Cenomi Retail on track to turn profit, turnaround underway: CEO

19/11/2023 Argaam Special
Günther Helm, CEO, CenomiRetail

Günther Helm, CEO, Cenomi Retail 


Fawaz Abdulaziz Alhokair Co. (Cenomi Retail) remains steadfast in its commitment to its turnaround program.

 

Despite challenging results in Q3 2023, the company made substantial progress in executing its comprehensive turnaround plan.

 

Speaking to Cenomi Retail’s CEO Günther Helm in an exclusive interview with Argaam, he expressed: "As our efforts and actions get embedded in the business, we are confident in our ability to deliver consistent profitability.” 

 

"The losses incurred by the company mask many fundamental drivers that are moving in the right direction as Cenomi Retail pushes ahead with its turnaround program," Helm added. 

 

Helm said that rental expenses went down by nearly SAR 40 million, and staff costs dropped by SAR 77 million on a year-to-date basis. 

 

"The Q3 2023 losses are attributed to lower sales revenue due to seasonality, as well as the spike in finance charges from SAR 33 million to SAR 105 million as the company has felt the impact of the steep rise in interest rates."

 

"Furthermore, the overall Saudi consumer spending remains robust. However, the third-quarter revenues declined as per the point-of-sale (POS) reports issued by the Saudi Central Bank (SAMA) with the clothing and footwear sector dropping by 7% in the third quarter."

 

Helm added that Champion Brands, Zara, and the rest of the Inditex brands are continuing to outpace the market, having delivered 6% and 4% growth, respectively, on a quarter-on-quarter basis. 

 

The company’s food and beverage (F&B) witnessed the divestment of four brands in Q4 2022, which had a strong impact on a year-on-year (YoY) basis.

 

The F&B business has been growing steadily with over 3% in Q3 2023, compared to Q2 2023. 

 

Helm added that the company’s other operating income is primarily driven by landlord support contributions.

 

This will vary from quarter to quarter and although relatively regular, its magnitude is subject to new mall openings.

 

The company settled SAR 272 million as part of a SAR 300 million payment to its creditors in early October. This will help bring down its outstanding gross debt and mitigate some of the impact seen from higher interest rates. Cenomi Retail remains committed to working constructively with creditors to manage and reduce the company’s debt burden.

 

Moreover, a letter of intent was signed with Abdullah Al Othaim Fashion Co. to divest 22 non-core brands in Saudi Arabia in line with the company's overall business strategy. The deal is expected to be completed in Q1 2024.

 

The divestment of the US business aligns with the company’s strategic divestment plan.

 

The US operations did not contribute to the profitability of the business, though the company’s international presence grows 10% on a like-for-like basis with particular strength in the CIS markets.

 

In addition, the company is rightsizing its business in the markets of Egypt and Morocco to mitigate the impact of macroeconomic conditions.

 

Cenomi Retail does not provide any forecasts, but it stresses that it is largely focused on returning to profitability.

 

The company reported a net loss of 91.8 million in the first nine months of 2023 against a profit of SAR 21.9 million in the year-earlier period. The third-quarter net loss reached SAR 204.1 million, Argaam reported.

Comments {{getCommentCount()}}

Be the first to comment

loader Train
Sorry: the validity period has ended to comment on this news
Opinions expressed in the comments section do not reflect the views of Argaam. Abusive comments of any kind will be removed. Political or religious commentary will not be tolerated.