‘Retail here to stay’ says CEO of Saudi conglomerate Alhokair

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Alhokair and ACC said they are likely to see the financial impact of the deal ‘from Q1 2022 onward in terms of profit sharing.’ (Supplied)
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Alhokair and ACC said they are likely to see the financial impact of the deal ‘from Q1 2022 onward in terms of profit sharing.’ (Supplied)
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Alhokair and ACC said they are likely to see the financial impact of the deal ‘from Q1 2022 onward in terms of profit sharing.’ (Supplied)
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Updated 24 March 2021
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‘Retail here to stay’ says CEO of Saudi conglomerate Alhokair

  • COVID store closures fail to dent retail giant, as big expansion plans on the cards

JEDDAH: Saudi retail conglomerate Fawaz Abdul Aziz Alhokair Co. (Alhokair) announced earlier this month a partnership with shopping center operator Arabian Centers Company (ACC) to acquire a majority stake in UK-based e-commerce platform Vogacloset, in a deal worth SR68.85 million ($18.36 million).

With Saudi consumers stuck at home due to coronavirus travel restrictions and physical malls shut at various periods over the last 12 months, it is no wonder Alhokair is keen to buy into the Kingdom’s surging e-commerce sector.

In fact, in its full year report for 2020, it recorded a 311 percent surge in online activity in the first quarter of 2021 compared with the fourth quarter last year.

Despite this ambitious entry into cyberspace, Marwan Moukarzel, CEO of Alhokair, confidently told Arab News that in-store shopping is not going anywhere and remains a healthy business sector for the company, despite the events of the last year.

“Retail is here to stay,” Moukarzel said. “It is a cultural thing; it is an entertainment destination and family destination above all.”

And the statistics prove him right. Despite the challenging year, when overall revenue for 2020 was down 1.6 percent year-on-year to SR5.342 billion, resulting in a loss of SR681 million, earnings per square meter was up 3 percent to SR124 and revenue per hour was up 7 percent to SR980.

Moukarzel is putting money behind his big words, with Alhokair planning to open about 57 food and beverage (F&B) outlets in the next 12 to 16 months and eyeing at least another 50 stores in the fashion, cosmetics and beauty, sports goods, and leisure space. And, on top of that, the company will also finalize acquisitions and franchise rights in the gadgets, electronics and multimedia space.

Retail outlets closed in the Kingdom on March 16 last year, and reopened and shut again at various stages throughout the year, but Alhokair took several steps to maintain its business balance. The company benefited from the government’s SANED program, which covered 60 percent of wages for 70 percent of its Saudi staff. In addition, Alhokair managed to secure rent relief from its landlords for the closure periods.

“2020 was tough, but there were also opportunities. It made us think of how can we evolve as an organization, how can we change, and be more agile and resilient,” Moukarzel said.




Marwan Moukarzel, CEO of Alhokair.

He said that the Saudi retail market opened up faster than most markets in the region and internationally, too, especially after the government allowed stores to partially open in Ramadan (June) for six-hour slots during the lucrative shopping season.

As part of its strategy, Alhokair also revamped its network of 1,580 store locations across 13 countries. While 308 non-performing stores have been closed since January 2019, 58 new outlets have opened in more attractive locations.

Across the company’s international markets, revenue was up 1.1 percent overall. While some markets such as Kazakhstan and the US were down 22 percent and 13 percent, respectively, others prospered, such as Georgia, which was up 15 percent, Egypt (up 12 percent) and Azerbaijan (up 7 percent).

“During the COVID-19 period, we were successful in launching several mono-brand sites, and several products almost on every multi-brand platform in the Middle East,” said Moukarzel.

The sites include Aldo and Mango, while the company also launched online versions of Zara Fashion and Zara Home, on top of seven brands operated by Spain’s Inditex, which are exclusive to Alhokair in Saudi Arabia and other markets such as Armenia, Georgia and Azerbaijan. It also launched its own Aleph online store for Apple premium reseller products.

“The one thing that retailers can do better is to understand that the Saudi customers are expecting better services, better experiences … that is complemented with omnichannel online capability,” Moukarzel said.

As part of its deal to acquire Vogacloset, ACC and Alhokair will also pump $12 million into the e-commerce site to develop its presence in Saudi Arabia. Established in London in 2013, Vogacloset sells European fast fashion and beauty products to Arab customers. Since 2015 its sales have grown by 70 percent and in 2020 it attracted 12 million unique users across the Middle East, with more than half shopping from the Kingdom.

According to a Tadawul listing by Alhokair, Vogacloset’s revenue rose from SR58 million in 2018 to SR266 million in 2020. As a result, it went from a net loss of SR240,000 in 2018 to a net profit of SR10.94 million last year. Moukarzel said: “If I recall, when I first joined this company two years ago, online was actually a threat and a challenge. Today with all the progress that we’ve made, I would look at it as a great opportunity that would drive growth and help provide a better experience for customers.”

Established in 1990, Alhokair operates 472,100 square meters of retail space across 81 brands in its portfolio, and has plans to expand even further. 

“As part of our strategy, we have geared toward diversifying the business and getting ourselves into more categories in the retail space, such as leisure, gadgets, electronics, on top of F&B,” Moukarzel said.

Alhokair acquired the Saudi rights for 10 international F&B brands from the Food and Entertainment Co. Ltd. for SR340 million over a year ago. “This gives us a new angle to the business and diversifies our focus. We are also looking at adding more exciting F&B concepts into our portfolio,” Moukarzel added.

During the last 12 months, Alhokair added brands like Kiko in the cosmetics space and Decathlon in the sports and leisure sector. The first Decathlon in the Kingdom will be a 3,500 square meter store in the Mall of Arabia in Jeddah.

“We are always exploring every interesting brand that has future potential, is ‘omni-chanellable’, ‘Instagramable’, and has potential in the Saudi market,” Moukarzel said, adding that he aims to add another two to three international brands in the coming weeks.

With their financial year starting in April, Moukarzel said it will be a year focused on getting back to normal “slowly but surely.”

He added: “With Ramadan around the corner and restrictions recently lifted, we can only be optimistic about the future.

“It would be interesting to see how fast the market goes back to normal... [Saudi Arabia] is set for an amazing growth story.”


Riyadh to see 1m sq. m. of new office space by end of 2026: Knight Frank

Updated 5 sec ago
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Riyadh to see 1m sq. m. of new office space by end of 2026: Knight Frank

RIYADH: Saudi Arabia’s push for regional headquarters has spurred demand for office space in Riyadh, with the capital’s stock set to grow by 1 million sq. meters by 2026, a report showed.

According to global property consultancy Knight Frank’s Autumn 2024 Saudi Arabia Commercial Market Review, this will bring the city’s total office space to 6.3 million sq. meters.

The regional HQ program also impacts office lease rates, with 517 companies now committed to establishing their primary hub in the Kingdom, the report disclosed.

This comes ahead of the nation’s goal of attracting approximately 480 multinational corporations to move their headquarters to the Kingdom by 2030.

“Vision 2030 is reshaping Saudi Arabia’s economy and society, with a central focus on transforming Riyadh into a key regional and global center for business, finance, leisure, and tourism,” said Faisal Durrani, partner and head of research for the Middle East and North Africa at Knight Frank.

“Indeed, 49 percent of the new jobs created in the Kingdom over the last five years has been in Riyadh, which is adding to the upward pressure on office rents, with many key office districts and business parks fully leased, with waiting lists,” Durrani added.

He went on to say that the limited availability of office space is also forcing up Riyadh’s Grade B rents, which have climbed by 27 percent over the past year.

In the Dammam Metropolitan Area region, Grade A rents have climbed by 2.2 percent since the third quarter of 2023, fueled mainly by strong demand from the public sector, he added.


Saudi hotel industry sees 11.4% spending surge, amid overall weekly POS decline: SAMA

Updated 13 min 37 sec ago
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Saudi hotel industry sees 11.4% spending surge, amid overall weekly POS decline: SAMA

RIYADH: Spending in Saudi hotels saw a week-on-week increase of 11.4 percent between Nov. 10 and 16, reaching SR399.7 million ($106.4 million), according to the Kingdom’s central bank.

The weekly point-of-sale transactions bulletin from SAMA showed that restaurants and cafes recorded the second largest sectoral increase with a 4.3 percent rise to reach SR2.07 billion, which also equated to the biggest share of the overall value.

Spending on furniture came in third place, registering a 2 percent increase to SR304.8 million.

Overall, Saudi Arabia’s POS transactions registered a weekly decrease of 1.5 percent, with the education sector leading the decline.

SAMA recorded SR13.2 billion in transactions over the week, with the education industry posting the highest sectoral decrease at 47.9 percent to reach SR89.5 million.

The central bank’s figures showed that the electronics sector saw the second-largest dip, with a 10.9 percent slide to SR198 billion.

Spending on telecommunication recorded the third most significant decrease, at 7.4 percent, reaching SR117.1 million. 

Expenditure on food and beverages saw a 0.6 percent negative change this week, reaching SR1.9 billion, claiming the second-biggest share of this week’s POS transaction value.

Spending on miscellaneous goods and services followed, accounting for the third largest POS share with a 4.1 percent dip, reaching SR1.5 billion.

Spending in the leading three categories accounted for 42 percent or SR5.5 billion of the week’s total value.

At 0.02 percent, the smallest increase occurred in spending on recreation and culture, boosting total payments to SR309.5 million. Expenditures on public utilities surged by 0.2 percent to SR52.9 million. 

Geographically, Riyadh dominated POS transactions, representing 34.06 percent of the total, with expenses in the capital reaching SR4.5 billion — a 3.5 percent decrease from the previous week. 

Jeddah followed with a 0.04 percent surge to SR1.8 billion, and Dammam came in third at SR641.4 million, down 4.6 percent.

Madinah experienced the most significant rise in spending, increasing 6.9 percent to SR567 million.

Tabuk recorded a decline of 7.5 percent, reaching SR235.9 million, and Abha dropped 3.4 percent to stand at SR149.4 million.


Japan, Saudi medical centers unite to revolutionize stem cell therapy

Updated 20 November 2024
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Japan, Saudi medical centers unite to revolutionize stem cell therapy

  • Cytori Therapeutics K.K., has been a pioneer in the stem cell therapy business

TOKYO:  Cytori Therapeutics Japan and the King Abdullah International Medical Research Center have signed a Memorandum of Understanding to strengthen research and training initiatives in the field of cell therapy. 

The signing ceremony took place between Dr. Ahmed Alaskar, executive director of KAIMRC, and Hoshino Yoshihiro, president and CEO of Cytori Therapeutics K.K., during the Riyadh Global Medical Biotechnology Summit 2024.

The partnership underscores the potential of regenerative medicine in treating chronic diseases such as diabetes, liver cirrhosis, critical limb ischemia, chronic wounds, knee osteoarthritis and other aging-related conditions. The aim of combining Cytori’s cutting-edge stem cell technology with KAIMRC’s expertise in translational research is to develop groundbreaking treatments for these critical health issues.

The two organizations will collaborate on fundamental research, clinical trials and other areas of mutual interest, including projects in biomedical R&D, preclinical studies and clinical trials, as well as training and development for staff in health-related and engineering fields.

Cytori Therapeutics K.K., has been a pioneer in the stem cell therapy business, specializing in cell therapy services and the development of adipose-derived regenerative cells from human subcutaneous fat tissues for therapeutic use. The company also develops, manufactures, and exports medical devices. 

This article is also available on Arab News Japan


Oil Updates – prices little changed as market weighs mixed drivers

Updated 20 November 2024
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Oil Updates – prices little changed as market weighs mixed drivers

SINGAPORE: Oil prices held steady for a second day on Wednesday as concerns about escalating hostilities in the Ukraine war potentially disrupting oil supply from Russia and signs of growing Chinese crude imports offset data showing US crude stocks rising.

Brent crude futures dipped 5 cents to $73.26 a barrel by 8:41 a.m. Saudi time. US West Texas Intermediate crude futures was flat at $69.39 per barrel.

The escalating war between major oil producer Russia and Ukraine has kept a floor under the market this week.

“We may expect (Brent) oil prices to stay supported above the $70 level for now, as market participants continue to monitor the geopolitical developments,” said Yeap Jun Rong, market strategist at IG.

On Tuesday, Ukraine used US ATACMS missiles to strike Russian territory for the first time, Moscow said. Russian President Vladimir Putin lowered the bar for a possible nuclear attack.

“This marks a renewed build up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market,” ANZ analysts said in a note to clients.

On the demand side, US crude oil stocks rose by 4.75 million barrels in the week ended Nov. 15, market sources said on Tuesday, citing American Petroleum Institute figures.

That was a bigger build than the 100,000 barrel increase analysts polled by Reuters were expecting.

Gasoline inventories, however, fell by 2.48 million barrels, compared with analysts’ expectations for a 900,000-barrel increase.

Distillate stocks also fell, shedding 688,000 barrels last week, the sources said.

Official government data is due later on Wednesday.

In a boost to oil price sentiment, there were signs that China, the world’s largest crude importer, may have stepped up oil purchases this month after a period of weak imports.

Data from vessel tracker Kpler showed China’s crude imports are on track to end November at or close to record highs, an analyst told Reuters.

Weak imports by China so far this year have pulled down oil prices, with Brent sinking 20 percent from its April peak of more than $92 a barrel.


Saudi Arabia raises $910m in November sukuk offering 

Updated 20 November 2024
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Saudi Arabia raises $910m in November sukuk offering 

RIYADH: Saudi Arabia’s National Debt Management Center has completed its riyal-denominated sukuk issuance for November, raising SR3.41 billion ($910 million), a 28.19 percent year-on-year increase. 

In October, the Kingdom issued sukuk worth SR7.83 billion, while the figures for September and August were SR2.6 billion and SR6.01 billion, respectively.  

Sukuk, also known as Islamic bonds, are Shariah-compliant debt products that allow investors to gain partial ownership of an issuer’s assets until maturity. 

Saudi Arabia’s consistent sukuk issuances align with a report released by Moody’s in September, which stated that the global markets for these Islamic bonds are expected to remain strong in 2024.  

The report also projected that the issuance of Shariah-compliant bonds could reach between $200 billion and $210 billion this year, up from just under $200 billion in 2023. 

According to a statement by the NDMC, the November sukuk issuance was divided into five tranches. The first tranche, valued at SR2.52 billion, is set to mature in 2029. 

The second tranche was valued at SR434 million and will mature in 2031, while the third tranche amounted to SR137 million, with a maturity date in 2034. 

NDMC stated that the fourth tranche, sized at SR10 million, is scheduled to mature in 2036. The fifth tranche, valued at SR310 million, will mature in 2039. 

A report by Fitch Ratings in October highlighted that sukuk issuances are on the rise, driven by improving financing conditions following the US Federal Reserve’s rate cuts to 5 percent in September. 

Fitch noted that global sukuk outstanding reached $900 billion by the end of the third quarter of 2024, an 8.5 percent increase compared to the same period in 2023.  

The report further projected that interest rates could decline to 4.5 percent by the end of 2024 and 3.5 percent in 2025, likely boosting sukuk issuances in the short term. 

In August, Fitch reported that the UK remains a significant hub for Islamic finance, with the London Stock Exchange ranking as the third-largest listing venue for US dollar sukuk globally. 

Saudi Arabia’s continued momentum in sukuk issuances reflects its commitment to developing the Islamic finance market as a core component of its Vision 2030 economic diversification strategy.