Gulf retail chain Spinneys eyes $1bn revenue by 2013

Supermarket brand is eyeing multimillion-dollar store rollout across Middle East
Gulf retail chain Spinneys eyes $1bn revenue by 2013
Retailer Spinneys began operations in Egypt in 1924
By Reuters
Sun 06 Nov 2011 10:32 AM

Gulf supermarket chain
Spinneys will cross the $1bn revenue mark in two years and is looking to expand
further in the Middle East, its chief executive said on Sunday.

Un-listed Spinneys,
which began operations in 1924 in Egypt, has seen its revenues growing by
around 20 percent since 2007 in Lebanon, while in Egypt it is seeing even
larger figures, said chief executive Michael Wright.

"We anticipate
that by 2013 our annualized revenue will be at $1bn," he said.

Spinneys, in which
Dubai private equity firm Abraaj Capital holds a controlling stake, is seeing
strong growth at a time of regional turmoil in the Gulf Arab world and a
slowdown in global economic growth.

"Retailing is
quite resistant to these things - people have to eat," Wright said.

Spinneys this month
opened the first of four new grocery retail outlets it plans to unveil in
Lebanon over the next six weeks as part of a regional expansion strategy. The
capital expenditure of this first phase was $24m.

Wright said that
the company plans to open an additional four stores in Lebanon, three in Qatar,
two in Jordan and at least three in Egypt by 2013.

For Wright,
expanding the supermarket chain is central to growing profits.

"Profitability
comes with scale and the fact is that we're growing so much," Wright said.

"[Our
operations in] Egypt and Lebanon are profitable, and Qatar will become
profitable this year."

Spinneys had
planned to further expand into new territories within the Middle East, but the
unexpected political uprisings of the Arab Spring that have rocked the region
since December pushed those plans back.

"The timeline
has been affected by the Arab spring. We have plans for projects in Libya,
Syria and Tunisia, but had to wait until things settled down," Wright
said.

While there are
currently no plans for Abraaj Capital to sell its share in the company,
Spinneys is keen to stay in shape for any investment opportunities that do
arise.

"Private
equity firms are never in for a very long term. [Due to] that strategic
planning has to be about growth and profit that creates a shareholder value
that becomes an exit price. We live this in all our strategy," said
Wright, who has been with the company since 1987.

However, he
dispelled suspicions of an imminent initial public offering, citing timing
issues.

"It's not
imminent. The markets are not really ready for an IPO at this time. The
economic crisis and Arab Spring made this difficult."

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