Sign in
Our friends at Cenomi Retail have wrapped up the strategic sale of subsidiary Innovative Outfit Trading to Abdullah Al Othaim Fashionas the company pushes through with its rationalization drive to focus on what it calls “champion brands.” Cenomi Retail currently holds the franchise rights to some of the biggest household names globally including Zara, Massimo Dutti, Bershka, along with other Inditex brands.
The retailer has been on a rationalization drive in a bid to optimize operations by downsizing its brand portfolio and focusing on the most successful names. Cenomi Retail owned the franchise rights to around 67 global brands, as of November 2023, down from around 100 brands, according to the company’s latest earnings release (pdf). The retail giant has completely exited the Balkans and signed a letter of intent to fully divest fully its US operations as of November 2023.
The sale of 16 brands to Abdullah Al Otham will bring in SAR 115 mn in proceeds, in addition to another SAR 4.7 mn from the transfer of inventory — still subject to a final assessment, according to a disclosure to Tadawul last week. The brands Al Othaim Fashion is acquiring include Flormar, Oxxo, Monsoon, ADL, Bijou Brigitte, Bizou, Gerry Weber, IKKS, Lasenza, Lipsy, Marie France, Quiz, Springfield, Women Secret, Undiz, and Ziddy.
The impact on Cenomi Retail’s financials will be small: The 16 brands contributed just 5.7% of the retail giant’s total revenues in 9M 2023 at SAR 238 mn. The transaction should boost Cenomi Retail’s EBITDA by SAR 10 mn on an annualized basis.
This has been in the works since last year: The initial SPA was signed in December 2023 entailing the transfer of the franchise rights of 18 brands in a SAR 120 mn transactions, before the owners of two brands rejected the transfer, shaving SAR 5 mn off the value of the original agreement.
Cenomi booked SAR 4.2 bn in revenues in 9M 2023, with 7.7% growth in EBITDA. Online receipt grew 35%, while international operations grew 8%. Cenomi said its “champion brands strategy” has outperformed the overall fashion category with Zara revenues growing 9.1% y-o-y in 9M 2023 and revenues from other Inditex brands rising 5.9% y-o-y in the same period.
Cenomi’s footprint: The retail giant is currently active in 1.3k stores across 100 malls in 10 countries, with brands spanning womenswear, menswear, kids and baby, department stores, shoes and accessories and cosmetics. This is in addition to operating a number of restaurants and coffee shops including Subway and Cinnabon. The retailer’s Aleph brand is an Apple premium partner.
