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Saudi retailer Fawaz Abdulaziz Alhokair reported a 10.11 percent drop in Q1 net profit, ending June 30, 2019 as the implementation of a new accounting standard starting April 1 this year, resulted in the booking of an additional 26 million Saudi riyals in costs.
After the implementation of IFRS 16, the company’s Q1 2019 net profit after tax and zakat amounted to 224 million riyals, compared to 249.2 million riyals in Q1 2018. Excluding IFRS 16, the company’s Q1 2019 normalised net profit is at 249.5 million riyals.
The company’s revenue after IFRS 16 stood at 1.73 billion riyals in Q1 2019, compared to 1.85 billion riyals in Q1 2018.
Commenting on the year’s results and the company’s outlook, Alhokair’s CEO Marwan Moukarzel said: “Over the past year management has been implementing a bold and necessary portfolio optimization strategy.”
“Despite applying temporary pressure on our top line, this has laid the foundations for long-term, sustainable growth and value creation,” he added.
The group has pulled out of its franchise partnership with British store group Marks & Spencer and terminated its franchise agreements with some ‘non-performing brands’, which had contributed 160 million riyals to top-line in the first quarter of the previous year.
“We have also elevated our retail experience, improved quality across our stores and streamlined our supply chain processes with the ultimate goal of extracting more from less,” Moukarzel added.
“The merits of these strategies are beginning to bear fruit with the Group returning to positive LFL growth and with strengthened profitability,” he ended.
(Reporting by Gerard Aoun; Editing by Seban Scaria)
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© ZAWYA 2019
