Saudi Arabia's Cenomi Retail, formerly known as Fawaz Abdulaziz Alhokair & Co., has signed an agreement with Abdullah Al-Othaim Fashion Company to sell 100% of the share capital of a subsidiary, for a total transaction value of 120 million riyals ($32 million), plus the value of inventory on hand.

Abdullah Al-Othaim Fashion Company will acquire Innovative Outfit Trading Company along with the franchise rights for the brands and their corresponding 244 stores and assets, Cenomi said in a statement on Riyadh's Tadawul bourse on Thursday.

The additional consideration for inventory on-hand will be calculated at the time of deal closing and store handover, which is expected in Q1 2024, when the the financial impact will be recognized by Cenomi.

Brands involved in the transaction include Flormar, Oxxo and Monsoon amongst others. Store employees are expected to be hired by the new brands owner as part of the sale.

The Cenomi's brands contributed SAR 238 million to revenue in the nine months to September 2023, 5.7% of Cenomi Retail’s total revenue with the divestment expected to positively impact profitability by SAR 10 million on an annualized basis, it added.

The sale forms part of Cenomi Retail’s on-going transformation program and strategy of focusing on champion brands within the fashion, electronics and food & beverage categories. It will use the net proceeds from the sale to deleverage the business. Cenomi Retail has over 1,300 stores across 100 shopping malls in 11 countries.

Abdullah Al-Othaim Fashion Company, is a subsidiary of Abdullah Al Othaim Investment Company, the operator of malls and entertainment centres in the kingdom, the GCC and Egypt.

(Reporting by Brinda Darasha; editing by Seban Scaria)