Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX) Q4 2022 Earnings Call Transcript

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So I think it’s an important couple of weeks that we’re going to be knocking on doors and hopefully answering a lot of the questions, I think you kind of shaped your question or framed your question having to do with the share price. I mean obviously, the share price had a very nice reaction to the announcement. We’ve been monitoring volumes. Volumes are double — at least double what they normally ask. So clearly, there are investors that perform well and are now taking profits. But we’re excited to get on the plane and talk about what we think is a super exciting message.

Eugenio Garza: If I can just comment, Alan, just quickly on ticket, you have to remember also the services category, we picked up a couple of financial institutions that had not been present over the past fourth quarter. So that pickup in traffic with lower ticket resulted in part of that mix effect that Juan was talking about. And with regards to the road show, just to complement also what Juan said, again, we heard you guys loud and clear last week and to our interactions with you guys over the week, that capital allocation going forward is a big topic that you guys would like to hear more about. And again, we’ll talk, again, not only in the roadshow, but to all of you throughout the — throughout our interactions. And we recognize that, that is going to be a hot topic going forward.

However, as we said in the call last time, we intend to, I mean, give you more color as all these transactions that we intend to execute materialize, they’re all subject to market conditions and other situations. But the most important thing to keep in mind is that we have committed, number one, to the leverage target of 2x; and number two, not to be holding any inefficient amounts of cash at the holding company. So I hope that, that gives you as much color as we can right now. But as we start to execute on a lot of these initiatives, we should be able to give you and pinpoint with more exact clarity how we’re going to deal with the capital allocation going forward.

Operator: The next question comes from the line of Héctor Maya calling from Scotiabank.

Héctor Maya: Very, very quick ones, I promise. So you have mentioned that you want to build the platform for the traditional channel with OXXO and Coke. So I would like to know how you will be executing that strategy to supply this channel mainly on how your OXXO trucks and Coca-Cola FEMSA red trucks would adopt their spaces and routes to go to mom and pops, what kind of products and categories would you be aiming to supply to them? How long until we start seeing this already happening at a full scale? And some details if possible on an integrated order system? And how much CapEx would be directed to this?

Francisco Camacho Beltrán: All right. Héctor, thank you for the question. As we analyze the opportunities and the pain points of the traditional channel, there are certain things that they have been suffering from over the last several years, I would say. And we have talked this in some of the meetings we have had with you. I mean, on the one hand, there is the disruption they have on the daily operations to go and shop for the products they sell in the store. They have a number of limitations in how they can shop for those. I mean sometimes they need to buy 1 unit, and they actually need to buy the whole case. And evidently, those pain points have been exacerbated by the fact that now many times in the store, they have to receive 10 different trucks during the day.

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