Cenomi Retail, Saudi’s largest vertically integrated retailer, has posted revenue of SAR 1.613 billion in the second quarter of 2023 and SAR 3.034 billion for the first half of 2023, marking a reduction of 5.4 per cent and 1.9 per cent respectively year on year.
According to its financial results report for the three months and half-year that ended on June 30, EBITDA for the second quarter of 2023 was SAR 316.6 million, an increase of 79.2 per cent and for the first half of 2023, reached SAR 385.9 million, an increase of 77.7 per cent year on year.
These figures reflect the significant progress of the company’s turnaround strategy.
Following a strategic review by newly appointed CEO, Günther Helm, who assumed the position on April 1, the company adopts a ‘Saudi First’ strategy. To prioritise the growth across the entire Mena region, the company will be considering strategic options to exit non-strategic geographies namely, the US and the Balkans.
Mr Helm said: “The Saudi retail market holds immense growth potential, driven by a dynamic and youthful consumer base known for its discerning preferences that are constantly evolving.
“This presents an opportunity that I believe is crucial for Cenomi Retail to capitalise on. On joining the company in April, my team and I have undertaken a strategic assessment which led to the decision to double down on our Saudi and Mena focus. The strategy is already yielding favourable results.
“A return to profitability is underway, and our net profit of SAR 169.2 million, a notable increase of 173.6 per cent in Q2 2023, is a testament to that. We have taken significant steps to optimize our inventory and enhance operational efficiency. Inventory management is a key focus for us. This quarter, we reduced inventory on hand to 18 weeks, down from 21 weeks in the previous quarter. In addition, the optimization of our retail footprint contributed to this quarter’s solid EBITDA of SAR 316.6 million.”
The focus on rationalising its portfolio of brands aims to bolster the company’s transformation as a multi-category retailer. A further seven non-strategic brands have been added to the original list of 22 to divest with an expected positive impact on profitability.
The company also launched an initiative to right-size its store footprint in the markets of Morocco and Egypt, with a total of 16 and 39 stores destined for closure, respectively.
“A robust corporate governance framework is critical for a leading organisation like ours,” added Mr Helm.
“As such, working closely with the audit committee and the board of directors, we have embarked on an overhaul of policies, systems and processes to help us address all previously identified areas of improvement and to help us achieve our ambitions to be a best-in-class corporate citizen. Our commitment to the growth of both our business, but also our people, is at the forefront of our strategy.
“This is why we have made strategic senior hires into our IT and supply chain functions, with other c-suite hires expected to join in the near term. We recognise that by investing in strengthening our team and our assets, we will also increase the overall experience in stores and online to satisfy our discerning customers. I am confident that this strategy sets strong foundations for future growth opportunities.”
