Al Othaim CEO says analyst estimates 'exaggerated', expansions underway

Abdullah Al Othaim Markets Co.’s Q3 2020 financial results missed the over-estimated forecasts of research firms, Chief Executive Officer (CEO) Abdulaziz AlOthaim told Argaam.

“These forecasts did not factor in the challenges the Saudi retailers faced over the previous period, including the implementation of the value-added tax (VAT) in Q3 2020, as well as the enactment of the online education due to the COVID-19 outbreak,” AlOthaim added.

Al Othaim generated additional revenue during the back-to-school season as consumers buy school stationery and other supplies, he added.

The Q3 2020 profit decline was driven by consumers’ lower purchasing appetite after the implementation of a 15% VAT in addition to the Kingdom’s decision to switch to online schooling, he explained.

Meanwhile, Al Othaim reported higher earnings in the nine-month period due to improved profit margins and stronger demand for food commodities during the lockdown period.

The firm also implemented cost-efficiency measures while capitalizing on the government’s initiatives to mitigate the repercussions of COVID-19 outbreak.

Al Othaim’s investments in the real estate segment and properties rent yielded secondary returns, which improved over the previous period despite a slump in revenue, the chief executive said. The Saudi retailer offered discounts as well as grace periods to help tenants amid the slowdown due to the pandemic outbreak.

When asked about the company’s expected performance in Q4 2020 and FY21, AlOthaim indicated that the company’s performance generally echoes its strategic plans as regards sales revenue as well as profit margins, in line with investors’ aspirations.

“We are continuously working on an expansion strategy to match clientele needs, in a way that helps in bolstering performance, developing the existing branches and enhancing the services offered,” he noted.

Al Othaim has a network of 247 branches across the Kingdom.

The company posted net earnings of SAR 60.7 million in Q3 2020, a 20% decline year-on-year, Argaam reported.