Fawaz Alhokair’s Q4 misses estimates on lower sales: NCBC

Fawaz Abdulaziz Alhokair Co. (Alhokair) recorded its first loss on record at SAR 184.4 million in the fourth quarter of fiscal year 2017/2018, compared to a profit of SAR 86 million in the year-ago period, NCB Capital said in a report Sunday.

The  results came below the NCBC and consensus estimates of SAR 39.8 million and SAR 60.6 million, respectively.

The weaker-than-expected results were attributed to a 15.1 percent year-on-year (YoY) decline in sales, a 22.5 percent YoY increase in operating expenses, and contraction in gross margins due to provisions.

"We expect further weakness in sales in the coming quarters due to the expected expat departure from Q318 onwards as well as net store closures during the year," the report said.

NCB Capital said it expects the Saudi-listed company to close 25 stores by September 2018, in addition to the 60 stores closed between March 2017 and December 2017.

The research firm maintained a Neutral rating on Alhokair, with a price target of SAR 30.5 per share.