Femsa Slumps in Mexico City as Taxes Weigh on Convenience StoresNacha Cattan
Fomento Economico Mexicano SAB, owner of Latin America’s biggest convenience-store chain, fell the most in a year as company executives said taxes on sodas and junk food hurt store traffic.
Shares of Femsa dropped 3.8 percent to 124.69 pesos at 1:52 p.m. in Mexico City, its biggest slide on a closing basis since April 2013. The company was the worst performer after tortilla purveyor Gruma SAB on the benchmark IPC equity index, which decreased 0.1 percent.
Femsa executives said on a conference call today that second-quarter results trailed their expectations although they expected a gradual pickup in consumer spending. The Monterrey-based company posted adjusted net income of 3 billion pesos ($232 million), missing the 4.4 billion peso average forecast of analysts surveyed by Bloomberg. It registered a 0.7 percent drop in traffic at its retail chains including Oxxo.
The results “were not as solid as expected at Oxxo,” JPMorgan Chase & Co. analyst Andrea Teixeira wrote in a research report to clients.
On Jan. 1, Mexico imposed a 1 peso per liter tax on soft drinks and an 8 percent levy on junk food while raising sales taxes in areas bordering the U.S. to 16 percent from 11 percent.