The largest franchise retailer in Saudi Arabia, Cenomi Retail, has reported revenues of SAR 1,460 million, and SAR 4,538 million for the third quarter and nine-month period of FY2023 respectively.
The company made substantial gains in Saudi Arabia supported by a renewal in consumer sentiment and a solid international retail performance.
Saudi retail revenues were relatively unchanged at SAR 1,035 million in Q3-FY23, supported by early signs of a pickup in consumer sentiment and demand in Saudi Arabia. For 9M-FY23, revenues amounted to SAR 3,309 million which comes at a two per cent year-on-year decrease. Factoring in the exited brands, Saudi retail, especially its fashion segment, has resumed its growth, which bodes well for the remainder of the year.
International retail operations are on the rise, with revenues of SAR 326 million in Q3-FY23, up nine per cent YoY, and SAR 877 million in 9M-FY23, up 13 per cent YoY. Cenomi Retail still intends to expand its market share in key growth zones across the globe.
Interim CEO at Cenomi Retail, Mohamad Mourad, said: “Our successful rebranding, the acceleration of our transformation program, and the initiation of our strategic divestment program come together to improve profitability, as we focus on aligning our business with Champion Brands, investing in F&B growth and successful international markets. With these measures, we are now ready to embark on a new phase of growth and development for Cenomi Retail.
“The country’s transformative initiatives and progressive vision align perfectly with our goal of being the leading retail brand partner in the Kingdom, whilst remaining committed to expanding our international footprint in key strategic growth markets and strengthening our digital capabilities.”
Cenomi progress and transformation
Since the company strategically aligns its business with Champion Brands, several key milestones on its transformation journey were successfully achieved during the period.
This includes the strategic brand rationalisation program, which aimed to divest 26 non-strategic brands, four of which have already been exited.
This move is predicted to impact revenues by approximately SAR 288 million while boosting profits by SAR 25 million once the program is completed.
In keeping Cenomi Retail’s dedication to streamlining its operations and effectively managing its inventory levels, the company recorded a one-off inventory charge of SAR 290 million during Q3-FY23, adjusting for which would result in a net profit figure of SAR 91 million, thus representing a 10 per cent year-on-year increase. Cenomi adopted a conservative approach to addressing inventory balances that were realigned following the ongoing store closures and extra orders caused by concerns over global supply chain issues.
Chief financial officer at Cenomi Retail, Ahmed Belbesy, said: “Our Q3 financial results were supported by a revival in demand in the domestic market and a strong performance from our international portfolio.
“This, together with the focus on optimising our operations and inventories, provides a more stable and assured footing for the business. We have made great progress on settling legacy-related party receivables and have already received payments of nearly SAR 270 million, which will be reflected in our financial statements for the upcoming quarter. Furthermore, we have appointed advisors to undertake a comprehensive reassessment of the balance sheet and restructure our debt to provide a solid platform to fuel our growth.”
Formerly known as the Fawaz Alhokair Group, Cenomi underwent a drastic transformation in December, overhauling its operations from being predominantly bricks and mortar-based to one of the region’s biggest online marketplaces.
The retail behemoth represents more than 1,000 brands in Saudi Arabia, including Apple, Zara and Gap, and operates 21 malls and shopping centres in the country.
