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Cenomi Retail’s net losses widened to SAR 151.7 mn in 1Q 2024, compared to a net loss of SAR 55.9 mn in 1Q 2023, on the back of brand exits and store closures as part of its turnaround strategy, it said in its earnings release (pdf) Revenues remained essentially unchanged on an annual basis at SAR 1.3 bn.
Things are looking brighter on the quarterly front: Cenomi Retail trimmed its net losses by 85.2% q-o-q from SAR 1 bn in 4Q 2023. Revenues were up 31.5% q-o-q on the back of higher sales from its local retail segment during Ramadan. Revenues from its international retail segment were down 7.9% q-o-q while sales from its F&B segment were down 4.8% q-o-q to SAR 86.5 mn over the same period.
Rationalization strategy moves forward: Cenomi Retail completed the first phase of its brand exit strategy, raising some SAR 35 mn in the first quarter of the year. The rest of its sale agreements with Abdullah Al Othaim Fashion — comprising phase two with the sale of five brands — are set to be finalized during 2Q 2024, it said. The board also approved during the quarter a program that will see it sell an additional 24 brands, including its Apple premium reseller Aleph. It expects the sale of the 24 brands to bring in some SAR 650 mn in revenues with a net asset value of SAR 215 mn, while the country’s largest franchise retailer’s board had also recommended lowering the company’s capital to SAR 100 mn as part of a capital restructuring to “offset accumulated losses.”
Where the funds are going: Proceeds from brand sales will be channeled to principal repayment, with Cenomi Retail paying SAR 170 mn of debt principal so far. It also said it expects its ongoing organizational restructuring program to save more than SAR 60 mn.
A look at the retail store count: Cenomi Retail saw a 38.1% y-o-y decline in the number of its stores in Saudi to 562 stores over the period after 266 store closures and the opening of four new stores. Internationally, it reported a 17.8% y-o-y drop over the period to 249 stores after opening eight new stores and shutting down 26 stores. It slashed the number of brands by 23% y-o-y in the first quarter to 57 brands, down from 74 in the corresponding period a year earlier.
What they said: “Performance in Q1 2024 in Saudi Arabia was softer than expected due to a number of external factors such as vacation seasonality, geopolitics impact from last December and store closures. However, Cenomi Retail will continue with its Saudi First strategy. While the challenges are not yet behind us and despite the current net loss, we will continue to implement our turnaround strategy. Our focus will be on enhancing the topline, which will naturally lead to a stronger stabilized EBITDA, by progressing our strategy. Overall, I am confident all of our efforts will bring benefits for all stakeholders,” Cenomi Retail Acting CEO Salim Fakhouri said.
Cenomi Retail is the largest franchise retailer in the Kingdom and the only listed business of its type in the region. The retailer is currently active in over 900 stores across 326 malls in nine 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.
