Jarir posts forecast-beating 2017, plans six new stores in 2018: Al-Agil

Jarir Marketing Co. reported better-than-expected earnings for 2017, driven by several factors, mainly smartphone sales and strong supplier discounts, which lifted profit margins, chairman Muhammad Al-Agil told Argaam in an exclusive on Tuesday.

“The company expanded its market share to over 20 percent in the smartphones retail segment, thanks to the sector’s Saudization, launch of new showrooms and improved online sales which accounted for over 1.5 percent of total sales volume,” Al-Agil said.

He expected the retailer to open more than six stores this year, in addition to one showroom in the United Arab Emirates.

Al-Agil added that it is difficult to estimate the impact of the value-added tax on the company’s sales, describing the launch of the Citizen’s Account program and increased Saudi female employment as positive.

Meanwhile, Jarir is well-positioned to overcome high labor costs, as Saudization rate at the company ranged between 55 percent and 59 percent, he added.

In an earnings note, NCB Capital said on Tuesday the bookstore operator recorded the highest quarterly net income on record at SAR 251.9 million.

The investment bank expected the Citizen’s Account payments and monthly cost of living allowance of SAR 500-1,000 for state employees and retirees to offset the impact of lower subsidies and maintain discretionary spending levels relatively unchanged.

“We believe this will continue to support the gross margin expansion, as companies limit discount levels offered. Moreover, we believe new store openings will further support future growth, although weak LFL remains a concern,” NCB Capital added.

Jarir’s full-year net profit stood at SAR 867.6 million, a rise of 18.2 percent year-on-year (YoY).