Jarir Q2 results disappoint despite new stores: Riyad Capital

Riyad Capital said Jarir Marketing Company’s Q2 net profit of SAR 154.9 million— while 14.6 percent higher than a year earlier— has missed expectations, despite new store openings.

The investment firm had forecast SAR 201 million.

“Revenues have been recorded at a modest SAR 1.4 billion (+9 percent Y/Y) this quarter, below both our forecast of SAR 1.5 billion and SAR 1.9 billion in Q1,” said Riyad Capital in a note.

While anticipating a seasonally weak Q2 on absence of back-to-school buying and onset of summer vacations, “the quantum has surprised.” Riyad Capital added.

On first look, it appears consumers had spent substantially in Q1 on the back of the two salary bonuses (record topline of SAR 1.9 billion in Q1) and have cut back this quarter, it said.

Gross margins have declined to 13.6 percent for the quarter as compared to 14.8 percent in Q1, it added.

Riyad Capital has maintained its “hold” rating and its target price at SAR 223 per share. Jarir shares are trading 2.3 percent down at SAR 225 on Tadawul Wednesday.