Adapting to evolving market landscape, Magrabi reports double-digit growth

Magrabi Retail Group, one of the region’s leading optical retail chains, has outlined a roadmap for 2024 containing strategic priorities and initiatives to build upon the successes of the previous year. (Supplied)
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Updated 02 April 2024
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Adapting to evolving market landscape, Magrabi reports double-digit growth

  • Retail group is committed to investing in data capability, digital transformation

RIYADH: One of the region’s leading optical retail chains, Magrabi Retail Group, reported double-digit growth in 2023, highlighting its adaptability in a rapidly evolving market landscape.

The company witnessed a 15 percent surge in total sales compared to the previous year, and a 30 percent increase in like-for-like sales under its Doctor M banner, surpassing previous expectations.

Yasser Taher, the company’s CEO attributed this growth to the expansion and development of the group’s property portfolio. 

“We opened new stores for both our luxury banner Magrabi and the lifestyle banner Doctor M, including refurbishments, upgrades, and strategic store relocations,” Taher told Arab News. 

This strategic expansion not only enhanced the group’s market presence but also contributed to higher average order values and increased foot traffic.

Digital dominance

In addition to its physical footprint, the group has made significant strides in the digital sphere, experiencing a 225 percent growth in online sales in 2023.

This growth can be attributed to its focus on enhancing the online customer experience through various initiatives, including virtual try-on features and swift delivery enhancements such as same-day delivery.

Taher highlighted the enhancements made to last-mile delivery services, including the introduction of same-day and express options within 90 minutes in the UAE. 

These initiatives reduced delivery times and helped meet the evolving expectations of customers in an increasingly digital landscape. 

The executive emphasized the importance of removing service frictions, adding: “Our focus in 2023 centered on enhancing the end-to-end customer experience and removing service frictions.” 

Taher went on: “These improvements boosted our conversion rate, and we intend to continue this trajectory in 2024.”

He also revealed the approach taken to address key gaps and introduce innovative features.

“We identified and addressed 52 gaps, improved website content quality, and introduced features like virtual try-on,” Taher disclosed.

Strategic investments

In 2023, the group invested SR115 million ($30.66 million) in new store openings, refurbishments, and transformation projects, laying a foundation for future growth and scalability.

Outlining the strategic rationale behind these investments, Taher stated: “Expanding our network by opening new stores significantly impacts our future top line. We are adding more stores in both banners and continuing to upgrade the Magrabi banner to a luxury one.”

He also disclosed the group’s strategy to introduce shipping services to Qatar, Egypt, and Kuwait and adopt a new approach, transitioning from cross-border shipping to establishing local hubs in each target country. 

Our focus in 2023 centered on enhancing the end-to-end customer experience and removing service frictions.

Yasser Taher, Magrabi Retail Group CEO

“Egypt has been live since January 2024, with the creation of a fulfillment center. We are now preparing for Kuwait and Qatar, expected to be operational by September 2024. This expansion is integral to our growth in 2025, providing convenience and an omnichannel experience to our customers. It’s transforming the customer experience, adding depth to our relationships, and enhancing convenience for our customers.”

Looking ahead

The retail group has outlined a roadmap for 2024 containing strategic priorities and initiatives to build upon the successes of the previous year.

“In 2024, our primary focus is on marketing and communications,” Taher affirmed. The group aims to reinforce its position as the leader in luxury eyewear retailing through targeted campaigns and brand positioning strategies.

The executive also underscored the importance of continued investment in brand evolution and expansion initiatives. 

“We’re directing our attention to a second campaign for Doctor M, launching Concept 3.0,” Taher said. 

This milestone marks a pivotal moment for the Doctor M brand, with the rollout of new stores and enhanced customer experiences.

In addition to marketing and brand initiatives, Taher places a strong emphasis on operational excellence. 

“Operationally, we’re prioritizing CRM (customer relationship management)  activations and clienteling,” Taher explained, highlighting the importance of personalized customer experiences and relationship management. 

By leveraging data-driven insights and technology solutions, the Group aims to enhance customer engagement and drive repeat business. 

Furthermore, Magrabi Retail Group is committed to investing in data capability and digital transformation, including a substantial project on supply chain end-to-end optimization. By optimizing processes and leveraging technology, the Group seeks to enhance efficiency and agility across its operations, ultimately delivering greater value to customers.

As part of its strategic vision for 2024, the group has initiated an environmental, social, and governance strategy and framework development. “Furthermore, we’ve initiated our ESG strategy and framework development, which we plan to communicate in Q4 this year,” Taher disclosed.

New leadership

Taher, the first non-family CEO of Magrabi Retail Group, discussed the implementation of key improvements to the company’s overall strategy. 

These changes included the establishment of a new board of directors aimed at elevating corporate governance standards within the organization.

“The significant change we’re implementing on the board is majority independent and equal voting decisions, creating best-in-class corporate governance,” stated Taher.

This restructuring underscores the company’s commitment to fostering transparency and accountability at all levels.

The revamped board structure has already shown promising results, with Taher noting the implementation of thorough reporting mechanisms and structured board agendas. 

“The disciplined approach and active board engagement support strategy formulation and mitigate risk,” Taher remarked, highlighting the board’s role in identifying potential blind spots and driving overall growth.

In 1981, Magrabi Optical opened its first store in Jeddah and since then it has expanded across Saudi Arabia, Egypt, and Kuwait, as well as Qatar and the UAE. 

This expansion made it one of the largest eyewear and sunglasses retail chains in the Middle East and North Africa.

The group has also set ground-breaking targets for gender equality and fair practices, including the ambitious goal of 50:50 gender equality throughout, from board to shop floor, by 2025.

The company is already making huge strides forward in this regard, with the executive team, senior leadership team, and board already gender-balanced.


Closing Bell: Saudi main index edges down to close at 12,198

Updated 19 May 2024
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Closing Bell: Saudi main index edges down to close at 12,198

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday losing 0.06 points to close at 12,198.38.  

The total trading turnover of the benchmark index was SR4.42 billion ($1.18 billion) as 60 stocks advanced, while 160 retreated.  

On the other hand, Nomu, the parallel market, rose 577.98 points, or 2.18 percent, to close at 27,062.01. This comes as 28 stocks advanced while as many as 33 retreated.

Meanwhile, the MSCI Tadawul Index slipped 1.45 points, or 0.09 percent, to close at 1,528.60.

The best-performing stock of the day was Lazurde Co. for Jewelry. The company’s share price surged 10.00 percent to SR16.06. 

Other top performers included Middle East Specialized Cables Co. as well as Aldrees Petroleum and Transport Services Co.

The worst performer was Zahrat Al Waha for Trading Co., whose share price dropped by 10 percent to SR45.45.

Makkah Construction and Development Co. as well as Jazan Development and Investment Co also performed poorly.

On the announcements front, Kingdom Holding Co. announced its interim financial results for the period ending March 31. 

According to a Tadawul statement, the company’s net profit hit SR196 million in the first quarter of 2024, reflecting a 14.6 percent surge when compared to the similar quarter last year. 

The increase is mainly due to a rise in the sale of investment property, a surge in the share of results from equity-accounted investees, and a decrease in financial charges. 

It is also linked to an increase in finance income as well as a drop in withholding and income tax.

Moreover, Dar Alarkan Real Estate Development Co. announced its interim financial results for the first three months of 2024. 

A bourse filing revealed that the firm’s net profit reached SR153.5 million by the period ending March 31, up 30.57 percent from the corresponding period in 2023. This surge is primarily attributed to higher property sales. 

Furthermore, Middle East Paper Co. announced its interim financial results for the year’s first quarter. 

According to a Tadawul statement, the company recorded a net loss of SR18 million in the first three months of 2024, compared to a net loss of SR7 million in the same period of the previous year.

This is mainly owed to reduced gross profit, a jump in general and administrative dues, and increased finance and zakat expenses. 

Red Sea International Co. also announced its interim financial results for the period ending on March 31. 

A bourse filing revealed that the firm’s net profit stood at SR13.3 million at the end of the first quarter of 2024, compared to a net loss of SR19.5 million recorded in the same quarter a year ago. 

This is mainly the result of the strategic business transformation, which included acquiring 51 percent of First Fix and effectively executing and delivering projects.

Meanwhile, Saudi Manpower Solutions Co., announced the completion of the institutional book-building process and the determination of the final offer price for its initial public offering on the main market of the Saudi Exchange.

According to a company statement, the final offer price has been set at SR7.5 per share, with a market capitalization of SR3 billion at listing. The price range for the offering was set at SR7 to SR7.5.   

The institutional book-building process generated an order book of around SR115 billion and was 128 times oversubscribed, indicating strong investor demand.   


Baheej unveils waterfront development project in Yanbu 

Updated 19 May 2024
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Baheej unveils waterfront development project in Yanbu 

RIYADH: Saudi Arabia’s tourism sector continues to expand, with Baheej Tourism Development Co. unveiling a new waterfront development project in Yanbu. 

This joint venture between ASFAR, a Saudi tourism investment company owned by the Public Investment Fund, and the Tamimi-AWN Alliance, aims to develop the waterfront area of the Royal Commission at Yanbu. 

The initial project will cover 32,000 sq. m. and feature three leisure assets: a beach, a tourist activation center, and a hotel. It is set for complete unveiling in 2027. 

A fourth component is scheduled to be announced at a later date. 

According to a release, each aspect of the project aims to provide memorable and sustainable tourism experiences. 

Visitors will soon have the opportunity to explore Yanbu, a city with a rich history dating back to the 16th century, renowned for its architectural heritage and sandy beaches. 

Baheej envisions Yanbu as an iconic location that showcases Saudi Arabia’s culture, history, and natural beauty, providing a unique destination to tourists. 

Nora Al-Tamimi, CEO of Baheej, outlines the project’s development in three phases, emphasizing community engagement, sustainability, and minimal environmental impact.  

Al-Tamimi said: “We believe that destinations are not just built but discovered, and Baheej’s commitment lies in uncovering Saudi Arabia’s hidden gems. Our strategic collaborations are aimed at curating unparalleled experiences that showcase Saudi Arabia’s rich culture, history, and natural wonders.”  

She added: “Yanbu City’s contemporary infrastructure, captivating environment, and attractive coastal landscapes make it an exceptional gateway to the Red Sea Riviera. We anticipate the complete unveiling of our destination and its components by the end of 2027.”   

By analyzing risks and investment opportunities, the project aims to position Yanbu as a locally and internationally sought-after tourist destination, explained Al-Tamimi. 

Baheej’s role will involve integrating local culture and promoting protection of the planet, enhancing Yanbu’s appeal and supporting regional development. 

This approach aims to transform Yanbu’s hospitality sector, blending community heritage with environmental stewardship. 

Established in 2023, Baheej aims to create accessible tourism experiences that meet international standards while remaining contextual and sustainable. 

These initiatives are part of a broader strategy to transform Saudi towns into thriving, eco-friendly destinations. 

Baheej also plans to announce additional projects in other cities by the end of 2024.


Saudi banks’ money supply surges 8% in March to reach $753bn 

Updated 19 May 2024
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Saudi banks’ money supply surges 8% in March to reach $753bn 

RIYADH: Saudi banks’ money supply rose 8 percent in March, as compared to the same month last year, to reach SR2.82 trillion ($753 billion), official data showed.

According to the data released by the Saudi Central Bank, also known as SAMA, the increase was mainly fueled by a roughly 21 percent surge in banks’ term and savings accounts, reaching SR843.25 billion. These deposits represented the second-largest portion, comprising 30 percent of the total money supply, following demand deposits, which constituted 50 percent at SR1.41 trillion.

On the other hand, quasi-money holdings made up 21 percent of the total, experiencing a 1 percent decrease during this period. Meanwhile, currency outside banks accounted for an 8 percent share, showing a 10 percent growth.

Multiple factors influenced the upsurge in term deposits. Firstly, the elevated interest rate environment within the Kingdom, shaped by the US Federal Reserve’s anti-inflationary monetary policy, has spurred individuals and entities to seek higher returns through these accounts.

Moreover, the increase in accounts held by government-related entities played a significant role. As per Fitch Ratings, these entities opted to channel their surplus liquidity into term deposits with commercial banks, thereby boosting the growth trajectory of such accounts.

It is noteworthy that during 2022, SAMA raised key policy rates seven times, followed by an additional four increases in 2023. The central bank’s repo rate was last raised by 25 basis points to 6 percent in its July 2023 meeting, marking its highest level since 2001. Since then, rates have remained unchanged. 

Meanwhile, US inflation surged to a six-month high in March, prompting investors to delay their expectations for Federal Reserve rate cuts.

Deposits represent a costly funding source for banks, with heightened competition in the financial market significantly driving up their average cost.

Despite this, the surge in interest rates also strengthened Saudi banks’ profits on the asset side. Higher borrowing rates led to increased income, offsetting the challenges posed by the expensive funding environment.

On the asset side, Saudi bank loans grew by 11 percent during this period to reach SR2.67 trillion; therefore, lending growth among Saudi banks outpaced deposits.

In their April report, S&P Global suggested that Saudi financial institutions would explore alternative funding strategies to manage the rapid increase in lending, driven by rising demand for new mortgages.

The credit-rating agency noted that the funding profiles of financial institutions in the Kingdom will undergo changes, mainly due to a government-supported initiative aimed at boosting homeownership.

According to their analysis, mortgage financing accounted for 23.5 percent of Saudi banks’ total credit allocation by the end of 2023, compared to 12.8 percent in 2019.

They highlighted that the ongoing financing needs of the Vision 2030 economic initiative, coupled with relatively sluggish deposit growth, are likely to prompt banks to seek alternative budget sources, including external funding.

S&P Global anticipated this trend to persist, especially as corporate lending assumes a more significant role in growth in the coming years.

The report indicated that Saudi banks are expected to adopt alternative funding strategies to support this expansion. It also noted that the stability of Saudi deposits mitigates the risk posed by maturity mismatch.

Furthermore, the agency projected an increase in Saudi banks’ foreign liabilities, rising from approximately $19.2 billion by the end of 2023, to meet the funding demands of robust lending growth, particularly amidst slower deposit expansion.

The report emphasized that Saudi banks have already tapped into international capital markets, and S&P Global anticipates this trend to continue over the next three to five years.


Saudi aviation sector contributes $21bn to GDP: GACA

Updated 19 May 2024
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Saudi aviation sector contributes $21bn to GDP: GACA

RIYADH: Saudi Arabia is experiencing steady growth in its aviation sector, contributing $21 billion to the Kingdom’s gross domestic product in 2023 and solidifying its position as a global tourism hub.

The General Authority for Civil Aviation stated that the aviation industry is creating positive impacts in other key areas of Saudi Arabia’s economy, with the sector responsible for a further $32.2 billion in tourism receipts, according to a press statement. 

GACA added that the aviation industry alone has enabled 241,000 jobs in the Kingdom and has contributed to supporting 717,000 jobs in tourism-related areas. 

The authority revealed that the nation outperformed global aviation sector growth rates in 2023, achieving 123 percent of international pre-pandemic seat capacity compared with a worldwide and regional average recovery rate of 90 percent and 95 percent, respectively. 

GACA will present these findings in an analysis titled “2024 State of Aviation Report” at the Future Aviation Forum on May 20. 

Saudi Arabia’s Minister of Transport and Logistics Services and Chairman of GACA, Saleh Al-Jasser, said: “The Saudi aviation sector is providing unprecedented opportunities for global aviation, achieving major leaps in global rankings in support of Vision 2030 and in line with the National Strategy for Transport and Logistics services.” 

Saudi Arabia’s National Transport and Logistics Strategy seeks to increase the industry’s contribution to the Kingdom’s GDP to 10 percent from the current 6 percent by 2030. 

“The inaugural State of Aviation report highlights the contribution that the aviation sector makes to the Saudi society and economy, with the great support from the Custodian of the Two Holy Mosques and His Highness the Crown Prince,” added Al-Jasser.  

Abdulaziz Al-Duailej, president of GACA, said that the Kingdom is building a more resilient, connected, high-performing aviation sector across various verticals, including airlines, airports, cargo and logistics, and human capability and training systems. 

“GACA has developed this report to fulfill its role as a strategic aviation regulator, measuring and recording the progress of the sector in line with the targets of the Saudi Aviation Strategy. The report also informs GACA’s ongoing regulatory work and the impacts of new regulations in creating greater competition, value, and choice in Saudi Aviation,” said Al-Duailej.  

During the Future Aviation Forum, Saudi Arabia is expected to unveil a roadmap detailing how the Kingdom will grow its aviation sector tenfold into a $2 billion industry by 2030. 

This year’s gathering will bring together more than 5,000 sector experts and leaders from more than 100 countries to discuss ways to shape the future of international air travel and freight management.


The Arab Energy Fund and Dussur sign $200m MoU to boost greenfield energy projects

Updated 19 May 2024
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The Arab Energy Fund and Dussur sign $200m MoU to boost greenfield energy projects

RIYADH: Greenfield energy projects are set to receive a boost, as The Arab Energy Fund has signed a $200 million funding agreement with the Saudi Arabian Industrial Investments Co. 

A memorandum of understanding was executed between the energy-focused financial institution TAEF and the Saudi-based industrial investment and development company, also known as Dussur.  

This deal aims to fast-track and facilitate prospective financing opportunities for TAEF through bridge financing in selected greenfield projects promoted by Dussur. 

Nicolas Thevenot, chief banking officer at TAEF, said: “We are thrilled to sign this MoU with Dussur and enter an era of collaboration to support the advancement of the flourishing energy sector in Saudi Arabia.”  

He added: “Our strategic partnership with Dussur is also aligned with our planned investment of up to $1 billion to advancing the energy transition with a focus on decarbonization and related technologies over the next five years.” 

The MoU contributes to the Kingdom’s efforts to advance industrialization and economic diversification by defining a broad framework agreement between TAEF and Dussur. 

“Dussur is pleased to have signed this MoU with TAEF, which could unveil multiple collaborative opportunities to maximize Dussur’s impact on the Saudi economy,” said Omar Al-Qarawi, director of finance and accounting at Dussur. 

He added: “Through this MoU, Dussur and TAEF aim to further their joint efforts to leverage strategic and sustainable industrial investments.”  

In February, the Public Investment Fund-backed Dussur launched an oilfield services and industrial chemicals factory in Jubail in collaboration with Bakers Hughes, a Texas-based oilfield services provider. 

The Saudi Petrolite Chemicals facility is expected to increase the Kingdom’s supply base of raw materials such as solvents and glycols. 

It is intended to accelerate the development of the skills and capabilities of Saudi human resources in manufacturing, thus contributing to the increase in localization rates and the rapid delivery of chemical solutions. 

The opening ceremony was attended by Saudi Energy Minister Prince Abdulaziz bin Salman, Investment Minister Khalid Al-Falih, and Minister of Industry and Mineral Resources Bandar Alkhorayef.