Cenomi Centers doubles profit after asset sale

Reuters

• Retail mall operator’s profit grew 125% to SAR388m in Q1
• Asset disposal programme has so far raised SAR875m
• Cenomi added 72 brands to its portfolio in Q1

Cenomi Centers said on Tuesday that net profit more than doubled in 12 months during the first quarter of 2023 as shopping mall footfall rose to near-record levels and it sold off non-core assets. 

The Saudi retail company operates 21 assets, with over 4,900 stores in 10 cities.

It said profit jumped by 125 percent to SAR388 million ($103 million) in the period, on the back of an 11 percent rise in quarterly revenue to SAR577 million.

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CEO Alison Rehill-Erguven said the performance was supported by the company’s non-core asset sale programme. This included offloading of land in Riyadh, leading profits of SAR238.7 million in Q1. 

The programme has so far raised SAR875 million and is expected to raise a total of SAR2 billion.

Cenomi said visitor footfall reached 29.4 million during the period, increasing 47 percent compared with Q1 2022, while occupancy rates at its malls fell slightly to just over 92 percent.

Rehill-Erguven said the company will continue with its non-core asset sale programme, which she described as “an important tool to further strengthen our balance sheet and liquidity position”.

She added that Cenomi has an “exciting growth pipeline” that will add 50 percent to its retail space and will deliver “first of their kind lifestyle destinations” to the kingdom. 

According to a filing on the Saudi Stock Exchange, the company took a SAR52 million hit from cancelling its Madinah Walk project, which “no longer aligned with its investment criteria”. 

It added that it is looking for other assets to develop in the Saudi holy city while also assessing opportunities in Tabuk in the north-west of the country. 

The results come as analysts say the retail sector in Saudi Arabia is undergoing an “exciting transformation”.

Jonathan Pagett, head of retail advisory (Saudi Arabia) for Knight Frank, said: “Saudi Arabia’s retail sector is witnessing a clear evolution towards an experiential model.

“As the younger demographic grows, the demand for retail centres offering a diverse blend of shopping, entertainment and culinary experiences will skyrocket.”

Pagett added that even as ecommerce grows, “there is still a significant place for physical retail” which can provide a different, enhanced shopping experience from online retail.

During Q1, Cenomi Centers said it welcomed 72 brands to its portfolio while renewing 413 contracts with retailers. 

Earlier this month Cenomi Centers, previously known as Arabian Centres Company, and Cenomi Retail, formerly known as Fawaz Abdulaziz Alhokair Company, said they are in discussions to create a new retail powerhouse in Saudi Arabia.