April 26, 2018 / 1:19 PM / 3 months ago

UPDATE 2-Mexico's Femsa to expand Amazon pick-up at Oxxo stores

(Recasts Amazon, executive quotes and share price)

By Daina Beth Solomon

Mexico City, April 26 (Reuters) - Mexican bottler and retailer Fomento Economico Mexicano said on Thursday it will expand a pilot program that uses its ubiquitous Oxxo convenience stores as package pick-up points for Amazon.com Inc.

The partnership between the U.S.-based online retailer and the network of more than 16,700 stores reflects growing investment by Mexican brick-and-mortar businesses in e-commerce, which accounts for a fraction of the country's retail sales but is seen as key to growth.

"We are in the process of taking the number of stores that are part of the Amazon pilot to a significantly bigger scale," Juan Fonseca, investor relations director for the company known as Femsa, said in a call with analysts.

He did not reveal how many Oxxo stores would take part in the expanded pilot.

Shares of Femsa were up more than 4 percent to a high of 179.79 pesos despite results that showed net profit plunged to 2.02 million pesos ($110,692) in the first quarter from 3.29 billion pesos in the year-earlier period.

The company attributed the profit drop largely to its Coca-Cola bottling unit, one of the world's largest, which was hurt by the Mexican peso's appreciation against the U.S. dollar. The poor showing was partly offset by growth in Femsa's Oxxo stores, pharmacies and gas stations.

Oxxo's same-store sales increased 7.5 percent on average, benefiting from pre-Easter shopping in late March that lifted sales across the sector, including at Wal-Mart de Mexico and El Puerto de Liverpool.

Mexico's retailers association ANTAD expects same-store sales in the sector to grow 5.8 percent this year as inflation cools and higher public spending ahead of the July 1 presidential election trickles down to consumers, analysts said.

Femsa Chief Executive Officer Eduardo Padilla cheered signs of a drop in Mexican inflation, saying the company's quarterly results were slightly better than expected. He added that the election environment along with demand during the upcoming World Cup soccer tournament in Russia should benefit Oxxo in the second quarter.

Padilla, however, added that consumer confidence had yet to fully recover from the impact of inflation. "I'm not fully confident the consumer is back," he said on the analyst call.

$1 = 18.303 pesos per dollar at end of first quarter Reporting by Noe Torres, Gabriel Stargardter and Daina Beth Solomon in Mexico City and Siddharth Cavale in Bengaluru Editing by Jeffrey Benkoe and Paul Simao

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