Saudi clothing retailer Alhokair posts quarterly loss after store closures amid pandemic

The temporary closure of its retail outlets to comply with government COVID-19 restrictions pushed Saudi Arabia’s Fawaz Abdulaziz Alhokair Co. into the red for the three months ending June 30.

Alhokair posted a 67.392% drop in sales to 564.9 million riyals ($150.64 million) for its first quarter (its financial year starts April 1) compared to 1.7324 billion riyals in the same three months last year.

The company that owns the franchise for fashion brands like Zara and La Senza as well as the café Costa reported a net loss of 535.6 million riyals ($142.83 million).

In a bourse filing on Tuesday (August 25) Alhokair said it closed most of its retail units in Saudi Arabia starting March 16 and gradually reopened between April 26 and June 21 in line with the lifting of pandemic containment measures. It does most of its business in Saudi Arabia but also operates as a franchise retailer in Middle East and North Africa, Central Asia and the Caucasus.

The company weathered the pandemic-imposed closures of its units by negotiating rent relief of an average of three to three and a half months that saved it 64 million riyals, it said. It also received payroll support from a Saudi government program.

At the end of June it said it temporarily implemented additional companywide salary reductions and was considering other measures that may impact its store network and headcount.

Alhokair also attributes its first-quarter loss to the implementation of the final stages of a “portfolio optimization strategy” that closed non-performing stores and divested “weak brands”. It did not disclose which brands.

ONLINE SALES UP

The company reported 83 million riyals in online sales, which constituted 15% of its total sales for the quarter, from only 0.5% for the same period last year.

Since the launch of its e-commerce business in May 2019 up to the end of its 2020 financial year on March 31, Alhokair’s online sales were only 37.7 million riyals.

NEW PORTFOLIO ADDITION: DECATHLON

The Saudi retailer has finalized its representation agreement with French sports retailer Decathlon.

It currently represents over 80 brands and trades in around 1,600 stores across 100 shopping malls in 13 countries.

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