garza, our CFO , and Jorge Collazo, who heads Coca-Cola Center's Investor Relations.
Speaker 7: Today we are joined by Paco Camacho, our Chief Corporate Officer, Eugenio Garza, our CFO , and Jorge Collazo, who heads Coca-Cola Center's Investor Relations.
Today, we're joined by Soco Camacho, our Chief Corporate Officer if.
By far our CFO, Unfortunately, JASO, who heads our cockpits Coca Cola FEMSA as Investor Relations team.
Speaker 3: transcript
Speaker 3: The plan is for Paco to open the conversation with some high-level and strategic comments on trends and results, followed by Eugenio, who will focus more on the detailed numbers, and we will then open the call for your questions.
Speaker 8: The plan is for backup to open the conversation with some high level of strategic comments on trends and results. Follow by Ocranio who will focus more on the detailed numbers and we will then open the call for your questions.
The planning for a packet to open the conversation with some high level of strategic comments on trends and results followed by a perennial who will focus more on the detailed numbers and we will then open the call for your questions.
If I could please go ahead.
Thank you Brian.
Good morning, everyone.
Speaker 4: transcript
Speaker 4: Good morning, everyone. Let me begin by thanking you once again for all your kind messages of support and sympathy around the passing of the mail last program.
Speaker 9: Good morning, everyone. Let me begin by thanking you once again for all your kind messages of support and sympathy around the passing of the mail last program.
Let me begin by thanking you once again for your kind messages of support and sympathy around the passing of Danielle last August.
Speaker 4: transcript
Speaker 4: He left a big hole for us, but also a big legacy. And we carry on with renewed purpose to continue what he started.
Speaker 10: He left a big home for us, but also a big legacy. And we carry on with renewed purpose to continue what he starts.
He left a big hole for us, but also a big legacy and we carry on with renewed purpose to continue what he's got.
Speaker 4: transcript
Speaker 4: To that end, Jose Antonio transitioned seamlessly and is now fully engaged in his dual role as chairman and CEO , steering the ship as we continue to execute our ambitious strategy.
Speaker 11: To that end, Constantinot transition seamlessly and is now fully engaged in his dual goal as chairman and CEO , skearing the ship as we continue to execute or ambitious as tribes.
To that end cause Antonio transition seamlessly and is now fully engaged in his dual role as chairman and CEO scaring the shape and we continue to execute our ambitious right.
Speaker 4: transcript
Speaker 4: On that note, and as an update on where we are on PEMSA Forward, we can inform you that regarding the Envoy IFS Brady transaction announced at the end of August , the regulatory process has advanced according to schedule and we expect the transition to close soon.
Speaker 12: On that note, and as an update on where we are on PEMSA Forward, we can inform you that regarding the Envoy IFS Brady transaction announced at the end of August , the regulatory process has advanced according to schedule and we expect the transition to close soon.
And that note.
I'll take the where we are in terms of forward. We can inform you that regarding the envoy.
Ah, Yes, it's Brady transaction announced at the end of August the regulatory process has had bad according to schedule.
We expect the transition to close them.
Speaker 4: transcript
Speaker 4: Additionally, we have launched the divestiture process for the next layer of assets, including those related to Solistica and Imbera, and we are already making good progress on those early efforts.
Speaker 13: Additionally, we have launched the divestiture process for the next layer of assets, including those related to Solistica and Embarrassed. And we are already making good progress on those earlier.
Additionally, we have launched the divestiture process for the next layer of assets, including those related to <unk> and in bad.
And we are already making good progress on those early efforts.
Speaker 4: transcript
Speaker 4: Furthermore, last month, we announced changes to FEMSA's senior leadership team, as well as an evolution of the organizational structure of our retail business vertical.
Speaker 14: Furthermore, last month, we announced changes to fences in your leadership team, as well as an evolution of the organizational structure of our retail business.
Furthermore, last month, we announced changes to our senior leadership team as well as an evolution of the organizational structure for the retail business vertical.
Speaker 4: transcript
Speaker 4: Once these changes take effect in November , we will have one leader for each of the three core business verticals in full consistency with FEMSA Forward, enabling our organization to operate with maximum focus and effectiveness.
Speaker 15: One of these changes take effect in November . We will have one leader for each of the three fourth business verticals in full consistency within the floorwork. Enabling our organization to operate with maximum total of some effect.
While these changes take effect in a very good well.
We've had one neither for each of the three four business verticals for consistency with FEMSA forward, enabling our organization to operate with maximum focus on effectiveness.
Speaker 4: transcript
Speaker 4: As we have mentioned before, centensor forward is fully aligned with centensred customers centricity and our broader strategic priorities of driving long term growth increasing increasingly, enabled by digital capabilities, all we within our core business verticals and with a disciplined approach to capital allocation.
Speaker 16: Let me have mentioned before, SAMHSA forward is fully aligned with SAMHSA's customers and creativity and our broader strategic priorities of driving long-term growth, increasingly enabled by digital capabilities, always within our core business verticals and with a discipline approach to capital allocation.
And we have mentioned before.
Fan support widening fully aligned with customer centricity, and our broader strategic priorities, while driving long term growth.
Christian increasingly enabled by digital capabilities, all within our acquired business vertical.
Disciplined approach to capital allocation.
Speaker 4: transcript
Speaker 4: On this last topic, we have made significant progress in our analysis, and we will share and discuss our findings with our board at the upcoming November meeting.
Speaker 17: On this last topic, we have made significant progress in the war analysis. And we will share and discuss our findings with our board at the upcoming November
On this last topic, we have made significant progress in our analysis and we will share and discuss our findings with our board at the upcoming November meeting.
Speaker 4: transcript
Speaker 4: We are all aware that this is an item top of mind and we will keep you posted as appropriate.
Speaker 18: We are all aware that this is an item top of mine. And we will keep you posted as a pro.
We are all aware that this is and I can talk offline and we will keep you posted as appropriate.
Speaker 4: transcript
Speaker 4: Moving on to the result, or third quarter numbers, continued the very positive trends seen during the first half of the year.
Speaker 19: Moving on to the result, or third quarter numbers, continued the very positive trends seen during the first half of the year.
Moving onto the results our third quarter numbers continued the very positive trends seen during the first half of the year fully consistent with our strategic priorities and making progress towards the targets set by each business unit long range plan.
Speaker 4: transcript
Speaker 4: fully consistent with our strategic priorities and making progress towards the target set by each business unit long range plan.
Speaker 20: fully consistent with the rest of the pre-oid is making progress towards the target set by each business unit long-range blast.
Speaker 4: transcript
Speaker 4: Indeed, 2023 is shaping up to be a banner year for our core business.
Speaker 21: Indeed, 2023 is shaping up to be a banner year for our core business.
Indeed, 2023 is shaping up to be a banner year for our card business vertical.
Speaker 4: transcript
Speaker 4: Beginning with virxunity, like we did our toall last quarter. It's helpful to talk for a minute about their own long brange plan and the four priorities around which it is built is strengthening the core.
Speaker 22: Beginning with proximity, like we did in our call last quarter, it's helpful to talk for a minute about their own long range plan and the four priorities are on which it is built. Strengthening the core.
Beginning with proximity like would eat into our call last quarter. It's helpful to talk for a minute about their own long range plan and the four priorities around which it is built.
In the court.
Eloping new growth avenues.
Speaker 4: transcript
Speaker 4: developing multiple successful formats, and growing the footprint beyond Mexico. Looking at OXA's third quarter.
Speaker 23: developing multiple successful formats, and growing the footprint beyond Mexico. Looking at OXA's third quarter.
Developing multiple successful for that.
Growing the footprint beyond Mexico.
Looking at DOCSIS third quarter results through this lens.
Speaker 4: transcript
Speaker 4: we see they again made stellar progress in strengthening the core, a same-store-sales growth remained above 15% against a demanding comparison base.
Speaker 24: We see they again made standard progress as strengthening the core. A same store-save growth remain above 15% against a demanding comparison base.
We see they again made stellar progress strengthening the core same store sales growth remain above 50% against a demanding comparison base.
Speaker 4: transcript
Speaker 4: with average traffic contributing more than half of the growth, which is remarkable.
Speaker 25: with average traffic contributing more than half of the growth, which is remarkable.
With average traffic contributing more than half of the growth which is remarkable.
Speaker 4: transcript
Speaker 4: This strong performance continues to be driven by a broad set of tailwinds, including a strong consumer demand for thirst, gathering and snacking occasions.
Speaker 26: This is Trump's performance, continues to be driven by a broad set of tailwinds, including a Trump-consumer demand for thirst, gathering and his lacking location.
This is strong performance continues to be driven by a broad set of stay wins, including a strong consumer demand for third gathering and as Lachlan locations.
Speaker 4: transcript
Speaker 4: solid commercial income dynamics, better segmentation at the store, and the rapid adoption of a spin premium loyalty program.
Speaker 27: solid commercial income dynamics, better segmentation and the store, and the rapid adoption of a spin premium logic for
Solid commercial income dynamics, better segmentation of the sport and the rapid adoption of its been Premier luggage program.
Speaker 4: transcript
Speaker 4: Continuing with the possibility of a stronger core, store growth with robust ones again.
Speaker 28: Continuing with the positive news of a stronger core, store growth was robust once again.
Continuing with the positive news of a stronger core store growth.
But once again with.
Speaker 4: transcript
Speaker 4: with Mexico and LATAM having 293 net new stores during the quarter.
Speaker 29: with Mexico and La Tama, having 293 net new stores during the quark.
With Mexico, and Latam, adding 293 net new stores during the quarter.
Speaker 4: transcript
Speaker 4: and 1,453 during the past 12 months.
Speaker 30: and 1,433 during the past 12 months.
And 1453 during the past 12 months.
Speaker 4: transcript
Speaker 4: Looking only at Mexico, we are on pace to meet or exceed the 1,000 new net store threshold for the first time since before the COVID pandemic and with more provocative stores.
Speaker 31: Looking only at Mexico, we are on pace to meet or exceed the 1000 new net store threshold for the first time since before the COVID pandemic. And with more about the store.
Looking only at Mexico, we are on pace to meet or exceed the 1000 new.
Net historic threshold for the first time since before the Covid pandemic and with more productive stores.
Speaker 4: transcript
Speaker 4: Moving on to a long-range priority of growing beyond Mexico, during the quarter, Grouponos continued its solid advance, with revenues increasing over 150% year over year, and with also footprint in Brazil, more than doubling during the last 12 months.
Speaker 32: Moving on to a long-range priority of growing beyond Mexico, during the quarter, Grouponos continued its solid advance, with revenues increasing over 150% year over year, and with also footprint in Brazil, more than doubling during the last 12 months.
Moving onto the loan grades priority of growing beyond Mexico during the quarter group.
Continued its solid advice with revenues, increasing over 150% year over year and with office footprint in Brazil more than doubling during the last 12 months.
Speaker 4: transcript
Speaker 4: Still in proximity to America, but along the priority of developing multiple successful formats, BADA grew revenues by 36.7% and reached a total of 309 stores as of the end of the quarter.
Speaker 32: stealing proximity America, but along the priority of the therapy, multiple successful formats, but I grew revenues by 30.7%, 36.7% and reached a total of 309 stores as of the end of the quarter.
Please proceed with your America, but along the priority of developing multiple successful formats. Barra grew revenues by 37% 36, 7% and reached a total of 309 stores I saw at the end of the quarter.
Speaker 4: transcript
Speaker 4: For its part, Proximity Europe increased revenues by 8.7 percent, reflecting traffic recovery and positive pricing initiatives, as well as the growth of Ballora food service and B2B business.
Speaker 32: For its parts, proximity to Europe increased revenues by 8.7%, reflecting traffic recovery and positive pricing initiatives, as well as the growth of balloting service and need to be business.
For its part proximity Europe increased revenues by eight 7%.
Reflecting traffic recovery and positive pricing initiatives as well as the growth of below their foodservice and b to B business.
Speaker 4: transcript
Speaker 4: And so at the end of the period, Proximity Europe has 2,810 points of success.
Speaker 32: And so at the end of the period, Proximity Europe has 2,810 points of success.
I felt the end of the period proximity to Europe as 2810 points uptake.
Speaker 4: transcript
Speaker 4: Our health operations continue the trend we saw in the first half of the year, reflecting foreign exchange headwinds from a strong Mexican peso relative to local currencies in South America.
Speaker 9: Our health operations continue to trend we saw in the first couple of years. Reflecting foreign exchange headwinds from a strong Mexican peso relics relative to local currencies in South America.
Yeah.
Our health operations continued the trend we saw in the first half of the year, reflecting foreign exchange headwinds from a strong Mexican peso relative relative to local currencies in South America.
Speaker 4: transcript
Speaker 4: as well as mixed results with flat numbers in Chile and positive trends in Colombia and Ecuador offset by pressure in a more competitive Mexico.
Speaker 32: as well as mixed results with flat numbers in Chile and positive trends in Colombia and Ecuador of set-by pressure in a more competitive mix.
Well as mixed results with flattish flat numbers in Chile, and positive trends in Colombia, and Ecuador, offset by pressure in the more competitive in Mexico.
Speaker 4: transcript
Speaker 4: Importantly, during the quarter, our health business continues to push to consolidate competitive position across several markets, increasing its footprint by 95% to reach a total of 4,000, three hundred and forty seven locations.
Speaker 32: Importantly, during the quarter, our health business continues to push to consolidate its competitive position across several markets, increasing its footprint by 9.5% to reach a total of 4,347 locations.
Importantly, during the quarter, our health business continues to push the consolidated competitive position across several markets increasing its footprint by 19, 5% to reach a total of 4347 locations.
Speaker 4: transcript
Speaker 4: In fact, during the last year or shell division added new locations across the territories at a base of one per day.
Speaker 28: In fact, during the last year, our shell division added new locations across its territories at a pace of one per day.
In fact during the last year, our health Division added new locations across its territories at a pace of one per day.
Speaker 4: transcript
Speaker 4: For its part, our fuel business delivers a stable performance with strength in the corporate wholesale business continuing to perform relative to retail.
Speaker 27: For its part, our fuel business delivers a stable performance with strength in the corporate wholesale business continuing to perform relative to retail.
Okay.
Bart or fueled business delivered a stable performance with a three with its strength.
In the corporate wholesale business.
Income performed relative to weak.
Outperformed relatively weak.
Speaker 4: transcript
Speaker 4: Regarding data files, the number of active users for a cell reached 6.4 million during the quarter.
Speaker 29: Regarding digital, the number of active users for spin reached 6.4 million during the quarter.
Regarding digital the number of active users for Spain reached $6 4 million during the quarter.
Speaker 4: transcript
Speaker 4: An active user for our Prania Logity Program reached 17.7 million.
Speaker 29: and active users for our PREMIA loyalty program reached 17.7 million.
And active users for our Premier loyalty program reached $17 7 million.
Speaker 4: transcript
Speaker 4: when more than 28% of FOXO Mexico sales are now associated with the program.
Speaker 27: when more than 28% of FOXO Mexico sales are now associated with the program.
While more than 28% of OXXO, Mexico sales are now associated with the program.
Speaker 4: transcript
Speaker 4: We continue to privilege the acquisition of higher quality users while we make progress fine-tuning the use cases, value proposition, unit economics, and monetization strategies for each part of the economy.
Speaker 27: We continue to privilege the position of higher quality users while we make progress by tuning the use cases, valuable positions, unit economics, and one of the patient strategies for each part of the group.
We continue to privilege acquisition of higher quality users, while we make progress fine tuning the use cases value proposition unit economics, and monetization strategies for each part of the ecosystem.
Speaker 4: transcript
Speaker 4: In terms of financial implications, during the quarter we deployed close to 1 billion pesos on growing this business, roughly in line with the previous quarter.
Speaker 27: In terms of financial implications, during the quarter, we deployed close to one billion pesos and growing this business. Roughly in line with the previous quarter.
In terms of financial implications during the quarter, we deployed close to 1 billion pesos in growing this business.
Roughly in line with the previous quarter as well as budget.
Speaker 4: transcript
Speaker 4: Finally cocacola offens are a leadver, a remarkable set of results for the third quarter, driven by double-digit volume of revenue growth as they accelerate their pace of investment across market and with that.
Speaker 28: Finally, Coca-Cola fans at the leader are remarkable set of results for the third quarter driven by double digit volume and revenue growth as they accelerate their pace of investment across market. And with that, let's.
Finally, Coca Cola FEMSA deliver a remarkable set of results for the third quarter, driven by double digit volume and revenue growth as they accelerate their pace of investment in growth market.
And with that let me turn it over to Kenya.
Speaker 5: transcript
Speaker 5: Thank you, Paco, and good morning to everyone online. Before going on to the numbers, also want to give a quick shout out to all our colleagues in Acapulco and surrounding areas that were affected by Hurricane Otis. They have been true heroes in helping the community get back on their feet over the past couple of days. Thank you for that.
Speaker 9: Thank you, Pakol, and good morning to everyone online. Before going on to the numbers, also want to give a quick shout out to our colleagues in a couple of surrounding areas that were affected by hurricane notice. They have been two heroes in helping the community to get back on their feet over the past couple of days. Thank you for that.
Thank you Pablo and good morning to everyone on the line before going onto the numbers also wanted to give a quick shout out to our colleagues in Acapulco surrounding areas that were affected by hurricane notice they have been true heroes and helping the communities get back on their feet over the past couple of days. Thank you for that.
Speaker 5: transcript
Speaker 5: Going into the results in more detail, I also want to bring your attention before that that as of the third quarter, we are now booking envoy solutions as of the discontinued operations. Therefore, for comparability purposes, we are adjusting our third quarter 22 consolidated financials to reflect this change.
Speaker 8: Going into the results in more detail, I also want to bring your attention before that, as of the third quarter, we are now booking envoy solutions as of the discontinued operations. Therefore, for comparability purposes, we are adjusting our third quarter 22 consolidates financials to reflect this change.
Going to the results in more detail I also want to bring your attention before that.
As of the third quarter, we are now booking envoy solutions as a discuss discontinued operations. Therefore for comparability purposes, we are adjusting our third quarter 'twenty two consolidated financials to reflect this change.
Speaker 5: transcript
Speaker 5: Moving on to census consolidated quarterly results, total revenues during the third quarter increased 19.3% while income from operations increased 12.7% compared to the third quarter of 2022.
Speaker 19: Moving on to FEMSA's consolidated quarterly results, total revenues during the third quarter increased 19.3%, while income from operations increased 12.7% compared to the third quarter of 2022.
Moving on to FEMSA consolidated quarterly results total revenues during the third quarter increased 19, 3% while income from operations increased 12, 7% compared to the third quarter of 2022.
Speaker 5: transcript
Speaker 5: Net consolidated income was 12.8 billion pesos, reflecting higher income from operations.
Speaker 19: Net-consolvated income was $2.8 million per billion pesos reflecting higher income from operations.
Net consolidated income was $12 8 million Brazilian vessels, reflecting higher income from operations, a noncash foreign exchange gain of $5 4 billion related to centers U S. Dollar denominated cash position as impacted by the depreciation of the Mexican peso during the quarter and a decrease in noninterest expenses during the quarter.
Speaker 5: transcript
Speaker 5: A non-cash foreign exchange gain of $5.4 billion related to census US dollar-denominated cash position has impacted by the depreciation of the Mexican vessel during the quarter, and a decrease in many interest expenses during the quarter.
Speaker 19: A non-cash foreign exchange gain of $5.4 billion related to census US dollar-denominated cash position has impacted by the depreciation of the Mexican vessel during the quarter, and a decrease in many interest expenses during the quarter.
Speaker 5: transcript
Speaker 5: This was offset by a decrease in our net income from discontinued operations.
Speaker 19: This was offset by a decrease in on net income from discontinued operations.
This was offset by a decrease in our net income from discontinued operations, which mainly reflects the results of our investment in Heineken during third quarter 2020.
Speaker 5: transcript
Speaker 5: which mainly reflects the results of our investment in Heineken during third quarter 2022.
Speaker 19: which mainly reflects the results of our investment in Heineken during third quarter 2022.
Speaker 5: transcript
Speaker 5: Moving on to discuss our operations and beginning with Proximity Americas. We added 293 units during the quarter to reach 1,453 net new stores for the last 12 months.
Speaker 19: Moving on to discuss our operations and beginning with proximity Americas. We added 293 units during the quarter to reach 1453 net new stores for the last 12 months.
Moving on to discuss our operations and beginning with proximity Americas. We added 283 units during the quarter to reach <unk> hundred 53, net new stores for the last 12 months. This puts US ahead of target and underscores not just the momentum we have achieved in Mexico, but also the strong phase we now have in Latin America, particularly in Colombia.
Speaker 5: transcript
Speaker 5: This puts us ahead of target and underscores not just the momentum we have achieved in Mexico, but also the strong faith we now have in Latin America. Particularly in Colombia, where we recently began opening stores in our fourth city, Cali.
Speaker 19: This puts us ahead of target and underscores not just the momentum we have achieved in Mexico, but also the strong faith we now have in Latin America. Particularly in Colombia, where we recently began opening stores in our fourth city, Cali.
We recently began opening stores in our fourth city tally.
Speaker 5: transcript
Speaker 5: Also, same-store sales were up 15.1% for the third quarter. This was driven by an increase of 6.6% in average customer ticket and a very strong 8% growth in traffic.
Speaker 19: Also, same-store sales were up 15.1% for the third quarter. This was driven by an increase of 6.6% in average customer ticket and a very strong 8% growth in traffic.
OXXO same store sales were up 15, 1% for the third quarter. This was driven by an increase of six 6% in average customer ticket and a very strong 8% growth in traffic.
Speaker 5: transcript
Speaker 5: As Paco mentioned at the outset, this performance reflects a broad set of tailwinds related to core categories performing well, healthy commercial income dynamics, better segmentation efforts, and the growing impact of the Premier Loyalty Program, all of this against the backdrop of a robust consumer environment.
Speaker 19: As Paco mentioned at the outset, this performance reflects a broad set of tailwinds related to core categories performing well, healthy commercial income dynamics, better segmentation efforts, and the growing impact of the Premier Loyalty Program, all of this against the backdrop of a robust consumer environment.
Pascal mentioned at the outset. This performance reflects the broad set of tailwind to elect related to core categories, performing well healthy commercial income dynamics better segmentation efforts and the growing impact of the Premier loyalty program. All of this against the backdrop of a robust consumer environment.
Speaker 5: transcript
Speaker 5: Gross margin expanded by a full percentage point to reach 41.2%, with electing strong commercial activity and promotional programs from key suppliers, as well as an undemanding comparison base from last year.
Speaker 19: Gross margin expanded by a full percentage point to reach 41.2%, reflecting strong commercial activity and promotional programs from key suppliers, as well as an undemanding comparison base from last year.
Gross margin expanded by a full percentage points to reach 41, 2%, reflecting strong commercial activity and promotional programs with key suppliers as well as the non demanding comparison base from last year.
Speaker 5: transcript
Speaker 5: Income from operations increased 14.7% while operating margin decreased 50 basis points compared to the same period of 2022 to which 8.9% with likely an increasing labor expenses standing from the labor with points in next.
Speaker 19: Income from operations increased 14.7% while operating margin decreased 50 basis points compared to the same period of 2022 to reach 8.9% reflecting an increase in labor expenses stemming from the labor reforms in Mexico.
Income from operations increased 14, 7%, while operating margin decreased 50 basis points compared to the same period of 2022 to reach eight 9%, reflecting an increase in labor expenses stemming from the labor reforms in Mexico.
Speaker 5: transcript
Speaker 5: At proximity to Europe , revenues increase 8.7% in local currency to which 11.2 billion pesos. We're selecting a recovery in traffic and ticket driven mostly by improved customer mobility.
Speaker 19: At Proximity Europe , revenues increased 8.7% in local currency to reach 11.2 billion pesos, reflecting a recovery in traffic and ticket driven mostly by improved customer mobility.
At proximity Europe revenues increased eight 7% in local currency to reach 11, 2 billion pestles, reflecting a recovery in traffic and ticket driven mostly by improved customer mobility.
Speaker 5: transcript
Speaker 5: Gross margin was 42% reflecting a mixed effect driven by the positive performance of valorta's food service and B to be the.
Speaker 19: Girls margin was 41.8%, reflecting a mix effect driven by the positive performance of Valora's food service and B2BV.
Gross margin was 41, 8%, reflecting a mix effect driven by the positive performance of our Lord is foodservice and <unk> businesses.
Speaker 5: transcript
Speaker 5: Operating margin was 3.1%, reflecting better operating leverage partially offset by an increase in expenses driven by inflationary pressure.
Speaker 19: Operating margin was 3.1%, reflecting better operating leverage partially offset by an increase in expenses driven by inflationary pressure.
Operating margin was three 1%, reflecting better operating leverage partially offset by an increase in expenses driven by inflationary pressures.
Speaker 5: transcript
Speaker 5: Moving on to FEMSA's health operations. During the quarter, we expanded our drugstore count by 80 net new additions to reach a total of 4,347 units across all of our territories at the end of September , and 365 total net new stores for the last 12 months.
Speaker 19: Moving on to Fence Health Operations. During the quarter, we expanded our drug store count by AV Net New Editions to reach a total of 4,347 units across all of our territories at the end of September and 365 total net news stores for the last 12 months.
Moving onto defensive health operations during the quarter, we expanded our drugstore com by 80 net new additions to reach a total of 4300 47 units across all of our territories at the end of September and 365 total net new stores for the last 12 months.
Speaker 5: transcript
Speaker 5: Revenue increased slightly, while thanks to our sales decreased in average of 3.6%.
Speaker 19: Revenues increased slightly, while same-store sales decreased an average of 3.6%.
Revenues increased slightly while same store sales decreased an average of three 6%.
Speaker 5: transcript
Speaker 5: However, as was the case last quarter, it is important to note that on a currency neutral basis, revenues would have grown 13.6% and same store sales would have increased 4.7%, partially offset by a demanding comparison base in our operations in Chile and a very challenging competitive environment in Mexico.
Speaker 19: However, as was the case last quarter, it is important to note that on a currency neutral basis, revenues would have grown 13.6% and same store sales would have increased 4.7%, partially offset by a demanding comparison base in our operations in Chile and a very challenging competitive environment in Mexico.
However, as was the case last quarter. It is important to note that on a currency neutral basis revenues would have grown 36% and same store sales would have increased four 7%, partially offset by a demanding comparison base in our operations in Chile, and a very challenging competitive environment in Mexico.
Speaker 5: transcript
Speaker 5: Gross margin contracted 30 basis points in the quarter, reflecting a negative mix effect driven by the increasing contribution of our operations in Colombia, which have a structurally lower margin.
Speaker 19: Gross margin contracts as 30 basis points in the quarter with selecting a negative mix effect driven by the increasing contribution of our operations in Colombia, which have structurally lower margin.
Gross margin contracted 30 basis points in the quarter, reflecting a negative mix effect driven by the increasing contribution of our operations in Colombia, which have a structurally lower margin operating margin increased 60 basis points, reflecting an increase in labor expenses in most of our markets.
Speaker 5: transcript
Speaker 5: Operating margin increased 60 beta points, reflecting an increased in labor expenses in most of our markets.
Speaker 19: Operating margin increased 60 basis points, reflecting an increase in labor expenses in most of our markets.
Speaker 5: transcript
Speaker 5: Adoxo gaps, revenues increase 14.2% and same station sales to 8.1%. Retail volumes were again complemented by a robust pick up in corporate and wholesale activity.
Speaker 19: Adoxo gaps, revenues increase 14.2% and same station sales to 8.1%. Retail volumes were again complemented by a robust pick up in corporate and wholesale activity.
I hope so that revenues increased 14, 2% and same station sales grew eight 1% retail volumes were again complemented by a robust pick up in corporate and wholesale activity.
Speaker 5: transcript
Speaker 5: During the quarter, gross margin was 12.4%, while operating margin was 4.5%, with left-wing tight expense control, offset by increased labor expense.
Speaker 19: During the quarter, gross margin was 12.4%, while operating margin was 4.5%, with left-wing tight expense control, offset by increased labor expense.
During the quarter gross margin was 12, 4%, while operating margin was four 5%, reflecting tight expense control offset by increased labor expenses.
Speaker 5: transcript
Speaker 5: Moving on, Coca-Cola FEMSA, as you saw a couple days ago, delivered a stellar set of results in the third quarter. Total volume grew 11.6% driven by growth across all of its territories. Total revenues increased 10.1% and operating income grew 15.3% as operating margin expanded by 70 base points to reach 13.5%. You can listen to the replay of their conference call held last Wednesday on their investor relations website.
Speaker 19: Moving on, Coca-Cola Fensa, as you saw a couple of days ago, delivered a stellar set of results in the third quarter. Total volume grew 11.6% driven by growth across all of its territories. Total revenues increased 10.1% and operating income grew 15.3%. As operating margin expanded by 70 base points to reach 13.5%. You can listen to the replay of their conference call held last Wednesday on their investor relations website.
Moving on Coca Cola FEMSA as you saw a couple of days ago delivered a stellar set of results in the third quarter total volume grew 11, 6% driven by growth across all of its territories total revenues increased 10, 1% and operating income grew 15, 3% as operating margin expanded by 70 basis points to reach 13, 5%.
You can listen to the replay of the conference call him last Wednesday on their Investor Relations website.
Speaker 5: transcript
Speaker 5: And with that, let us open the line up for questions. Operator, please.
Speaker 19: And with that, let us open the line up for questions. Operator, please.
And with that let US open the lineup for questions operator please.
Speaker 2: transcript
Speaker 2: Thank you. As a reminder, if you'd like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. You are kindly asked to limit yourself to one question only. If you change your mind and want to withdraw your question, please press star 2. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question.
Speaker 4: Thank you. As a reminder, if you'd like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. You are kindly asked to limit yourself to one question only. If you change your mind and want to withdraw your question, please press star 2. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question.
Thank you as a reminder, if you'd like to ask a question or micro contributors turn on todays call. Please press star one on your telephone keypad.
I'll kindly ask you limit yourself to one question only if you change your mind and want to withdraw your question. Please press star two please ensure your lines are on mute locally how's you'll be prompted to a short question.
Speaker 2: transcript
Speaker 2: Our first question comes from the line of Ben Furrer from Barclays. Please go ahead.
Speaker 5: Alpha's question comes from the line of Ben Ferrer from Barclays. Big Go Head.
Our first question comes from the line of Ben Ferrara from Barclays. Please go ahead.
Yeah.
Sentara from Barclays. Please go ahead.
Okay.
Speaker 2: transcript
Speaker 2: Our next question comes from a line of Ricardo Alves from Morgan Stanley . Please go ahead.
Speaker 4: Our next question comes from a line of Ricardo Alves from Morgan Stanley . Please go ahead.
Our next question comes from the line of Ricardo Alves from Morgan Stanley. Please go ahead.
Speaker 6: transcript
Speaker 6: Hi, everyone. Thanks so much for the call. Thanks for the quick update on capital location as well. I'll leave follow-ups on that to another colleague. I wanted to take advantage.
Hi, everyone. Thanks so much for the call. Thanks for the quick update on capital location as well. I'll leave follow-ups on that to another colleague. I wanted to take advantage.
Hi, everyone. Thanks, so much for the call and thanks for the quick update on capital allocation as well I'll leave follow ups on that to another colleague.
I wanted to.
Speaker 6: transcript
Speaker 6: such strong top line at OXO, as well as the new leadership with Jose Antonio in the retail vertical. Wanted to take advantage of that and try and ask a more strategic question. I mean, FEMSA opened nearly 300 stores this quarter, right? We're running at 1,500 units last 12 months. So in the context of the FEMSA forward announcement, the prominence that OXO is gaining, the senior management changes, is there a revised?
such strong, top-line at Oxo. As well as the new leadership with Jose Antonio in the retail vertical, wanted to take advantage of that and try and ask him a strategic question. I mean, FEMSA opened nearly 200 stores this quarter, right? We're running at 1500 units, less 12 months. So in the context of the FEMSA forward announcement, the prominence that Oxo is gaining, the senior management changes, is there a revise?
To take advantage of such.
Such strong.
Topline at OXXO as well as the new leadership with wholesale partners in the retail vertical.
I wanted to take advantage of that and try and ask a more strategic question I mean, FEMSA opened nearly 200 stores this quarter right.
Running at 1500 units last 12 months.
So in the context of the FEMSA forward announcement, the prominence that OXXO is gaining the senior management changes is there a revised.
Speaker 6: transcript
Speaker 6: medium to long-term growth plan for OXO. I wanted to see if you can break it down again into what are the latest thoughts for Mexico, South America, ex-Brazil, and even Brazil, if you will, but mostly proximity Americas.
medium to long-term growth plan for for also Wanted to see if you can break it down again into What are the latest thoughts for for Mexico South America X Brazil and even Brazil if you will Mostly proximity America
Medium to long term growth plan for OXXO wanted to see if you can break it down again into what are the latest thoughts for Mexico, South America, ex Brazil, and even Brazil, if you will but mostly proximity Americas.
Speaker 6: transcript
Speaker 6: Basically, after these numbers, quarter over quarter of beads on the top line front, we feel that there's upside to the numbers that we've discussed over and over again over the past couple of quarters. So just curious to hear the latest strategic thoughts ahead for also coming from Jose Antonio and the proximity team overall. And then I'll go back in the queue. Thank you.
Basically, after these numbers, quarter over quarter of beads on the top line front, we feel that there's upside to the numbers that we've discussed over and over again over the past couple of quarters. So just curious to hear the latest strategic thoughts ahead for also coming from Jose Antonio and the proximity team overall. And then I'll go back in the queue. Thank you.
Basically.
After these numbers quarter over quarter of beats on the top line front, we feel that there is upside to the numbers that we've discussed over and over again over the past couple of quarters. So just curious to hear.
The latest strategic thoughts I had for OXXO coming from wholesale until I know in the proximity team overall.
And then I'll go back into queue. Thank you.
Speaker 4: transcript
Speaker 4: Thank you, thank you Riccardo for the question. I'm not sure what it means to go back in the queue, but thank you. I'll start with the first part of the question. I want to limit myself to one question. I know, thanks for the discipline. Listen, many start with the first part of the question. I will let then, can you provide a bit more color? But look, on the strategic side, clearly, the good news here is that...
Speaker 25: Thank you. Thank you, Ricardo, for the question. I'm not sure what it means to go back in the queue, but yeah, thank you. I'll just start with the first part of the question. Because I want to limit myself to one question. I know, thanks for the discipline. Listen, let me start with the first part of the question, and I will let them, or can you provide a bit more color? But, Luke, on the strategic side, clearly, the good news here is that there's a lot of good news. Thank you.
Thank you. Thank you Ricardo for the question I'm not sure what it means to go back into queue. Thank you.
Let's start with the with the with the first part of it.
And myself to one question.
I know it takes sort of a disciplined listen let me start with the first part of your question I will let Dan.
Can you provide a bit more color, but luke.
Strategic side clearly the good news here you said.
Speaker 4: transcript
Speaker 4: on top of the goodness of the organizational alignment with FEMSA forward.
Speaker 27: on top of the goodness of the organizational alignment with FEMSA forward.
On top of the goodness of the organizational alignment, we transfer corridor, which is taking place as we as we said in November.
Speaker 4: transcript
Speaker 11: which is taking place, as we said, in November .
Speaker 4: The fact is that we have also shared with you, we have very robust long range.
Speaker 25: The fact is that we have also shared with you, we have very robust, long-range...
The fact is that we have also shared with you we have very robust long range plans in each of the businesses including of course.
Speaker 4: transcript
Speaker 4: plans on each of the businesses, including, of course, Proximity.
Speaker 20: plans on each of the businesses, including, of course, Proximity.
Speaker 4: transcript
Speaker 4: So as of today, what is happening is that all the plans that were developed behind that long-range plan strategy are being deployed. And every single one of them are providing results. And some of those results are, of course, part of what is.
Speaker 25: So as of today, what is happening is that all the plans that were developed behind that long range plan strategy are being deployed. And every single one of them are providing results and some of those results are of course part of what is
Proximity so.
As of today, what the what is happening is that all the plans that were developed behind that long range plan and strategy are being deployed in every single one of them are providing results in some of those results.
Of course.
Speaker 4: transcript
Speaker 4: Now, as we work right now in the budget for 2024, as we close to the 23, you can imagine that part of the exercise is to also revise or revisit the projection that was done for the next several years as part of the long-range plan. And the team is working on that. And I assure you that when we call to coming in,
Speaker 11: Now, as we work right now in the budget for 2024, as we close to the 23, you can imagine that part of the exercise is to also revise or revisit the projection that was done for the next several years as part of the long-range plan. And the team is working on that. And I assure you that when we call to coming in,
Part of what is being reported now as we work.
Right now in the in the budget for 2024 as we closer to 23, you can imagine that part of the exercise is to also revise or revisit the prediction that was done for the next several years as part of the long range plan and the team is working on that.
I assure you that when you close when we foresee coming in.
Speaker 4: transcript
Speaker 4: He's actively participating in reviewing those numbers and checking whether they need to adjust some of the strategies, how they will start working together. So I mean, clearly he's part of the very robust group.
Speaker 26: He's actively participating in reviewing those numbers and checking whether they need to adjust some of the strategies, how they will start working together. So I mean, clearly he's part of the very robust group.
Actively participating in reviewing those numbers.
In checking whether they need to adjust some of your strategies.
How they will start working together so I mean, clearly is part of the very robust.
Speaker 4: transcript
Speaker 4: process that we have in FEMSA related to the long-range plan, to the budget, to the
Speaker 32: process that we have in Fencer related to the long range plan to the budget today.
The process that we haven't factor related to the long range plan to the budget today.
Speaker 4: transcript
Speaker 4: to the business management and Jose is jumping in at the right moment to make sure that any adjustment is taken care of as part of that process.
Speaker 24: to the business management and Jose is jumping in at the right moment to make sure that any adjustment is taken care of as part of that process.
So the business management.
Jose is jumping in at the right moment to to make sure that any adjustment is taken care of as part of that profit as for the second part of the question.
Speaker 3: transcript
Speaker 3: As for the second part of the question, I know, but yeah, yeah. Hey, Ricardo, it's one. Yeah, I think in terms of the number of openings, as you correctly framed the question, this is this is pretty strategic in the following sense, you know, the last couple of years, certainly through the covert years.
Speaker 8: As for the second part of the question, I know, but yeah, yeah. Hey, Ricardo, it's one. Yeah, I think in terms of the number of openings, as you correctly framed the question, this is this is pretty strategic in the following sense, you know, the last couple of years, certainly through the covert years.
Yeah, Hey, regardless quantity.
I think in terms of the number of openings.
As you correctly frame. The question. This is this is a pretty strategic in the following sense.
Last couple of years certainly through the Covid years. There was this big deceleration in the opening of stores in Mexico right.
Speaker 4: transcript
Speaker 4: there was this big deceleration in the opening of stores in Mexico, right? We closed a bunch of stores and then we were opening 800 per year and obviously there was this concern of, you know, does this mean that structurally we can't go back to kind of the four-digit number of openings in Mexico? And of course, what we've seen the last, you know, 18 to 24 months is, you know, once we built our pipeline with the new standards.
Speaker 7: There was this big deceleration in the opening of stores in Mexico, right? We closed a bunch of stores and then we were opening 800 per year. And obviously there was this concern of, you know, this means that structurally we, we can't go back to kind of the four digit number of openings in Mexico. And of course, what we've seen the last, you know, 18 to 24 months is, you know, once we built our pipeline with a new standard,
We closed a bunch of stores when we were opening 800 for year end and obviously there was a concern of you know does this mean that structurally we we can't go back to kind of the four digit.
And a number of openings in Mexico and of course, what we've seen the last 18 to 24 months.
Once once we build our pipeline with the new standards.
Speaker 7: transcript
Speaker 3: that are allowing us to open better, more productive stores, we are already back to the 1,000 stores per year in Mexico. And I think at this point, that is the number that I would plug into a model. I don't know necessarily that we would go back to the, you know, 1,200, 1,300, 1,400 that we did at some point in Mexico. I think I would use the 1,000 number for Mexico. But.
Speaker 7: but allowing us to open better and more productive stores, we are already back to the 1000 stores per year in Mexico. And I think at this point, that is the number that I would plug into a model. I don't know necessarily that we would go back to the, you know, 1,200, 1,300, 1,400 that we did at some point in Mexico. I think I would use the 1000 number for Mexico. But.
But are allowing us to open better and more productive stores. We are already back to the 1000 stores per year in Mexico, and I think at this point that is the number that I would plug into a model I don't know necessarily that we would go back to the 230 <unk> hundred 1400 that we did have some.
Point in Mexico, I think I would use the thousand number for Mexico, but the other part of the equation, which is Latam.
Speaker 7: transcript
Speaker 4: The other part of the equation, which is Latin, has definitely come of age over that time frame as well. So we mentioned actually minutes ago, we are now in four markets in Colombia. So it's both, we've got a manga, Pereda and now Cali.
Speaker 7: The other part of the equation, which is Latin, has definitely come of age over that time frame as well. So we mentioned actually minutes ago, we are now in four markets in Colombia. So it's both, we've got a manga, Pereda and now Cali.
Has definitely come of age over that timeframe as well so.
We mentioned a few minutes ago, we are now in four markets in Colombia. So it's both tanker among got at Ada and now Kelly.
Operator: Hello and welcome to the Census Third Quarter 2023 results conference call. Please note this conference is being recorded and for the duration of the call, your lines will be only done only. However, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. We kindly ask you to limit yourself to one question only. If you require assistance at any point, please press star zero and you'll be connected to an operator.
Speaker 7: transcript
Speaker 4: and things are going well and you know you integrate it okay market and choose it there's going to be some further growth there as well and of course Peru is also kind of coming into a stage where we could probably accelerate the opening so if you look at it in an aggregate number so the 14 and 14 hundred and change that number will probably continue to
Speaker 8: and things are going well and you know you integrate it okay market and choose it there's going to be some further growth there as well and of course Peru is also kind of coming into a stage where we could probably accelerate the opening so if you look at it in an aggregate number so the 14 and 14 hundred and change that number will probably continue to
Things are going well.
We integrated okay market in Chile, there is going to be some further growth there as well and of course, Peru is also kind of coming into a stage, where we could probably accelerate the openings. So if you look at it in an aggregate number so the $14 40 to 100 and change that number will probably continue to increase.
Speaker 7: transcript
Speaker 4: But it will be more driven by ex-Mexico than by Mexico. And I would leave Mexico at a thousand until further notice. But again, remembering that those thousand stores are going to be more productive than the thousand stores that we opened two, three, four, five years ago.
Speaker 8: But it will be more driven by ex-Mexico than by Mexico. And I would leave Mexico at 1,000 until further notice. But again, remembering that those 1,000 stores are going to be more productive than the 1,000 stores that we opened 2, 3, 4, or 5 years ago. So I thank you.
But it will be more driven by ex Mexico, and by Mexico, and I would I would leave Mexico had a 1000.
Juan Fonseca: I will hand you over to Juan Fonseca to begin today's conference. Thank you.
Till until further notice, but again remembering that those stores are going to be more productive than the 1000 stores that we opened 2345 years ago.
Juan Fonseca: Good morning, everyone. Welcome to Census Third Quarter 2023 results conference call.
Juan Fonseca: Today we are joined by Paco Camacho, our chief co-cord officer, Antonio Garza, our CFO, and Jorge Coyaso, who heads Coca-Cola Census Investurization Team. The plan is for Paco to open the conversation with some high level of strategic comments on trends and results followed by Ocrenio who will focus more on the detailed numbers and we will then open the call for your questions. Paco, please go ahead. Thank you, Juan. Good morning, everyone.
Speaker 5: transcript
Speaker 5: The only thing I would add just to get on to move on here, but I think it's important is that as we continue to execute on the language plan, we are having to surface across all initiatives, I mean, top-line initiatives.
Speaker 19: The only thing I would add to get on to move on here, but I think it's important is that as we continue to execute on the long range plan, we are having success across all initiatives. I mean, top line initiatives.
The only thing I would add just to get an optimal walk here, but I think it's important is that as we continue to execute on the long range plan. We are having some success across all initiatives I mean top line initiatives bottleneck initiatives and that is making.
I think the unit economics, especially in Mexico, better than we thought they would be when we originally executed so if anything I see a longer runway in terms of how long we can grow at this pace and that can cause. This challenge going forward will be more of a bandwidth issue as to how we allocate that I mean, human power and just I mean.
Speaker 7: transcript
Speaker 7: in terms of how long we can grow at this pace. And I think Jose's challenge going forward would be more of a bandwidth issue as to how we allocate, I mean, human power and just, I mean, bandwidth to prioritize across all the regions that are now encompassed what he is managing. So it's more a prioritization issue than anything else, and I'm comfortable that we would be able to grow at this pace probably for longer than we otherwise would have with the old unit economics. And none of this really includes Brazil, right? I mean, Brazil is its own thing, and there I would also envision an acceleration of the pace. Very clear.
Speaker 8: in terms of how long we can grow at this space. And I think process challenge going forward would be more of a bandwidth issue as to how we allocate an human power and just bandwidth to prioritize across all the regions that are now encompassed what he is managing. So it's more a prioritization issue than anything else and uncomfortable that we would be able to grow at this stage to take a probably for longer than we otherwise would have with the old unit economics. And this none of this will include Brazil, right? I mean Brazil is its own thing and there I would also envision an acceleration of the pace. Very clear.
Paco Camacho: Let me begin by thanking you once again for all your kind messages of support and sympathy around the passing of Daniel last August. He left a big call for us, but also a big legacy. And we carry on with renewed purpose to continue what he started to that end, because Antonio transition seamlessly and is now fully engaged in his dual role as chairman and CEO, skeering the ship as we continue to execute our ambitious strides.
Bandwidth to prioritize.
Across all the regions that are now encompass what he is managing so it's more a prioritization issue than anything else.
And I'm comfortable that.
That we would be able to grow at this pace.
Probably for longer than we otherwise would have with the old unit unit economics.
Speaker 7: transcript
Speaker 7: And this none of this really includes Brazil, right? I mean, Brazil is its own thing and and there I would also envision an acceleration of the of the pace. Very clear.
Speaker 8: And none of this will include Brazil, right? I mean, Brazil is its own thing, and there I would also envision an acceleration of the pace. Very clear.
None of this really includes Brazil, right I mean, Brazil has its own thing and I'm. There I would also envision an acceleration of the pace.
Paco Camacho: On that note, and as an update to where we are in terms of forward, we can inform you that regarding the envoy, ISS Brady transaction announced at the end of August, the regulatory process has advanced according to schedule and we expect the transition to close soon. Additionally, we have launched the divestiture process for the next layer of assets, including those related to Solistica and Embarrassed, and we are already making good progress on those early efforts.
Very clear thanks for the comprehensive answer everybody.
Speaker 2: transcript
Speaker 2: Our next question comes from a line of Ben Farah from Barclays. Please go ahead. Okay, we try this again.
Speaker 5: Our next question comes from a line of Benzura from Barclays. Go ahead. Okay, we trade it again.
Thank you.
Our next question comes from the line of Ben Theurer from Barclays. Please go ahead.
Okay I will try this again can you hear me yes.
Speaker 8: transcript
Speaker 8: Fantastic. So, first of all, congratulations on the results and I'd like to ask my question on capital allocation in general. We talked right now about store openings.
So first of all, congratulations on the results. And I'd like to ask my question on capital allocation in general. We talked right now about store openings.
Yes, perfect. Thank you.
Fantastic.
First of all congratulations on the results.
And I'd like to ask my question on <unk>.
Paco Camacho: Furthermore, last month, we announced changes to fences in your leadership team, as well as an evolution of the organizational structure for retail business verticals. One of these changes take effect in November, we will have one leader for each of the three four business verticals in full consistency with fence forward, enabling our organization to operate with maximum focus and effectiveness. As we have mentioned before, fences forward is fully aligned with fences, customers and treaties, and our broader strategic priorities for driving long-term growth, increasingly enabled by digital capabilities, always within our core business verticals and with a discipline approach to capital allocation.
Capital allocation in general we talk right now about store openings for OXXO.
Speaker 8: transcript
Speaker 8: Oxxo, you've talked about the health piece, one per day, nice number, 365 in the last 12 months. So if we think about these CapEx plans, right, and obviously the cash you need for building that base, new stores, be it Oxxo, be it health, in the different regions, how should we think about just your cash flow allocation and just...
Speaker 25: Oxxo, you've talked about the health piece, one per day, nice number, 365 in the last 12 months. So if we think about these CapEx plans, right, and obviously the cash you need for building that base, new stores, be it Oxxo, be it health, in the different regions, how should we think about just your cash flow allocation and just...
You've talked about the health piece one per day nice number 465 in the last 12 months. So if we think about these capex plans right and obviously the cash you need for building that base new stores speed OXXO.
Good health in the different regions, how should we think about just your cash flow allocation and just general allocation of the excess capital that you have right now post M&A any update you can give us on that that would be much appreciated.
Speaker 8: General allocation of the excess capital that you have right now. Post emana any update you can give us on that, that will be much of.
Speaker 25: General allocation of the excess capital that you have right now post M&A any update you can give us on that that will be much
Speaker 5: transcript
Speaker 5: Sure, let me take that then, and then you guys can compliment me if you want. I mean, the true beauty of the Proximity Health Model from a capital allocation perspective is that they're true compounders. I mean, they generate a lot of cash, and we are at a store base right now in all geographies that pretty much self-funds this growth at very high marginal ROICs.
Speaker 10: Sure, let me take that then and then you guys can come and let me do on. I mean, the true beauty of the proximity health model from a capital allocation perspective is that they're true compounders. I mean, they generate a lot of cash and we are at a store base right now in all geographies that pretty much sell funds to scrolls at very high marginal voice.
Sure let me take that down and then you guys can complement me.
I mean, the true beauty.
The proximity model from.
From a capital allocation perspective is that there are two compounds I mean, they they generate a lot of cash and we are at a store base right now in all geographies. They are pretty much self fund this growth at very high marginal voice.
Paco Camacho: On this last topic, we have made significant progress in our analysis, and we will share and discuss our findings with our board at the upcoming November meeting. We are all aware that this is an item top of mind, and we will keep you posted as a pro. Moving on to the results, or third quarter numbers, continue the very positive trends seen during the first half of the year, fully consistent with the worst strategic priorities and making progress towards the target set by each business unit, long range plan.
Speaker 5: transcript
Speaker 5: So, it is a fantastic business model at the stage we're in. So, we could be, I mean, over the next five years, be spending, I mean, from $4 to $5 billion of growth capex, not just in new store openings, but also distribution centers and all the infrastructure that will be self-funding by the business unit and still have enough cash left over for distributions to shareholders. So, that basically leaves at least the cash we have on hand in the balance sheet right now available. And again, cash is fungible, but in that amount of the cash that we have right now for inorganic expansion and for capital returns to shareholders. So, we're faced, I think, with a very high-cost problem of having, I mean, two very cash-generative assets at very attractive reinvestment opportunities in cash flow generation. We have one burgeoning business, not burgeoning, but, I mean, incubating business, which is digital, which we are investing in, but it only consumes a fraction of the cash that the other two pieces have.
Speaker 19: So it is a fantastic business model at this stage we're in. So we could be, I mean, over the next five years, depending, I mean, from four to $5 billion of growth capEx, not just in new store opening, but also distribution centers, so now the infrastructure that will be self-funding by the business unit and still have enough cash left over for distributions to shareholder. So that basically leads at least the cash we have on hand in the balance sheet right now available. And again, cash is vulnerable, but in that amount of the cash that we have right now for inorganic expansion and for capital returns to shareholder. So we're faced, I think, with a very high cholesterol and we're adding two very cash-generated assets at very attractive reinvestment opportunities in cash flow generation. We have one, a burgeoning business, not burgeoning, but incubating business, which is digital, which we are investing in. But the only consumes a fraction of the cash that the other two businesses.
It is it is a fantastic gives us model at this stage we're in.
So we could be I mean over the next five years, the spending I mean from $4 billion to $5 billion of growth Capex not just in new store openings, but also distribution centers and all the infrastructure that will be self funding by the business units and still have enough cash left over for distributions to shareholders. So that basically leaves at.
Paco Camacho: Indeed, 2023 is shaping up to be a banner year for our core business vertical. Beginning with proximity, like we did in our call last quarter, it's stressful to talk for a minute about their own long range plan and the four priorities around which it is built. Strengthening the core, developing new growth avenues, developing multiple successful for that, and growing the footprint beyond Mexico. Looking at us as third quarter results for this month, we see they again made stellar progress.
Is the cash we have on hand in the balance sheet right now available and again cash is fungible, but.
But in that amount of the cash that we have right now.
For inorganic expansion and for capital returns to shareholders. So we're faced I think with a very high class problem of adding I mean, two very cash generative assets at.
Paco Camacho: Strengthening the core, a same store, same growth remain above 15% against a demanding comparison base, with average traffic contributing more than half of the growth, which is remarkable. This is strong performance continues to be driven by a broad set of tailwinds, including a strong consumer demand for first gathering and snacking occasions. Solid commercial income dynamics, better segmentation and the store and the rapid adoption of a spin premium logic progress. Continuing with the positive news of a stronger core, the store growth was robust once again, with Mexico and Latin adding 293 net new stores during the quarter, and 1,453 during the past 12 months.
At very attractive.
Reinvestment opportunities and cash flow generation, we have won.
Burgeoning business not Virginia.
I mean, we're incubating business, which is digital which we are investing in but but he only consumes a fraction of the cash that the other two businesses are spitting off and that provides us again optionality to look for value creating acquisitions.
Speaker 5: transcript
Speaker 5: are spitting off and that provides us again optionality to look for value creating acquisitions.
Speaker 19: are spitting off and that provides us again optionality to look for value creating acquisition.
Speaker 9: transcript
Speaker 9: and potentially substantial returns to shareholders.
and potentially, I mean, substantially transfer shareholders.
And potentially I mean substantial returns to shareholders as well.
Thank you.
Speaker 2: transcript
Speaker 2: The next question comes from a line of Bob Ford from Bank of America. Please go ahead.
Speaker 4: The next question comes from a line of Bob Ford from Bank of America. Please go ahead.
Our next question comes from the line of Bob Ford from Bank of America. Please go ahead.
Speaker 10: transcript
Speaker 10: Thank you. Good morning, everybody, and thanks for taking my question. You seem to be generating not only scale but engagement with FEMIA. Could you talk a little bit in terms of where you are in terms of driving frequency and average ticket and where you are in that progression of transitioning FEMIA from a cost to a profit center, please?
Thank you. Good morning, everybody, and thanks for taking my question. You seem to be generating not only scale, but engagement with PEMIA. Could you talk a little bit in terms of where you are in terms of driving frequency and average ticket and where you are in that progression of transitioning PEMIA from a cost to a profit center, please?
Thank you good morning, everybody and thanks for taking my question.
You seem to be generating not only scale, but engagement with perm, yeah could you talk a little bit in terms of where you are in terms of driving frequency and average ticket and where you are in that progression of transitioning tenure from a cost to a profit center. Please.
Yeah.
Speaker 3: transcript
Speaker 8: This is Juan. I think you focus on something that I find very exciting myself, which is the speed at which Premia has grown, the massive number of users, and when we look internally at the
Speaker 8: Hey, Bob. Yeah, this one. I think you're, you know, you focus on something that I find very exciting myself, which is the, you know, the speed at which Prêmia has grown, the massive number of users. And when we look internally at, you know,
Hey, Bob.
For this one.
Thank you.
Your focus on something that I find very exciting myself, which is the.
Paco Camacho: Looking only at Mexico, we are on pace to meet or exceed the 1,000 new net store threshold for the first time before the COVID pandemic, and with more productive stores. Moving on to a long range priority of growing beyond Mexico, during the quarter, Grouponaut continually solid advance, with revenues increasing over 150% year over year, and with also footprint in Brazil, more than doubling during the last 12 months. Still in proximity America, but along the priority of developing multiple successful formats, but a group revenues by 30.7%, 36.7%, and reached a total of 309 stores as of the end of the quarter.
The speed at which premier has grown.
The massive number of users.
And when we look internally.
Speaker 3: transcript
Speaker 3: impact on average tickets or how this is spilling over to the office of business, but also very early stages where we are working with partners, right? So when you talk about Volati, so you talk about...
Speaker 6: impact on average tickets, so how is this building over to the also business, but also very early stages where we are working with partners, right? So when you talk about volatius, you talk about
The.
Impact on average ticket so how's it is spilling over to to the OXXO business, but also very early stages, where we are working with partners right. So when you talk about <unk>.
Speaker 7: transcript
Speaker 7: The is pretty streiming service from telisa and potentially others, but that may come down the road. As well as the internal one auxographics particular, you notice the power of this in a demographic that historically has not really had a lot of access to loyalty program.
Speaker 8: Yeah, it's pretty the streaming service from Thelavisa and potentially others that may come down the road as well as the internal ones, you know, oxografic particular. You notice the power of this in a demographic that historically has not really had a lot of access to loyalty programs.
<unk> talked about.
But yes, it's pretty the streaming service from from from Televisa and potentially others may come down the road as well as internal watch OXXO gas in particular.
You noted the power of this and in a demographic that historically has not really had a lot of access to loyalty programs.
Speaker 7: transcript
Speaker 7: So, there is, you know, the average ticket that goes to Premier is meaningfully higher than the regular average ticket. You start really looking at things like...
Speaker 8: So there is, you know, the average ticket that goes to premium is meaningfully higher than the regular average ticket. You start really looking at things like...
So there is.
The average ticket that goes to premier is meaningfully higher than the regular average ticket up.
Paco Camacho: For its part, proximity Europe increased revenues by 8.7%, reflecting traffic recovery and positive pricing initiatives, as well as the growth of balloting service and need to be business. I saw the end of the period, proximity Europe has 2,000,110 points of sale. Our health operations continued the trend we saw in the first half of the year, reflecting foreign exchange headwinds from a strong Mexican peso relative to local currencies in South America, as well as mixed results with flat numbers in Chile and positive trends in Colombia and Ecuador, of set by pressure in a more competitive mix.
You start really looking at things like.
Speaker 7: transcript
Speaker 8: We do media, you know, digital media where you begin to monetize. When you get on your app to check your points balance or whatever and you begin to get ads.
Speaker 25: We do media, you know, digital media where you begin to monetize. When you get on your app to check your points balance or whatever and you begin to get ads.
Retail media.
<unk> media.
You begin to monetize a when you get on your on your App to check your points violence or whatever you begin to get us by some of our big suppliers.
Speaker 7: transcript
Speaker 7: by some of our big suppliers. So you're transferring the real estate, where, obviously for a long time, we've been monetizing the physical real estate on the commercial income front, but we're beginning to monetize the digital real estate.
Speaker 8: by some of our big suppliers. So you're transferring the real estate, where, obviously for a long time, we've been monetizing the physical real estate on the commercial income front, but we're beginning to monetize the digital real estate.
So you are transferring the real estate, where obviously for a long time.
We've been monetizing the physical real estate on the commercial income promptly we're beginning to monetize the digital real estate.
Speaker 3: transcript
Speaker 3: for similar purposes, which of course is, you know, endless.
Speaker 6: for similar purposes, which of course is, you know, endless.
For similar purposes, which of course is you know analyst.
Speaker 4: transcript
Speaker 4: So, very early stages, but moving in the right direction and probably a little bit faster than I expected. Yeah, and Bob, if I may, just to add a couple of points to that.
Speaker 32: So, very early stages, but moving in the right direction and probably a little bit faster than I expected. Yeah, and Bob, if I may, just to add a couple of points to that.
So very early stages, but.
Paco Camacho: Francisco. Importantly, during the quarter, our health business continues to push to consolidate its competitive position across several markets, increasing its footprint by 9.5% to reach a total of 4,347 locations. In fact, during the last year, our cell division added new locations across its territories at a pace of one per day.
Moving moving in the right direction, and probably a little bit faster than I expected and the boggy. If I may just to add a couple of them.
Speaker 4: transcript
Speaker 4: The most exciting part of the OPSA premia is the fact that we are being able to identify the different journeys from different consumer segments.
Speaker 32: The most exciting part of the OPSA premia is the fact that we are being able to identify the different journeys from different consumer segments.
Points to that.
The most exciting part of the ultra premium.
It is the fact that we are being able to identify the different journey from different consumer segments.
Speaker 4: transcript
Speaker 4: And the fact is that there is one way in which a consumer that goes into an OXO gas station and accumulates points there uses the overall OXO premium platform versus someone that goes and uses daily to buy a coffee in an OXO store. And the reality is that the team is
Speaker 32: And the fact is that there is one way in which a consumer that goes into an OXO gas station and accumulates points there uses the overall OXO premium platform versus someone that goes and uses daily to buy a coffee in an OXO store. And the reality is that the team is
And the fact is that there is a one way in which the consumer that goes into a note so that the station and accumulate points. There uses the overall.
Paco Camacho: For its part, our fuel business delivers a stable performance with a strength in the corporate wholesale business, continuing to perform relative to reach, outperform relative to reach. Regarding digital, the number of active users for a spin reached 6.4 million during the quarter. An active user for our premium Logel De Program reached 17.7 million, while more than 28% of folks of Mexico sales are now associated with the program. We continue to privilege that position of higher quality users while we make progress by tuning the use cases, valuable positions, unit economics, and one education strategies for each part of the ecosystem.
The premium platform.
We still want that growth in users daily Dubai, a coffee and then of the store and the reality is that the team.
Speaker 4: transcript
Speaker 4: is digging into every single journey possibility, so that they maximize the personalization for consumers in the mid-term. That's really the.
Speaker 11: is digging into every single journey possibility, so that they maximize the personalization for consumers in the mid-term. That's really the.
Is digging into every single Jeremy possibility, so that they maximize the.
Personalization for consumers in the in the midterm.
Speaker 4: transcript
Speaker 4: the end-game here on top of everything else at one set. So today, when you look at the tender, which is very high already, that already reflects the fact that consumers are themselves learning how to use their point, how to use the ecosystem. And you have to do with...
Speaker 32: the end-game here on top of everything else at one set. So today, when you look at the tender, which is very high already, that already reflects the fact that consumers are themselves learning how to use their point, how to use the ecosystem. And you have to do with...
Really the day the end game here on top of everything else that wants it. So today when you look at it.
The tender, which is very high already.
That already reflects the fact that consumers are themselves learning how to use their points out how to use the <unk>.
Paco Camacho: In terms of financial implications, during the quarter, we deployed close to 1 billion pesos and growing this business, roughly in line with the previous quarter as well as budget.
The ecosystem.
Speaker 4: transcript
Speaker 4: have a bunch of things related to the consumer. It has to do with the age group they belong to, to the socioeconomic level they belong to, to the type of life they have, whether they are a student or they are a young professional, or they are a professional driving an Uber or a truck.
Speaker 10: I have a bunch of things related to the consumer. It has to do with the age group, they belong to the socioeconomic level, they belong to the type of life they have and whether they are a student or they are a young professional or they are a professional driving a mover or a truck.
And you have to do with a bunch of things related to the consumer it has to do with the age group they may be.
Belonged to two.
Paco Camacho: Finally, Coca-Cola fans at the leader are remarkable set of results for the third quarter, driven by double digit volume and revenue growth as they accelerate their pace of investment across market.
This is economic level they belong to.
To the type of life, they have whether they are a student or they are jumped professional.
They are a professional driving a mover or a truck.
Ocrenio: And with that, let me turn it over to opinion.
Speaker 4: transcript
Speaker 4: And all those journeys are allowing us, understanding them, is what is allowing the team to actually tailor some of the activities that are conducted, promotions without the store, promotions without the gas, promotions with the partners.
Speaker 9: And all those journeys are what are allowing us, understanding them is what is allowing the team to actually tailor-made some of the activities that are conducted. Promotions with OXO Store, promotions with OXO Gas, promotions with the partners.
Ocrenio: Thank you, Paco, and good morning to everyone online. Before going on to the numbers, also want to give a quick shout out to our colleagues in a couple of surrounding areas that were affected by hurricane notice. They have been two heroes in helping the communities get back on their feet over the past couple of days. Thank you for that. Going into the results in more detail, I also want to bring your attention before that.
All of those journeys.
Our allowing us understanding them is what is allowing the team to actually pay.
Taylor made some of the activities that are conducted promotions with all store promotions, we hope for gas promotions with the partners.
Speaker 4: transcript
Speaker 4: And really, that is the exciting part of all this, beyond the number of active users that we have, which is really big too.
Speaker 10: And really, that is the exciting part of all this, beyond the number of active users that we have, which is really big too.
And really that is the exciting part of all these beyond the number of active users that we have which is really big too. So honestly moving forward. There is a lot of possibilities that are being done.
Speaker 4: transcript
Speaker 4: So, honestly, moving forward, there is a lot of possibilities that the team is tapping into that are part of what is included, once again, as I said before, in the long-range planning. And I'm sure that we'll be able to share more on what is happening in digital, more in detail in the months to come. Yeah, and I think the other thing that I was just beginning to accumulate, Bob,
Speaker 7: So, honestly, moving forward, there is a lot of possibilities that are being, that the team is stepping into, that are part of what is including once again, as I said before, in the long-range planning. And I'm sure that we'll be able to share more on what is happening in digital, more indeed, in the most to come. Yeah, and I think the other thing that I'm just beginning to accumulate, Bob,
Ocrenio: As of the third quarter, we are now booking envoy solutions as of the discontinued operations. Therefore, for comparability purposes, we are adjusting our third quarter 22 consolidates financials to reflective change. Moving on to census consolidated quarterly results, total revenues during the third quarter increased 19.3 percent, while income from operations increased 12.7 percent compared to the third quarter of 2022. Net consolidated income was 12.8 million pesos, reflecting higher income from operations, a non-cash foreign exchange gain of 5.4 billion related to census US dollar denominated cash position has impacted by the depreciation of the Mexican best of during the quarter, and a decrease in net interest expenses during the quarter. This was offset by a decrease in our net income from discontinued operations, which mainly reflects the results of our investment in high income during third quarter 2022.
The team is tapping into that are part of what is included and once again as I said before in the long range planning and.
And I'm sure that we'll be able to share more.
What has happened in digital more in detail in the months to come and I think the other thing that is beginning to.
Speaker 7: transcript
Speaker 7: Right. I mean, to Paco's point, we are we are being able to to gather.
Speaker 7: Right, I mean to to Pucka's point we are being able to gather and
Accumulated Bob is the amount of data right I mean, two buckets point, we are we are being able to gather and obviously for the first time.
Speaker 3: transcript
Speaker 3: Obviously, for the first time, have the data.
Speaker 7: Over to you for the first time, I had the data.
Speaker 7: transcript
Speaker 7: you know, assigned to a person for whom we know, you know, who they are, what their email account is, what their phone number is, and then begin to customize some of these promotional activity and incentivize behaviors with the rewards themselves. So early stages for all of this, but off to a faster start.
Speaker 7: you know, assigned to a person for whom we know, you know, who they are, what their email account is, what their phone number is, and then begin to customize some of these promotional activity and incentivize behaviors with the rewards themselves. So early stages for all of this, I thought off-group after start time.
The data.
Assigned to a person for whom we know.
Who we are and what their email account is what their phone number is and then begin to to.
To customize some of these promotional activity and incentivize behaviors with the rewards themselves. So early stages for all of this has got off to a faster start talking about the unexpected.
Ocrenio: Moving on to discuss our operations and beginning with proximity americas. We added 293 units during the quarter to reach 1453 net new stores for the last 12 months. This puts us ahead of target and underscores not just the momentum we have achieved in Mexico, but also the strong phase we now have in Latin America, particularly in Colombia, where we recently began opening stores in our fourth city, Cali, also since their sales were up 15.1% for the third quarter.
Speaker 10: transcript
Speaker 10: And there are just as a follow up or you guys making money or losing money and you know, I mean, I'm all in. I kind of get the get the time. How should we
And just as a follow up, are you guys making money or losing money? And, you know, I mean, I'm all in. I kind of get the get the tan. How should we.
And just as a follow up are you guys, making money or losing money and you know I mean I'm.
All in I kind of get the get the Tam.
How should we think about the evolution, though.
Speaker 5: transcript
Speaker 5: I think at this point we are, given the elasticity from the point usage, we are better than breakeven on the PREMIA and we're still at early stages, so it's promising. Great for you. Thank you so much.
Speaker 19: I think at this point we are given the elasticity from the point usage. We are better than break even on the premia and we're still at early stage so it's promising. Great for you. Thank you so much.
I think at this point, we are given the elasticity from the point of usage.
We are better than breakeven on the brand yet and we're still at early stages. So it's promising.
That's great for you. Thank you so much and congratulations.
Ocrenio: This was driven by an increase of 6.6% in average customer ticket in a very strong 8% growth in traffic. As Paco mentioned at the outset, this performance reflected broad set of tailwinds related to core categories performing well, healthy commercial income dynamics, better segmentation efforts, and the growing impact of the perennial loyalty program. All of this against the backdrop of a robust consumer environment. Gross margin expanded by a full percentage point to reach 41.2% with electing strong commercial activity and promotional programs from key suppliers as well as an undemanding comparison base from last year.
Speaker 2: transcript
Speaker 2: The next question comes from a line of Thiago Portolucci from Goldman Sachs. Please go ahead.
Speaker 4: The next question comes from a line of Thiago Portolucci from Goldman Sachs. Please go ahead.
Yeah.
The next question comes from the line of Chuck a bottler Ritchie from Goldman Sachs. Please go ahead.
Speaker 8: transcript
Speaker 8: I think the more you do, the more I'm on the right-hand side of the job complete. I think it's the next question. And I'll like that score and be the little bit more integral, right?
Speaker 22: Good morning, Gene, Rob, and congrats on the results and for taking my question. I would like to explore and dig a little bit more into growth, right?
Okay.
All right.
And even at a big mine should grow right.
Speaker 8: transcript
Speaker 11: Starting with Mexico, and we've been hearing you guys cautioning down on the strong coms for ser sale. But the fingis, quarter after quarter, you have been beating expectations like not only sort surbeting your own marks, but also performing by far.
Speaker 22: Starting with Mexico and we've been hearing you guys cautioning down on the strong comb's for some sort of suit but the thing is quarter after quarter you have been beating expectations right Not only surpassing your own marks but also performing by far
Starting with Mexico, and we've been hearing you guys cautioning down on the strong comps for same store sales, but the thing it's quarter after quarter, who had been beating expectations right not only surpassing our own marks but all self performed by par.
Speaker 8: transcript
Speaker 11: S right with your competitors, ment ioning, incrementally higher growth within the heart counter and even on our end, cmbya growing in meking. How should we think about some circuits for all going forward, how sustainable the things is above inflation ticket growth might be? How much heart counters including that traffic? This is the first question and the second, one is still on the expansion.
Speaker 22: your peers, right? With your competitors mentioning incrementally higher growth within the hard discounter and even on our end seeing Bada growing and new teams, how should we think about center sales for OXO going forward? How sustainable do you think is above inflation ticket growth might be? How much hard discounters could impact traffic? This is the first question and the second one still on the expansion team.
Ocrenio: Income from operations increased 14.7% while operating margin decreased 50 basis points compared to the same period of 2022 to reach 8.9% with electing an increasing labor expenses standing from the labor reforms in Mexico. At proximity year of revenues increased 8.7% in local currency to reach 11.2 billion pesos with electing a recovery in traffic and ticket driven mostly by improved customer mobility. Gross margin was 41.8% with electing a mixed effect driven by the positive performance of Valora's food service and B2B businesses. Operating margin was 3.1% with electing better operating leverage partially offset by an increase in expenses driven by inflationary pressures.
Right.
With your competitor dark named Shining.
Incrementally higher growth within the hard discounter and even on our existing BARDA growing in mid teens.
How should we think about same store sales for oxo going forward, how sustainable is that both inflation ticket growth might be how much high concord, putting back traffic.
This is the first question and the second one on the expansion.
Speaker 8: transcript
Speaker 22: Do you have any color on how your build up in Brazil is performing in terms of stability and what are the learnings from Brazil that eventually you might take in today's web? Those are the questions.
<unk>.
We don't have any color on how your buildup in Brazil is performing in terms of profitability and what are the learnings from Brazil that eventually you might take which would be worth and those are good questions. Thank you very much.
Ocrenio: Moving on to fence of health operations. During the quarter we expanded our drug store count by 80 net new additions to reach a total of 4,347 units across all of our territories at the end of September and 365 total net new stores for the last 12 months. Revenues increased slightly while same store sales decreased in average of 3.6%.
Speaker 4: transcript
Speaker 4: Yeah, thank you, Tiago. Let me take the first part of the question and then I'll let Eugenio and Juan to add color to that and tackle the second part.
Speaker 32: Yeah, thank you, Thiago. Let me take this first part of the question, and then I'll let the aquarium funds to add color to that and tackle the second part.
Yes.
Thank you Thiago.
Let me let me take the first part of the question and then I'll let.
Equity and funds.
To add color to that and tackle the second part.
Speaker 4: transcript
Speaker 4: When it comes to also on- and I think that can make reference to that- the reality is, as we said, they are executing the long range plan that they put together.
Speaker 32: When it comes to OPSO, and I think that Eugenio made reference to that, the reality is that, as we said, they are executing the long-range plan that they put together.
<unk>.
Okay.
When it comes to OXXO and 19 opinion made reference to that.
Ocrenio: However, as was the case last quarter, it is important to note that in a currency neutral basis revenue would have grown 13.6% and same store sales would have increased 4.7%. Partially offset by a demanding comparison base in our operations in Chile and a very challenging competitive environment in Mexico. Gross margin contracted 30 basis points in the quarter with electing a negative mixed effect driven by the increasing contribution of our operations in Colombia which have a structurally lower margin. Operating margin increased 60 basis points with electing an increased in labor expenses in most of our markets.
Reality is that as we said they are executing the long range plan.
But that they've put together.
Speaker 4: transcript
Speaker 4: those action plans are paying dividends, are working, and are delivering results.
Speaker 25: those action plans are paying dividends, are working, and are delivering results.
Those action plans are paying dividends are working and are delivering results.
Speaker 4: transcript
Speaker 4: I think that it's safe to say that they are ahead of the long-range plant projection.
Speaker 23: I think that it's safe to say that they are ahead of the long-range plant projection.
I think that it's safe to say that they are ahead of the language plant prediction.
Speaker 4: transcript
Speaker 4: And they are the process of reshaping those and working as a team to refresh those projects.
Speaker 32: And they are the process of reshaping those and working as a team to refresh those projects.
And they are in the process of.
Reshaping those and working as a team to do.
To refresh those projections.
Speaker 4: transcript
Speaker 4: And the runway, as Eugenio said, we are confident that the runway for performance is longer than the original thought.
Speaker 32: And the wrong way as the wind is said, we are confident that the wrong way for performance is longer than the original itself.
And that the runway is so kind of it.
We are confident that the runway for performance is longer than then.
Ocrenio: At also that, revenues increased 14.2% and same station sales to 8.1%. Retail volumes were again complemented by a robust pickup in corporate and wholesale activity. During the quarter gross margin was 12.4% while operating margin was 4.5% with electing tight expense control offset by increased labor expenses.
Speaker 4: transcript
Let me start.
Speaker 4: The reality is that, as you know, well, in many business, we have to be realistic about what can be a tailwind and what type of headwind come ahead of us. The operational excellence of the team.
Speaker 32: The reality is that, as you know well, in any business, we have to be realistic about what can be a tailwind and what type of headwinds come ahead of us, and the operational excellence of the teams.
Having said that.
The reality is that as you know well in any business and we have to be realistic about whats going to be yet.
Tailwind and what type of headwinds from ahead of us.
The operational excellence of the teams are creating a bunch of pain.
Speaker 4: transcript
Speaker 4: are creating a bunch of those penguins and we see a lot of opportunities moving forward in the growing the core and the new format.
Speaker 23: are creating a bunch of those penguins and we see a lot of opportunities moving forward in the growing the core and new format.
Ocrenio: Moving on, Copacola Fensa as you saw a couple days ago delivered a stellar set of results in a third quarter. Total volume grew 11.6% driven by growth across all of its territories. Total revenues increased 10.1% and operating income grew 15.3%. As operating margin expanded by 70 basis points to reach 13.5%.
Tailwind.
We see a lot of opportunities moving forward in the growing the core and new formats.
Speaker 4: and the rest of it as part of the strategic plan.
Speaker 32: and the rest of it as part of the strategic plan.
And the rest of it is part of our strategic plan.
Speaker 4: transcript
Speaker 4: Nevertheless, we also know that evidently there are things that happen beyond our control that have to be with the content, with the categories, with the activities and activations from our suppliers, commercial partners, et cetera, and we are always prepared to do that. And all that is put into the melting pot and the teams come up with a revised projection.
Speaker 20: Nevertheless, we also know that evidently there are things that happen beyond our control that have to be with the context, with the categories, with the activities and activation from our suppliers, commercial partners, etc. And that we are always prepared to do that. And all that is put into the melting pot and the team's come up with a revised projection.
Nevertheless, we also know that evidently there are there are things that happen beyond our control that have to meet with the context with the category with.
Operator: You can listen to the replay of their conference call held last Wednesday on their investor relations website.
Operator: And with that, let us open the line up for questions. Operator, please. Thank you. As a reminder, if you'd like to ask questions or make a contribution to this call, please press star one on your telephone keypad. You are kindly asked to limit yourself to one question only. If you change your mind and want to withdraw your question, please press star two. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question.
The activities in activation from our suppliers.
Moshe finance et cetera.
I always prefer to do that.
And all of that is put into the into the melting Boston and the team to come up with a with a revised projection.
Speaker 4: transcript
Speaker 4: So for the time being, we remain very positive about the possibilities in our also, in our actual model. They continue to, to polish the diamond, to collect that way in terms of the operational excellence, the operational efficiency, learning how to activate the category is better. The segmentation is working fantastic.
Speaker 23: So for the time being, we remain very positive about the possibilities in our OXO model. They continue to polish the diamond, to put it that way, in terms of the operational excellence, the operational efficiency, learning how to activate the categories better. The segmentation is working fantastic.
So for the time being we remain very positive about.
Speaker 4: transcript
The possibilities in nowhere OXXO millwork for model they continued to poly's with diamond to call. It that way in terms of the declaration of excellent operational efficiency.
Speaker 4: transcript
Ben Ferrer: Our first question comes from the line of Ben Ferrer from Barclays.
Learning how to activate the categories better the segmentation working fantastic.
Ben Ferrer: Please go ahead. Ben Ferrer from Barclays. Please go ahead.
Speaker 4: So, again, positive, but we remain conscious of all the external factors that are around us and that we have to juggle at the same time.
Speaker 26: So again, positive, but we remain conscious of all the external factors that are around us and that we have to to juggle at this.
Speaker 4: transcript
So again positive, but we remain conscious of four volt external factors that are around us.
Speaker 4: transcript
You have to to juggle.
Speaker 5: transcript
Speaker 5: I would add that, I mean, if you look at what's happening over the past few quarters, I think it is a reversal of the trend we saw during the pandemic of consumption patterns shifting from the small box to the larger box.
Speaker 19: I would add that, I mean, if you look at what's happening over the past three quarters, I think it is a reversal of the trend we saw during the pandemic of consumption, patterns shifting from the small box to the larger box.
At the same time.
I would add that I mean, if you looked at.
Ricardo Alves: Our next question comes from the line of Ricardo Alves from Morgan Stanley. Please go ahead. Hi everyone. Thanks so much for the call. Thanks for the quick updates on capital location as well. I'll leave follow ups on that to another colleague. I wanted to take advantage of such strong pop line at also as well as the new leadership with Jose Antonio in the retail vertical. I wanted to take advantage of that and try and ask a more strategic question. I mean, FEMSA opened nearly 200 stores this quarter, right? We're running at 1500 units less 12 months.
What's happening over the past few quarters that will I think it is a reversal of the trend we saw during the pandemic of consumption patterns shifting from the small box to the larger boats and now thats coming back with a vengeance and that is coming back higher than we anticipated frankly, so we're seeing traffic trends pick up.
Speaker 5: transcript
Speaker 5: And now that's coming back with a vengeance. And that is coming back higher than we anticipated, frankly. So we're seeing traffic trends pick up and also tickets.
Speaker 19: And now that's coming back with a vengeance. And that is coming back higher than we anticipated, frankly. So we're seeing traffic trends pick up and also tickets.
Speaker 5: transcript
Speaker 5: and pricing stick to what we have. So I don't know if this is a secular trend or if it's a temporary trend, but it is what's causing the short-term results. Having said that, with the value prop that we have and with the union economics we're getting, we're comfortable that we can continue on that path going forward. And I think you mentioned BADA and the other multi-formats. I think, I mean, we're growing there as well, and we see a lot of promise. Having said that, they're still too small to make any kind of cannibalization threat.
Speaker 10: and pricing stick to what we have. So I don't know if this is a secular trend, or this is a temporary trend, but it is what's causing the short-term results. Having said that with the value prop that we have and with the unit economics we're getting, we're comfortable that we can continue on that path going forward. And with, I think you mentioned Bata and the other multi-formats, I think we're growing there as well, and we see a lot of promise. Having said that there's still too small to make any kind of cannibalization thread.
Also tickets.
And pricing stick to what we have so I don't know if this is a secular trend.
As a temporary trend bumped up but it is split plus in the short term results, having said that with the value prop that we have and with the unit economics. We're getting we're comfortable that we can continue on that path going forward and I think you mentioned BARDA and the other multi format. So I think I mean, we're growing there as well and we see a lot of promise having said that.
Ricardo Alves: So in the context of the FEMSA forward announcement, the prominence that Oxo is gaining, the senior management changes, is there a revised medium to long-term growth plan for Oxo? I wanted to see if you can break it down again into what are the latest thoughts for Mexico South America X, Brazil, and even Brazil if you will, but mostly proximity Americas. Basically, after these numbers quarter over quarter of beats on the top line front, we feel that there's upside to the numbers that we've discussed over and over again over the past couple of quarters.
We're still too small to make any kind of cannibalization threat.
Speaker 9: transcript
Speaker 9: to the expansion path we've seen also. Again, there are more than a million mom-and-pops in Mexico. I mean, tens of thousands of larger formats and stores across Mexico. So I think there's room for all of the formats to continue to grow in this way. And the second part of your question was with regards to Brazil. And again, what I can say is from a four-wall perspective,
Speaker 19: to the expansion path we see in also again there are more than a billion non-anxiety in Mexico. I mean I mean tens of thousands of of larger formats and historical or of Mexico so I think there's room for all of the formats to continue to grow in this way. And the second party question was with regards to Brazil and again what I can say is from a four-wall
So the expansion pack, we see not so again, there are more than 1 billion mom and Pops in Mexico.
Tens of thousands of larger format.
And the stores of course, Mexico. So I think there's room for all of all of the formats to continue to grow in this way in the second part of your question was with regards to Brazil, and again, what I can say is from a four wall perspective.
Speaker 9: The stores are performing much better than we expected when we originally entered into the partnership with Raízen. It's still an issue of scale. As you know, our model is distribution-driven, and distribution investments are front-loaded. You have to put the distribution center first and then fill it up. So there's still a big runway of stores before we can get to the economics we expect for the region. But the fact that the forward model is working well gives us a high sense of confidence.
Speaker 19: The stores are performing much better than we expected when we originally entered into the partnership with Raízen. It's still an issue of scale. As you know, our model is distribution-driven, and distribution investments are front-loaded. You have to put the distribution center first and then fill it up. So there's still a big runway of stores before we can get to the economics we expect for the region. But the fact that the forward model is working well gives us a high sense of confidence.
The stores are performing much better than we expected when we originally entered into the partnership with <unk>.
It's still an issue of scale as you know our model is distribution driven and distribution investments are Frontloaded. You you have to build a distribution center first and then fill it up so there is still I mean.
Ricardo Alves: So just curious to hear the latest strategic thoughts ahead for Oxo coming from Jose Antonio and the proximity team overall. And then I'll go back in the queue. Thank you. Thank you, Ricardo, for the question. I'm not sure what it means to go back in the queue, but thank you. I'll start with the with the first part of the question. I want to limit myself to one question. I know, thanks for the discipline.
Speaker 5: transcript
A big runway of stores before we can get to the economics, we expect that for the region, but the fact that the four wall model is working well and it gives us a heightened sense of confidence that we will get to these numbers and that we will be able to replicate this units of distribution center slash our stores.
Speaker 9: transcript
Speaker 9: that we will get to these numbers and that we will be able to replicate these units of distribution centers slash.
Speaker 19: that we will get to these numbers and that we will be able to replicate this unit of distribution center slash us.
Speaker 9: transcript
Speaker 9: in the region of Sao Paulo and hopefully in more regions in the future, and to what extent we can export that to the U.S. I think the U.S. is a different market, and we'll get to that, but it's, I mean, that's the learning so far in Brazil.
Speaker 19: in the region of São Paulo and hopefully more regions in the future. To what extent we can export that to the US, I think the US is a different market and we'll get to that, but that's the learning so far in Brazil.
Ricardo Alves: Listen, let me start with the first part of the question. I will let them. We can you provide a bit more color, but look on the on the strategic side, clearly the good news here is that on top of the goodness of the organizational alignment between the four were, which is taking place as we said in November. The fact is that we have also shared with you we have very robust long range plans on each of the businesses, including, of course, proximity.
In the region of Sao Paulo, and hopefully more regency in that in the future.
And to what extent, we can export that to the U S. I think that you went to a different market and we will get to that but.
But it's.
Speaker 3: transcript
Speaker 3: Yeah, I'll just ask the other this one. I mean, going back, I'm kind of, you know, guilty as charged because I remember six months ago sitting in this same conference room on the call and telling all of you to not put into your model kind of a teens number. And then I've been wrong for the following two quarters because we've delivered 15s. You know, I think the O'Hank is point, Jerry's still out in terms of how much of this
Speaker 7: Yeah, I'll just ask the other this one. I mean, going back, I'm kind of, you know, guilty as charged because I remember six months ago sitting in this same conference room on the call and telling all of you to not put into your model kind of a teens number. And then I've been wrong for the following two quarters because we've delivered 15s. You know, I think the O'Hank is point, Jerry's still out in terms of how much of this
I mean, that's the learning so far in Brazil.
I would just add this one.
I mean going back and kind of guilty as.
Charged because.
I remember six months ago sitting in this same conference room.
The call and telling all of you to not put into your model.
Ricardo Alves: So as of today, what is happening is that all the plans that were developed behind that long range plan strategy are being deployed. And every single one of them are providing results and some of those results are of course parts of what what is being recorded. Now, as we work right now in the budget for 2024, as we close to the 23, you can imagine that part of the exercise is to also revise or revisit the projection that was done for the next several years as part of the long range plan.
Kind of a teens number.
And then I've been wrong for the following two quarters, because we've delivered fifteens.
I think the oranges point.
Jerry still out in terms of how much of this.
Speaker 7: transcript
Speaker 7: It's sustainable, but it increasingly looks like there's a lot of structural reasons why things are as positive as they are as opposed to just the bounce back from the pandemic.
Speaker 8: is sustainable, but it increasingly looks like there's a lot of structural reasons why things are as positive as they are, I suppose to just the bounce back from
It is sustainable but it increasingly looks like Theres a lot of structural reasons why things are as positive as they are as opposed to just the bounce back from Covid.
Speaker 8: transcript
Speaker 7: As we begin to look at 2024,
Speaker 14: As we begin to look at 2024,
As we begin to look at 2024.
Speaker 8: transcript
Speaker 7: Again, I think the numbers are going to continue to trend down, so in my mind, we're probably thinking more about a very high single-digit sales growth, and we'll revise that in February .
Speaker 7: Again, I think the numbers are going to continue to trend down, so in my mind, we're probably thinking more about a very high single-digit sales growth, and we'll revise that in February .
Again, you know.
I would I think the numbers aren't going to continue to trend down.
So in my mind, it would probably we're probably thinking more about a very high single digit same store sales growth and we will revise that in February.
Ricardo Alves: And the team is working on that and I'm I assure you that when close when we close it coming in, he's actively participating in interviewing those numbers and in checking whether they need to adjust some of the strategies, how they will start working together. So I mean, clearly, it's part of the very robust process that that we have in pencil related to the long range plan to the budget to the to the business management.
Speaker 8: transcript
Speaker 7: You know, double digits are out of the question, at least for the early, early stages of 2024. We'll see.
Speaker 25: You know, double digits are out of the question, at least for the early, early stages of 2024. We'll see.
But I don't think you know double digit turn out of the question at least for the early early stages of 2024, we will see.
Speaker 3: transcript
Speaker 3: But the deceleration has certainly been a lot.
Speaker 7: But the deceleration has certainly been a lot.
But is the deceleration has certainly been a lot of.
Speaker 8: transcript
Speaker 11: less rapid than than we expected six months ago. So that's that's all very good news.
Speaker 8: Let's wrap it then we expected six months ago. So that's all very good news.
Less rapid than we expected six months ago. So that's all very good news.
That's super clear, thank you very much everyone.
Ricardo Alves: And Jose is jumping in at the right moment to make sure that any adjustments is taken care of as part of that process as for the second part of the question. I think in terms of the number of openings, as you correctly framed the question, this is pretty strategic in the following sense. You know, the last couple of years, certainly through the COVID years, there was this big deceleration in the opening of stores in Mexico.
Speaker 2: transcript
Speaker 2: Before we proceed to the following questionions, final reminder: if you like to ask a question, Please pstar when we can ask you to limit yourselves to one question only. The next question comes from alarogasa, from BTG. Please go ahead, go ahead.
Speaker 4: Before we proceed to the following questions, a final reminder, if you'd like to ask a question, please press star 1. We kindly ask you to limit yourself to one question only. The next question comes from Alvaro Garcia from BTG. Please go ahead. Go ahead.
Thanks, Joe.
Before we proceed to the following questions for a final reminder, if you'd like to ask a question Chris.
One we kindly ask you to limit yourself to one question already.
The next question comes from Alvaro Garcia from BTG. Please go ahead go ahead.
Speaker 11: transcript
Speaker 12: Hi guys, thanks for this question. My question we haven't focused on margins that also profitability came down a bit as you may.
Hi guys, thanks for this question. My question we haven't focused on margins that also profitability came down a bit as you may.
Hi, guys. Thanks for the question.
Speaker 11: transcript
My question, we haven't focused on.
Margins at OXXO facility.
Speaker 11: transcript
Speaker 12: celerated sequentially. You mentioned the release: sort of increas lab expect.
accelerated sequentially and you mentioned the release sort of increased labor expense.
Facility came down a bit SG&A.
Ricardo Alves: We closed the bunch of stores and then we were opening 800 per year and obviously there was this concern of this mean that structurally we can't go back to the four digit number of openings in Mexico. And of course, what we've seen the last 18 to 24 months is once we built our pipeline with the new standards that are allowing us to open better, more productive stores. We are already back to the 1000 stores per year in Mexico.
Accelerated sequentially and you mentioned in the release sort of increased labor expenses.
Speaker 11: transcript
Speaker 12: In connection with labor form. I was wondering if there was any other dynamic going on. There may be sort of quicker growth outside of Max ine, not still very, very small. I'm not sure if that's starting to maybe move a need a little bit or ition really solely up people thing in Mexico. Thank you very, very.
in connection with labor reform, but I was wondering if there was any other dynamic going on there, maybe sort of quick growth outside of Mexico. I know it's still very very small, but I'm not sure if that's starting to maybe move the needle a bit or is this really solely a people thing in Mexico. Thank you very much.
In connection with labor for them, but I was wondering if there was any other dynamics going on there maybe.
Quicker growth outside of Mako I know, it's still very very small, but I'm not sure. If that's starting to maybe move the needle with it.
Or is it really solely a people thing in Mexico. Thank you very much.
Speaker 9: transcript
Speaker 9: I would say, Alvaro, thank you for the question. First, primarily, it is labor, as we said. Having said that, a lot of these initiatives in the strategic plan, including we are looking at better methods for recycling cash, for cashing cash out in the stores. We are rejiggering the operational model with regards to how many people operate the store, how many are fixed, how many are variable, in terms of shifts, et cetera. And all of that is experimentation. It's piloting as we look to build more resiliency from a cost perspective going forward. And all of these experiments are flowing through P&L as OPEX. So that is a little bit of the factor that you also see there. There is, as you said, also just a mixed effect with regards to South America, which is less profitable than Mexico at the margin. But I would say, I mean, 80-20, it's labor, 20% the rest of the stuff I just talked about.
Speaker 19: I would say a lot of thank you for the question. First, primarily it is labor, as we said, having said that a lot of these initiatives in the strategic plan, including we are looking at better methods for recycling cash, for caching cash out in the stores, we are re- I mean, re-jiggering the operational model with regards to how many people operate the store, how many are fixed, how many are variable, in terms of shifts, et cetera. And all that is experimentation. It's piloting as we look to build, I mean, more resiliency from a cost perspective going forward. And all of the experiments are flowing through PNL's topics. So that is a little bit of the factor that you also see there. There is, if you say also just a mix effect with regards to South America, which is less profitable than Mexico at the margin. But I would say, I mean, 80, 20, it's labor, 20% of the rest of the stuff I just talked about.
I would say I want to thank you for the question first primarily it is labor as we said having said that a lot of these initiatives in the strategic plan.
Including we are looking at.
Ricardo Alves: And I think at this point, that is the number that I would plug into a model. I don't know necessarily that we would go back to the, you know, 1200, 1300, 1400 that we did at some point in Mexico. I think I would use the 1000 number for Mexico. But the other part of the equation, which is latan, has definitely come of age over that time frame as well. So we mentioned a few minutes ago, we are now in four markets in Colombia.
Better methods for recycling cash for cash in cash out in the stores. We are re rejiggering the operational model with regards to how many people.
Operate the store how many are fixed how many are variable in terms of shifts et cetera, and all of that is experimentation. Its final thing is we as we look to build more resiliency from a cost perspective going forward and all of those experiences.
All of that all of these experiments are flowing through our P&L as opex so that.
It is a little bit of the factor that you also see there. There is as you said also just the mix effect with regards to South America, which is less profitable than the Mexico at the margin, but I would say I mean 80 20, it's labor, 20% the rest of the stuff I just talked about.
Ricardo Alves: So it's both. I think they're going well and you know, you integrate it. I think there's going to be some further growth there as well. And of course, Peru is also kind of coming into a stage where we could probably accelerate the opening. So if you look at it in an aggregate number. So the 14 1400 and change that number will probably continue to increase. But it will be more driven by ex Mexico and by Mexico.
Speaker 4: transcript
Speaker 3: And I would have one more thing. I Ro this 1, you know.
Speaker 28: And I would add one more thing out of this one. You know,
Would add one more thing of all of this one.
Speaker 8: transcript
Speaker 7: Historically has been the main source of margin expansion at also, and usually we do very well at the growth level and then we lose some of it in the's e n a and we end up with a smaller expansion at the operating level.
Speaker 6: historically has been the main source of margin expansion at also. And usually we do very well at the growth level. And then we lose some of it in the SNA and we end up with a smaller expansion at the operating level.
Gross margin historically has been the main source of margin expansion at OXXO and usually we do very well at the gross level and then we use some of it in the SG&A and we ended up with a smaller expansion at the operating level.
Ricardo Alves: And I would leave Mexico at 1000 until until further notice. But again, remembering that those 1000 stores are going to be more productive than the 1000 stores that we opened two, three, four, five years ago. The only thing I would add just to get on to move on here, but I think it's important is that as we continue to execute on the language plan, we are having success across all initiatives. And that is making, I think the unit economics, especially in Mexico better than we thought they would be when we originally executed.
Speaker 7: transcript
Speaker 7: I was personally very happy to see this quarter, I was going back to an expansion at the growth level.
Speaker 14: I was personally very happy to see this quarter, I was going back to an expansion at the growth level.
I was personally very very happy to see this quarter.
I was going back to an expansion of the growth level.
Speaker 7: transcript
Speaker 7: You know, we've talked about services having been volatile. Some of our corresponded banks coming and going. We now have a North de-Bac.
Speaker 8: You know, we've talked about services having been volatile. Some of our corresponded banks coming and going. We now have a North de-Bac.
We've talked about our services havent been volatile similar correspondent banks coming and going we now have a notice to back.
Speaker 7: transcript
Speaker 11: We talked for a number of quarters about PREMIA, the impact of how we were booking the points.
Speaker 9: We talked for a number of quarters about premia, the impact of how we were looking at the point to this...
We talked for a number of quarters about premier of the impact of how we were looking into deploying to this prior to us moving the whole loyalty program outside of OXXO on into the digital P&L.
Speaker 8: transcript
Speaker 11: prior to moving the whole loyalty program outside of also on into the digital PNL. But to have them exceeded those two noisy situations, at least right now it looks like we're back to a place where commercial income begins to be strong enough that it helps.
Speaker 9: prior to moving the whole loyalty program outside of also on into the digital PNL. But to have them exceeded those two noisy situations, at least right now it looks like we're back to a place where commercial income begins to be strong enough that it helps.
Ricardo Alves: So if anything, I feel longer runway in terms of how long we can grow at this pace. And I think process challenge going forward would be more of a bandwidth issue as to how we allocate the human power. And just I mean bandwidth to prioritize across all the regions that are now encompass what he is managing. So it's more a prioritization issue than anything else and uncomfortable that that we would be able to grow at this stage.
But to have exited those two kind of noisy.
Situations.
At least right now it looks like we're back to a place where commercial commercial income.
<unk> to be strong enough that it will it helps expand the margin at the gross level and we were able to continue that and that bodes well.
Speaker 7: transcript
Speaker 11: the margin at the growth level, and if we are able to continue that, then that bodes well to our ability to then offset
Speaker 9: found the margin at the growth level. And if we were able to continue that, then that both well to our ability to then offset.
Our ability to then offset.
Speaker 7: transcript
Speaker 11: Labor pressures, which as you know, going into 2024, there are outstanding questions in terms of, you know, Congress and what's gonna be passed around the labor legislation. So we'll see, but we're much better going into that situation with an expanding growth margin coming from commercial income, which is where we are right now. Thank you.
Speaker 8: Labor pressures, which as you know, going into 2024, there are outstanding questions in terms of, you know, Congress and what's gonna be passed around the labor legislation. So we'll see, but we're much better going into that situation with an expanding growth margin coming from commercial income, which is where we are right now. Thank you.
Ricardo Alves: It's probably for longer than we otherwise would have with the old unit economics. And none of this will include Brazil, right? I mean, Brazil is its own thing and there I would also envision an acceleration of the pace. Very clear.
Labor pressures, which as you know going into 2024 there are.
Sending questions in terms of.
Congress.
What's going to be passed around labor legislation. So so we'll see but we're much better going into that situation.
Ricardo Alves: Thanks for the comprehensive answer, everybody. Thank you.
With an expanding gross margin coming from commercial income, which is where we are right now.
Yes.
Great. Thank you very much for the color.
Thanks Arnaud.
Speaker 2: transcript
Speaker 2: The next question comes from a line of Alan Alanis from Santander. Please go ahead.
Speaker 4: The next question comes from a line of Alan Alanis from Santander. Please go ahead.
The next question comes from the line of Alan Alanis from Samsung.
Speaker: So first of all, congratulations on the results.
Speaker 4: transcript
Speaker 11: Yep, thank you so much. Good morning and congratulations for the results.
Speaker 18: Yep, thank you so much. Good morning and congratulations for the results.
Go ahead.
Speaker: And I'd like to ask my question on capital allocation in general. We talked right now about store openings, Foxo. You've talked about the health piece one per day, nice number, 365 in the last 12 months. So if we think about these capex plants, right? And obviously the cash you need for building that base, new stores, be it, Foxo. Be it health in the different regions. How should we think about just your cashflow allocation and just general allocation of the excess capital that you have right now post M&A any update you can give us on that that will be much appreciated.
Yes. Thank you so much good morning, and congratulations for the results.
Speaker 12: transcript
Speaker 11: We have to do with the data and the fact that it's growing 50 more than 50% cost and the rest of the supermarkets. I understand what the HND said was the revenge standing in so forth because of you. You see it down the trap.
Speaker 18: We have to do with the data and the fact that it's growing 50 more than 50% cost and the rest of the supermarkets. I understand what the HND said was the revenge standing in so forth because of you. You see it down the trap.
My question has to do with that.
With BARDA and the fact that the growing 50 more than 50% faster than the rest of the supermarkets.
Understand.
Regarding spending and so forth.
Speaker 12: transcript
Speaker 11: But clearly, you now have a winning model on that on the supermarket. So what are the ambitions with this chain? How fast can you grow it? And how much this changes your strategic thinking regarding moving to different formats? That would be my question. And if you could also just quickly
Speaker 18: But clearly you now have a winning model on that on the supermarket. So what are the ambitions with this chain? How fast can you grow it? And how much the changes you're strategic thinking when you are moving to different formats? That would be my question. And if you could also just quickly.
The traffic, but clearly you would now have a winning model on bottle in the supermarket.
What are the what are your ambitions with this.
The chain.
Can you grow it.
How much that changes your thinking regarding moving to different formats that would be what would be my question. Maybe if you could also just quickly.
Speaker 12: transcript
Speaker 11: comment on the strength of spirits demand in Mexico in the last quarter in Oaxaca or in Nevada, that would be highly appreciated. Thank you so much.
Speaker 18: comment on the strength of spirits demand in Mexico in the last quarter in Oaxaca or in Nevada, that would be highly appreciated. Thank you so much.
Comment on the plane spirits demand in Mexico in the last quarter Knoxville or both.
Speaker: Sure, let me take that and then you guys can compliment me too. I mean, the true beauty of the proximity health model. From a capital allocation perspective is that they're true compounders. I mean, they they generate a lot of cash and we are at a store base right now in all geographies that pretty much sell funds this growth at very high marginal voice. So it is a fantastic business model at this stage or in.
I appreciate it thank you so much.
Speaker 4: transcript
Speaker 4: Yeah, let me just take the first part of the question about Vata. First, I mean, Vata is, we don't consider Vata to be a supermarket. I mean, Vata is a completely different format. It is a small box. It has a limited assortment. It meets very specific consumer needs related to their shopping.
Speaker 20: Yeah, let me take the first part of the question about Vara. First, I mean, Vara is, we don't consider Vara to be a supermarket. I mean, Vara is a completely different format. It is a small box. It has a limited assortment. It meets very specific consumer needs related to their shopping.
Yes.
Let me take the first part of the question about Nevada.
First I mean BARDA is.
We don't forget about it to be a supermarket I mean, but it's a completely different format.
It is a small box.
Speaker: So we could be, I mean, over the next five years, depending. I mean, from four to five billion dollars of growth capex, not just in new store opening, but also distribution centers and all the infrastructure that will be self funding by the business unit and still have enough cash leftover for distributions to shareholder. So that basically leads at least the cash we have on hand in the balance sheet right now available and again cash is vulnerable.
It has.
Limited assortment.
It meet very specific consumer needs related to their shopping routine.
Speaker 4: transcript
Speaker 4: Routine So I would say that there is. There is no comparison versus what we know at the regular supermarket. So it a different, different segment, different for.
Speaker 25: routine. So I would say that there is no compilers in versus what we know at the regular supermarket. So it's a different segment, different form.
So I would say that there is.
No comparison versus.
What we know at the regular supermarket. He said he said different different segments different for it.
Speaker 4: transcript
Speaker 4: As for the opportunities, I mean, obviously the fact that we are accelerating the store opening, the fact that the performance is good, we feel confident at this stage that we have a value proposition that is relevant, that is tested and approved by consumers, liked by consumers, and that's why our intention is to accelerate.
Speaker 16: And for the opportunities, I mean, obviously, the fact that we are accelerating is still opening the fact that the performance is good. We feel confident that we have a value proposition that is relevant, that the test is and approved by consumers, life by consumers. And that's why our attention is to accelerate.
Speaker: But in that amount of the cash that we have right now for for inorganic expansion and for capital returns to shareholders. So we're faced, I think, with a very high cost problem of adding an into very cash generated assets at very attractive reinvestment opportunities in cashflow generation. We have one a burgeoning business, not burgeoning, but I mean, we're incubating business, which is digital, which we are investing in, but the only consumes a fraction of the cash that the other two businesses are spitting off and that provides us again optionality to look for valid creating acquisitions and potentially I mean substantial returns to shareholders as well.
As for the export opportunities.
Obviously, the fact that we are accelerating the store opening and the fact that the performance is good.
Speaker: Thank you.
We feel confident that the states that we have a value proposition that is relevant to that effect.
Approved by consumers lifecycle tumors and that that's why the orientation is to accelerate that.
Speaker 4: transcript
Speaker 4: At the same time, we are also aware that we have to do this in a discipline manner. And that's why we are a stage for example, for collecting geographically only certain areas of Mexico. We'll continue to expand in the regions where we are. Make sure that we capture all the growth that is there. We're applying the models that we have.
Speaker 15: At the same time, we are also aware that we have to do this in a discipline manner. And that's why we are a stage for example, for collecting geographically only certain areas of Mexico. We'll continue to expand in the regions where we are. Make sure that we capture all the growth that is there. We're applying the models that we have.
At the same time, we are also aware that we have to do this in a disciplined manner and Thats. Why we are these days for example for collecting geographically only certain areas.
Of Mexico.
We'll continue to expand in the regions, where we are.
Make sure that we capture all of the World that is there are we applying.
Speaker 12: transcript
Speaker 4: We are confident also at this stage that, given that it's a different format and a different value proposition for consumers, that there is no or very limited cannibalization with our out-of-store.
Speaker 11: We are confident also that they give a different format and a different value of position for consumers, but there is no very limited kind of validation with our outside storage.
The model that we have.
Bob: But I question comes from a line of up for from Bank of America, please go ahead. Thank you. Good morning, everybody, and thanks for taking my question. You seem to be generating not only scale, but engagement with Pamia.
Our confidence also need state yet.
Even though the different formats and of equal value proposition for consumers, but.
There is no or very limited cannibalization with with our actual stores.
Speaker 9: transcript
Speaker 9: So that's what I can say about the format itself. And, Chris, do you want to add something? Yep. No, just with regards to your second question on spirits, I mean, clearly the pandemic kind of brought that category to the forefront of the OXA value prop, and that continues to be strong. Beer sales are now, I mean, back to where they were, if not higher than prior to the pandemic, but the consumption pattern of people trying higher-graduation drinks is still there and still strong.
Speaker 19: So that's what I can say about the format itself. And, Chris, do you want to add something? Yep. No, just with regards to your second question on spirits, I mean, clearly the pandemic kind of brought that category to the forefront of the OXA value prop, and that continues to be strong. Beer sales are now, I mean, back to where they were, if not higher than prior to the pandemic, but the consumption pattern of people trying higher-graduation drinks is still there and still strong.
Bob: I could you talk a little bit in terms of where you are in terms of driving frequency and average ticket and where you are in that progression of transitioning Pamia from a cost to a profit center, please. Hey, Bob. Yeah, this one. I think you're, you know, you focus on something that I find very exciting myself, which is the speed at which Pamia has grown the massive number of users. And when we look internally at, you know, the Impact on an average ticket, so how is it spilling over to the also business, but also very early stages where we are working with partners, right?
Sure.
That's what I can say about the format itself. When you want to add something you know just with regards to your second question on spirits, I mean, clearly the pandemic kind of brought that category to the forefront of the OXXO value prop and that continues to be strong beer sales are now I mean back to where they were if not higher than then.
Prior to the pandemic, but the consumption pattern.
We'll try and how Youre gratulation drinks is still there and still strong.
Speaker 4: transcript
Speaker 4: And the other thing, just to add one bit of color, additional color, and I guess that we spoke about it in another meeting we had. But remember that in Bada, for example, just to talk about the format and the value proposition, there is a big component of private labor.
Speaker 10: And the only thing, just to add one bit of a visual or a visual or an element, I guess that we spoke about it in another way we have. But remember that in Bata, for example, just to talk about the format and the value proposition, there is a big component of private label.
The other thing just to add.
One bit of color additional color I guess that we spoke about it.
And another meeting we had but remember that in BARDA. For example, just to talk about the format and the value proposition. There is a big component of private label.
Speaker 4: transcript
Speaker 4: So private label is an important part of the equation. It is more important in certain categories, it keeps growing in general, so that speaks to the type of format and value proposition that we have in BAT.
Speaker 10: So, surprisingly, it's an important part of the equation. It is more important in certain categories, it's growing, it keeps growing in general. So, that speaks to the type of format and valuable position that we have in bias.
Bob: So when you talk about volati, so you talk about the, yeah, it's pretty the streaming service from from from Tel Avisa and potentially others that may come down the road as well as the internal ones, you know, oxogracis particular. You notice the power of this in a demographic that historically has not really had a lot of access to loyalty programs, so there is, you know, the average ticket that goes to premium is meaningfully higher than the regular average ticket.
So the private label.
Important.
Part of the equation. It is more importantly, certain category is growing.
Growing in general so that speaks to the type of format.
<unk> proposition that we have in <unk>.
Speaker 12: transcript
Speaker 11: Got a good critical. Thank you, good private label. Thank you so much. Appreciate it. Congratulations. Good asses.
Speaker 18: Got a good critical. Thank you, good private label. Thank you so much. Appreciate it. Congratulations. Good asses.
Got it that's what's critical.
<unk>. Thank you so much I appreciate it congratulations.
Good SSL and Atlanta.
Speaker 2: transcript
Speaker 2: The next question comes from a line of Rodrigo Alcantara from UBS, please go ahead.
Speaker 4: The next question comes from a line of Rodrigo Alcantara from UBS. Please go ahead.
Our next question comes from the line of Jorge go I'd come thorough from UBS. Please go ahead.
Bob: You start really looking at things like retail media, you know, digital media where you begin to monetize, when you get on your app to check your points balance or whatever, and you begin to get ads by some of our big suppliers. So you're transferring the real estate where for a long time, we've been monetizing the physical real estate on the commercial income firm, but we're beginning to monetize the digital real estate for similar purposes, which of course is, you know, endless. So very early stages go up, but moving moving in the right direction and probably a little bit faster than I expected.
Speaker 13: transcript
Speaker 13: Hi, good morning, good afternoon. Thanks, Paco, Henry, and Juan for taking my question.
Hi, good morning, good afternoon. Thanks, Paco, Henry, and Juan for taking my question.
Hi, Good morning, good afternoon, Thanks for taking my question.
Speaker 13: transcript
Speaker 13: So, a couple of months ago, our friends came back to walk. So right. So, I mean, this clearly demonstrated the relevance of your proximity format.
So a couple of months ago our panoramic friends came back to Oxford, right? So I mean, this clearly demonstrated the relevance of your proximity format.
So a couple of months ago, our Panoptic trends came back to work right. So I mean just.
<unk> demonstrated the rattler box.
Speaker 13: transcript
Speaker 13: So, my question would be on the opportunity you see to know, or you are working on for.
Speaker 10: So, my question would be on the opportunity you see to know, or you are working on for.
Proximity format. So my question would be on <unk> E channel or are working on four two.
Speaker 13: transcript
Speaker 13: to take advantage of the retraumated opportunities at the third level or perhaps partnering with e-commerce guys. Just some other strategies or venues you see to take the most from the proximity format that you have in Mexico. We know, thank you.
Speaker 10: to take advantage of the retail made opportunities at the store level, or perhaps partnering with e-commerce guys, just some other strategies or venues you see to take the most from the proximity format that you have in Mexico. Thank you.
That should be a read through maybe opportunities at the store level or perhaps.
We e-commerce guys, just some other strategies or Ben you see to take the most from the proximity format that you have in Mexico, We don't thank you.
Speaker: Yeah, I'm going to bother if I may just to add a couple of points to that. The most exciting part of the oxopremia is the fact that we are being able to identify the different journeys from different consumer segments. And the fact is that there is one way which the consumer that goes into a notes of data station and accumulate points there uses the overall oxopremian platform versus someone that goes and uses daily to buy a coffee in an office store.
Speaker 5: transcript
Speaker 5: yeah I mean really those are all. I mean very relevant points- and that's kind of part of the agenda for a long-ange plan- are more and more the digital business. Obviously it's a business in and of itself, but the digital opportunities associated.
Speaker 19: Yeah, I mean, those are all, I've been very relevant points and that's kind of part of the agenda for the long-range plan. More and more, the digital business obviously is a business in and of itself, but the digital opportunities associated.
Yes.
They are all very relevant points and thats kind of part of the agenda for the London plan, a more and more the digital business, obviously, it's a business in and of itself, but the digital opportunities associated with the with the store model in the digital element of combination of physical and digital is something that is part of the strategic plan and something that.
Speaker 9: transcript
Speaker 5: with the store model and the digital elements of a combination of physical and digital is something that is part of the strategic plan and something that is also slowly rolling out. I mean, there are very significant efforts going on with regards to building out a retail media network within the stores and using the inside of the stores also as a way to
Speaker 19: with the store model and the digital elements of combination of physical and digital is something that is part of the strategic plan and something that also slowly rolling out. I mean, there are very significant efforts going on with regards to building out a retail media network within the stores and using the inside of the stores also as
Also slowly rolling out I mean, there are very significant efforts going on with regards to building out our retail media network within the stores and using the inside of the stores also as.
Speaker 9: transcript
Speaker 9: Specific advertising platforms to generate traffic. We will have eventually, the ability to.
Speaker: And the reality is that the team is digging into every single journey possibilities so that they maximize the personalization for consumers in the midterm. That's really the end game here on top of everything else at point set. So today, when you look at the tender, which is very high already, that already reflects the fact that consumers are themselves learning how to use their point, how to how to use the ecosystem. And you have to do with a bunch of things related to the consumer.
Specific advertising platforms to generate traffic, we will have eventually the ability to.
To determine which customers are coming into the store if they have the spin off or not in the inhaler. The advertisements to the actual demographics of the store customers that are at any given point in time. So all of that is creating tremendous opportunities on that.
That site as well.
And again, the more that that.
That digital.
The platform is growing the more we know that there are opportunities well above just the basic products that we offer right now which is a wallet basically with a with a with a loyalty program attached to it I mean, there are significant opportunities there on the credit side on different financial products in the future with a broader <unk>.
Speaker 9: transcript
Speaker 9: a wallet basically with a loyal program attached to it. I mean, there are significant opportunities there on the credit side, on different financial products and in the future with a broader SKU mix and just the ultra-store to deliver to those customers to other channels and other means. So those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point.
Speaker 19: a wallet basically with a loyal program attached to it. I mean, there are significant opportunities there on the credit side, on different financial products and in the future with a broader SKU mix and just the ultra-store to deliver to those customers to other channels and other means. So those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point.
Speaker: You have to do with the age group, they belong to the socioeconomic level, they belong to the type of life they have, whether they are students, or they are a job professional, or they are a professional driving an Uber or a truck. And all those journeys are what are allowing us, understanding them is what is allowing the team to actually tailor made some of the activities that are conducted from options without the store, promotions, we also got promotions with the partners.
Speaker 4: transcript
Speaker 4: a broader SKU mix than just via offshore stores to deliver to those customers through other channels and other means. So those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point. And Rodrigo, I think that you have, your question, it reflects basically the number of opportunities that pop up every time we talk about the digital and the connection with the store.
Speaker 11: broader SK Unix and just be an access source to deliver to those customers to other channels and other means. So those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point. And to agree, I think that you have a, your question, it reflects that basically the number of opportunities that pop up every time we talk about the digital and the connection with the store. And the way
And just be OXXO stores to deliver to those customers through other channels and other means. So those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point.
Speaker 4: transcript
Speaker 4: And Rodrigo, I think that you have your question. It reflects basically the number of opportunities that pop up every time we talk about the digital and the connection with the store. And the way we are reading that is that, I mean, clearly for our digital proposition, the link with the store is an enormous competitive advantage.
Speaker 27: And I think that you have a, your question, it reflects that basically the number of opportunities that pop up. Every time we talk about the digital and the connection with the store. And the way we are reading that is that I mean, clearly for our digital proposition, the language of the story is an enormous competitive advantage.
Hum.
I think that do you have.
To your question.
Reflects basically the number of opportunities that pop up.
Speaker: And really that is the exciting part of all these beyond the number of active users that we have which is really big too. So, honestly, moving forward, there is a lot of possibilities that are being that the team is tapping into that are part of what is included once again, as I said before, in the long range planning.
Every time, we talk about the digital and the connection with the store and the way we are reading that is that clear.
Clearly for all of our digital proposition.
The linked with the story is an enormous competitive advantage.
Speaker 4: transcript
Speaker 4: And that digital ecosystem, as Eugenio made reference to, is of tremendous value for the consumer.
Speaker 11: And that digital ecosystem, as Eugenio made reference to, is of tremendous value for the consumer.
That figure.
Physical ecosystem.
I was hoping you made reference to is.
Speaker: And I'm sure that we'll be able to share more on what is happening in digital, more in detail in the most to come. Yeah, and I think the other thing that obviously is beginning to accumulate all this is the amount of data. I mean, to focus points, we are being able to gather, and obviously for the first time had the data assigned to a person for whom we know who they are, what their email account is, what their phone number is, and then begin to customize some of these promotional activity and incentivize behaviors with the rewards themselves. So, early stages for all of this got off to a faster start than expected.
Speaker 4: transcript
Speaker 4: And the priority of the team is to make sure that we not only tap into that to create value, but also importantly, to help consumers' lives and to help them in their day-to-day and to open new possibilities on their financial side, but also importantly, on their journey as consumers.
Speaker 11: And all the priority of the team is to make sure that we're not only tapping to that to create value, but also importantly, to help consumers life and to help them in their day-to-day and to open new possibilities for on their financial side but also importantly on their journey as consumers.
Each of tremendous value for the consumer.
And all the priority of the team is to make sure that we not only tap into that to create value, but also importantly to help consumers lives.
To help them in their day to day and to open new possibilities for.
Financial side, but also importantly on their journey as consumers.
Speaker 13: transcript
Speaker 13: I see that that's very clear. Thanks for that. But yeah, I'm asking on the retail media per se, right? Because, you know, we have seen how the retailers, let's see a Walmart, for instance, already a 2 billion pesos business, right? Highly marginocratic. So just curious for you guys, do you think that, I mean, we're still in an early stage about that? And how far do you think we could get on the retail media?
Speaker 10: I see that that's very clear. Thanks for that. But yeah, I'm asking on the retail media per se right, because we have seen how the retailer let's see a Wal-Mex for instance, already a two billion pesos business, right? Highly margin-acquantic, so just curious for you guys, do you think that, I mean, we're still in an early stage about that and how far do you think we could get on the retail media?
I see that that's very clear thanks for that but I'm asking on the retail maybe a per se right. Because now we have seen how old the retailer net see bottlenecks for instance, already at $2 billion Samsung business right. It's highly margin accretive. So just curious thing for you guys do you think that I mean.
Julian how are you thinking about that.
Speaker: And there are just as a follow-up are you guys making money or losing money and you know I mean I'm all in I kind of get to get the time. How should we think about the evolution though? I think at this point we are given the electricity from the point you said we are better than break even on the premium and we're still early stages so it's promising. Great for you. Thank you so much and congratulations.
How far do you think we could get on the retail media.
Speaker 8: transcript
Speaker 7: Yeah, Rodrigo, it's Juan. I mean, I think retail media is, I mean, basically, we've thrown two or three pitches in the top of the first inning to talk about something that's kind of involved these days with the World Series starting.
Speaker 9: Yeah, this one, I mean, I think retail media is, I mean, basically we've thrown two or three pitches in the top of the first inning to talk about something that's kind of involved with the world series starting. No, this is just...
Yes, there's one I mean.
<unk> retail media is I mean, basically we've thrown two or three pitches.
The top of the first inning.
Talk about something Thats kind of in Vogue. These days with the World series starring Oh. This is this is just tip of the iceberg finish it.
Speaker 7: transcript
Speaker 14: tip of the iceberg, as Eugenio said, if you, I mean, at the end of the day, a lot of this goes back to, you know, 13 million, the 13 million times today, somebody is going to interact with our stores, right? And that number will continue to grow. And, and so the potential is really
Speaker 9: Kippo the iceberg, as I've said. If you, I mean, at the end of the day, a lot of this goes back to, you know, 13 million times today, somebody's going to interact with our stores, right? And that number will continue to grow. And so the potential is really...
At the end of the day a lot of it goes back to.
Thiago Botolucci: The next question comes from a line of Thiago Botolucci from Goldman Sachs. Please go ahead. Yes. Starting with Mexico and we've been hearing you guys cautioning down on the strong coms for center, but the thing is quarter after quarter you have been beating expectations right not only surpassing your own mark, but also performing by far. You're right. With your competitors mentioning incrementally higher growth within the hards counter and even on our insane data growing and making. How should we think about centers for also going forward? How sustainable these things is above inflation ticket growth might be? How much hards counter is putting back traffic?
30 million to 30 million times today somebody is going to interact with our stores and that number will continue to grow.
And so the potential is really important.
Speaker 8: transcript
Speaker 7: You know, we haven't really spoken a lot lately about a couple other things that are, you know, happening on the fulfillment side. You've mentioned, you know, partnering on the e-commerce side, obviously the 21, 22,000 stores.
Speaker 9: You know, we haven't really spoken a lot lately about a couple other things that are, you know, happening on the fulfillment side. You've mentioned, you know, partnering on the e-commerce side, obviously the 21, 22,000 stores.
We haven't really spoken a lot lately about a couple of other things that are.
It is happening.
On the fulfillment side you had mentioned.
Hearing on the ecommerce side, obviously to the 'twenty, one 'twenty 2000 stores.
Speaker 7: transcript
Speaker 14: Whether it's directly as we've been doing it with Amazon for a number of years, or exploring the use of lockers, or other ways that we can participate, and the last mile component, which again, we've done a lot of work on that, and we've identified that
Speaker 9: Whether it's directly as we've been doing it with Amazon for a number of years, or exploring the use of lockers, or other ways that we can participate, and the last mile component, which again, we've done a lot of work on that, and we've identified that
Whether it's directly or that we've been doing it with Amazon for a number of years or exploring the use of lockers or other ways that we can can participate.
On the last mile component, which again, we've done a lot of work on Bath and we've identified that it's for a certain subset of our average transactions that are really big enough to kind of sustain the cost of delivery, but there are other things that are happening kind of in the.
Speaker 7: transcript
Speaker 14: So for a certain subset of our average transactions that are really big enough to kind of sustain the cost of delivery. But there are there are other things that are happening kind of in the you, behind the curtain, all of which are part of the long bridge plan and along all of which we are, we are making pro.
Speaker 9: So for a certain subset of our average transactions that are really big enough to kind of sustain the cost of delivery, but there are other things that are happening kind of in the, you know, behind the curtain, all of which are part of the long range plan and along all of which we are making progress.
Thiago Botolucci: This is the first question and the second one is still and on the expansion team. Do you have any color on how your build up in Brazil is performing in terms of profitability and what are the learnings from Brazil that eventually you might take into the US. Those are the questions. Thank you very much. Yeah. Thank you Thiago.
Behind the curtain.
All of which are part of the Longbridge brand and.
Along all of which we are we are making progress.
Speaker 13: transcript
Speaker 13: I see. Exciting. Thank you. Thank you, Juan, Paco. Congrats on the results.
Speaker 10: I see. Exciting. Thank you. Thank you. Juan Bako. Congrats on the results.
I see exciting. Thank you. Thank you Kwon buckle Ah congrats on the results.
Speaker 2: transcript
Speaker 2: annext question comes from volana factor Maya, from scottiia Bank. letase go ahead.
Speaker 4: Our next question comes from where I'm the Hector Maya from Scotia Bank. Please go ahead.
Thank you. Thank you.
Okay.
Our next question comes from Rolando Hector Maya from Scotia Bank. Please go ahead.
Speaker 14: transcript
Speaker 15: Hi, thank you for taking my question. So it's definitely very encouraging seeing the rebalancing.
Hi, thank you for taking my question. So it's definitely very encouraging seeing the rebalancing.
Speaker: Let me take the first part of the question and then I'll let the Ukrainian fans to add color to that and tackle the second part. When it comes to also and I think that you can make reference to that. The reality is that as we said, they are executing the long range plan that they put together. Those action plans are paying dividends are working and are the leaders resolved. I think that it's safe to say that they are ahead of the language plan projection.
Hi, Thank you for taking my question. So it's definitely very encouraging seemed a robust resulting in OXXO. So congratulations on that it was also very interesting to see the growth with Spain. I mean, it seems you are well on track to reach 10 million users.
Speaker 14: transcript
Speaker 15: result in OXO, so congratulations on that. It was also very interesting to see the growth with SPIN. I mean, it seems you are well on track to reach the 10 million user target that you had mentioned a year ago. So seeing this, I just wanted to know if this, I mean, if at this stage.
resolving also. So congratulations on that. It was also very interesting to see the growth with spin. I mean, it seems you are well-entracted to reach a 10 million user target that you have mentioned a year ago. So, seeing this, I just wanted to know if at this stage.
That you had mentioned a year ago. So seeing this I just wanted to know is this I mean, you've had these states you have more clarity regarding how much more you could accelerate this and what could be the potential economics and you plan to leverage these very critical mass to integrate.
Speaker 14: transcript
Speaker 15: You have more clarity regarding how much more you could accelerate this and what could be the potential economics in your plan to leverage this very critical mass to integrate COF to supply mom and pop stores in the traditional channel in Mexico.
You have more clarity regarding how much more you could accelerate this and what could be the potential economics in your plan to leverage this very critical mass to integrate COF to supply mom and pop stores in the traditional channel in Mexico.
Speaker: And they are the process of reshaping those and working as a team to to refresh those projections. And the wrong way as the wind is said, we are confident that the wrong way for performance is longer than than we originally thought. Having said that, the reality is that as you know, well in many business, we have to be realistic about what can be a tailwind and what type of headwinds come ahead of us.
To supply.
Pop stars in the traditional channel in Mexico. Thank you.
Speaker 8: transcript
Speaker 3: Hey, Hector. Yeah, I think regarding spin, you know, one of the things we have learned.
Speaker 9: I think regarding spin, you know, one of the things we have learned.
Yeah.
Hey, Kurt.
Regarding spin.
Speaker 8: transcript
Speaker 14: Is we had to coun of the thesis that the store would be helpful.
Speaker 9: And we had the kind of the thesis that the store would be helpful.
One of the things we have learned.
And we had kind of a thesis that the store would be helpful.
Speaker 7: transcript
Speaker 14: in the acquisition of customers. But to be honest, it's exceeded our expectations. And this has translated into the cost of acquisition, right? Because some of the.
Speaker 9: in the acquisition of customers. But to be honest, it's exceeded our expectations. And this has translated into the cost of our position, right? Because some of it...
And the acquisition of customers.
But to be honest, it's exceeded our expectations and.
And this has translated into into the cost of acquisition right because some of it some of the incentives and some of the strategies that we had at the beginning have turned out to not really be necessary. So we know it looks like we can continue to asphalt at the pace that you are seeing.
Speaker 3: transcript
Speaker 14: some of the incentives and some of the strategies that we had in the beginning.
Speaker 9: some of the incentives and some of the strategies that we had in the beginning.
Speaker: The operational excellence of the teams are creating a bunch of those penguins and we see a lot of opportunities moving forward in the growing the core. And the retrofits are part of their strategic plan. Nevertheless, we also know that evidently there are things that happened beyond our control that have to be with the context, with the categories, with the activities and activities from our suppliers, commercial partners, etc. And that we are always prepared to do that.
Speaker 8: transcript
Speaker 14: have turned out to not really be necessary. So we know it looks like we can continue to add SOPs at the pace that you're seeing without incurring on a very high cost. So, you know, to the apprentice comment on Fidgettle, the actual.
Speaker 9: have turned out to not really be necessary. So we know it looks like we can continue to add SOPs at the pace that you're seeing without incurring on a very high cost. So, you know, to the apprentice comment on Fidgettle, the actual.
Without incurring on a very high cost so.
Two opinions commented on physical.
Speaker 8: transcript
Speaker 14: network of physical stores and these 13 million times somebody's getting asked today if he already has a spin account.
Speaker 9: network of physical stores and these 13 million times somebody's getting asked today if he already has a spin account.
The actual.
Network with physical stores. These 13 million times somebody is getting asked today, if you've already had the spin account.
Speaker 8: transcript
Speaker 14: That has turned out to be very, very powerful. And so yes, we are, we are continued to grow, I mean on the spin side. I think we added.
Speaker 9: That has turned out to be very, very powerful and so, yeah, we are, you know, we are continuing to grow. I mean, on the spin side, I think we added.
That has turned out to be very very powerful and so yes, we are.
Speaker: And all that is put into the melting pot and the teams come up with a revised projection. So for the time being, we remain very positive. And we are very positive about the possibilities in our also model. They continue to to polish the diamond, to call it that way in terms of the operational excellence, the operational efficiency, learning how to activate the categories better, the segmentation is working fantastic. So again, positive, but we remain conscious of all the external factors that are around us and that we have to to travel at the same time.
We are.
Continued to grow.
Speaker 8: transcript
Speaker 14: We're adding something like 400,000 stops per month. And on the premium side, it's significantly faster than that. So going back to an earlier question a few minutes ago, I think the bigger challenge is on engagement.
Speaker 9: We're adding something like 400,000 subs per month and on the premier side it's significantly faster than that. So going back to an earlier question a few minutes ago, I think the bigger challenge is on engagement.
On the spend side I think we added.
We're adding something like 400000 stops per months.
And on the on the premium side of Cigna.
It can be faster than that so.
Going back to an earlier question a few minutes ago I think the bigger challenge is some engagement on generating engagements on having more things for people to do was there on the app.
Speaker 8: transcript
Speaker 7: on generating engagement, on having more things for people to do while they're on the app, spending more time, and then of course this is going to translate into better digital media numbers as well because people are going to be there for longer. So that's really the number one item on the agenda.
Speaker 9: on generating engagement, on having more things for people to do while they're on the app, spending more time, and then of course this is going to translate into better digital media numbers as well because people are going to be there for longer. So that's really the number one item on the agenda.
Pending more time and then of course this is going to translate into better.
Digital media numbers as well because people are going to be there for longer.
So that's that's really the number one item on the agenda is increasing engagement in monetization as opposed to just sheer.
Speaker 4: transcript
Speaker 4: increasing engagement and monetization as opposed to just sheer number of subs because that's happening more or less on its own. And in fact, Hector, this is Paco, but just to add to Juan's point.
Speaker 31: increasing engagement and monetization as opposed to just sheer number of subs because that's happening more or less on its own. And in fact, this is a battle, but just to add to one step to...
Speaker: I would add that, I mean, if you look at what's happening over the past quarter, I think it is a reversal of the trend we saw there in the pandemic of consumption, patterns shifting from the small box to the larger box. And now that's coming back with a vengeance and that is coming back higher than we anticipated frankly. So we're seeing traffic trends pick up and also ticket and pricing stick to what we have.
The number of subs, because that's happening more or less on its own and in fact this is platform, but just to add.
Speaker 4: transcript
Speaker 4: The fact is that as a metric, for example, today we focus significantly more on active users rather than total users.
Speaker 11: The fact is that asymmetric, for example, today we're focusing significantly more on active users rather than total users.
Two one to one point.
The fact is that as a metric for example.
Today, we focused significantly more.
Active users rather than total users for a screen because what is important is the those that are making at least one transaction a month and then once you have those transacting at least once a month and you focus on besides of the transaction and the number of transactions that they make.
Speaker 4: transcript
Speaker 4: because what is important is those that are making at least one transaction a month. And then once you have those transacting at least once a month, then you focus on the size of the transaction and the number of transactions that they make.
Speaker 24: because what is important is those that are making at least one transaction a month. And then once you have those transacting at least once a month, then you focus on the size of the transaction and the number of transactions that they make.
Speaker: So I don't know if this is a secular trend or if it's a temporary trend, but it is what's causing the short term results having said that with the value prop that we have and with the union economics we're getting we're comfortable that we can continue on that path going forward. And with, I think you mentioned that and the other multi formats, I think, I mean, we're growing there as well. And we see a lot of promise having said that there's still too small to make any kind of cannibalization threat to the expansion path we see.
Speaker 4: transcript
Speaker 4: And that's where the team is focalizing at this stage, which is understanding what is the journey of the consumer, how a consumer in one location and of a certain social demographic uses the car.
Speaker 25: And that's where the team is focusing at this stage, which is understanding what is the journey of the consumer, how a consumer in one location of a certain social demographic uses the car.
That's what the team is focused I think is at this stage, which is understanding what is the journey of the consumer our consumer in one location.
On a certain socio demographic uses the card.
Speaker 7: transcript
Speaker 4: Do they use a physical card? Do they use a digital card? Do they use it to transfer money? Do they use it to pay? Do they use it to receive payments from other people? And depending on how they are using that card.
Speaker 26: Do they use a physical card? Do they use a digital card? Do they use it to transfer money? Do they use it to pay? Do they use it to receive payments from other people? And depending on how they are using that card.
They use a physical card that they use a digital card that they used to transfer money do they use it to pay than they used to receive payments.
Speaker: Not so again, there are more than a million momentum in Mexico. I mean, I mean, tens of thousands of larger format and source across Mexico. So I think there's there's room for all of all of the formats to continue to grow in this way.
From from <unk>.
Some other people.
Speaker 4: then is the type of authoring and the type of journey that we put our consumer in.
Speaker 13: then is the type of authoring and the type of journey that we put our consumer in.
Depending on how they are using that card. Then is is the type of offerings and the type of guarantee that we put that consumer into.
Speaker 4: transcript
Speaker 4: So when you look at the transactions, the reality is the transactions grew almost 60% during the month.
Speaker 20: So when you look at the transactions, the reality is the transactions grew almost 60% during the month.
Speaker: And the second party question was with regards to Brazil. And again, what I can say is from a four wall perspective, the stores are performing much better than we expected when we originally entered into the partnership with with Raiden. It's still an issue of scale. As you know, our model is distribution driven and distribution investments are, I mean, are front loaded. You have to put the distribution center first and then fill it up.
So when you look at the transactions that reallocated the infections was 16% during the month.
Speaker 4: transcript
Speaker 4: Um, and what the team has learned is that those.
Speaker 27: Um, and what the team has learned is that those.
On the.
Speaker 4: transcript
Speaker 4: users that have a higher frequency are obviously the ones having each interaction a higher ticket to.
Speaker 25: users that have a higher frequency are always either one with a higher lever, in which interaction, of a higher Pocket 2.
The DFAST scenarios that adult users that have a higher frequency are obviously the ones that come in each.
Speaker 4: transcript
Speaker 4: But again, as I said, clearly it is different if you are a student in Veracruz, how you use the card versus if you are someone that is working in Tijuana and you're sending money to Oaxaca. So, I mean, clearly all those different ways of using a SPIN will play a role in terms of how we activate it in the store and what type of offers we do to each of these consumer segments and cohorts.
Speaker 25: But again, as I said, clearly it is different if you are a student in Veracruz, how you use the card versus if you are someone that is working in Tijuana and you're sending money to Oaxaca. So, I mean, clearly all those different ways of using a SPIN will play a role in terms of how we activate it in the store and what type of offers we do to each of these consumer segments and cohorts.
Direction of higher ticket.
No.
But again as I said clearly it is different if you are how.
Speaker: So there's still, I mean, a big runway of stores before we can get to the economics we expect for the region, but the fact that the four wall model is working well, I mean, gives us a heightened confidence that we will get to these numbers and that we will be able to replicate this unit of distribution center slash. Our stores in the region of so power and hopefully more regions in the future and to what extent we can export that to the US, I think the US is a different market and we'll get to that, but, but it's, I mean, that that's the learning so far in Brazil.
How you use the card versus EUR 700, and working with quanta understanding wanted to happen.
I mean, clearly all those different ways of using the using a spin will play a role in terms of how we activate it in the store and what type of offers we look each of these consumer segments in cohorts.
Speaker 4: transcript
So again, lots of possibilities, but once again, the focus shouldn't be so much on the recruiting, but significantly more on the frequency and how active those consumers are using the platform.
Speaker 16: So again, lots of possibilities, but once again, the focus shouldn't be so much on the recruiting, but significantly more on the frequency and how active those consumers are using the platform.
So again lots of possibility.
But once again the focus should be on the on so much on the recruiting but significantly more on the frequency and collectibles consumers are using the using the platform I think of it I think the other part of your question had to do with the need to be and as you know that's the second element always talked about right.
Speaker 9: transcript
I think the other part of your question, Hector, had to do with the B2B, and as you know, that's the second element. All we've talked about right now and the success we've seen so far has been on the consumer. To kind of close the loop in the ecosystem, that's the other big part of the strategy. As you know, we acquired NetPay, which basically gives us...
Speaker 19: I think the other part of your question, nectar had to do with the D2B. And as you know, that's the second element. All we talked about right now, and the success within so far has been on the consumer to kind of close the loop in the ecosystem. That's the other big part of the strategy, as you know. We acquired net pay, which basically gives us.
Speaker: Yeah, I will just add the other this one. I mean, going back I'm kind of guilty as charged because I remember six months ago, sitting in this same conference room on the call and telling all of you to not put into your model kind of a teens number. And then I've been wrong for the following two quarters because we've delivered 15s. You know, I think the biggest point Jerry still out in terms of how much of this is sustainable, but it increasingly looks like there's a lot of structural reasons why things are as positive as they are as opposed to just the bounce back from COVID.
Now.
The success, we've seen so far has been on the consumer too.
<unk> kind of close the loop in the ecosystem.
The other big part of the strategy as you know we acquired net paid which basically gives us the infrastructure. So the rail.
Speaker 5: transcript
the infrastructure, so the rail on which to build the strain and the good relationships that
Speaker 19: the infrastructure, so the rail on which to build the strain and the good relationships that
Cola pensor has obviously with thousand nono pops in the southern part of Mexico and with the ability to distribute nonnoncoof products.
Speaker 19: Coca-Cola FEMSA has obviously with all the mom-and-pops in the southern part of Mexico and with the ability to distribute non-COF products.
On which to build the strain in the good relationships that.
Coca Cola FEMSA has obviously with all of them on the tops in the southern part of Mexico, and with the ability to distribute.
Speaker 5: transcript
through OXO distribution centers and OXO commercial relationships.
Speaker 19: through OXO distribution centers and OXO commercial relationships.
Non core non core products.
Speaker 5: transcript
I'm trying to bring a digital solution so that that mom and pop through the spin ecosystem with obviously a differentiated product more tailored to their B2B needs.
Speaker 19: trying to bring a digital solution so that that moment pop through the spin ecosystem, with obviously a differentiated product, more tailored to their B2B needs.
We will also distribution centers and of our commercial relationships.
Turning to bring a digital solution, so that that mom and pop through the spin ecosystem with obviously.
Speaker: As we begin to look at 2024 again, you know, I think the numbers are going to continue to trend down. So in my mind, it would probably probably be thinking more about a very high single digit since the sales growth and we'll revise that in February. But I don't think, you know, double digits are out of the question, at least for the early, early stages of 2024. We'll see. But the deceleration has certainly been a lot less rapid than we expected six months ago. So that's all very good news.
Our differentiated product more tailored to their b to b needs with.
Speaker 9: transcript
With different. I mean ability to provide services, to potentially credit, et cetera, and have access.
Speaker 19: with different, I mean, ability to provide services, potentially credit, et cetera, and have access.
Speaker: That's super clear. Thank you very much.
With different <unk> ability to provide.
Services, potentially credit et cetera, and have access.
Speaker 9: transcript
through the digital framework to accept payments.
Speaker 19: through the digital framework to accept payment.
Speaker 5: transcript
To order from golf or to order from other products that will be again using the railways that we built with Pepe, that would be kind of the other side of the song of the of the prompt. Sorry that that could bring both both sides together and close the loop.
Speaker 19: To order from golf or to order from other products that will be again using the railways that we built with Pepe, that would be kind of the other side of the song of the of the prompt. Sorry that that could bring both both sides together and close the loop.
Through the digital framework to accept payments to order from golf or to order from other products that would be again using the railways that we built with that that would be kind of the other side of the song.
Operator: Thank you.
<unk> of the promissory that that could bring both both sides together and close the loop.
And try to provide an ecosystem, both on the consumer side that,' as well as on the on the mom pop slash little restaurant side. So' a little bit we'retryingto?
Speaker 19: and try to provide an ecosystem both on the consumer side as well as on the on the moment pop slash little restaurant side So that's a little bit of what we're trying to do there
And try to provide an ecosystem both on the consumer side as well as on the on the mom and pop slash little restaurants side. So that's a little bit of what we're trying to do that.
Operator: Before we proceed to the following questions, a final reminder, if you'd like to ask a question, please press star one, we kindly ask you to limit yourself to one question only.
Speaker 14: transcript
For that part, is there a timeline on when we could possibly be seeing that on more details on that?
For that part, is there a timeline on when we could possibly be seeing that on more details on that?
So that part is there a timeline.
Let's see if we could possibly be seeing that.
Speaker 5: transcript
We're still in the early stages. Again, we have pilots running in some of the Coca-Cola offensive regions.
Speaker 19: We're still in the early stages, again, we have pilots running in some of the Coca-Cola offensive regions.
More details on that.
Alvaro Garcia: The next question comes from Alvaro Garcia from BTG, please go ahead. Hi guys, thanks for this question. My question, we haven't focused on margins that also, profitability came down a bit as you may accelerate it sequentially. You mentioned the release, sort of increased labor expenses in connection with labor reform, but I was wondering if there was any other dynamic going on there, maybe sort of quicker growth outside of Mexico. I know it's still very, very small, but I'm not sure if that's starting to maybe move the needle a bit, or it's really solely a people thing in Mexico. Thank you very much.
We're still in the early stages again, we have pilots running in some of the Coca Cola FEMSA, We just and we're still tinkering with the value proposition on how to do it. So it's still early days to up to.
Speaker 5: transcript
and we're still tinkering with the value proposition on how to do it. So, it's still early days to have a full timing. That initiative obviously has different implications from an acquisition cost perspective, which was the easy part with the B2C side and also. So, we're still working our way around that. Having said that, we do believe that the value, potential value creation in a win-win situation with the mom-and-pops and small fomitas or restaurants.
Speaker 19: And we're still tinkering with the value proposition on how to do it. So it's still early days to have a full timing. That initiative obviously has different implications from a negotiation cost perspective, which was the easy part with the B2C side on also. So we're still working our way around that, having said that we do believe that the value, potential value creation in a win-win situation with the mom and pop since most of the data are restaurants.
You'll have a full timing that initiative obviously has.
Any implications from an acquisition cost perspective, which was the easy part with the BTC side and also so we're still working our way around that having said that we do believe that the value potential value creation and a win win situation with the mom and Pops and small from beef, thus our restaurants in the Coca Cola FEMSA network is.
Speaker 5: transcript
in the Coca-Cola network is large enough for us to be able to devise a business model that works for all of us.
Speaker 19: in the Coca-Cola-Femma network is large enough for us to be able to devise a business model that works for all of us.
Large enough for us to be able to devise a business model that works for all of us.
Speaker: I would say a lot of thank you for the question. First, primarily it is labor, as we said, having said that a lot of these initiatives in the strategic plan, including we are looking at better methods for recycling cash, for regards to how many people operate the store, how many are fixed, how many are variable, in terms of shifts, etc. All of that is experimentation. It's piloting as we look to build, I mean more resiliency from a cost perspective going forward.
Thank you. Thank you very much.
Speaker 2: transcript
The next question comes from the line of Ulysses Argote from JP Morgan. Please go ahead.
Speaker 4: The next question comes from the line of Ulysses Argotte from JP Morgan. Please go ahead.
Thanks, Nick.
Our next question comes from the line of releases all Godfrey from J P. Morgan. Please go ahead.
Speaker 15: transcript
Hey guys, good morning. Thanks so much for the space for questions. So just one quick one here from my side. On the release there, you're mentioning on the proximity formats, the decrease in the contribution on financial services. So just to understand there, if there's any change in competitive landscape or dynamics, or if there's any kind of specific situation that are impacting that part of the business. I mean, Juan, you spoke already about kind of Banorte going back and forth, but it would be great if we could get just some extra color there.
Hey guys, good morning. Thanks so much for the space for questions. So just one quick one here from my side. I'm on the release there. You're mentioning on the proximity formats, the decreasing the contribution on financial services. So just to understand there, if there's any change in competitive landscape or dynamics, or if there's any kind of specific situation, they're impacting that part of the business. I mean, when you spoke already about kind of an order going back and forth, but it would be great if we could get just some extra color there.
Hey, guys. Good morning, Thanks, so much for the space for questions. So just one quick one here from my side on the release that you were mentioning on the proximity formats that decreasing the contribution on financial services.
Just to understand there if there's any change in competitive landscape or dynamics or if theres any kind of specific situation there impacting that part of the business.
When you spoke already about kind of one off theyre.
Speaker: All of the experiments are flowing through P&L topics. That is a little bit of the factor that you also see there. There is, if you said, also just a mix effect with regards to South America, which is less profitable than Mexico at the margin, but I would say 80-20, it's labor 20% of the rest of the stuff I just talked about.
Going.
Back and forth, but it would be great. If we could get just some extra color there. Thank you.
Speaker 8: transcript
Know on that front yeah but not literally just came back like a few base or weeks ago So it would not be in the numbers and of course we had lost city and we there's been some volatility there So I think looking backwards certainly there's been it's been one of the reasons where we've had some some.
Speaker 8: I mean, on that front, yeah, but not it literally just came back like a few days or weeks ago, so it would not be in the numbers. And of course, we had lost city and there's been some volatility there. So I think looking backwards, certainly there's been, it's been one of the reasons where we've had some...
Yeah.
Thus from an uptick literally just came back like a few days or weeks ago. So it would not be in the numbers.
And of course, we had lost city and there has been some volatility there. So I think looking backwards certainly their spin it's been one of the reasons.
Speaker: I would add one more thing, I wrote this one. Growth margin historically has been the main source of margin expansion at Oxo, and usually we do very well at the growth level, and then we lose some of it in the S&A and we end up with a smaller expansion at the operating level. I was personally very, very happy to see this order. I was going back to an expansion at the growth level.
Speaker 8: transcript
noise. But yeah, going forward, we're expecting, I think, more balanced or stable dynamic. There's there's no, there's nothing, no new information regarding a shift in the partners or how
Speaker 14: noise. But yeah, going forward, we're expecting, I think, more balanced or stable dynamic. There's there's no, there's nothing, no new information regarding a shift in the partners or how
Where we've had some some.
Noise, but.
Yeah going forward, we are expecting I think a more balanced or stable dynamic there is no.
There is nothing no new information regarding a shift into partners.
Speaker 9: transcript
one of the reasons you are seeing a little bit of that weakness leak is that I mean we have purposely also managed pricing to be to be I mean not only competitive but also provide value for the customer and pricing has not kept up with inflation for services So that's why with the high inflation period we've experienced over the past thir few quarters.
Speaker 10: One of the reasons you are seeing a little bit of that weakness, Ulises, is that, I mean, we have purposely also managed pricing to be, I mean, not only competitive, but also provide value for the customer. And pricing has not kept up with inflation for services. So that's why with the high inflation period we've experienced over the past few quarters.
How we interact with them one of the reasons you are seeing a little bit of that weakness silicosis.
We have purposely also manage pricing to be got to be not only competitive but also provide value for the customer and pricing has not kept up with inflation for services. So that's why with the high inflation period, we've experienced over the past few quarters.
Speaker: We've talked about services having been volatile, some of the corresponded banks coming and going. We now have a note to back. We talked for a number of quarters about premia, the impact of how we were looking at the point to this prior to us moving the whole loyalty program outside of Oxo and into the digital P&L, but to have kind of exceeded those two kind of noisy situations, at least right now it looks like we're back to a place where commercial income begins to be strong enough that it helps expand the margin at growth level, and if we were able to continue that, then that both well to our ability to then offset labor pressures, which as you know, going into 2024, there are outstanding questions in terms of Congress and what's going to be passed around labor legislation. We'll see, but we're much better going into that situation with an expanding growth margin coming from commercial income, which is where we are right.
Speaker 5: transcript
as you look through the income statement that there is a loss in the very high marginal profitability that these services bring. There has been some decay in that profitability because we haven't kept up pricing on purpose.
Speaker 12: as you look through the income statement, that there is a loss in the very high marginal profitability that the service is going, there has been some decay in that profitability because we haven't kept up pricing on purpose.
As you look out through the income statement.
There is a loss in the very high marginal profitability that would be services bring there has been some decay in that profitability because we haven't kept up pricing on purpose.
Alright Super clear Thank you Ross.
The next question comes from a line of Alejandro Fuchs from Itaewoo. Please go ahead.
Speaker 4: The next question comes from a line of Alejandro Fuchs from Itaewoo. Please go ahead.
Speaker 2: transcript
Thank you.
The next question comes from the line of either Honda Fuchs from <unk>. Please go ahead.
Speaker 16: transcript
Hello, Paco, Ramiro, Juan. Thank you for taking my question. I could follow up maybe to Aldo's question on pressures and labor costs, right? We're seeing this, of course, about in Mexico, and it seems.
Speaker 12: Hello, Paco, Ramiro, Juan. Thank you for taking my question. I could follow up maybe to Aldo's question on pressures and labor costs, right? We're seeing this, of course, about in Mexico, and it seems.
Yeah.
Hello Pablo.
Thank you for taking my question.
Follow up maybe to August question loan pressure from labor costs rise overcame weak across the board with Mexico.
Speaker 16: transcript
you know, in next year, it would only be more pressure, right? We have changes maybe to the working weeks. We have maybe changes on the demand of payment. So I wanted to get a sense in how the company's thinking to the budget in next year, if there's any way, you know, that also can be even more efficient than it already is, or how you guys thinking maybe of trying to mitigate some of these potential impacts coming into next year.
Speaker 12: you know, in next year, it would only be more pressure, right? We have changes maybe to the working weeks. We have maybe changes on the demand of payment. So I wanted to get a sense in how the company's thinking to the budget in next year, if there's any way, you know, that also can be even more efficient than it already is, or how you guys thinking maybe of trying to mitigate some of these potential impacts coming into next year.
But it won't be next year, we would only.
Even more pressure right.
Until the work includes work maybe changes on the member payment.
So I wanted to get a phone call.
Other companies thinking to the mix.
Speaker: Thank you very much for the call.
Anyway, what about OXXO.
Speaker: Thank you.
Even more efficient.
Alan Alanis: The next question comes from a line of Alan Alanis from Santander, please go ahead. Thank you so much.
Or how are you guys thinking maybe off trying to mitigate some of the potential impact for next year. Thank you.
Speaker 4: transcript
Yeah, Alejandro, thank you for the question. Indeed, I mean, when you look at OXO's strategies.
Speaker 16: Yeah, Alejandro, thank you for the question. Indeed, I mean, when you look at, when you look at also the strategies.
Alan Alanis: Good morning and congratulations for the results. I want you to have to do with the data and the fact that it's growing 50 more than 50% faster than the rest of the supermarket. I understand what they said is the revenge standing and so forth because of you. You see it there on the traffic, but clearly you now have a winning model on that on the supermarket. So what are the ambitions with this chain?
Yeah, well thank you for the question.
Indeed, I mean, when you look at when you look at.
Speaker 4: transcript
One of them, one of the strong action plans that they have is the optimization of the store itself. And they have historically been very good at it.
Speaker 27: One of them, one of the strong action plans that they have is the optimization of the store itself. And they have historically been very good at it.
Oxford.
Friday.
One of them one of the strong action plans that they have the optimization of.
Of the store itself.
Speaker 4: transcript
So the reality is that, regardless of whether or not there are cost pressures- which there will always be, be some of them, and then obviously, like the labor 1, they can be higher one given in any given year. But the reality is that that is a continuous process.
Speaker 27: So the reality is that regardless of whether or not there are cost pressures, which there will always be some of them and then obviously like the labor one, they can be hiring one given year. But the reality is that that is a continuous process.
And they have historically been very good at it so big.
The reality is that regardless of whether or not there are.
Alan Alanis: How fast can you grow it? And how much of the changes you're strategically thinking when we are moving to different hormones? That would be that would be my question. So if you could also just quickly comment on the 20th spirit demand in Mexico in the last quarter, you know, so always about that. That will be how you appreciate it. Thank you so much. Yeah, Alan, let me just take the first part of the question about data.
Cost pressures, which there will always be.
Some of them and then they'll give me like the labor one they can be hiring one given in any given year, but the reality is that that is a continuous process.
Speaker 4: transcript
And the workshop is continuously...
Speaker 16: and also is continuously
On OXXO.
Speaker 4: transcript
Saving costs out of the operation, and that is something that they have done for many years. They have. They are very good at it and you can rest assure that, moving forward, they will continue to actively pursue. That is part of the of the long range plan action that they.
Speaker 26: saving costs out of the operation. And that is something that they have done for many years. They are very good at it. And you can rest assured that moving forward, they will continue to actively pursue that. It's part of the long-range plan actions that they have.
Tenuously.
Shaving costs out of the operation and that is something that they have done for many years.
Alan Alanis: First, I mean, data is, we don't consider data to be a supermarket. I mean, we, data is a completely different format. It is a small box. It has a limited assortment. It meets very specific consumer needs related to their shopping routine. So I would say that there is no comparison versus what we know at the regular supermarket. It's a different segment, different form. As for the opportunities, I mean, obviously the fact that we are accelerating the store opening, the fact that the performance is good.
They are very good at it and you can rest assure that moving forward. They will continue to actively pursue that is part.
Speaker 4: transcript
' going. Sorry then for the, the cause themselves.
Speaker 26: Good. Sorry. And then at Are for the causing cell I
Of the long range plan actions that they have.
Sorry than us.
Speaker 4: transcript
They are, in fact, modeling some increases for 2024 as part of the budget generation for next year.
Speaker 25: They are in fact modeling some increases for 2024, the part of the budget generation for next year.
As for the cars themselves.
They are in fact modeling some some increases for 2024 at the start of the of the budget generation.
Speaker 4: transcript
The reality is, as you know, there are different assumptions that you can have.
Speaker 13: The reality is, as you know, there are different assumptions that you can have.
For next year. The reality is as you know there are different assumptions that you can have.
Speaker 4: transcript
So, at this stage, the team is considering a few of the scenarios and then planning accordingly.
Speaker 13: So at this stage, the team is considering a few of the scenarios and then planning accordingly.
So at this stage the team is considering a few of the scenarios and then planning accordingly, but the reality is that today. There is limited visibility in terms of what exactly is going to happen.
Speaker 4: transcript
But the reality is that today there's limited disability in terms of what exactly is going to happen.
Speaker 21: but the reality is that today there's limited visibility in terms of what exactly is going to happen.
Speaker 4: transcript
In each of those lines for 2024. So the best you can do at the business is to make sure that you have the different scenario that you plan for it.
Speaker 21: in each of those lines for 2024. So the best you can do at a business is to make sure that you have the different scenarios that you plan for it.
Alan Alanis: We feel confident that the state that we have a valuable position that is relevant, that is tested and approved by consumers, like by consumers. And that's why our attention is to accelerate that. At the same time, we are also aware that we have to do this in a discipline manner. And that's why we are at this stage, for example, focalizing geographically only certain areas of Mexico. We'll continue to expand in the regions where we are.
In each of those lines for 2024, so the best you can do as a business is to make sure that you have the different scenarios that you plan for it.
Speaker 4: transcript
and then you are ready with the specific action plans either because you already have them or because you will deliver or develop specific ones. Eugenio?
Speaker 25: and then you are ready with the specific action plans either because you already have them or because you will deliver or develop specific ones. Eugenio?
And then you already with the with the specific action plans, either because you already have them or because you won't deliver until redevelopment specific ones.
Speaker 9: transcript
I was just going to add that I mean, I mean, taking my hat off as a FEMSA employee and just looking at it as a Mexican.
Speaker 19: I was just going to add that I mean, I mean, taking my hat off as a FEMSA employee and just looking at it as a Mexican.
I was just going to add that I mean, I mean, taking my head off at the FEMSA employee and just looking at it as a Mexican.
Speaker 9: transcript
I think, I mean, from a macro perspective, I mean, the economy will have to adjust, and certain segments of the economy will have to make tougher choices, fortunately in retail.
Speaker 19: I think coming from a macro perspective, I mean, the economy will have to adjust and certain segments of the economy will have to make proper choices. Fortunately, in retail.
I think I mean from a macro perspective, I mean, the economy, we will have to adjust and in certain segments of the economy will have to make tougher choices Fortunately in retail.
Speaker 4: transcript
a little bit easier than in other sectors. But at the end of the day, there will be more money and a better lifestyle for most of the Mexicans. So, I mean, there'll be more money to spend and hopefully more top-line growth in the economy as well. So, I think it's the right investment. We're just going through the growing pains of adapting to the new reality of relative labor costs to all of the costs in the economy. No, yeah, and I think following up on what Eugenio just said, I think it's important to understand that there's a lot of work to be done
Speaker 20: a little bit easier than in other sectors. But at the end of the day, there will be more money and a better lifestyle for most of the Mexicans. So I mean, there will be more money to spend and hopefully more top-line growth in the economy as well. So I think it's the right investment. We're just going through the growing pains of adapting to the new reality of the relative labor cost to all of the cost in the economy. No, yeah, I think it's following up on what I've figured.
Alan Alanis: Make sure that we capture all the growth that is there. We are applying the models that we have. We are confident also at this stage that given that it's a different format and a different valuable position for consumers. But there is no very limited kind of validation with with our other stores. So that's what I can say about the format itself. You can easily want to have something. Yeah, no, just with regards to your second question on spirits, I mean, clearly the pandemic kind of brought that category to the forefront of the also valley prop.
It's a little bit easier than in other sectors, but at the end of the day, there will be more money in a better lifestyle for for most of the Mexican so I mean, there will be more money to spend and hopefully more topline growth in the economy as well. So I think it's the right investment we are just going through the growing pains of adapting to the new reality relative labor cost to all.
But often the economy no again I think I'm following up on water fingers you said.
Speaker 7: transcript
I mean we should kind of think of separately what's minimum wage increases and then whatever happens with you location and.
Speaker 8: I mean, we should kind of think of separately what's minimum wage increases and then whatever happens with, you know, vacation and the hours.
I mean.
We should kind of think of them separately.
Alan Alanis: And that continues to be strong. Beer sales are now, I mean, back to where they were. If not higher than than compared to the pandemic, but the consumption pattern. People trying higher graduation drinks are still there and still strong. And the other thing, just to add, one peak of color, additional color around the land, I guess that we spoke about it in another way we have. But remember that in battle, for example, just to talk about the format and the value proposition.
Ma'am wage increases and then whatever happens with vacation and hours worked weekend and so on and so forth obviously.
Speaker 7: transcript
in the work week and so on and so forth. Obviously.
Speaker 6: the workweek and so on and so forth. Obviously...
Speaker 7: transcript
And we've seen it for the past five years, you know, the big increases in the minimum wage do have a silver lining as a retailer, obviously, because there's more money circulating in the economy and that will happen again.
Speaker 6: And we've seen it for the past five years, you know, the big increases in the minimum wage do have a silver lining as a retailer, obviously, because there's more money circulating in the economy and that will happen again.
And we've seen for the past five years.
Increases in the minimum wage do have a silver lining as a retailer obviously, because theres more money circulating in the Colombian and that will happen again.
Speaker 7: transcript
So going back to the double-digit growth of the top line, clearly this happens in an environment where people, in real terms, have actually increased their earnings by and large, So that's kind of something that needs to be put into the equation, because we do get some of it back through the top line.
Speaker 8: So going back to the double-digit growth of the top line, clearly this happens in an environment where people in real terms have actually increased their earnings by and large. So that's kind of something that needs to be put into the equation because we do get some of it back through the top line.
No.
Going back to the double digit growth of the topline clearly this happens in an environment where people in real terms have actually.
Alan Alanis: There is a big component of private label. So, privately it's an important part of the equation. It is more important in certain categories. It's growing, it keeps growing in general. So, that speaks to the type of format and valuable position that we have in beta. Got a good, good critical. Thank you. Thank you so much.
Increased their earnings are by and large so that's that's kind of something that needs to be put into the equation.
Speaker: Appreciate it.
Because we do get some of it back through the top line.
Speaker: Congratulations.
Thank you very much.
Speaker 2: transcript
The final question comes from a line of Ricardo Alves from Morgan Stanley . Please go ahead.
Speaker 4: The final question comes from a line of Ricardo Alves from Morgan Stanley . Please go ahead.
The final question comes from the line of Ricardo Alves from Morgan Stanley. Please go ahead.
Speaker 6: transcript
Thanks very much for the follow-up. Eugenio, I got cut off, so I'm sorry if you addressed this already. And I know you're still studying the issue of shareholder returns, but I feel that I need to ask, is there any, even a small update, any change, for instance, on the framework and execution? You know, we've been discussing the possibility of extraordinary dividends buyback and eventually a new dividend policy as kind of a potential framework. So just a quick update on that, on your recent thoughts as you're doing, your work is progressing on that. And just quickly, I think that in the preliminary remarks you mentioned a board meeting, I just wanted to confirm the date, if that's possible. Thank you so much.
Thanks very much for the follow-up. Eugenio, I got cut off, so I'm sorry if you addressed this already. And I know you're still studying the issue of shareholder returns, but I feel that I need to ask, is there any, even a small update, any change, for instance, on the framework and execution? You know, we've been discussing the possibility of extraordinary dividends buyback and eventually a new dividend policy as kind of a potential framework. So just a quick update on that, on your recent thoughts as you're doing, your work is progressing on that. And just quickly, I think that in the preliminary remarks you mentioned a board meeting, I just wanted to confirm the date, if that's possible. Thank you so much.
Thanks, very much for the follow up.
Okay.
I got cut off so I'm sorry, if you addressed this already.
Rodrigo Alcantara: The next question comes from a line of Rodrigo Alcantara from UBS. Please go ahead. Hi, good morning. Good afternoon. Thanks, Paco Henne and Juan for taking my question. So, a couple of months ago our panoramic friends came back to Oxford, right? So, I mean, this clearly demonstrated the relevance of your proximity format.
And I know you're still studying the issue of shareholder returns, but I said that I need to ask is there any even small updates any any change for instance on the framework and execution, we've been discussing the possibility of extraordinary dividends buyback and eventually a new dividend policy as it is kind of a potential frame.
Speaker: So, my question could be on the opportunity to see, you know, or you are working on for to take advantage of the retomated opportunities at the store level or perhaps partnering with e-commerce guys, just some other strategies or venues you see to take the most from the proximity format that you have in Mexico. So, we don't thank you. Yeah, I mean, really, those are all, I've been very relevant points and that's kind of part of the agenda for the long run plan.
Sure.
So just a quick update on that on your recent thoughts as Youre doing your.
Work is progressing on that.
And just quickly I think that in the preliminary remarks, you mentioned the board meeting just wanted to confirm the date if that's possible. Thank you so much.
Speaker 5: transcript
On the first topic, really no major of the itimments anything. What you work cur, CT but. But having said that, we are getting closer, we are making the- I mean the more detailed analysis and they're still I mean the bates going on internally about how, what the long term kind of targets are for the different businesses acquisition possibilitieshow. Many of those are really value ofaccreative. How many of.
Speaker 19: Yeah, on the first topic, really no major update, you didn't miss anything where you were cut off, but having said that we are getting closer, we are making the more detailed analysis and there's still, I mean, the base going on internally about how what's the long-term kind of targets are for the different businesses, acquisition possibilities, how many of those are really value of creative, how many are...
Yeah on the first topic really no major update you didn't Miss anything where you were cut off but that but having said that we are getting closer we are making the I mean the more.
A more detailed analysis and there is still I mean debates going on internally about how what the long term kind of targets are for the different businesses acquisition possibilities. How many of those are really value accretive how many are not what the right strategies for distributing any excess capital.
Speaker: More and more, the digital business obviously is a business in and of itself, but the digital opportunities associated with the with the store model and the digital elements of combination of physical and digital is something that is part of the strategic plan and something that also slowly rolling out. I mean, there are very significant efforts going on with regards to building out a retail media network within the stores and using the inside of the stores also as a specific advertising platforms to generate traffic.
Speaker 5: transcript
what the right strategy is for distributing any access capital to shareholders of Thera. So not a lot of updates, all I can say is that we're getting closer and the purpose of everyone here in management and the board, we're all aligned that whatever we will do will be in the interest of maximizing the intrinsic per share value of a long-term shareholder for FENSA. So we're very clear on that.
Speaker 29: what the right strategy is for distributing any excess capital to shareholders, et cetera. So not a lot of updates. All I can say is that we're getting closer in the purpose of everyone here in management and the board, we're all aligned that whatever we will do will be in the interest of maximizing the intrinsic per share value of a long-term shareholder for FEMSA. So we're very clear on that.
Two last to shareholders et cetera, so not a lot of updates all I can say is that we're getting closer.
The purpose of everyone here in management and the board are we're all aligned that whatever we will do will be in the interest of maximizing the intrinsic per share value of a long term shareholder for FEMSA. So we're very clear on that.
Speaker 9: transcript
And we will not deviate from that. And as is customary, we usually have the third quarter board meeting after the third quarter results.
Speaker 13: And we will not deviate from that. And as is customary, we usually have the third quarter board meeting after the third quarter results.
We will not deviate from that and as is customary we usually have.
Speaker: We will have eventually the ability to determine which customers are coming into the store if they have the spin up or not and in Taylor, the advertisements to the actual demographics of the store customers that are at any given point in time. So, all of that is creating, I mean, tremendous opportunities on that side as well. And again, the more that the digital platform is growing, the more we know that there are opportunities well above just the basic products that we operate now, which is a wallet basically with a with a with a loyal program attached to it.
Speaker 5: transcript
So that's coming up in the next couple of weeks. We will be discussing this.
Speaker 31: So that's coming up in the next couple of weeks. We will be discussing this.
The third quarter Board meeting after the third quarter results. So that's coming up in the next couple of weeks, we will be discussing this.
Speaker 9: transcript
won't give you any guarantees that there's going to be any specific.
Speaker 31: won't give you any guarantees that there's going to be any specific.
Speaker 9: transcript
News that will come out of that, but we are making good progress and we will be unveiling what our final thoughts are as we originally anticipated in due course.
Speaker 31: News that will come out of that, but we are making good progress and we will be unveiling what our final thoughts are as we originally anticipated in due course.
Won't give you any guarantees that theres going to be any specific.
News that will come out of that but we are making good progress and and we will be unveiling what our final thoughts are as we originally anticipated.
In due course.
Speaker 17: transcript
Thank you very much for the discipline of lining up again like a Harry Potter ride and just riding it again, waiting in line. Thank you. Appreciate that. Thanks, Paco.
Thank you very much for the discipline of landing up again, like Harry Potter ride and just riding it again. I'm really glad. Thank you. Appreciate that. Thanks, <expletive> off.
And Ricardo Thank you Laurie.
Thank you very much for the discipline of lightening up again like like a report there right.
It again [laughter] waiting in line.
I appreciate that thanks.
Speaker 2: transcript
Thank you, we are now further questions, so I'll hand you back to your hosts to conclude today's conference.
Speaker 4: Thank you. There are no further questions, so I'll hand you back to your host to conclude today's conference.
Speaker: I mean, there are significant opportunities there on the credit side on different financial products and in the future, with a broader SKU mix and just be an officer stores to deliver to those customers to other channels and other means.
Yeah.
Thank you there are no further questions. So I'll hand, you back to your hosts to conclude today's conference.
Speaker 8: transcript
Thanks everyone for your interest today, happy to have you along for the journey, have a great weekend.
Speaker 7: Thanks everyone for your interest today, happy to have you along for the journey, have a great weekend.
Thanks, everyone for your interest today.
Happy to have you along.
Speaker: So, those are all very exciting initiatives that I think are being slowly opened up and we're just at the tip of the iceberg at this point. And I think that you have a new question. It reflects that basically the number of opportunities that pop up every time we talk about the digital and the connection with the store. And the way we are reading that is that I mean, clearly for our digital proposition, the link with the stories is an enormous competitive advantage.
The journey.
Speaker 2: transcript
Thank you for joining today's call. You may now disconnect your lines.
Speaker 4: Thank you for joining today's call. You may not disconnect your lines.
Have a great weekend.
Yeah.
Thank you for joining today's call you may now disconnect your lines.
Speaker: And that the digital ecosystem as so when you make reference to is of tremendous value for the consumer. And all the priority of the team is to make sure that we not only tap into that to create value, but also importantly to help consumers life and to help them in their day today and to open new possibilities for on their financial side. And that will support the key on their journey as consumers. I see that. That's very clear. Thanks for that.
Speaker: But yeah, I'm asking on the retail media per se, right? Because we have seen how the retailer, let's see a lot of max for instance, already a two billion pesos business, right? Highly margin aquatic. So just curious if for you guys, do you think that, I mean, we're still in an early stage about that. And how far do you think we could get on on the retail media? Yeah, I mean, I think retail media is, I mean, basically we've thrown two or three pitches in the top of the first inning to talk about something that's kind of involved these days with the World Series starting.
Speaker: No, this is just tip of the iceberg, as I've said. I mean, at the end of the day, a lot of this goes back to, you know, 13 million, the 13 million times today, somebody is going to interact with, with our stores, right? And that number will continue to grow. And so the potential is really important.
Speaker: You know, we haven't really spoken a lot lately about a couple other things that are, you know, happening on the fulfillment side. You mentioned, you know, partnering on the commerce side, obviously the 2021, 22,000 stores. Whether it's directly that we've been doing it with Amazon for a number of years or exploring the use of lockers or other ways that we can participate on the last milestone point, which again, we've done a lot of work on that and we've identified that it's for a certain subset of our average transactions that are really big enough to kind of sustain the cost of delivery, but there are other things that are happening kind of in the, you know, behind the curtain. And all of which are part of the language plan and along all of which we are, we are making progress.
Speaker: I see exciting. Thank you.
Maya: Our next question comes from role. I'm a factor, Maya from Scotia Bank. Please go ahead.
Speaker: Hi, thank you for taking my question. So it's definitely very encouraging seeing the robust, resolving also. So congratulations on that. It was also very interesting to see the growth with spin. I mean, it seems you are well on track to reach the 10 million user targets that you have mentioned a year ago. So seeing this, I just wanted to know is this, I mean, if at this stage, you have more clarity regarding how much more you could accelerate this and what could be the potential economics in your plan to leverage these very critical mass to integrate cost to supply momopup stores in the traditional channel in Mexico. Thank you.
Speaker: Yeah, I think regarding spin, you know, one of the things we have learned is, and we had kind of the thesis that the store would be helpful in the acquisition of customers. But to be honest, it succeeded our expectations, and this has translated into the cost of acquisition, right? Because some of the incentives and some of the strategies that we had in the beginning have turned out to not really be necessary.
Speaker: So we, you know, it looks like we can continue to add sorts at the pace that you're seeing without incurring on a very high cost. So, you know, to create this comment on digital, the actual.., network of physical stores and these 13 million times somebody is getting us today if you already have a spin account. That has turned out to be very, very powerful. And so, yeah, we are, you know, we are, we are continue to grow.
Speaker: I mean, on the spin side, I think we added, we're adding something like 400,000 subs per month. And on the, on the premier side, it's significantly faster than that. So, going back to an earlier question a few minutes ago, I think the bigger challenge is on engagement, on, on generating engagement, on, on having more things for people to do while they're on the app, spending more time. And then, of course, this is going to translate into better digital media numbers as well, because people are going to be there for longer.
Speaker: So, that's, that's really the number one item on the agenda is increasing engagement and monetization as opposed to just sheer[inaudible] For that part, is there a timeline? When is it that we could possibly be seeing that more details on that? We're still in the early stages. Again, we have pilots running in some of the Coca-Cola cancer regions, and we're still tinkering with the value proposition on how to do it. So it's still early days to have a full timing.
Speaker: That initiative obviously has different implications from a negotiation cost perspective, which was the easy part. With the B2C side on also. So we're still working our way around that having said that we do believe that the value potential value creation in a win-win situation with the moment pops and small from BTS or restaurants in the Coca-Cola Cancer Network is large enough for us to be able to devise a better model that works for all of us. Thank you. Thank you very much. Thank you.
Ulysses Argotte: The next question comes from the line of Ulysses Argotte from JP Morgan. Please go ahead. Hi guys, good morning. Thanks so much for the space for questions. So just one quick one here from my side. On the release there, you're mentioning on the proximity formats, the decrease in the contribution on financial services. So just to understand there, if there's any change in competitive landscape or dynamics or if there's any kind of specific situation, they're impacting that part of the business. I mean, when you spoke already about kind of a Northe going back and forth, but it would be great if we could get just some extra color there. Thank you.
Speaker: I mean, on that front, yeah, but not literally just came back like a few days or weeks ago, so it would not be in the numbers. And of course, we had a lot of city and there's been some volatility there. So I think looking backwards, certainly there's been, it's been one of the reasons where we've had some noise. But yeah, going forward, we're expecting, I think, more balanced or stable dynamic. There's no, there's nothing, no new information regarding a shift in the partners or how we interact with them.
Speaker: One of the reasons you are seeing a little bit of that weakness is that I mean, we have purposely also managed pricing to be, I mean, not only competitive, but also provide value for the customer and pricing has not kept up with inflation for services. So that's why with the high inflation period, we've experienced over the past few quarters, as you look through the income statement that there is a loss in the very high marginal profitability that the service is going. There has been some decay in that profitability because we haven't kept up pricing on purpose.
Speaker: All right, super clear.
Speaker: Thank you.
Alejandro Frux: The next question comes from a line of Alejandro Frux from it. I will please go ahead. Alejandro Frux, thank you for taking my question. I could follow up maybe to other question on pressures on labor costs, right. Working with, of course, about Mexico and it seems that, you know, in next year, we would only be more pressure, right. We have changed it, maybe to the working weeks, we have made changes on the land repayment.
Speaker: So I wanted to get a phone and how the company is thinking to the ballot in next year, in any way, not at all. So even more efficient than it already is, or how you guys think maybe are trying to mitigate some of this potential aid that's coming to me. Thank you. Yeah, Alejandro, thank you for the question. Indeed, I mean, when you look at, when you look at also the strategies, one of them, one of the strong action plans that they have is the the optimization of the store itself, and they have historically been very good at it.
Speaker: So the reality is that regardless of whether or not there are cost pressures, which there will always be some of them, and then obviously like the labor one, they can be hiring one given year, but the reality is that that is a continuous process, and also is continuously saving costs out of the operation, and that is something that they have done for many years, they are very good at it, and you can rest assured that moving forward, they will continue to actively pursue that, as part of the long-range plan action that they have. And then as for the cause themselves, they are in fact modeling some increases for 2024, as part of the budget generation for next year.
Speaker: The reality is, as you know, there are different assumptions that you can have. So at this stage, the team is considering a few of the scenarios, and then planning accordingly, but the reality is that today there is limited disability in terms of what exactly is going to happen in each of those lines for 2024. So the best you can do out of business is to make sure that you have a different scenario, that you plan for it, and then you are ready with the specific action plans either because you already have them or because you will deliver or so we develop specific ones.
Speaker: Oh, it's just going to add that, I mean, taking my hat off as a fence employee and just looking at it as a Mexican, I think, I mean, from a macro perspective, I mean, the economy will have to adjust, and certain segments of the economy will have to make tougher choices. Fortunately in retail, it's a little bit easier than in other sectors, but at the end of the day, there will be more money and a better lifestyle for most of the Mexicans.
Speaker: So, I mean, there will be more money to spend and hopefully more top-line growth in the economy as well. So I think it's the right investment. We're just going through the growing pains of adapting to the new reality of the relative labor costs to all of the cost in the economy. No, yeah, and I think following up on what I've just said, I mean, we should kind of think of separately what's minimum wage increases from then, whatever happens with, you know, vacation and hours in the work week and so on and so forth.
Speaker: Obviously, and we've seen it for the past five years, you know, the big increases in the minimum wage do have a silver lining as a retailer, obviously because there's more money circulating in the economy and that will happen again. So, you know, going back to the double-digit growth of the top line, clearly this happens in an environment where people in real terms have actually increased their earnings by and large. So that's kind of something that needs to be put into the equation because we do get some of it back through the Thank you very much.
Ricardo Alves: The final question comes from a line of Ricardo Alves from Morgan Stanley, please go ahead. Thanks very much for the follow up. Eugenio, I got caught off, so I'm sorry if you addressed this already.
Eugenio Garza: And I know you're still studying the issue of shareholder returns, but I feel that I need to ask, is there any even small update, any change for instance on the framework and execution within discussing the possibility of extraordinary dividends by back and eventually a new dividend policy as kind of a potential framework. So just a quick update on that, on your recent thoughts as you're doing your work is progressing on that.
Eugenio Garza: And just quickly, I think that in the preliminary remarks, you mentioned a board meeting, just wanted to confirm the date if that's possible. Thank you so much. Yeah, on the first topic, really no major update, you didn't miss anything where you were caught off, but having said that we are getting closer, we are making the more detailed analysis and there's still, I mean, the base going on internally about how what the long term kind of targets are for the different businesses, acquisition possibilities, how many of those are really valuable, creative, how many are not, what the right strategy is for distributing any access capital to shareholders, etc.
Eugenio Garza: So not a lot of updates, all I can say is that we're getting closer and the purpose of everyone here in management and the board, we're all aligned, that whatever we will do will be in the interest of maximizing the intrinsic per share value of the long term shareholder for fences. So we're very clear on that, and we will not deviate from that.
Eugenio Garza: And at this customary, we usually have the third quarter board meeting after the third quarter results. So that's coming up in the next couple of weeks, we will be discussing this, won't give you any guarantees that there's going to be any specific news that will come out of that, but we are making good progress and we will be, I mean, unveiling what our final thoughts are as we originally anticipated into course.
Speaker: Thank you very much for the discipline of lightning up again, like Harry Potter ride and just writing it again. Thank you for the journey and have a great weekend.
Operator: Thank you for joining today's call.
Operator: You may not disconnect your lines.