Cenomi Retail to divest more brands in turnaround plan

Cenomi Retail

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• Aims to raise $173m from deals
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Franchiser Cenomi Retail has announced another round of brand divestments as it seeks to tackle rising losses.

The Saudi company closed more than 200 stores last year and sold 16 brands in the first quarter of 2024. On Wednesday Cenomi Retail said its board of directors had approved the third phase of the sell-off.

The company aims to raise SAR650 million ($173 million) from the phase 3 sales, which are due to be completed during the 2024 financial year.

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Cenomi, which had 75 brands in its portfolio before it began the divestment programme, said it would end up with just 13. It plans to focus on so-called “global champions” in the fashion and food and beverage sectors, such as Zara.  

The company added that it would expand the offerings of Cinnabon, Subway and Jamba on the back of forecasts of growth for the F&B sector.

The divestment programme – an important pillar in improving the financial performance of the business, which reported losses of more than SAR1 billion last year – will also reduce Cenomi’s footprint from more than 1,000 to 367 stores.

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The non-core brands that will be sold in phase 3 include Aleph, Kiko, Decathlon and Flying Tiger Copenhagen. More will be announced over the coming months.

Salim Fakhouri, acting CEO, said: “As part of our continued transformation strategy, a further 18 brands have been identified for either sale or exit and will deliver more than SAR650 million of proceeds and further improve core profitability of the business.” 

“The exit of these non-core brands is critical in delivering on our turnaround strategy.”

Earlier this week the company said its 2023 revenues – SAR5.2 billion, a drop of 5 percent – had been affected by the closure of outlets. International retail revenues improved by nearly 8 percent to SAR1.1 billion on strong demand for its Inditex brands such as Zara, Pull & Bear and Bershka. 

Cenomi’s liabilities exceeded its assets by SAR3 billion at the end of 2023, prompting auditors to raise concerns in its latest financial results statement issued over the weekend. Accumulated losses also rose to SAR1.4 billion last year.

Cenomi’s struggles are in contrast to Saudi Arabia’s retail strength, according to analysts. The kingdom rose nine places to No 3 in the latest Global Retail Development Index, published by consultancy Kearney.

Debashish Mukherjee, a partner at Kearney and consumer and retail practice lead in the Middle East, said the kingdom was “at the forefront of retail’s next wave of growth”.