OXXO margins grow while the Health division continues to struggle
- OXXO Mexico expanded its gross margin by 140 basis points in early 2026 despite slightly negative customer traffic.
- The FEMSA Forward strategy simplifies the company by selling non-core assets to focus on retail and digital growth.
- FEMSA bought 249 convenience stores in the United States, providing a new testing ground for growth outside of Latin America.
- The company retained full control of 607 OXXO stores in Brazil following the separation of its joint venture.
- Spin is growing inside the OXXO network but management postponed the pursuit of a full banking license.
- The Health division remains a weak spot due to store closures in Mexico and credit risks with institutional clients in Colombia.
The core store engine is healing
The bull case focuses on OXXO Mexico. The company now reports this unit on its own because it is the primary profit engine. In the first quarter of 2026, OXXO Mexico expanded its gross margin by 140 basis points. This gain came from commercial income, which is money suppliers pay for better shelf space and promotions. Customer traffic was still slightly negative, but it improved significantly compared to the deeper declines seen in 2025.
FEMSA is a simpler operation today. The FEMSA Forward plan successfully divested non-core assets like Heineken shares, plastics, and logistics businesses. Management can now focus entirely on retail, Coca-Cola FEMSA, and the Spin digital platform.
The geographic footprint is also expanding. FEMSA acquired 249 Delek convenience stores in the United States. In Brazil, the company took full control of 607 OXXO stores after splitting its joint venture. The Bara hard-discount format is also gaining momentum in Mexico with private label goods nearing 30 percent of its revenue mix.
The bear case centers on the struggling Health division. The pharmacy business faces store closures in Mexico, severe credit risk in Colombia, and margin pressure in Chile from changing product mixes. Meanwhile, Spin is growing its user base but is now tightly tethered to OXXO rather than chasing a full banking model. This makes the digital strategy more practical but limits its open-ended upside.
Small purchases creating massive scale
FEMSA makes money by being extremely close to the customer. OXXO sells snacks, drinks, prepared food, cigarettes, and basic goods in small locations that are easy to reach. The model depends on frequent visits, prime locations, and fast checkouts. Over time, these small transactions add up to massive revenue.
OXXO also earns money directly from suppliers. Consumer brands pay for prominent promotion and preferred shelf placement. This commercial income can lift margins even when shoppers are careful with their money, which helped OXXO Mexico during recent periods of weak consumer demand.
Spin brings digital payments, loyalty rewards, and data into the store network. Management shifted Spin to an Ecosystem 2.0 model, creating one shared profit and loss statement with OXXO Mexico. This lowers the risk of building a stand-alone bank too fast, but it ties the value of Spin directly to OXXO store usage.
The model faces trouble if customer traffic keeps falling, wages rise faster than sales, or the Health division continues to absorb cash and management attention. Expansions in the United States and Brazil offer new revenue sources, but only if FEMSA proves it can earn high returns outside its traditional Mexican base.
What FEMSA owns
OXXO Mexico
The primary profit engine. It relies on daily store traffic, supplier income, and tight operational cost control.
Americas and Mobility
Includes OXXO outside Mexico and OXXO Gas. This unit now manages the newly acquired U.S. stores and the fully controlled Brazil network.
Bara
The company's hard-discount format in Mexico. It is scaling quickly with private label goods making up nearly 30 percent of its revenue.
Proximity Europe
The Valora business gives FEMSA a European footprint for food and convenience. It provides geographic balance away from Latin America.
Health Division
The pharmacy business operates in Mexico, Colombia, Chile, and Ecuador. Store closures and credit risks currently make it a problem area.
Spin
The digital unit covers payments and loyalty tied to OXXO. It crossed 50 percent tender share in early 2026 but paused its banking license application.
Coca-Cola FEMSA
FEMSA holds a major stake in this highly profitable bottler. Mexico and Brazil drive the vast majority of its total revenue.
Where revenue comes from
Revenue mix is based on the 2025 Form 20-F reportable segments. Proximity Americas and Coca-Cola FEMSA combined generate the vast majority of total sales.
What could go wrong
OXXO traffic stays negative
High impact · Medium oddsOXXO Mexico traffic remained slightly negative in early 2026. If customer visits stay weak, margin gains from supplier income may not be enough to drive profit. A convenience store requires frequent foot traffic to cover fixed costs like rent and labor.
Labor rules squeeze store margins
High impact · Medium oddsMexico continues to raise minimum wages, and a shorter statutory workweek remains a possibility. OXXO employs many retail workers, so labor changes directly hit the cost base. Management can raise prices, but doing so could hurt customer traffic further.
Health division burns cash
Medium impact · High oddsThe Health division is actively closing underperforming stores in Mexico and facing credit risks in Colombia. If the turnaround takes longer than expected, it will consume cash that could otherwise be returned to shareholders or invested in OXXO.
EPS Sanitas exit stumbles
Medium impact · Medium oddsManagement chose not to renew the EPS Sanitas health contract in Colombia when it expires. While this lowers future credit risk, the transition itself carries execution risk. Payment delays or disputes could hurt financial results during the wind-down.
U.S. expansion disappoints
Medium impact · Medium oddsThe recent acquisition of 249 convenience stores in the United States places FEMSA in a new, highly competitive market. If integration costs rise or the stores fail to attract customers, the U.S. growth narrative will lose its value.
In one breath
What does FEMSA actually do?
FEMSA is a retail and beverage holding company. Its best-known business is OXXO, but it also owns Valora in Europe, pharmacies, gas stations, Spin, and a large stake in Coca-Cola FEMSA.
Why is OXXO so important to FMX stock?
OXXO Mexico is the core engine because it has massive scale, frequent customer visits, and high supplier income. FEMSA now reports OXXO Mexico as a stand-alone segment, reflecting its importance to investors.
Is Spin a bank?
Spin is not a full bank. Management postponed the banking license plan and is currently focusing Spin on digital payments, loyalty rewards, and data collection inside the OXXO ecosystem.
What is the biggest problem at FEMSA?
The Health division remains the clearest problem. Mexico requires store closures, Colombia has credit risk tied to institutional clients, and Chile faces margin pressure from changing product sales.
