Cenomi Retail on track to profitability, plans to close some stores in 2023: CEO

Günther Helm, CEO of Cenomi Retail

Fawaz Abdulaziz Alhokair Co.'s (Cenomi Retail) second-quarter results are a step towards achieving profitability, CEO Günther Helm told Argaam in an interview.

He expects the company to break-even, return to profitability, and continue to implement the turnaround program.

Accumulated losses stand currently at 10% of capital, the CEO said, adding that the firm is directing its efforts towards the optimization of its brand portfolio, rationalization of stores, and overall divestment in non-strategic assets.

"We continue to be well on track in our journey towards delivering impact, profitability and increased shareholder value," Helm said.

Landlords of malls and shopping centers strategically extend periodic support to their major tenants and anchor brands through financial contributions or fees. This strategic approach is an investment on the part of the landlords, as they keenly recognize the pivotal role these brands play.

"Not only do these brands attract a substantial number of visitors to the premises, thereby enhancing footfall, but their presence also acts as a catalyst sparking interest among potential tenants, subsequently boosting occupancy rates," Helm said.

With regard to retailers, the company always analyzes store-level profitability, perpetually trims underperforming stores, and invests in growing locations. "We have identified 33 stores in Saudi, 16 in Morocco and 39 in Egypt that will be closed in the remainder of the year," he noted.

The company closed 76 locations in the second quarter as it continues to optimize its store footprint across markets. Cities and markets are evolving, which helps attract customers.

As of June 30, 2023, the company's total debts reached SAR 2.9 billion. "We are currently negotiating a refinancing of our outstanding debt with lenders and are on the cusp of achieving a positive outcome," the top executive said.

Cenomi Retail is working to launch FNAC store, the premier European electronics retailer, this month in Cenomi Nakheel Mall, Dammam, in addition to launching the first Jamba outlet in the Kingdom in Q4 2023, bringing wholesome and healthy smoothies and juices to Saudi consumers.

"We have adopted a ‘Saudi First’ approach to our strategy, leveraging the Kingdom’s strong market fundamentals and a positive demographic that supports our growth ambitions. Having said that, we are approaching the end of the reset phase in our home market of Saudi retail segment and continue to witness growth in our F&B segment," Helm said.

The company also continues to review its presence in non-strategic markets and decided to exit the US and Balkans and rationalize its retail footprint in Egypt and Morocco. "However, our CIS operations continue to be driven by an encouraging retail market environment," the CEO noted.

Cenomi Retail reported a net profit of SAR 113.8 million in the first six months of 2023, compared to a loss of SAR 1.7 million in the year-ago period. Q2 earnings reached SAR 169.2 million, according to data compiled by Argaam.