Saudi Arabia based Cenomi Retail has reported revenues of SAR1,460 million and SAR4,538 million, respectively, for the third quarter and nine-month period of FY2023 ending on December 31, 2022.
The Group recorded revenue of SAR1,460 million in Q3-FY23 compared to SAR1,466 million in Q3-FY22. This result was due to the exit of four brands as part of the brand rationalisation programme that saw a 25% YoY decline in F&B revenues as the full impact of discontinued operations was reflected in the third quarter. While revenue for 9M-FY23 was broadly flat at SAR4,538 million as a result of the decline in F&B sales which has largely offset the positive impact from the international portfolio.
Cenomi’s Saudi retail revenues were relatively unchanged at SAR1,035 million in Q3-FY23 supported by early signs of a pickup in consumer sentiment and demand in the Kingdom. For 9M-FY23, revenues amounted to SAR3,309 million, indicating a YoY decrease of 2%. With the goal of divesting 26 non-strategic brands, four of which have already been exited, is expected to impact revenues by approximately SAR288 million, while boosting profits by SAR25 million once the programme is completed.
The Group’s international retail operations continued to thrive with revenues of SAR326 million in Q3-FY23, up 9% YoY, and SAR877 million in 9M-FY23, up 13% YoY, with Jordan and the CIS countries maintaining their positive momentum. Cenomi Retail is still focusing on growing its market share in key growth markets across the globe.
The F&B segment recorded a decline in revenues of 25% YoY to SAR99 million in Q3-FY23 from SAR131 million in Q3-FY22, with a net closure of 75 stores during the quarter, including 58 store closures of the four exited brands. For 9M-FY23, F&B revenues amounted to SAR352 million, decreasing 5% YoY. This was due to Cenomi Retail’s brand rationalisation programme, which saw the exit of Azal restaurants and Shawarma Almuhalhel, translating to a revenue impact of SAR 46 million in Q3.
At the same time during the period, the company completed the acquisition of 30 Subway stores (sub franchisor) across the Kingdom and is looking to add a further 17 stores in addition to 15 new Cinnabon outlets, which are scheduled for opening in 2023.
In addition, recent staff optimisation review in the head office and stores led to downsizing of 15% of the headquarter headcount delivering an annualised saving of SAR50 million. On the other hand, the company added to its leadership team with the appointment of the new Chief Technology and Information Officer to drive system wide digitalisation and efficiency.
Inventory optimization measures have continued during the period with a one-off charge of SAR290 million. Adjusting net profit for this impact would result in an amount of SAR91 million in 9M-FY23, a YoY growth of 10%. Inventory levels have dropped by over 40% from SAR1.7 billion to SAR1 billion, thus allowing the business to grow from a more efficient base.
“Our Q3 financial results were supported by revival in demand in the domestic market and a strong performance from our international portfolio. This, together with the focus on optimizing our operations and inventories, provides a more stable and assured footing for the business. We have made great progress on settling legacy related party receivables and have already received payments of nearly SAR270 million, which will be reflected in our financial statements for the upcoming quarter. Furthermore, we have appointed advisors to undertake a comprehensive reassessment of the balance sheet and restructure our debt to provide a solid platform to fuel our growth,” stated Ahmed Belbesy, Chief Financial Officer, Cenomi Retail.
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