Saudi retailer Fawaz AlHokair registers second-quarter loss

Fawaz Abdulaziz AlHokair, a Saudi Arabian retailer, swung to a second-quarter loss as expenses and cost of funding climbed and revenue fell on portfolio optimisation.

Net loss for the three-month period ending on September 30 reached 26.7 million Saudi riyals (Dh26.1m), down from an 8.9 million riyal profit a year earlier, the company said in a statement to the Saudi stock exchange, Tadawul, where its shares trade.

AlHokair, which owns the franchise rights for brands such as Zara and Banana Republic in Saudi Arabia, said revenue for the reporting period also declined 3.1 per cent year-on-year to 1.23 billion riyals.

The company’s depreciation and amortisation expense climbed to Dh233.5m riyals at the end of September, more than trebling from 72.4m riyals a year earlier. Its finance costs also increased to 121.5m riyals, a more than 15 per cent yearon-year rise, it noted.

“Implementation of a portfolio optimisation strategy mandating the termination and closure of non-performing stores and disposal of weak brands” also affected quarterly profits, the company said in the bourse filing.

However, with the store closure programme now ending, there are “encouraging signs” for the business, chief executive Marwan Moukarzel said. “The rate of revenue decline has eased significantly, while positive like-for-like revenue growth has been maintained for two consecutive quarters. As the rate of non-performing store closures and new store openings normalises, we expect further top-line relief to materialise,” he added.

The retailer has managed to reduce its sales and distribution expenses by 41 per cent compared to the same quarter of the previous year.