Fawaz Alhokair studies options to offset losses, eyes new brands

Logo of Fawaz Abdulaziz Alhokair Co.

Fawaz Abdulaziz Alhokair Co. is currently studying several options to offset accumulated losses, said Chief Financial Officer Ahmed Belbesy. 

He said the company placed particular attention on optimizing inventory balances by taking substantial one-off inventory-related provisions of SAR 461 million. 

Marwan Moukarzel, Chief Executive Officer (CEO), Fawaz Alhokair, noted that the financial year presented extraordinary challenges that no market was prepared for, creating one of the most challenging retail operating environments in living memory.

Notwithstanding the profound disruption, the conditions created a catalyst for the company to accelerate its “operational upgrade strategy”, driving business excellence and optimizing portfolio to achieve meaningful results for a return to profitable growth.

Despite a difficult period, which saw sales decline year-on-year in all segments, Saudi retail began to show signs of recovery as COVID-19 restrictions eased, with an improved trajectory in the third and fourth quarters, Moukarzel added.

“Weaker offline sales were partially offset by strong online performance, which grew by 408%, as we ramped up our digitization program.”

The food and beverage (F&B) segment’s top line recovered gradually during the year but remained subdued as capacity restrictions on dine-in remained in place. Meanwhile, international operations in key markets suffered for the majority of the year as pandemic-related restrictions and closures persisted, which began easing from April.

The company is looking to diversify its brand mix, focusing on higher-margin segments, and has made significant progress by finalizing brand agreements during the year in F&B and athleisure sectors.

“We are pursuing increased digitization and strengthening our e-commerce offer by bringing more brands online,” Moukarzel said.

Fawaz Alhokair opened its first Decathlon store in Jeddah, and three more are set to open in Riyadh before year-end.

The company widened net loss after Zakat and tax by 63% to SAR 1.11 billion in the fiscal year ended March 31, 2021, from SAR 681.2 million a year earlier, Argaam reported.

In March, the firm said its accumulated losses reached 49.4% of capital, ascribing it to several reasons, including forming provisions related to inventories.

In the same month, the company’s board of directors approved using the entire statutory reserve, amounting to SAR 205.8 million, to partially offset accumulated losses.